Reading time ( words)
Amphenol Corporation has reported first quarter 2021 results and announced a new three-year, $2 billion stock repurchase program.
First Quarter 2021 Highlights:
- Sales of $2.377 billion, up 28% in U.S. dollars and 23% organically1 compared to the first quarter 2020
- GAAP diluted EPS of $0.53, up 33% compared to the prior year period
- Adjusted Diluted EPS1 of $0.52, up 49% compared to the prior year period
- Operating margin of 19.6%
- Operating Cash Flow of $321 million and Free Cash Flow1 of $243 million
- Announces closing of two new acquisitions during the quarter, Euromicron and Cabelcon
- Closed on the acquisition of MTS Systems Corporation
- Announces a new three-year, $2 billion open market stock repurchase program
“I am very proud that our team drove results that significantly exceeded our expectations in the first quarter 2021, while still prioritizing the safety and health of our employees worldwide amidst the ongoing COVID-19 pandemic,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt.
“We are pleased to have closed the first quarter with sales and Adjusted Diluted EPS exceeding the high end of our guidance. Sales increased by a strong 28% in the quarter, with growth in nearly all markets, driven in particular by the automotive, mobile devices, industrial and IT datacom markets.”
“Amphenol continued to deploy its financial strength in a variety of ways to increase shareholder value in the first quarter. To that end, the Company purchased 2.4 million shares of its common stock for $153 million, bringing total share repurchases under the 2018 stock repurchase program to 40.3 million shares, or $1.95 billion. The Company also paid dividends of $87 million, resulting in total capital returned to shareholders during the first quarter of $240 million.”
“We remain focused on expanding our growth opportunities through a deep commitment to developing enabling technologies for customers in all markets, an ongoing strategy of market and geographic diversification and an active and successful acquisition program. To that end, and as previously announced on April 7, 2021, we are excited to have closed the acquisition of MTS Systems Corporation (MTS), and look forward to closing the sale of the MTS Test & Simulation business to Illinois Tool Works Inc. following the receipt of all required regulatory approvals and satisfaction of other customary closing conditions.”
“In addition to the MTS acquisition, we are excited to have closed two new acquisitions since January, Euromicron and Cabelcon. In February, we closed on the acquisition of Euromicron Werkzeuge GmbH and its sister company LWL-Sachsenkabel GmbH (collectively, “Euromicron”) from the Gustav Zech Foundation. Based in Germany and with annual sales of approximately $25 million, Euromicron is a manufacturer of highly engineered fiber optic interconnect solutions for the mobile networks and IT datacom markets. In March, we closed on the acquisition of the Cabelcon business of Corning Incorporated (NYSE: GLW). Based in Denmark with annual sales of approximately $25 million, Cabelcon is a designer and manufacturer of high-technology connectors and interconnect assemblies primarily for the broadband market. The five acquisitions we have completed so far this year strengthen the Company’s global capabilities and enhance our product offerings, while adding talented management teams to the Amphenol family. With our long-term, successful acquisition program, we look forward to creating more value in the future by bringing additional outstanding businesses into Amphenol.”
New Stock Repurchase Program
During April 2021, the Company purchased the remaining authorized amount of common stock under its existing three-year, $2 billion stock repurchase plan. As a result, on April 27, 2021, the Company’s Board of Directors approved a new three-year, $2 billion open market stock repurchase plan.
Second Quarter 2021 Outlook
Given the current dynamic market environment and assuming no new material disruptions from the COVID-19 pandemic as well as constant exchange rates, for the second quarter 2021, Amphenol expects sales to be in the range of $2.415 billion to $2.475 billion, representing 22% to 25% growth over the second quarter of 2020, and Adjusted Diluted EPS from continuing operations in the range of $0.53 to $0.55, representing 33% to 38% growth over the second quarter of 2020. The Company’s guidance excludes cash and non-cash costs related to the MTS acquisition. These costs are currently expected to be approximately $85 million, or $0.12 per diluted share, and include expenses related to the early extinguishment of debt, non-cash purchase accounting related expenses, external transaction expenses, severance and other costs.
“Despite the ongoing challenges and uncertainties posed by the COVID-19 pandemic, we are encouraged by the platform of strength that has been created by the Company’s performance,” Mr. Norwitt continued. “The electronics revolution continues to create exciting long-term growth opportunities for Amphenol across each of our diversified end markets, with customers driving their products and networks to achieve ever higher levels of performance. We believe these opportunities will enable a long-term increase in demand for our expanded range of high-technology interconnect, sensor and antenna products. Our ongoing actions to leverage our competitive advantages and create sustained financial strength, as well as our initiatives to expand our high-technology product offerings, both organically and through our acquisition program, have created an excellent base for the Company’s future performance. I remain confident in the ability of our outstanding entrepreneurial management team to dynamically adjust to changing market conditions, to capitalize on the wide array of growth opportunities that arise even in times of crisis and to continue to generate sustainable value for the long-term. Most importantly, I continue to be truly grateful to our team for their extraordinary efforts to protect the safety and health of our employees around the world, while continuing to strongly support our customers and drive outstanding operating performance.”
2-for-1 Stock Split
As announced on January 27, 2021, the Company’s Board of Directors approved a 2-for-1 stock split, which was paid in the form of a stock dividend to shareholders of record as of the close of business on February 16, 2021. The additional shares were distributed on March 4, 2021 and the Company’s common stock began trading on a split-adjusted basis on March 5, 2021. The effect of the stock split on the Company’s financial results, including all share and per share data for both the current and prior year periods, is reflected in this press release.