Amphenol(US:APH)2023-04-27 16:00Net Sales and Segment Performance - Net sales in Q1 2023 were $2,974.0 million, a 1% increase in U.S. dollars, 3% in constant currencies, and 1% organically compared to Q1 2022[112] - Harsh Environment Solutions segment sales increased 17% in U.S. dollars, 20% in constant currencies, and 15% organically in Q1 2023, driven by growth in commercial aerospace, automotive, military, and industrial markets[113] - Communications Solutions segment sales decreased 15% in U.S. dollars, 13% in constant currencies, and 13% organically in Q1 2023, primarily due to declines in IT, data communications, industrial, mobile networks, and mobile devices markets[114] - Interconnect and Sensor Systems segment sales increased 10% in U.S. dollars, 13% in constant currencies, and 10% organically in Q1 2023, driven by growth in industrial and automotive markets[114] - The Harsh Environment Solutions segment accounted for approximately 29% of total net sales in Q1 2023[113] - The Communications Solutions segment accounted for approximately 38% of total net sales in Q1 2023[114] - The Interconnect and Sensor Systems segment accounted for approximately 33% of total net sales in Q1 2023[114] - Organic growth in Q1 2023 was driven by commercial aerospace, broadband communications, military, automotive, and industrial markets[112] - Organic sales declines in Q1 2023 were seen in IT, data communications, mobile networks, and mobile devices markets[112] - Net sales for the first quarter of 2023 were $2,974.0 million, a 1% increase compared to $2,951.9 million in the same period of 2022[117] - Harsh Environment Solutions segment net sales grew by 17% to $854.2 million, driven by a 20% constant currency growth and 5% acquisition impact[117] - Communications Solutions segment net sales declined by 15% to $1,126.7 million, with a 13% constant currency decline[117] - Interconnect and Sensor Systems segment net sales increased by 10% to $993.1 million, with a 13% constant currency growth and 3% acquisition impact[117] Financial Performance and Income - Operating income for the first quarter of 2023 was $591.7 million, or 19.9% of net sales, compared to $589.8 million, or 20.0% of net sales, in the same period of 2022[119] - Adjusted Operating Income for the first quarter of 2023 was $597.1 million, or 20.1% of net sales, compared to $589.8 million, or 20.0% of net sales, in the same period of 2022[119] - Net income attributable to Amphenol Corporation for the first quarter of 2023 was $439.2 million, or $0.71 per diluted share, compared to $425.7 million, or $0.68 per diluted share, in the same period of 2022[125] - Adjusted Net Income attributable to Amphenol Corporation for the first quarter of 2023 was $426.1 million, or $0.69 per diluted share, compared to $421.9 million, or $0.67 per diluted share, in the same period of 2022[125] Cash Flow and Liquidity - The Company had cash, cash equivalents, and short-term investments of $1,498.7 million as of March 31, 2023, compared to $1,434.2 million as of December 31, 2022[129] - Net cash provided by operating activities increased to $532.4 million in Q1 2023, up from $350.8 million in Q1 2022, primarily due to lower working capital usage[136] - Free Cash Flow (non-GAAP) rose to $435.5 million in Q1 2023, compared to $274.5 million in Q1 2022, driven by higher Operating Cash Flow[140] - Net cash used in investing activities was $256.6 million in Q1 2023, primarily due to $113.2 million for acquisitions and $96.9 million in capital expenditures[141] - Net cash used in financing activities was $265.4 million in Q1 2023, driven by $387.5 million in net repayments of commercial paper and $166.9 million in stock repurchases[144] - The company's free cash flow is defined as net cash provided by operating activities less capital expenditures, net of proceeds from disposals of property, plant, and equipment[170] Debt and Financing - The company has a $2,500.0 million Revolving Credit Facility, with no outstanding borrowings as of March 31, 2023[146] - The company issued $245.1 million in USCP Notes in Q1 2023, with a weighted average interest rate of 5.29%, down from $632.8 million in Q4 2022[148] - The company's 2022 Term Loan remains undrawn as of March 31, 2023, with a $750.0 million capacity and a maturity date of April 19, 2024[147] - The company issued $350.0 million of 4.750% Senior Notes due March 30, 2026, primarily to repay outstanding borrowings under the U.S. Commercial Paper Program[152] - The company's Euro Notes consist of two series with a principal amount of €500.0 million each, maturing in May 2026 and October 2028[154] - The company's Senior Notes impose certain obligations and prohibit various actions unless specific financial requirements are met, and the company was in compliance as of March 31, 2023[155] - Outstanding borrowings under the U.S. Commercial Paper Program as of March 31, 2023, were at a weighted average floating interest rate of 5.29%[173] - No outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan, and Euro Commercial Paper Program as of March 31, 2023[173] - The company may borrow under the Revolving Credit Facility, Commercial Paper Programs, and a $750.0 million unsecured delayed draw term loan credit agreement[173] - Borrowings under the Euro Commercial Paper Program and Revolving Credit Facility may be denominated in foreign currencies, exposing the company to exchange rate risks[173] - Interest rates for borrowings under the Revolving Credit Facility fluctuate based on the company's debt rating and currency-specific benchmark rates[173] - The 2022 Term Loan, entered into in April 2022, bears interest at rates fluctuating with a spread based on the company's debt rating over the base rate or adjusted term SOFR[173] - Commercial Paper Programs are subject to floating interest rates, exposing the company to market risk related to interest rate changes[173] - Recent increases in the federal funds rate by the U.S. Federal Reserve have substantially increased floating interest rates related to the U.S. Commercial Paper Program[173] - The company does not expect changes in interest rates to have a material effect on income or cash flows for the remainder of 2023, primarily due to limited reliance on floating rate borrowings[173] Acquisitions and Investments - The company completed one acquisition in Q1 2023 for approximately $113.2 million, net of cash acquired, in the Harsh Environment Solutions segment[158] - The company incurred $5.4 million ($4.0 million after-tax) of acquisition-related expenses in Q1 2023, primarily due to amortization related to acquired backlog[161] Share Repurchases and Dividends - The company repurchased 2.1 million shares of its Common Stock for $166.9 million in Q1 2023 under the 2021 Stock Repurchase Program[156] - The company declared a quarterly dividend of $0.21 per share in Q1 2023, an increase from $0.20 per share in Q1 2022[157] - The company has remaining authorization to purchase up to $605.2 million of its Common Stock under the 2021 Stock Repurchase Program as of April 26, 2023[156] Tax and Regulatory Impact - The Inflation Reduction Act of 2022 did not have a material impact on the company's financial condition in Q1 2023[111] - The company plans to repatriate most of its pre-2023 foreign earnings, with associated tax payments due as repatriations are made[133] Working Capital and Inventory - Accounts receivable decreased by $219.4 million to $2,411.9 million in Q1 2023, driven by lower sales and partially offset by acquisitions and exchange rate effects[138] - Inventories increased by $11.5 million to $2,105.1 million in Q1 2023, influenced by acquisitions and exchange rate changes, with inventory days rising from 86 to 93 days[138] Market Risks - The company is exposed to market risks related to foreign currency exchange rates and interest rate changes, with no significant concentration with any one counterparty[173]