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

Oct 23, 2019 • 01:00 pm ET

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

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Presentation
Operator
Operator

Hello, and welcome to the 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 introduce today's conference host, Mr. Craig Lampo. Sir, you may begin.

Executive
Craig A. Lampo

Thank you. 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 third quarter 2019 conference call.

Our third quarter results were released this morning. I will provide some financial commentary on the quarter. And then, Adam, will give you an overview of the business as well as current trends and then, we will take questions.

As a reminder, we may refer in this call to certain non-GAAP financial measures and may make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information.

The Company closed the third quarter with sales of $2.101 billion and with GAAP and adjusted diluted EPS of $0.92 and $0.95 respectively. Sales were down 1% in US dollars and flat in local currencies compared to the third quarter of 2018. And from an organic standpoint, excluding both acquisitions and currency impacts, sales in the third quarter decreased 6%. Sequentially, sales were up 4% in US dollars, 5% in local currencies and 3% organically.

Breaking down sales into our two segments. Our cable business, which comprised 5% of our sales, was down 9% in US dollars and down 8% in local currencies compared to the third quarter of last year. The interconnect business, which comprised 95% of our sales, was down 1% in US dollars and flat in local currencies compared to last year. Adam will comment further on trends by market in a few minutes.

Adjusted operating income was $414 million for the third quarter of 2019. And adjusted operating margin was 19.7%, which is down 120 basis points compared to the third quarter of 2018. Compared to the second quarter of 2019, adjusting -- adjusted operating margins decreased 60 basis points.

From a segment standpoint, in the cable segment, margins were 10.2%, which was down compared to the 13.1% in the third quarter of 2018, primarily driven by volume as well as to a lesser extent, product mix. In the interconnect segment, margins were 21.7% in the third quarter of 2019, which was down compared to 22.7% in the third quarter of last year. This reduction was primarily driven by a relatively normal downside conversion, together with the impact of the cost of the restructuring actions taken in the quarter as well as the contribution from acquisitions, which are currently operating at a profitability level below the Company average.

This quarter's performance is a direct result of the strength and commitment of the Company's entrepreneurial management team, which continues to foster a high