Amphenol Corporation (NYSE:APH) Q4 2023 Earnings Call Transcript January 24, 2024
Amphenol Corporation beats earnings expectations. Reported EPS is $0.827, expectations were $0.77. Amphenol Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello, and welcome to the Fourth Quarter 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 introduce your conference host, Mr. Craig Lampo, you may begin.
Craig Lampo: Thank you very much. Good afternoon, everyone. This is Craig Lampo, Amphenol’s CFO, and I’m here together with Adam Norwitt, our CEO. We would like to wish everyone a Happy New Year, and welcome you to our fourth quarter of 2023 conference call. Our fourth quarter and full year 2023 results were released this morning. I will provide some financial commentary, and then Adam will give an overview of the business and current trends. Then we will take questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information. The company closed the fourth quarter with sales of $3,327 million and record adjusted diluted EPS of $0.82.
Fourth quarter sales were up 3% in U.S. dollars, 2% in local currencies and down 1% organically compared to the fourth quarter of 2022. Sequentially, sales were up 4% in U.S. dollars, 4% in local currencies and 2% organically. Adam will comment further on trends by market in a few minutes. For the full year of 2023, sales were $12,555,000,000 down 50 basis points in U.S. dollars, flat in local currencies and down 3% organically compared to 2022. Orders in the quarter were $3,164,000,000, up 10% compared to the fourth quarter of 2022 and flat sequentially, resulting in a book-to-bill ratio of 0.95:1. For the full year, orders were $12,267,000,000, down 5% compared to 2022, resulting in a book-to-bill of 0.98:1. GAAP operating income and operating margin was $690 million and 20.7%, respectively, in the fourth quarter of 2023 which increased 10 basis points compared to both the fourth quarter of 2022 and the third quarter of 2023.
Adjusted operating income was $706 million, which excluded $16 million in acquisition-related costs. Adjusted operating margin was 21.2% during the fourth quarter and a new quarterly record for the company. On an adjusted basis, operating margin increased by 30 basis points compared to the fourth quarter of 2022 and increased by 40 basis points sequentially. The year-over-year increase in adjusted operating margin was primarily driven by strong operating leverage on slightly higher sales levels as well as the benefit of pricing actions. These benefits were partially offset by the dilutive impact of recent acquisitions, most of which are currently operating below the corporate average. For the full year of 2023, GAAP operating income was $2.56 billion, which included $35 million of acquisition-related costs and excluding these costs, adjusted operating income was $2.594 million.
For the full year of 2023, GAAP operating margin was 20.4% and adjusted operating margin was a strong 20.7%, consistent with our previous annual record margins achieved in 2022 and 2018. On a GAAP basis, operating margin decreased 10 basis points compared to 2022. Compared to 2022, adjusted operating margin was flat, which primarily was driven by strong operational performance as well as the benefit of pricing actions, partially offset by the dilutive impact of acquisitions. This was an impressive margin performance given the slight sales decline we experienced in 2023. Our team continued to execute well in the quarter, and we are proud to have sustained these healthy levels of profitability, despite the continued range of challenges around the world.
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