APH Q2 2019 Earnings

Call Details

• Call Title: Amphenol Corporation Q2 2019 Earnings Call
• Date: July 24, 2019 at 5:00 PM UTC
• Management Team:
  • Craig Lampo (Chief Financial Officer)
  • Adam Norwitt (Chief Executive Officer)

Call Summary

Financial Performance

• Company reported sales of $2.015B in Q2 2019 and GAAP diluted EPS of $0.93 and adjusted diluted EPS of $0.92 for Q2 2019.
• Sales were up 2% in U.S. dollars and up 4% in local currencies versus Q2 2018, while organic sales excluding acquisitions and currency were down 1% year-over-year.
• Sequentially, sales were up 3% in U.S. dollars and local currency and up 1% organically versus Q1 2019.
• Orders were $2.19B in the quarter, flat year-over-year, producing a book-to-bill of 1.0x.
• Adjusted operating income was $408M and adjusted operating margin was 20.3%, down 30 basis points year-over-year but up 20 basis points sequentially.
• Cable segment comprised 4% of sales and declined 19% in U.S. dollars (down 17% local) with a segment margin of 9.7% versus 13.2% in Q2 2018.
• Interconnect segment comprised 96% of sales and grew 3% in U.S. dollars (up 5% local) with a segment margin of 22.2% versus 22.4% in Q2 2018.
• Interest expense was approximately $30M versus $26M a year ago, and adjusted effective tax rate was 24.5% versus 25.5% a year ago (GAAP tax rate approx. 21.3% versus 24.7% prior year).
• Cash flow from operations was $322M (approximately 114% of adjusted net income) and adjusted EBITDA was approximately $500M for the quarter.

Guidance

• Third quarter guidance is sales of $1.96B to $2.00B and adjusted diluted EPS of $0.86 to $0.88, which implies sales down 6% to 8% year-over-year and adjusted EPS down 11% to 13% year-over-year.
• Full-year 2019 guidance was revised to sales of $7.92B to $8.00B and adjusted diluted EPS of $3.56 to $3.60, representing full-year declines of 2% to 3% in sales and 5% to 6% in adjusted EPS versus prior year.
• Guidance assumes constant exchange rates and reflects a significant reduction in second-half sales expectations for communications equipment markets and reduced OEM/distributor outlooks in industrial and automotive.
• EPS guidance incorporates the cost of restructuring actions that are primarily expected to be reflected in Q3 and also incorporates initially lower operating margins of recent acquisitions.
• Industrial outlook now anticipates overall full-year growth in the high single digits including acquisitions, but the company now expects no organic growth in industrial for the full year 2019.
• Automotive full-year sales are now expected to grow in the low single digits, a slight reduction versus prior expectations, and the company no longer expects a meaningful organic step-up in H2 2019.
• Mobile devices full-year sales are expected to decline roughly 30% versus prior year, and mobile networks are expected to be flat in U.S. dollars for the full year but down high single digits organically.
• IT and data communications now target a mid-to-high single-digit sales decline for full-year 2019, and broadband is now expected down in the high single digits for the full year.