Amphenol Corporation (NYSE:APH) Q3 2019 Earnings Conference Call - Final Transcript

Oct 23, 2019 • 01:00 pm ET

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Amphenol Corporation (NYSE:APH) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
R. Adam Norwitt

we gave last -- at the end of last quarter. Operating margins in the quarter were 19.7% and did come in a bit stronger than we had anticipated coming into the quarter.

Craig mentioned that the Company generated very strong operating and free cash flow of $412 million and $341 million, respectively in the quarter. I just want to emphasize that this is a great reflection of the quality of the Company's earnings. I'm extremely proud of the Amphenol team around the world. In what's clearly a challenging market environment, we performed very well this quarter. And these excellent results are another clear reflection of the agility and discipline of our entrepreneurial organization around the world.

We're very pleased to have completed two additional acquisitions just here at the end of the quarter, which together represent approximately $60 million in annual sales and which we acquired for a collective purchase price of approximately $87 million. First, Cablescan, it's a manufacturer of high technology cable assemblies for the military aerospace market. Based in Yorkshire in the UK, Cablescan's products are sold into a range of military aerospace applications, including in particular land vehicles and aviation. And this company represents an outstanding complement to our already broad array of value add interconnect solutions for the important military and commercial aerospace markets.

XGiga is a manufacturer of active fiber optic interconnect products for the global communications market. And this company, which is based in Shenzhen, China broadens our product offering and strengthens our already industry-leading offering of high-speed interconnect products for the communications infrastructure market.

So as we welcome these outstanding new teams to the Amphenol family, we remain very confident that our acquisition program will continue to create great value for the Company. We have now acquired nine great businesses so far here in 2019 and these excellent companies collectively represent annualized revenues of approximately $530 million and more importantly, they have strengthened Amphenol across nearly all of our end markets with their entrepreneurial management teams, their high technology product offerings and their complementary market positions.

Most importantly though, these new family members create additional platforms for future expansion and performance improvement in the Company. We're pleased that our acquisition program remains a core competitive advantage for Amphenol.

Now turning to our progress across our served markets, I would just comment that we continue to be very encouraged by the value created by the Company's balanced and broad end market diversification. Once again in the third quarter, no market represented more than 20% of our sales. And very importantly, this diversification helps to mitigate the impact of the volatility of individual end markets, while all the while exposing us to leading technologies wherever they may arise across the electronics industry.

So turning first to the military market. The military market represented 12% of our sales in the quarter. Sales grew by a better-than-expected and very strong 26% in both US dollars and organically. This strong growth was very broad based, but was