APH Q1 2020 Earnings

Call Details

• Call Title: Amphenol Corporation Q1 2020 Earnings Call
• Date: April 22, 2020 at 5:00 PM UTC
• Management Team:
  • Adam Norwitt (Chief Executive Officer)
  • Craig Lampo (Chief Financial Officer)

Call Summary

Financial Performance

• Sales were $1,862,000,000 in Q1 2020, down 5% in U.S. dollars versus prior year and down 9% organically.
• GAAP EPS was $0.79 for Q1 2020 and adjusted EPS was $0.71, with adjusted EPS down 20% from $0.89 in Q1 2019.
• Operating income was $317 million and adjusted operating margin was 17%, which was down 310 basis points year-over-year and down 300 basis points sequentially.
• Interconnect segment margin was 19.1% in Q1 2020 versus 22% in both Q1 and Q4 2019, and cable segment margin was 7.6% versus 11% in Q1 2019.
• Orders were $2,150,000,000 in Q1 2020, up 7% versus Q1 2019, producing a book-to-bill ratio of 1.15 to 1, which management described as the highest in the company's modern history.
• Operating cash flow was $384 million and free cash flow was $323 million after capital spending of $61 million.
• First quarter EBITDA was $403 million and pro forma net leverage was 1.4 times at quarter end.
• Inventory, accounts receivable, and accounts payable were $1.3 billion, $1.5 billion, and $817 million respectively, with inventory days of 92, DSO of 75, and payable days of 57.

Guidance

• The company withdrew its full-year sales and EPS guidance and previously withdrew Q1 guidance on February 24, 2020.
• The company expects Q2 sales and EPS to be lower than Q1 2020 levels but will not provide a specific sales or EPS outlook at this time.
• Management expects elevated costs and a worse downside conversion rate in Q2 due to operational restrictions and limitations on adjusting payroll in some jurisdictions.
• Inventory days are expected to remain somewhat elevated while sales are depressed and are expected to revert as operations normalize.
• Certain businesses that support military customers are expected to see reduced staffing and lower sales in Q2 relative to Q1.
• The company expects further reductions in commercial aerospace and automotive sales in Q2 due to customer shutdowns and reduced demand.
• Management expects IT datacom and broadband sales to increase in Q2 driven by customer activity to expand bandwidth, while mobile networks are expected to be similar to Q1 levels.