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

Oct 23, 2019 • 01:00 pm ET

Previous

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

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
R. Adam Norwitt

driven in particular by growth in military vehicles, naval applications, aviation and communications equipment.

Sequentially, our sales increased by a very strong 9% in what is normally a seasonally more moderate quarter. Looking ahead, we expect sales in the fourth quarter to again increase modestly from these third quarter levels. And for the full year 2019, we now expect to achieve sales growth in the military market of just above 20%. This improved outlook reflects our team's excellent execution in the face of higher demand from customers across the defense market.

I remain extremely proud of Amphenol's team working in the military market. With strong demand that's being driven by both robust defense spending together with accelerating adoption of new technologies, our organization has simply done an outstanding job reacting to satisfy that demand, while also expanding our overall market position.

The addition of Cablescan this quarter further strengthens our already strong value add interconnect offering for a wide array of harsh environment applications. And our broadened range of interconnect products, together with the strongest and most international manufacturing footprint positions us very strongly for the future. The commercial aerospace market represented 5% of our sales in the quarter. Sales in commercial air were also stronger than expected, growing 15% in US dollars and 16% organically as we capitalized on continued strong demand for next generation jetliners with high electronics content. Sequentially, our sales were up slightly from the second quarter.

Looking into the fourth quarter, we expect sales to increase modestly from these levels. And for the full year 2019, we continue to expect a low double-digit increase in sales from prior year. The commercial air market continues to represent a significant opportunity for the future in Amphenol. Our customers are implementing new technologies on existing and next generation jetliner platforms, which creates increased demand for our high-technology products. We look forward to benefiting from that favorable trend for many years to come.

The industrial market represented 20% of our sales in the quarter. Sales in the third quarter increased by less than expected 4% in US dollars and were down by 6% organically as growth in oil and gas and medical applications was more than offset by reductions in heavy equipment, instrumentation and battery-related products. On a sequential basis, our sales did increase by 2% from the second quarter as the contributions from CONEC and Bernd Richter acquisitions that we announced last quarter were offset in part by slowing demand in the industrial market and that demand was slowing in particular in Europe.

Looking into the fourth quarter, we expect sales in the industrial market to further moderate from current levels due to slowing demand, especially in Europe. And for the full year 2019, we now expect growth in the low single digits. And this represents a modest reduction from our prior expectations. This slowdown is related to reduced demand outlooks from both our distributor and OEM customers.

Regardless of this further erosion of demand that we are