Amphenol Corporation (APH) Q1 2023 Earnings Call Transcript

Amphenol Corporation (NYSE:APH) Q1 2023 Earnings Conference Call April 26, 2023 1:00 PM ET

Company Participants

Adam Norwitt – Chief Executive Officer

Craig Lampo – Chief Financial Officer

Conference Call Participants

Amit Daryanani – Evercore

Wamsi Mohan – Bank of America

Samik Chatterjee – JPMorgan

Steven Fox – Fox Advisors

Luke Junk – Baird

Chris Snyder – UBS

William Stein – Truist Securities

Mark Delaney – Goldman Sachs

Guy Hardwick – Credit Suisse

Michael Anastasiou – TD Cowen

Operator

Hello, and welcome to the First 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 objections, you may disconnect at this time.

I would now like to turn – 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'm here together with Adam Norwitt, our CEO. We would like to welcome you to our first quarter 2023 conference call. Our first 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 first quarter with sales of $2.974 billion and GAAP and adjusted diluted EPS of $0.71 and $0.69, respectively. First quarter sales were up 1% in U.S. dollars and organically and up 3% in local currencies compared to the first quarter of 2022. Sequentially, sales were down by 8% in U.S. dollars, 9% in local currencies and 10% organically. Adam will comment further on trends by market in a few minutes. Orders in the quarter were $2.896 billion, which was down 16% compared to the first quarter of 2022 and flat sequentially, resulting in a book-to-bill ratio of 0.97 to 1. The lower book-to-bill was driven by lower bookings in the communications related markets, which continue to experience a decline in demand.

GAAP and adjusted operating income were $592 million and $597 million, respectively, in the first quarter of 2023. GAAP and adjusted operating margins were 19.9% and 20.1%, respectively, in the first quarter. On a GAAP basis, operating margin decreased by 10 basis points compared to the first quarter of 2022 and decreased by 70 basis points sequentially, and GAAP operating margins for the first quarter included $5 billion of acquisition-related costs. On an adjusted basis, operating margin increased 10 basis points compared to the first quarter of 2022 and decreased by 80 basis points sequentially. The year-over-year increase in adjusted operating margin was driven by strong operating leverage on the modestly higher sales volumes. And on a sequential basis, the decrease in adjusted operating margin reflected normal downside conversion on the lower sales levels.