Amphenol Corporation (APH) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 26, 2023 1:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Hello. And welcome to the Second Quarter Earnings Conference Call for Amphenol Corporation. Following today’s presentation, there will be a formal question-and-answer session. Until then all lines will remain in a listen-only mode. At the request of the company, today’s conference is being recorded. If anyone has any objection, you may disconnect at this time.

I would now like to introduce today’s conference host, Mr. Craig Lampo. Sir, you may begin.

Craig Lampo

Thank you very much. Good afternoon, everyone. This is Craig Lampo, Amphenol’s CFO and I am here together with Adam Norwitt, our CEO. We would like to welcome you to our second quarter 2023 conference call.

Our second quarter 2023 results were released this morning. I will provide some financial commentary and then Adam will give an overview of the business and current trends and then we will take questions.

As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements, so please refer to the relevant disclosures in our press release for further information.

The company closed the second quarter with sales of $3,054 million and GAAP and adjusted diluted EPS of $0.74 and $0.72, respectively. Second quarter sales were down 3% in U.S. dollars, 2% in local currencies and organically -- and 4% organically compared to the second quarter of 2022. Sequentially, sales were up 3% in U.S. dollars in local currencies and 2% organically. Adam will comment further on trends by market in a few minutes.

Orders in the quarter were $3,044 million, which was down 12% compared to the second quarter of 2022, but up 5% sequentially, resulting in a book-to-bill ratio of 1:1.

GAAP operating income was $620 million in the second quarter of 2023, which included $4 million of acquisition-related costs. Excluding these costs, adjusted operating income was $624 million. GAAP and adjusted operating margins were 20.3% and 20.4%, respectively, in the second quarter of 2023.

On a GAAP basis, operating margin decreased by 40 basis points compared to the second quarter of 2022, but increased by 40 basis points sequentially. And on an adjusted basis, operating margin decreased 30 basis points compared to the second quarter of 2022, but increased by 30 basis points sequentially. This modest year-over-year decrease in adjusted operating margin reflected a strong downside conversion on the sales -- lower sales volumes, as well as the dilutive impact of acquisitions, which are currently operating below the corporate average. On a sequential basis, the increase in adjusted operating margin reflected strong conversion on the higher sales levels.