Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

AMPHENOL CORPORATION

(APH)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

AMPHENOL CORP /DE/ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

10/29/2021 | 03:28pm EST

(amounts in millions, except share and per share data,

                             unless otherwise noted)




The following discussion and analysis of the results of operations and financial
condition for the three and nine months ended September 30, 2021 and 2020 has
been derived from and should be read in conjunction with our unaudited condensed
consolidated financial statements and the accompanying notes included herein for
Amphenol Corporation (together with its subsidiaries, "Amphenol," the "Company,"
"we," "our," or "us"), which are prepared in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP" or
"GAAP"). Any references to the Company's results in this Item 2 are specifically
to our continuing operations only and exclude discontinued operations, unless
otherwise noted. The following discussion and analysis also includes references
to certain non-GAAP financial measures, which are defined in the "Non-GAAP
Financial Measures" section below, including "Constant Currency Net Sales
Growth" and "Organic Net Sales Growth". For purposes of the following
discussion, the terms "constant currencies" and "organically" have the same
meaning, respectively, as these aforementioned non-GAAP financial measures.
Refer to "Non-GAAP Financial Measures" within this Item 2 for more information,
including our reasons for including the non-GAAP financial measures and material
limitations with respect to the usefulness of the measures.



Stock Split



On January 27, 2021, the Company announced that its Board of Directors approved
a two-for-one split of the Company's Common Stock. The stock split was effected
in the form of a stock dividend paid 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. All current and prior year data impacted by the stock
split and presented in this Item 2 and throughout this Form 10-Q herein,
including number of shares and per share information, earnings per share and
dividends per share amounts, among others, have been retroactively adjusted to
reflect the effect of the stock split. Refer to Note 1 of the accompanying Notes
to Condensed Consolidated Financial Statements for further information related
to the stock split.



Safe Harbor Statement



This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, which
relate to future events and are subject to risks and uncertainties. All
statements that address events or developments that we expect or believe may or
will occur in the future are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking statements,
which address the Company's expected business and financial performance and
financial condition, as well as expectations regarding the anticipated timing
and estimated expenses associated with the closing of certain acquisitions and
divestitures, among other matters, may contain words and terms such as:
"anticipate," "believe," "continue," "could," "estimate," "expect," "forecast,"
"guidance," "intend," "look ahead," "may," "ongoing," "optimistic," "plan,"
"potential," "predict," "project," "seek," "should," "target," "will" or "would"
and other words and terms of similar meaning.



Forward-looking statements by their nature address matters that are, to
different degrees, uncertain, such as statements about expected earnings,
revenues, growth, liquidity or other financial matters, together with any
forward-looking statements related in any way to (i) the coronavirus
("COVID-19") pandemic, including its future impact on the Company or (ii) the
expected closing of the divestiture of the MTS Test & Simulation ("MTS T&S")
business to Illinois Tool Works Inc. ("ITW"), which may not be completed in a
timely manner or at all, each of which are discussed within this Form 10-Q.
Although the Company believes the expectations reflected in all forward-looking
statements, including those with regards to results of operations, liquidity,
the Company's effective tax rate, and other matters discussed herein, are based
upon reasonable assumptions, the expectations may not be attained or there may
be material deviation. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which they
are made. There are risks and uncertainties that could cause actual results to
differ materially from these

                                       27

Table of Contents


forward-looking statements, which include, but are not limited to, the
following: future risks and existing uncertainties associated with adverse
public health developments, including epidemics and pandemics such as the
COVID-19 pandemic, which continues to disrupt our operations including,
depending on the specific location, government regulations that inhibit our
ability to operate certain of our facilities in the ordinary course and to
adjust certain costs, travel restrictions, supplier constraints, supply-chain
interruptions, logistics challenges and limitations, and reduced demand from
certain customers; uncertainties associated with a protracted economic slowdown
that could negatively affect the financial condition of our customers;
uncertainties and volatility in the global capital markets; political, economic,
military and other risks in countries outside the United States; the impact of
general economic conditions, geopolitical conditions and U.S. trade policies,
legislation, trade disputes, treaties and tariffs, including those affecting
China, on the Company's business operations; risks associated with the improper
conduct by any of our employees, customers, suppliers, distributors or any other
business partners which could impair our business reputation and financial
results and could result in our non-compliance with anti-corruption laws and
regulations of the U.S. government and various foreign jurisdictions; changes in
exchange rates of the various currencies in which the Company conducts business;
the Company's ability to obtain a consistent supply of materials, at stable
pricing levels; the Company's dependence on sales to the communications
industry, which markets are dominated by large manufacturers and operators who
regularly exert significant pressure on suppliers, including the Company;
changes in defense expenditures in the military market, including the impact of
reductions or changes in the defense budgets of U.S. and foreign governments;
the Company's ability to compete successfully on the basis of technology
innovation, product quality and performance, price, customer service and
delivery time; the Company's ability to continue to conceive, design,
manufacture and market new products and ability to rely upon continuing market
acceptance of its existing and future product lines; difficulties and
unanticipated expenses in connection with purchasing and integrating newly
acquired businesses, including the potential for the impairment of goodwill and
other intangible assets; events beyond the Company's control that could lead to
an inability to meet its financial covenants, which could result in a default
under the Company's revolving credit facility; the Company's ability to access
the capital markets on favorable terms, including as a result of significant
deterioration of general economic or capital market conditions, or as a result
of a downgrade in the Company's credit rating; changes in interest rates;
government contracting risks that the Company may be subject to, including laws
and regulations governing performance of U.S. government contracts and related
risks associated with conducting business with the U.S. government or its
suppliers (both directly and indirectly); governmental export and import
controls that certain of our products may be subject to, including export
licensing, customs regulations, economic sanctions or other laws; cybersecurity
threats, malware, phishing, ransomware or other increasingly sophisticated
attacks, that could impair our information technology systems and could disrupt
business operations, result in a loss of or inability to access confidential
information and critical business, financial or other data, and/or cause the
release of highly sensitive confidential information and adversely impact our
reputation and operating results and potentially lead to litigation and/or
governmental investigations and fines; changes in fiscal and tax policies,
audits and examinations by taxing authorities, laws, regulations and guidance in
the United States and foreign jurisdictions; any difficulties in protecting the
Company's intellectual property rights; and litigation, customer claims, product
recalls, governmental investigations, criminal liability or environmental
matters including changes to laws and regulations to which the Company may be
subject. In addition, the extent to which the COVID-19 pandemic will continue to
impact our business and financial results going forward will be dependent on
future developments such as the length and severity of the crisis, any potential
resurgence of the crisis including from the more transmissible Delta variant
strain and any future strains that may arise, future government regulations and
actions in response to the crisis, the timing, availability, effectiveness and
adoption rates of vaccines, and the overall impact of the COVID-19 pandemic on
the global economy and capital markets, among many other factors, all of which
remain highly uncertain and unpredictable.



A further description of these uncertainties and other risks can be found in the
Company's Annual Report on Form 10-K for the year ended December 31, 2020,
Quarterly Reports on Form 10-Q and the Company's other reports filed with the
Securities and Exchange Commission. These or other uncertainties may cause the
Company's actual future results to be materially different from those expressed
in any forward-looking statements. The Company undertakes no obligation to
update or revise any forward-looking statements except as required by law.

Impact of COVID-19 on our Operations, Financial Condition, Liquidity and Results of Operations




The COVID-19 pandemic caused widespread disruptions to our Company during 2020,
particularly during the first half of that year, and as of September 30, 2021,
we continue to experience some disruptions, and at a minimum, we

                                       28

Table of Contents

expect those disruptions to continue through the fourth quarter of 2021 and they
could, potentially, extend into 2022 and beyond. These disruptions have included
and may continue to include, depending on the specific location, government
regulations that inhibit our ability to operate certain of our facilities in the
ordinary course and to adjust certain costs, travel restrictions, supplier
constraints, supply-chain interruptions, logistics challenges and limitations,
and reduced demand from certain customers. In 2021, there have been resurgences
in COVID-19 cases in several regions around the world. The extent to which the
COVID-19 pandemic will continue to impact our business and financial results
going forward will be dependent on future developments such as the length and
severity of the crisis, any potential resurgence of the crisis including from
the more transmissible Delta variant strain and any future strains that may
arise, future government regulations and actions in response to the crisis, the
timing, availability, effectiveness and adoption rates of vaccines, and the
overall impact of the COVID-19 pandemic on the global economy and capital
markets, among many other factors, all of which remain highly uncertain and
unpredictable. In addition, the COVID-19 pandemic could impact the health of our
management team and other employees. The Company continues taking actions to
mitigate, as best we can, the impact of the COVID-19 pandemic on the health and
well-being of our employees, the communities in which we operate and our
partners, as well as the impact on our operations and business as a whole.
However, there can be no assurance that the COVID-19 pandemic will not have a
material and adverse impact on our operations, financial condition, liquidity
and results of operations.



Results of Operations


Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020




Net sales were $2,818.5 in the third quarter of 2021 compared to $2,323.4 in the
third quarter of 2020, which represented an increase of 21% in U.S. dollars, 20%
in constant currencies and 13% organically, over the respective prior year
period. Net sales were $7,849.5 in the first nine months of 2021 compared to
$6,172.9 in the first nine months of 2020, which represented an increase of 27%
in U.S. dollars, 25% in constant currencies and 19% organically, over the
respective prior year period. The increase in net sales in the third quarter and
first nine months of 2021 was driven primarily by growth in several markets in
the Interconnect Products and Assemblies segment, as described below.



Net sales in the Interconnect Products and Assemblies segment (approximately 96%
of net sales) in the third quarter of 2021 increased 21% in U.S. dollars, 20% in
constant currencies and 13% organically, compared to the third quarter of 2020.
The increase in the third quarter of 2021 was driven by growth in several
markets, in particular by strong growth in the industrial, automotive,
information technology and data communications, and mobile networks markets, and
moderate growth in the military market, along with contributions from the
Company's acquisition program, all of which were slightly offset by a decline in
the mobile devices market. Net sales in the Interconnect Products and Assemblies
segment (approximately 96% of net sales) in the first nine months of 2021
increased 27% in U.S. dollars, 25% in constant currencies and 19% organically,
compared to the first nine months of 2020. The increase in the first nine months
of 2021 was driven by growth in most of our markets, in particular by strong
growth in the automotive, industrial, information technology and data
communications, and military markets, and moderate growth in the mobile devices
and mobile networks markets, along with contributions from the Company's
acquisition program, all of which were slightly offset by a significant decline
in the commercial aerospace market, which continued to be negatively impacted by
the COVID-19 pandemic. The strong sales growth for the first nine months of 2021
in the Interconnect Products and Assemblies segment also reflected a recovery in
certain markets from the negative impact resulting from the COVID-19 pandemic
during the first nine months of 2020.



Net sales in the Cable Products and Solutions segment (approximately 4% of net
sales) in the third quarter of 2021, which primarily serves the broadband
communications market, increased 18% in U.S. dollars, 17% in constant currencies
and 11% organically, compared to the third quarter of 2020. Net sales in the
Cable Products and Solutions segment (approximately 4% of net sales) in the
first nine months of 2021 increased 20% in U.S. dollars, 20% in constant
currencies and 15% organically, compared to the first nine months of 2020. The
increase in the third quarter of 2021 was primarily driven by increased demand
from mobile network service providers, as well as the contribution from one
acquisition in this segment that closed during the first quarter of 2021,
partially offset by a reduction in demand from broadband operators. The increase
in the first nine months of 2021 was primarily driven by increased market demand
from broadband operators and mobile network service providers, coupled with the
market recovery from the negative

                                       29

Table of Contents


impact of the COVID-19 pandemic during the first nine months of 2020, as well as
the contribution from one acquisition in this segment that closed during the
first quarter of 2021.



The table below reconciles Constant Currency Net Sales Growth and Organic Net
Sales Growth to the most directly comparable U.S. GAAP financial measures for
the three and nine months ended September 30, 2021 compared to the three and
nine months ended September 30, 2020:




                                                                                      Percentage Growth (relative to same prior year period)


                                                                     Net sales             Foreign              Constant                                 Organic
                                                                     growth in            currency            Currency Net           Acquisition        Net Sales
                                                                 U.S. Dollars (1)        impact (2)         Sales Growth (3)         impact (4)        Growth (3)
Three Months Ended September 30:         2021         2020            (GAAP)             (non-GAAP)            (non-GAAP)            (non-GAAP)  

(non-GAAP)

Net sales:
Interconnect Products and Assemblies   $ 2,699.2    $ 2,221.9          21 %
                 1 %                   20 %                  7 %                 13 %
Cable Products and Solutions               119.3        101.5          18 %                  1 %                   17 %                  6 %                 11 %
Consolidated                           $ 2,818.5    $ 2,323.4          21 %                  1 %                   20 %                  7 %                 13 %

Nine Months Ended September 30:
Net sales:
Interconnect Products and Assemblies   $ 7,520.5    $ 5,899.4          27 %
                 2 %                   25 %                  6 %                 19 %
Cable Products and Solutions               329.0        273.5          20 %                  - %                   20 %                  5 %                 15 %
Consolidated                           $ 7,849.5    $ 6,172.9          27 %                  2 %                   25 %                  6 %                 19 %


Net sales growth in U.S. dollars is calculated based on Net sales as reported

in the Condensed Consolidated Statements of Income and Note 14 of the

accompanying financial statements. While the term "net sales growth in U.S. (1) dollars" is not considered a U.S. GAAP financial measure, for purposes of

this table, we derive the reported (GAAP) measure based on GAAP results,

which serves as the basis for the reconciliation to its comparable non-GAAP

    financial measures.


    Foreign currency translation impact, a non-GAAP measure, represents the

percentage impact on net sales resulting from foreign currency exchange rate

changes in the current reporting period(s) compared to the same period(s) in (2) the prior year. Such amount is calculated by subtracting current year net

sales translated at average foreign currency exchange rates for the

respective prior year period(s) from current year reported net sales, taken

as a percentage of the respective prior period net sales.

(3) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP

financial measures as defined in the "Non-GAAP Financial Measures" section.

Acquisition impact, a non-GAAP measure, represents the percentage impact on

net sales resulting from acquisitions that have closed during the prior (4) twelve months that have not been included in the Company's consolidated

results for the full current period(s) and/or prior comparable period(s)

presented. Such net sales related to these acquisitions do not reflect the

    underlying growth of the Company on a comparative basis.




Geographically, sales in the United States in the third quarter of 2021
increased 24% in U.S. dollars ($830.0 in 2021 versus $668.8 in 2020) and 14%
organically, compared to the third quarter of 2020. Sales in the United States
in the first nine months of 2021 increased 23% in U.S. dollars ($2,283.0 in 2021
versus $1,854.0 in 2020) and 15% organically, compared to the first nine months
of 2020. Foreign sales in the third quarter of 2021 increased 20% in U.S.
dollars ($1,988.5 in 2021 versus $1,654.6 in 2020), 18% in constant currencies
and 13% organically, compared to the third quarter of 2020. Foreign sales in the
first nine months of 2021 increased 29% in U.S. dollars ($5,566.5 in 2021 versus
$4,318.9 in 2020), 25% in constant currencies and 21% organically, compared to
the first nine months of 2020. The comparatively weaker U.S. dollar for the
third quarter and first nine months of 2021 had the effect of increasing sales
by approximately $31.7 and $162.1, respectively, relative to the comparable
periods in 2020.



Selling, general and administrative expenses increased to $318.7, or 11.3% of
net sales, and $893.0, or 11.4% of net sales, for the third quarter and first
nine months of 2021, respectively, compared to $259.1, or 11.2% of net sales,
and $748.4, or 12.1% of net sales, for the third quarter and first nine months
of 2020, respectively. The decrease in selling, general and administrative
expenses as a percentage of net sales in the first nine months of 2021 is
primarily driven by higher sales during the first nine months of 2021, relative
to the comparable period of 2020 which was more negatively impacted by the
COVID-19 pandemic, slightly offset by the impact of the MTS Sensors business
which currently has higher selling, general and administrative expenses as a
percentage of net sales compared to the average of the Company. Administrative
expenses represented approximately 4.6% and 4.5% of net sales for the third
quarter and first nine months of 2021, respectively, and represented
approximately 4.4% and 4.8% of net sales for the third quarter and first nine
months of 2020, respectively. Research and development expenses represented
approximately 2.9% and 3.0% of net sales for the third quarter and first nine
months of 2021, respectively, and represented approximately 3.0% and 3.1% of net
sales for the third quarter and first nine months of 2020, respectively. Selling
and marketing expenses represented approximately 3.8% and 3.9% of net sales for
the third quarter and first nine months of 2021, respectively,

                                       30

Table of Contents

and represented approximately 3.7% and 4.2% of net sales for the third quarter and first nine months of 2020, respectively.

Operating income was $571.2, or 20.3% of net sales, and $1,512.2, or 19.3% of
net sales, for the third quarter and first nine months of 2021, respectively,
compared to $475.8, or 20.5% of net sales, and $1,150.1, or 18.6% of net sales,
for the third quarter and first nine months of 2020, respectively. Operating
income for the first nine months of 2021 included $55.4 of acquisition-related
expenses (separately presented in the Condensed Consolidated Statements of
Income) primarily comprised of transaction, severance, restructuring and certain
non-cash costs related to the acquisition of MTS Systems Corporation ("MTS").
For the nine months ended September 30, 2021, these acquisition-related expenses
had the effect of decreasing net income from continuing operations by $44.6, or
$0.07 per share. Excluding the effect of these acquisition-related expenses,
Adjusted Operating Income and Adjusted Operating Margin, as defined in the
"Non-GAAP Financial Measures" section below, were $1,567.6, or 20.0% of net
sales, for the nine months ended September 30, 2021. The increase in Adjusted
Operating Income and Adjusted Operating Margin for the first nine months of 2021
relative to the comparable period in 2020 was primarily driven by the
Interconnect Products and Assemblies segment, as discussed further below.



Operating income for the Interconnect Products and Assemblies segment for the
third quarter and first nine months of 2021 was $603.3, or 22.4% of net sales,
and $1,652.3, or 22.0% of net sales, respectively, compared to $498.4, or 22.4%
of net sales, and $1,217.6, or 20.6% of net sales, for the third quarter and
first nine months of 2020, respectively. The increase in operating margin for
the Interconnect Products and Assemblies segment for the first nine months of
2021 relative to the comparable period in 2020 was primarily driven by normal
operating leverage on the higher sales volumes combined with the benefit of a
lower cost impact resulting from the COVID-19 pandemic compared to the first
nine months of 2020, partially offset by the impact of the more challenging
commodity and supply chain environment experienced to date in 2021.



Operating income for the Cable Products and Solutions segment for the third
quarter and first nine months of 2021 was $4.6, or 3.8% of net sales, and $20.0,
or 6.1% of net sales, respectively, compared to $10.9, or 10.7% of net sales,
and $25.7, or 9.4% of net sales, for the third quarter and first nine months of
2020, respectively. The decrease in operating margin for the Cable Products and
Solutions segment for the third quarter and first nine months of 2021 relative
to the comparable periods in 2020 is primarily driven by the impact of the more
challenging commodity, logistics and supply chain environment experienced to
date in 2021.



Interest expense for the third quarter and first nine months of 2021 was $29.0
and $86.7, respectively, compared to $28.0 and $87.1 for the third quarter and
first nine months of 2020, respectively. Refer to Note 4 of the Condensed
Consolidated Financial Statements for further information related to the
Company's debt.



Provision for income taxes for the third quarter and first nine months of 2021
was at an effective tax rate of 22.2% and 21.2%, respectively. Provision for
income taxes for the third quarter and first nine months of 2020 was at an
effective tax rate of 22.1% and 20.0%, respectively. For the third quarter and
first nine months of 2021 and 2020, the excess tax benefits resulting from stock
option exercise activity had the impact of decreasing the effective tax rate and
increasing earnings per share by the amounts noted in the tables below. For the
first nine months of 2021, the effective tax rate was further impacted by the
tax effect of acquisition-related expenses and the discrete tax benefit related
to the settlement of uncertain tax positions in certain non-U.S. jurisdictions,
each of which had the impact on the effective tax rate and earnings per share by
the amounts noted in the tables below. For the first nine months of 2020, the
effective tax rate was also impacted by a discrete tax benefit related to the
settlements of refund claims in a non-U.S. jurisdiction and the resulting
adjustments to deferred taxes, which had the impact of decreasing the effective
tax rate and increasing earnings per share by the amounts noted in the tables
below. Excluding the effect of these items, the Adjusted Effective Tax Rate, a
non-GAAP financial measure as defined in the "Non-GAAP Financial Measures"
section below within this Item 2, for the three and nine months ended September
30, 2021 and 2020 was 24.5% for all periods, as reconciled in the tables below
to the comparable effective tax rate based on GAAP results. Refer to Note 6 of
the Condensed Consolidated Financial Statements for further information related
to income taxes.


Net income from continuing operations attributable to Amphenol Corporation and Net income (from continuing operations) per common share attributable to Amphenol Corporation - Diluted ("Diluted EPS") were $418.8 and $0.67,


                                       31

Table of Contents

respectively, for the third quarter of 2021, compared to $346.6 and $0.56,
respectively, for the third quarter of 2020. Excluding the effect of the
aforementioned items discussed above, Adjusted Net Income from continuing
operations attributable to Amphenol Corporation and Adjusted Diluted EPS,
non-GAAP financial measures as defined in the "Non-GAAP Financial Measures"
section below within this Item 2, were $406.5 and $0.65, respectively, for the
third quarter of 2021, compared to $335.9 and $0.55, respectively, for the third
quarter of 2020. Net income from continuing operations attributable to Amphenol
Corporation and Diluted EPS were $1,115.5 and $1.79, respectively, for the first
nine months of 2021, compared to $846.4 and $1.38, respectively, for the first
nine months of 2020. Excluding the effect of the aforementioned items discussed
above, Adjusted Net Income from continuing operations attributable to Amphenol
Corporation and Adjusted Diluted EPS were $1,110.9 and $1.78, respectively, for
the first nine months of 2021, compared to $798.4 and $1.30, respectively, for
the first nine months of 2020.



The following tables reconcile Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Net Income from continuing operations attributable to Amphenol
Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a
continuing operations basis only, as defined in the "Non-GAAP Financial
Measures" section below) to the most directly comparable U.S. GAAP financial
measures for the three and nine months ended September 30, 2021 and 2020:




                                                                               Three Months Ended September 30,
                                                         2021                                                                    2020
                                                        Net Income                                                             Net Income
                                                       attributable     Effective                                             attributable     Effective
                           Operating     Operating      to Amphenol        Tax       Diluted      Operating     Operating      to Amphenol        Tax        Diluted
                            Income       Margin (1)     Corporation     Rate (1)       EPS         Income       Margin (1)     Corporation     Rate (1)        EPS
Reported (GAAP)           $     571.2          20.3 %  $       418.8         22.2 %  $   0.67    $     475.8          20.5 %  $       346.6         22.1 %  $    0.56
Excess tax benefits
related to stock-based
compensation                        -             -           (12.3)          2.3      (0.02)              -             -           (10.7)          2.4       (0.02)
Adjusted (non-GAAP) (2)   $     571.2          20.3 %  $       406.5         24.5 %  $   0.65    $     475.8          20.5 %  $       335.9         24.5 %  $    0.55







                                                                               Nine Months Ended September 30,
                                                         2021                                                                   2020
                                                        Net Income                                                             Net Income
                                                       attributable     Effective                                             attributable     Effective
                           Operating     Operating      to Amphenol       

Tax Diluted Operating Operating to Amphenol Tax

     Diluted
                            Income       Margin (1)     Corporation     Rate (1)       EPS         Income       Margin (1)     Corporation     Rate (1)       EPS
Reported (GAAP)           $   1,512.2          19.3 %  $     1,115.5         21.2 %  $   1.79    $   1,150.1          18.6 %  $       846.4         20.0 %  $   1.38
Acquisition-related
expenses                         55.4           0.7             44.6        (0.2)        0.07              -             -                -            -           -
Excess tax benefits
related to stock-based
compensation                        -             -           (34.3)          2.4      (0.05)              -             -           (28.1)          2.6      (0.05)
Discrete tax item                   -             -           (14.9)          1.0      (0.02)              -             -           (19.9)          1.9      (0.03)
Adjusted (non-GAAP) (2)   $   1,567.6          20.0 %  $     1,110.9         24.5 %  $   1.78    $   1,150.1          18.6 %  $       798.4         24.5 %  $   1.30

Note: All data in the tables above are on a continuing operations basis only and exclude results associated with discontinued operations.

While the terms "operating margin" and "effective tax rate" are not (1) considered U.S. GAAP financial measures, for purposes of this table, we

derive the reported (GAAP) measures based on GAAP results, which serve as the

basis for the reconciliation to their comparable non-GAAP financial measures.

All percentages and per share amounts in this table were calculated using (2) actual, unrounded results; therefore, the sum of the components may not add

    due to rounding.




Discontinued Operations



Following the acquisition of MTS, the Company concluded that the MTS T&S
business met the discontinued operations reporting criteria as of the MTS
acquisition date of April 7, 2021 in light of our definitive agreement to sell
the MTS T&S business to ITW. As a result, the financial results of the MTS T&S
business are reported as discontinued operations for the three and nine months
ended September 30, 2021. Income from discontinued operations attributable to
Amphenol Corporation, net of income taxes, was $7.7 and $10.3 for the third
quarter and first nine months of 2021, respectively. Income from discontinued
operations relates to the results associated with the MTS T&S business that was
acquired as part of the MTS acquisition. The Company will continue to account
for the MTS T&S business as discontinued operations until the business is sold
to ITW upon the receipt of all required regulatory approvals and the
satisfaction of other customary closing conditions, which we expect to occur
within one year of the date of the acquisition of MTS. The Company will incur
certain transaction fees and other professional and external costs

                                       32

Table of Contents

associated with the planned sale of the MTS T&S business. Refer to Note 12 of
the Notes to Condensed Consolidated Financial Statements for further details
related to the planned divestiture of the MTS T&S business.



Liquidity and Capital Resources

As of September 30, 2021 and December 31, 2020, the Company had cash, cash
equivalents and short-term investments of $1,302.5 and $1,738.1, respectively,
with the majority of such funds located outside of the United States. On April
7, 2021, the Company used a combination of cash and cash equivalents on hand and
borrowings under its U.S. Commercial Paper Program (defined below) to fund
the
acquisition of MTS.



As a result of the U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Act"), on
December 31, 2017, the Company indicated an intention to repatriate most of its
pre-2018 accumulated earnings and recorded the foreign and U.S. state and local
tax costs related to the repatriation. The associated tax payments are due as
the repatriations are made. The Company intends to distribute certain post-2017
foreign earnings and has accrued foreign and U.S. state and local taxes, if
applicable, on those earnings as appropriate as of September 30, 2021, and
intends to indefinitely reinvest all remaining post-2017 foreign earnings. The
Company intends to evaluate future earnings for distribution, and accrue for
those distributions where appropriate, and to indefinitely reinvest all other
foreign earnings. In addition, the Transition Tax on the deemed repatriation of
the accumulated unremitted earnings and profits of foreign subsidiaries will be
paid, net of applicable tax credits and deductions, in annual installments until
2025, as permitted under the Tax Act.



The Company's primary sources of liquidity are internally generated cash flow,
our cash, cash equivalents and short-term investments on hand, the Commercial
Paper Programs and the Revolving Credit Facility (each as defined and discussed
further within this Item 2).  The Company believes that its cash, cash
equivalents and short-term investment position on hand, ability to generate
future cash flow from operations, availability under its credit facilities, and
access to capital markets (including the recent issuance of the Company's $750.0
principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the
"2031 Senior Notes") in September 2021, as well as recent borrowings under the
U.S. Commercial Paper Program that were used to both partially fund the
acquisition of MTS and to redeem in full the Company's 3.125% Senior Notes due
September 15, 2021 (the "3.125% Senior Notes")), provide adequate liquidity to
meet its obligations for at least the next twelve months.



The Company's primary ongoing cash requirements will be for operating and
capital expenditures, product development activities, repurchases of its Common
Stock, dividends, debt service, payments associated with the Transition Tax
(which is payable in annual installments until 2025), taxes due upon the
repatriation of foreign earnings (which will be payable upon the repatriation of
such earnings), and funding of pension obligations. The Company's debt service
requirements consist primarily of principal and interest on the Company's Senior
Notes, and to the extent of any amounts outstanding, the Revolving Credit
Facility and the Commercial Paper Programs (all as defined below). The Company
may also use cash to fund all or part of the cost of acquisitions, as was the
case with the recent acquisition of MTS.



Cash Flow Summary


The following table summarizes the Company's cash flows from operating, investing and financing activities for the nine months ended September 30, 2021 and 2020, as reflected in the Condensed Consolidated Statements of Cash Flow:





                                                             Nine Months Ended September 30,
                                                                 2021       

2020

Net cash provided by operating activities from continuing
operations                                                   $    1,060.4  

$ 1,151.0 Net cash used in investing activities from continuing operations

                                                      (1,810.0)              (262.5)

Net cash provided by (used in) financing activities from continuing operations

                                               438.4              (384.2)
Net cash change from discontinued operations                          4.3                    -
Effect of exchange rate changes on cash and cash
equivalents                                                        (15.5)                 25.0

Net (decrease) increase in cash and cash equivalents $ (322.4)

   $         529.3




                                       33

  Table of Contents

Due to the immateriality of the Company's discontinued operations associated
with the MTS T&S business discussed in Note 12 of the Notes to Condensed
Consolidated Financial Statements, the following discussion related to the
Company's cash flows is on a continuing operations basis only, unless otherwise
noted.



Operating Activities



The ability to generate cash from operating activities is one of the Company's
fundamental financial strengths. Net cash provided by operating activities from
continuing operations ("Operating Cash Flow") was $1,060.4 in the first nine
months of 2021 compared to $1,151.0 in the first nine months of 2020.  The
decrease in Operating Cash Flow for the first nine months of 2021 compared to
the first nine months of 2020 is primarily due to a higher usage of cash related
to the change in working capital, partially offset by an increase in net income
from continuing operations.



In the first nine months of 2021, the components of working capital as presented
on the accompanying Condensed Consolidated Statements of Cash Flow increased
$414.1, excluding the impact of acquisitions and foreign currency translation,
primarily due to increases in inventories of $358.3, accounts receivable of
$186.9 and prepaid expenses and other current assets of $50.5, partially offset
by increases in accounts payable of $152.9 and accrued liabilities, including
income taxes, of $28.7. In the first nine months of 2020, the components of
working capital as presented on the accompanying Condensed Consolidated
Statements of Cash Flow decreased $38.6, excluding the impact of acquisitions
and foreign currency translation, due to increases in accounts payable of $191.7
and accrued liabilities, including income taxes, of $80.6, partially offset by
increases in accounts receivable of $126.4, inventories of $65.2, and prepaid
expenses and other current assets of $42.1.



The following describes the significant changes in the amounts as presented on
the accompanying Condensed Consolidated Balance Sheets at September 30, 2021 as
compared to December 31, 2020. Accounts receivable increased $252.9 to $2,204.5,
primarily due to higher sales in the third quarter of 2021 relative to the
fourth quarter of 2020, along with the impact of the MTS acquisition and the
other five acquisitions (collectively, the "2021 acquisitions") that closed
during the first nine months of 2021, partially offset by the effect of
translation from exchange rate changes ("Translation") at September 30, 2021
compared to December 31, 2020. Days sales outstanding at September 30, 2021 and
December 31, 2020 were 70 days and 72 days, respectively. Inventories increased
$490.3 to $1,952.5, primarily due to higher sales in addition to the impact of
recent supply chain disruptions experienced during the first nine months of
2021, along with the impact of our 2021 acquisitions, which carry more days of
inventory than the Company average, partially offset by Translation. Inventory
days at September 30, 2021 and December 31, 2020 were 91 days and 79 days,
respectively. Prepaid expenses and other current assets increased $53.2 to
$392.1, primarily due to increases in certain prepaid expenses and other current
receivables as well as the impact of the 2021 acquisitions. Property, plant and
equipment, net, increased $120.8 to $1,175.4, primarily due to capital
expenditures of $274.2 and the impact of the 2021 acquisitions, partially offset
by depreciation of $208.9 and Translation. Goodwill increased $807.3 to
$5,839.4, resulting from goodwill recognized related to the 2021 acquisitions,
primarily from the MTS acquisition, partially offset by Translation. Other
intangible assets, net increased $206.1 to $603.6, primarily due to the
recognition of certain intangible assets related to the 2021 acquisitions,
primarily from the MTS acquisition, partially offset by amortization. Other
long-term assets increased $35.6 to $387.9, primarily due to an increase in
operating lease right-of-use assets resulting from both leases assumed from the
2021 acquisitions as well as new and renewed lease agreements entered into
during the first nine months of 2021. Accounts payable increased $179.3 to
$1,300.0, primarily due to increased purchasing activity related to higher sales
levels, along with the impact of the 2021 acquisitions, partially offset by
Translation. Payable days at September 30, 2021 and December 31, 2020 were 61
days. Total accrued expenses, including accrued income taxes, increased $125.6
to $1,078.9, primarily as a result of the MTS acquisition and the other 2021
acquisitions, along with an increase in accrued salaries and wages and other
accrued expenses, partially offset by a decrease in accrued income taxes,
primarily resulting from certain tax payments. Other long-term liabilities,
including deferred tax liabilities, increased $154.5 to $860.8, primarily as a
result of an increase in deferred tax liabilities resulting from the MTS
acquisition.



There is no current requirement for cash contributions to any of the Company's
defined benefit pension plans in the U.S., and the Company plans to evaluate
annually, based on actuarial calculations and the investment performance of the
pension plans' assets, the timing and amount of cash contributions in the
future, as discussed in more detail in Note 10 of the Notes to Condensed
Consolidated Financial Statements.

                                       34

  Table of Contents



In addition to cash flow from operating activities, the Company also considers
Free Cash Flow, a non-GAAP financial measure defined in the "Non-GAAP Financial
Measures" section below, as a key metric in measuring the Company's ability to
generate cash. The following table reconciles Free Cash Flow to its most
directly comparable U.S. GAAP financial measure for the nine months ended
September 30, 2021 and 2020. The decrease in Free Cash Flow was primarily driven
by a decrease in Operating Cash Flow, as described above, and to a lesser
extent, an increase in capital expenditures. The following table is on a
continuing operations basis only and excludes any cash flows related to
discontinued operations:




                                                              Nine Months Ended September 30,
                                                                 2021                  2020
Operating Cash Flow (GAAP)                                 $        1,060.4      $        1,151.0
Capital expenditures (GAAP)                                         (274.2)               (204.8)
Proceeds from disposals of property, plant and
equipment (GAAP)                                                        2.4                  10.8
Free Cash Flow (non-GAAP)                                  $          788.6      $          957.0




Investing Activities



Cash flows from investing activities consist primarily of cash flows associated
with capital expenditures, proceeds from disposals of property, plant and
equipment, net sales and maturities (purchases) of short-term investments,
and
acquisitions.



Net cash used in investing activities from continuing operations was $1,810.0 in
the first nine months of 2021, compared to $262.5 in the first nine months of
2020. In the first nine months of 2021, net cash used in investing activities
from continuing operations was driven primarily by the use of $1,531.0 to fund
acquisitions and capital expenditures (net of disposals) of $271.8, partially
offset by net sales and maturities of short-term investments of $1.3. In the
first nine months of 2020, net cash used in investing activities was driven
primarily by capital expenditures (net of disposals) of $194.0, the use of $50.3
to fund acquisitions, and net purchases of short-term investments of $18.2.


Financing Activities


Cash flows from financing activities consist primarily of cash flows associated with borrowings and repayments of the Company's credit facilities and other long-term debt, repurchases of Common Stock, proceeds from stock option exercises, dividend payments, and distributions to and purchases of noncontrolling interests.




Net cash provided by financing activities from continuing operations was $438.4
in the first nine months of 2021, compared to net cash used in financing
activities from continuing operations of $384.2 in the first nine months of
2020. For the first nine months of 2021, net cash provided by financing
activities from continuing operations was driven primarily by (i) net borrowings
of $925.0 primarily under the U.S. Commercial Paper Program, the majority of the
proceeds of which were used for the MTS acquisition and to redeem the 3.125%
Senior Notes, (ii) net cash proceeds of $749.9, primarily related to the
September 2021 issuance of the 2031 Senior Notes, and (iii) cash proceeds of
$180.9 from the exercise of stock options, partially offset by (a) debt
repayments of $616.2, primarily related to the repayment of the assumed
outstanding MTS senior notes in the second quarter of 2021 as well as the
redemption of the 3.125% Senior Notes in the third quarter of 2021, (b)
repurchases of the Company's Common Stock of $491.0, (c) dividend payments of
$260.0, (d) cash transfer of $28.7 made by the Company's continuing operations
to its discontinued operations in order to fund the September 2021 payment of
contingent consideration assumed as part of MTS's acquisition accounting, (e)
distributions to and purchases of noncontrolling interests of $11.3, (f)
payments of $6.1 related to debt financing costs associated with the 2031 Senior
Notes, and (g) payments of $4.1 associated with the deferred purchase price
related to acquisitions. For the first nine months of 2020, net cash used in
financing activities was driven primarily by (i) repurchases of the Company's
Common Stock of $459.2, (ii) debt repayments of $402.9 related to the Company's
2.20% U.S. Senior Notes due April 2020 and other debt, (iii) net repayments of
$385.9 related to the Company's commercial paper programs, (iv) dividend
payments of $223.0, (v) payment of $75.0 related to acquisition-related
contingent consideration, (vi) payment of $16.2 associated with the deferred
purchase price related to an acquisition, (vii) distributions to and purchases
of noncontrolling interests of $11.5, (viii) payments of $8.7 related to

                                       35

Table of Contents


debt financing costs primarily associated with the 2025 Senior Notes and 2026
Euro Notes (each as defined below), and (ix) net repayments of $0.7 under the
Company's credit facilities, partially offset by the (a) net cash proceeds of
$942.3 from both the February 2020 issuance of the 2025 Senior Notes and the May
2020 issuance of the 2026 Euro Notes and (b) cash proceeds of $256.6 from the
exercise of stock options.


The Company has significant flexibility to meet its financial commitments. The
Company uses debt financing to lower the overall cost of capital and increase
return on stockholders' equity. The Company's debt financing includes the use of
commercial paper programs, the Revolving Credit Facility and senior notes as
part of its overall cash management strategy.



The Company has a $2,500.0 unsecured credit facility (the "Revolving Credit
Facility"), which matures January 2024 and gives the Company the ability to
borrow, in various currencies, at a spread over LIBOR. The Company may utilize
the Revolving Credit Facility for general corporate purposes. As of September
30, 2021 and December 31, 2020, there were no outstanding borrowings under the
Revolving Credit Facility. The Revolving Credit Facility requires payment of
certain annual agency and commitment fees and requires that the Company satisfy
certain financial covenants. At September 30, 2021, the Company was in
compliance with the financial covenants under the Revolving Credit Facility.



Pursuant to the terms of the U.S. commercial paper program, the Company may
issue short-term unsecured commercial paper notes (the "USCP Notes") in one or
more private placements in the United States (the "U.S. Commercial Paper
Program"). The maximum aggregate principal amount outstanding of USCP Notes at
any time is $2,500.0. On April 7, 2021, a combination of borrowings under the
U.S. Commercial Paper Program and cash and cash equivalents on hand were used to
fund the acquisition of MTS Systems Corporation. In addition, in the third
quarter of 2021, the Company used borrowings under the U.S. Commercial Paper
Program to redeem the 3.125% Senior Notes, of which $227.7 aggregate principal
amount was outstanding. The amount of USCP Notes outstanding as of September 30,
2021 was $924.3, with a weighted average interest rate of 0.19%. As of December
31, 2020, there were no USCP Notes outstanding.



The Company and one of its wholly owned European subsidiaries (collectively, the
"Euro Issuer") also has a commercial paper program (the "Euro Commercial Paper
Program" and, together with the U.S. Commercial Paper Program, the "Commercial
Paper Programs") pursuant to which the Euro Issuer may issue short-term
unsecured commercial paper notes (the "ECP Notes" and, together with the USCP
Notes, "Commercial Paper"), which are guaranteed by the Company and are to be
issued outside of the United States.  The ECP Notes may be issued in Euros,
Sterling, U.S. dollars or other currencies. The maximum aggregate principal
amount outstanding of ECP Notes at any time is $2,000.0. As of September 30,
2021 and December 31, 2020, there were no ECP Notes outstanding.



Amounts available under the Commercial Paper Programs may be borrowed, repaid
and re-borrowed from time to time. In conjunction with the Revolving Credit
Facility, the authorization from the Company's Board of Directors limits the
maximum principal amount outstanding of USCP Notes, ECP Notes, and any other
commercial paper or similar programs, along with outstanding amounts under the
Revolving Credit Facility, at any time to $2,500.0 in the aggregate. The
Commercial Paper Programs are rated A-2 by Standard & Poor's and P-2 by Moody's
and are currently backstopped by the Revolving Credit Facility, as amounts
undrawn under the Company's Revolving Credit Facility are available to repay
Commercial Paper, if necessary. Net proceeds of the issuances of Commercial
Paper are expected to be used for general corporate purposes. The Company
reviews its optimal mix of short-term and long-term debt regularly and may
replace certain amounts of Commercial Paper, short-term debt and current
maturities of long-term debt with new issuances of long-term debt in the future.



                                       36

  Table of Contents

As of September 30, 2021, the Company has outstanding senior notes (the "Senior
Notes") as follows:




 Principal    Interest
  Amount        Rate              Maturity
$     295.0       4.00 %        February 2022
      350.0       3.20 %         April 2024
      400.0      2.050 %         March 2025
      500.0      4.350 %          June 2029
      900.0       2.80 %        February 2030
      750.0      2.200 %       September 2031

€     500.0      0.750 %    May 2026 (Euro Notes)
      500.0       2.00 %  October 2028 (Euro Notes)



On September 14, 2021, the Company issued the 2031 Senior Notes at 99.634% of face value. The Company used the net proceeds from the 2031 Senior Notes to repay certain outstanding borrowings under the U.S. Commercial Paper Program.




On February 20, 2020, the Company issued $400.0 principal amount of unsecured
2.050% Senior Notes due March 1, 2025 at 99.829% of face value (the "2025 Senior
Notes"). On April 1, 2020, the Company used the net proceeds from the 2025
Senior Notes to repay the $400.0 principal amount of unsecured 2.20% Senior
Notes due April 1, 2020 upon maturity.



All of the Company's outstanding senior notes in the United States (the "U.S.
Senior Notes") are unsecured and rank equally in right of payment with the
Company's other unsecured senior indebtedness. Interest on each series of U.S.
Senior Notes is payable semiannually. The Company may, at its option, redeem
some or all of any series of U.S. Senior Notes, subject to certain terms and
conditions. The remaining principal amount outstanding associated with the
Company's 4.00% Senior Notes ("2022 Senior Notes") due in February 2022 is
recorded, net of the related unamortized discount and debt issuance costs,
within Current portion of long-term debt in the accompanying Condensed
Consolidated Balance Sheets as of September 30, 2021. On October 1, 2021, the
Company issued a notice of full redemption to the holders of the 2022 Senior
Notes, which will be redeemed at par value on November 1, 2021.



On May 4, 2020, the Euro Issuer issued €500.0 (approximately $545.4 at date of
issuance) principal amount of unsecured 0.750% Senior Notes due May 4, 2026 at
99.563% of face value (the "2026 Euro Notes" or the "0.750% Euro Senior Notes"
and collectively with the Euro Notes due October 2028, the "Euro Notes"). The
Company used the net proceeds from the 2026 Euro Notes to repay amounts
outstanding under the Revolving Credit Facility.



The Euro Notes are unsecured and rank equally in right of payment with the Euro
Issuer's other unsecured senior indebtedness, and are fully and unconditionally
guaranteed on a senior unsecured basis by the Company. Interest on each series
of the Euro Notes is payable annually. The Company may, at its option, redeem
some or all of any series of Euro Notes, subject to certain terms and
conditions.



The Company's Senior Notes contain certain financial and non-financial covenants. Refer to Note 4 of the Condensed Consolidated Financial Statements for further information related to the Company's debt.




In April 2018, the Company's Board of Directors authorized a stock repurchase
program under which the Company could purchase up to $2,000.0 of the Company's
Common Stock during the three-year period ending April 24, 2021 (the "2018 Stock
Repurchase Program") in accordance with the requirements of Rule 10b-18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). During the
first nine months of 2021, the Company repurchased 3.1 million shares of its
Common Stock for $203.8 under the 2018 Stock Repurchase Program. As a result of
these purchases, the Company completed all purchases authorized under the 2018
Stock Repurchase Program and, therefore, the 2018 Stock Repurchase Program has
terminated. Of the total repurchases made during the first nine months of 2021,
0.3 million shares, or $19.8, were retained in Treasury stock at the time of
repurchase; the remaining 2.8 million shares, or $184.0, were retired by the
Company. During the three and nine months ended September 30, 2020, the Company
repurchased 3.7 million and 9.1 million shares of its Common Stock for $201.9
and $459.2, respectively, under the 2018 Stock

                                       37

Table of Contents


Repurchase Program. Of the total repurchases made during the first nine months
of 2020, 2.0 million shares, or $110.3, were retained in Treasury stock at the
time of repurchase; the remaining 7.1 million shares, or $348.9, were retired by
the Company.


On April 27, 2021, the Company's Board of Directors authorized a new stock
repurchase program under which the Company may purchase up to $2,000.0 of the
Company's Common Stock during the three-year period ending April 27, 2024 (the
"2021 Stock Repurchase Program") in accordance with the requirements of Rule
10b-18 of the Exchange Act. During the three and nine months ended September 30,
2021, the Company repurchased 2.3 million and 4.1 million shares of its Common
Stock for $170.9 and $287.2, respectively, under the 2021 Stock Repurchase
Program. All of the shares repurchased under the 2021 Stock Repurchase Program
during the nine months ended September 30, 2021 have been or will be retired by
the Company. From October 1, 2021 to October 26, 2021, the Company repurchased
0.6 million additional shares of its Common Stock for $46.1 under the 2021 Stock
Repurchase Program, and has remaining authorization to purchase up to $1,666.6
of its Common Stock under the 2021 Stock Repurchase Program. The price and
timing of any future purchases under the 2021 Stock Repurchase Program will
depend on a number of factors such as levels of cash generation from operations,
the volume of stock option exercises by employees, cash requirements for
acquisitions, dividends paid, economic and market conditions and the price of
the Company's Common Stock.



Contingent upon declaration by the Company's Board of Directors, the Company
pays a quarterly dividend on shares of its Common Stock. The following table
summarizes the declared quarterly dividends per share as well as the dividends
declared and paid for the three and nine months ended September 30, 2021 and
2020:




                                                    Three Months Ended         Nine Months Ended
                                                      September 30,             September 30,
                                                    2021          2020        2021          2020
Dividends declared per share                      $   0.145     $   0.125   $   0.435     $   0.375

Dividends declared                                $    86.7     $    74.7   $   259.9     $   223.2
Dividends paid (including those declared in
the prior year)                                        86.6          74.6       260.0         223.0



On October 20, 2020, the Company's Board of Directors approved an increase to
its quarterly dividend rate from $0.125 per share to $0.145 per share effective
with dividends declared in the fourth quarter of 2020, and then on October 26,
2021, approved a further increase to its quarterly dividend rate from $0.145 per
share to $0.20 per share effective with dividends declared in the fourth quarter
of 2021, contingent upon declaration by the Company's Board of Directors.



Acquisitions and Divestitures



During the first nine months of 2021, the Company completed six acquisitions,
all but one of which is included within the Interconnect Products and Assemblies
segment, for approximately $1,531.0, net of cash acquired. These 2021
acquisitions were not material, either individually or in the aggregate, to
the
Company.


Acquisition of MTS and Planned Divestiture of MTS T&S Business




On April 7, 2021, pursuant to a definitive agreement dated December 9, 2020, by
and among the Company and MTS, the Company completed the acquisition of MTS for
a purchase price of approximately $1,300, net of cash acquired and including the
repayment of certain outstanding debt and liabilities at closing. The MTS
acquisition was funded through a combination of borrowings under the U.S.
Commercial Paper Program and cash and cash equivalents on hand. In addition to
the purchase price, the Company also assumed MTS's then-outstanding $350.0
principal amount of senior notes due August 15, 2027, which the Company repaid
and settled shortly after the closing for approximately $387.3, which included
accrued interest and a make-whole premium incurred as a result of the early
extinguishment of the senior notes. MTS is a leading global supplier of
precision sensors, advanced test systems and motion simulators. MTS was
historically organized into two business segments: Sensors ("MTS Sensors") and
Test & Simulation ("MTS T&S"). The MTS Sensors segment represents a highly
complementary offering of high-technology, harsh environment sensors sold into
diverse end markets and applications. The MTS Sensors business further expands
the Company's range of sensor and sensor-based products across a wide array of
industries and is reported as part of our continuing operations and within our
Interconnect Products and Assemblies segment. In the second quarter of 2021, the
Company

                                       38

  Table of Contents

incurred $55.4 ($44.6 after-tax, or $0.07 per diluted share) of acquisition-related expenses, primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the MTS acquisition.




On January 19, 2021 and prior to the closing of the MTS acquisition, the Company
entered into a definitive agreement to sell the MTS T&S business to Illinois
Tool Works Inc. ("ITW"). The agreed-upon sale price is approximately $750,
excluding any outstanding net debt assumed by Amphenol related to the MTS T&S
business and subject to post-closing adjustment. The Company expects to close on
the sale of the MTS T&S business upon the receipt of all required regulatory
approvals and the satisfaction of other customary closing conditions, which is
expected to be within one year of the date of the acquisition of MTS. The MTS
T&S business meets the "held for sale" accounting criteria, and its results and
related cash flows are reported as discontinued operations, effective as of the
MTS acquisition date, in the accompanying Condensed Consolidated Financial
Statements. Such classification as discontinued operations will continue until
the MTS T&S business is sold to ITW as currently anticipated. The Company did
not assign the MTS T&S business to either of our two reportable business
segments due to its planned sale. The Company will incur certain transaction
fees and other professional and external costs associated with the planned sale
of the MTS T&S business. Amphenol will not have any continuing involvement with
the MTS T&S business after the date of its divestiture.



For further discussion of the Company's 2021 acquisitions, including MTS, refer
to Note 11 of the Notes to Condensed Consolidated Financial Statements. For
further details related to the Company's discontinued operations as well as the
planned divestiture of the MTS T&S business, refer to Note 12 of the Notes to
Condensed Consolidated Financial Statements.



Environmental Matters



Certain operations of the Company are subject to environmental laws and
regulations that govern the discharge of pollutants into the air and water, as
well as the handling and disposal of solid and hazardous wastes. The Company
believes that its operations are currently in substantial compliance with
applicable environmental laws and regulations and that the costs of continuing
compliance will not have a material adverse effect on the Company's financial
condition, results of operations or cash flows. For more information on certain
environmental matters, refer to Note 16 of the Notes to Condensed Consolidated
Financial Statements.



Non-GAAP Financial Measures



In addition to assessing the Company's financial condition, results of
operations, liquidity and cash flows in accordance with U.S. GAAP, management
utilizes certain non-GAAP financial measures defined below as part of its
internal reviews for purposes of monitoring, evaluating and forecasting the
Company's financial performance, communicating operating results to the
Company's Board of Directors and assessing related employee compensation
measures. Management believes that these non-GAAP financial measures may be
helpful to investors in assessing the Company's overall financial performance,
trends and period-over-period comparative results, in addition to the reasons
noted below. Non-GAAP financial measures related to operating income, operating
margin, net income from continuing operations attributable to Amphenol
Corporation, effective tax rate and diluted EPS from continuing operations
exclude income and expenses that are not directly related to the Company's
operating performance during the periods presented. Items excluded in the
presentation of such non-GAAP financial measures in any period may consist of,
without limitation, acquisition-related expenses, refinancing-related costs, and
certain discrete tax items including but not limited to (i) the excess tax
benefits related to stock-based compensation and (ii) the impact of significant
changes in tax law. Non-GAAP financial measures related to net sales exclude the
impact of foreign currency exchange rates and acquisitions. Non-GAAP financial
measures and their most directly comparable U.S. GAAP financial measures
presented within this Item 2 are on a continuing operations basis only and
exclude any results associated with discontinued operations. The non-GAAP
financial information contained herein is included for supplemental purposes
only and should not be considered in isolation as a substitute for or superior
to the related U.S. GAAP financial measures. In addition, these non-GAAP
financial measures are not necessarily the same or comparable to similar
measures presented by other companies as such measures may be calculated
differently or may exclude different items.



                                       39

  Table of Contents
The non-GAAP financial measures defined below should be read in conjunction with
the Company's financial statements presented in accordance with U.S. GAAP. The
reconciliations of these non-GAAP financial measures to the most directly
comparable U.S. GAAP financial measures for the three and nine months ended
September 30, 2021 and 2020 are included in "Results of Operations" and
"Liquidity and Capital Resources" within this Item 2:



Adjusted Diluted EPS is defined as diluted earnings per share from continuing

operations (as reported in accordance with U.S. GAAP), excluding income and

expenses and their specific tax effects that are not directly related to the

? Company's operating performance during the periods presented. Adjusted Diluted

EPS is calculated as Adjusted Net Income from continuing operations

attributable to Amphenol Corporation, as defined below, divided by the weighted

average outstanding diluted shares as reported in the Condensed Consolidated

   Statements of Income.




   Adjusted Effective Tax Rate is defined as Provision for income taxes, as

reported in the Condensed Consolidated Statements of Income, expressed as a

? percentage of Income from continuing operations before income taxes, as

reported in the Condensed Consolidated Statements of Income, each excluding

income and expenses and their specific tax effects that are not directly

related to the Company's operating performance during the periods presented.




   Adjusted Net Income from continuing operations attributable to Amphenol

Corporation is defined as Net income from continuing operations attributable to

? Amphenol Corporation, as reported in the Condensed Consolidated Statements of

Income, excluding income and expenses and their specific tax effects that are

not directly related to the Company's operating performance during the periods

   presented.



Adjusted Operating Income is defined as Operating income, as reported in the

? Condensed Consolidated Statements of Income, excluding income and expenses that

are not directly related to the Company's operating performance during the

   periods presented.



Adjusted Operating Margin is defined as Adjusted Operating Income (as defined

? above) expressed as a percentage of Net sales (as reported in the Condensed

   Consolidated Statements of Income).




   Constant Currency Net Sales Growth is defined as the period-over-period

percentage change in net sales growth, excluding the impact of changes in

foreign currency exchange rates. The Company's results are subject to

? volatility related to foreign currency translation fluctuations. As such,

management evaluates the Company's sales performance based on actual sales

growth in U.S. dollars, as well as Organic Net Sales Growth (defined below) and

Constant Currency Net Sales Growth, and believes that such information is

   useful to investors to assess the underlying sales trends.



Free Cash Flow is defined as (i) Net cash provided by operating activities from

continuing operations ("Operating Cash Flow" - as reported in accordance with

U.S. GAAP) less (ii) capital expenditures (as reported in accordance with U.S.

GAAP), net of proceeds from disposals of property, plant and equipment (as

? reported in accordance with U.S. GAAP), all of which are derived from the

Condensed Consolidated Statements of Cash Flow. Free Cash Flow is an important

liquidity measure for the Company, as we believe it is useful for management

and investors to assess our ability to generate cash, as well as to assess how

much cash can be used to reinvest in the growth of the Company or to return to

   shareholders through either stock repurchases or dividends.



Organic Net Sales Growth is defined as the period-over-period percentage change

in net sales growth resulting from operating volume and pricing changes, and

excludes the impact of (i) changes in foreign currency exchange rates

(described above), which is outside the control of the Company, and (ii)

acquisitions, both of which are taken as a percentage of the respective prior

period(s) net sales. The acquisition impact represents the percentage impact on

net sales resulting from acquisitions that have closed during the prior twelve

? months that have not been included in the Company's consolidated results for

the full current period(s) and/or prior comparable period(s) presented. Such

net sales related to these acquisitions do not reflect the underlying growth of

the Company on a comparative basis. Management evaluates the Company's sales

performance based on actual sales growth in U.S. dollars, as well as Constant

Currency Net Sales Growth (defined above) and Organic Net Sales Growth, and

   believes that such information is useful to investors to assess the underlying
   sales trends.


                                       40

  Table of Contents


Critical Accounting Policies and Estimates

The Company's disclosures of its critical accounting policies, which are contained in its 2020 Annual Report, have not materially changed since that report was filed.

© Edgar Online, source Glimpses

All news about AMPHENOL CORPORATION
01/14RBC Capital Lifts Amphenol's Price Target to $80 From $76; Sector Perform Rating Kept
MT
01/10Goldman Sachs Adjusts Amphenol Price Target to $92 From $82, Maintains Buy Rating
MT
01/07Cowen Downgrades Amphenol to Market Perform From Outperform; Price Target is $80
MT
2021Stifel Raises Price Target on Amphenol to $85 From $75, Maintains Hold Rating
MT
2021Citigroup Raises Price Target on Amphenol to $100 From $80, Maintains Buy Rating
MT
2021AMPHENOL CORPORATION : Ex-dividend day for
FA
2021Morgan Stanley Lifts Price Target on Amphenol to $83 From $80, Maintains Equalweight Ra..
MT
2021JPMorgan Adjusts Amphenol's Price Target to $85 From $82, Maintains Neutral Rating
MT
2021AMPHENOL CORP /DE/ : Entry into a Material Definitive Agreement, Creation of a Direct Fina..
AQ
2021Amphenol Corporation Enters into A Second Amended and Restated Credit Agreement
CI
More news
Analyst Recommendations on AMPHENOL CORPORATION
More recommendations
Financials (USD)
Sales 2021 10 608 M - -
Net income 2021 1 527 M - -
Net Debt 2021 3 801 M - -
P/E ratio 2021 31,9x
Yield 2021 0,80%
Capitalization 46 592 M 46 592 M -
EV / Sales 2021 4,75x
EV / Sales 2022 4,43x
Nbr of Employees 80 000
Free-Float 99,2%
Chart AMPHENOL CORPORATION
Duration : Period :
Amphenol Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends AMPHENOL CORPORATION
Short TermMid-TermLong Term
TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Last Close Price 77,91 $
Average target price 86,67 $
Spread / Average Target 11,2%
EPS Revisions
Managers and Directors
Richard Adam Norwitt President, Chief Executive Officer & Director
Craig Anthony Lampo Chief Financial Officer & Senior Vice President
Martin H. Loeffler Chairman
William J. Doherty Senior VP & Group GM-Information Communications
Linda Chan Vice President-Information Technology
Sector and Competitors
1st jan.Capi. (M$)
AMPHENOL CORPORATION-10.23%46 592
LUXSHARE PRECISION INDUSTRY CO., LTD.-0.43%52 721
HON HAI PRECISION INDUSTRY CO., LTD.-0.96%51 902
LENS TECHNOLOGY CO., LTD.-15.14%15 512
JABIL INC.-6.92%9 592
YAGEO CORPORATION0.42%8 676