10-Q 1 aph-20240331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-10879

Graphic

AMPHENOL CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware

22-2785165

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

358 Hall Avenue

Wallingford, Connecticut 06492

(Address of principal executive offices) (Zip Code)

203-265-8900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.001 par value

APH

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 

As of April 23, 2024, the total number of shares outstanding of the Registrant’s Class A Common Stock was 600,603,947.

Amphenol Corporation

Index to Quarterly Report

on Form 10-Q

    

Page

Part I

Financial Information

Item 1.

Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

2

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023

3

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023

4

Condensed Consolidated Statements of Cash Flow for the Three Months Ended March 31, 2024 and 2023

5

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

38

Part II

Other Information

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

Signature

44

1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)

March 31, 

December 31, 

    

2024

    

2023

 

ASSETS

Current Assets:

Cash and cash equivalents

$

1,857.1

$

1,475.0

Short-term investments

 

106.4

 

185.2

Total cash, cash equivalents and short-term investments

 

1,963.5

 

1,660.2

Accounts receivable, less allowance for doubtful accounts of $68.0 and $68.4, respectively

 

2,501.4

 

2,618.4

Inventories

 

2,152.9

 

2,167.1

Prepaid expenses and other current assets

 

423.9

 

389.6

Total current assets

 

7,041.7

 

6,835.3

Property, plant and equipment, less accumulated depreciation of $2,304.1 and $2,261.8, respectively

1,311.6

1,314.7

Goodwill

7,100.5

7,092.4

Other intangible assets, net

 

785.4

 

834.8

Other long-term assets

483.3

449.2

Total Assets

$

16,722.5

$

16,526.4

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current Liabilities:

Accounts payable

$

1,264.7

$

1,350.9

Accrued salaries, wages and employee benefits

 

351.2

 

412.8

Accrued income taxes

 

150.9

 

166.0

Accrued dividends

132.1

131.7

Other accrued expenses

 

771.7

 

737.5

Current portion of long-term debt

 

752.5

 

353.8

Total current liabilities

 

3,423.1

 

3,152.7

Long-term debt, less current portion

 

3,556.9

 

3,983.5

Accrued pension and postretirement benefit obligations

 

142.1

 

143.0

Deferred income taxes

371.0

367.0

Other long-term liabilities

 

464.8

 

453.7

Total Liabilities

7,957.9

8,099.9

Redeemable noncontrolling interests

30.9

30.7

Equity:

Common stock

0.6

0.6

Additional paid-in capital

 

3,224.1

 

3,101.2

Retained earnings

 

6,163.5

 

5,921.1

Treasury stock, at cost

(103.8)

(142.8)

Accumulated other comprehensive loss

 

(602.9)

 

(533.6)

Total stockholders’ equity attributable to Amphenol Corporation

 

8,681.5

 

8,346.5

Noncontrolling interests

 

52.2

 

49.3

Total Equity

 

8,733.7

 

8,395.8

Total Liabilities, Redeemable Noncontrolling Interests and Equity

$

16,722.5

$

16,526.4

See accompanying notes to condensed consolidated financial statements.

2

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(dollars and shares in millions, except per share data)

Three Months Ended

March 31, 

  

2024

  

2023

 

Net sales

$

3,256.3

$

2,974.0

Cost of sales

 

2,167.3

 

2,030.6

Gross profit

 

1,089.0

 

943.4

Acquisition-related expenses

 

 

5.4

Selling, general and administrative expenses

 

404.2

 

346.3

Operating income

 

684.8

 

591.7

Interest expense

 

(38.1)

 

(35.9)

Other income (expense), net

 

16.0

 

4.1

Income before income taxes

 

662.7

 

559.9

Provision for income taxes

 

(110.7)

 

(117.2)

Net income

552.0

442.7

Less: Net income attributable to noncontrolling interests

 

(3.3)

 

(3.5)

Net income attributable to Amphenol Corporation

$

548.7

$

439.2

Net income attributable to Amphenol Corporation per common share — Basic

$

0.91

$

0.74

Weighted average common shares outstanding — Basic

 

600.0

 

595.1

Net income attributable to Amphenol Corporation per common share — Diluted

$

0.87

$

0.71

Weighted average common shares outstanding — Diluted

 

627.9

 

619.9

See accompanying notes to condensed consolidated financial statements.

3

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(dollars in millions)

Three Months Ended

March 31, 

    

2024

   

2023

   

Net income

$

552.0

$

442.7

Total other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

 

(71.2)

 

42.5

Pension and postretirement benefit plan adjustment, net of tax of ($0.3) and ($0.2), respectively

 

0.9

 

0.7

Total other comprehensive income (loss), net of tax

 

(70.3)

 

43.2

Total comprehensive income

 

481.7

 

485.9

Less: Comprehensive income attributable to noncontrolling interests

 

(2.3)

 

(4.3)

Comprehensive income attributable to Amphenol Corporation

$

479.4

$

481.6

See accompanying notes to condensed consolidated financial statements.

4

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(dollars in millions)

Three Months Ended March 31, 

    

2024

    

2023

 

Cash from operating activities:

Net income

$

552.0

$

442.7

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

103.8

 

96.3

Stock-based compensation expense

 

23.8

 

21.7

Deferred income tax provision

 

1.9

0.1

Net change in components of working capital

(73.9)

(23.8)

Net change in other long-term assets and liabilities

(8.1)

(4.6)

Net cash provided by operating activities

 

599.5

 

532.4

Cash from investing activities:

Capital expenditures

 

(94.3)

 

(97.7)

Proceeds from disposals of property, plant and equipment

 

0.5

 

0.8

Purchases of investments

 

(11.9)

 

(56.7)

Sales and maturities of investments

 

87.6

 

10.0

Acquisitions, net of cash acquired

 

 

(113.2)

Other, net

1.1

0.2

Net cash used in investing activities

 

(17.0)

 

(256.6)

Cash from financing activities:

Proceeds from issuance of senior notes and other long-term debt

 

 

350.2

Repayments of senior notes and other long-term debt

 

(1.1)

(3.1)

(Repayments) borrowings under commercial paper programs, net

(387.5)

Payment of costs related to debt financing

 

(2.9)

 

(2.3)

Purchase of treasury stock

 

(153.8)

 

(166.9)

Proceeds from exercise of stock options

113.3

74.3

Distributions to and purchases of noncontrolling interests

(5.2)

Dividend payments

 

(131.7)

 

(124.9)

Net cash used in financing activities

 

(176.2)

 

(265.4)

Effect of exchange rate changes on cash and cash equivalents

 

(24.2)

 

7.6

Net increase in cash and cash equivalents

 

382.1

 

18.0

Cash and cash equivalents balance, beginning of period

 

1,475.0

 

1,373.1

Cash and cash equivalents balance, end of period

$

1,857.1

$

1,391.1

Cash paid for:

Interest

$

32.8

$

34.9

Income taxes, net

 

130.1

 

116.1

See accompanying notes to condensed consolidated financial statements.

5

AMPHENOL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts included in the following Notes to Condensed Consolidated Financial Statements

are presented in millions, except share and per share data, unless otherwise noted)

Note 1—Basis of Presentation and Principles of Consolidation

The Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, and each of the related Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flow for the three months ended March 31, 2024 and 2023, include the accounts of Amphenol Corporation and its subsidiaries (“Amphenol,” the “Company,” “we,” “our” or “us”). All material intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included herein are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments considered necessary for a fair presentation of the results, in conformity with accounting principles generally accepted in the United States of America. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”).

Note 2—New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends ASC 280. The intent of ASU 2023-07 is to improve the disclosures around a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses by requiring entities to disclose on an annual and interim basis: (i) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss and (ii) an amount for other segment items by reportable segment and a description of its composition, which represents the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. Furthermore, entities will be required to: (i) provide all annual disclosures about a segment’s profit or loss and assets currently required under ASC 280 on an interim basis as well, (ii) clarify that an entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, and (iii) disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2023-07 on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The intent of ASU 2023-09 is to improve the disclosures around a company’s rate reconciliation information and certain types of income taxes companies are required to pay. Specifically, these new disclosure requirements will provide more transparency regarding income taxes companies pay in the United States and other countries, along with more disclosure around a company’s rate reconciliation, among other new disclosure requirements, such that users of financial statements can get better information about how the operations, related tax risks, tax planning and operational opportunities of companies affect their effective tax rates and future cash flow prospects. ASU 2023-09 is effective for annual fiscal years beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments under ASU 2023-09 should be applied on a prospective basis, although retrospective application is permitted. The

6

Company is currently evaluating the potential impact of ASU 2023-09 on its consolidated financial statements and disclosures.

Note 3—Inventories

Inventories consist of:

March 31, 

December 31, 

 

    

2024

    

2023

 

Raw materials and supplies

 

$

970.9

 

$

964.7

Work in process

 

587.0

 

562.3

Finished goods

 

595.0

 

640.1

 

$

2,152.9

 

$

2,167.1

Note 4—Debt

The Company’s debt (net of any unamortized discount) consists of the following:

 

March 31, 2024

December 31, 2023

 

Carrying

Approximate

Carrying

Approximate

 

    

Amount

    

Fair Value

    

Amount

    

Fair Value

 

Revolving Credit Facility

$

 

$

 

$

 

$

U.S. Commercial Paper Program

 

 

 

 

Euro Commercial Paper Program

 

 

 

 

Term Loan Credit Facility

3.20% Senior Notes due April 2024

 

350.0

 

349.9

 

350.0

 

348.4

2.050% Senior Notes due March 2025

399.9

387.7

399.8

386.8

4.750% Senior Notes due March 2026

349.2

347.5

349.1

350.6

0.750% Euro Senior Notes due May 2026

539.3

509.7

551.7

523.4

2.000% Euro Senior Notes due October 2028

538.9

515.1

551.4

531.4

4.350% Senior Notes due June 2029

499.8

486.9

499.8

497.2

2.800% Senior Notes due February 2030

899.6

804.2

899.6

817.6

2.200% Senior Notes due September 2031

748.0

620.6

747.9

629.9

Other debt

 

7.2

 

7.2

 

9.5

 

9.5

Less: unamortized deferred debt issuance costs

 

 

(22.5)

 

 

(21.5)

 

Total debt

 

4,309.4

 

4,028.8

 

4,337.3

 

4,094.8

Less: current portion

 

752.5

740.2

 

353.8

 

352.2

Total long-term debt

$

3,556.9

 

$

3,288.6

 

$

3,983.5

 

$

3,742.6

Revolving Credit Facility

On March 21, 2024, the Company entered into a third amended and restated credit agreement, which amended and restated its $2,500.0 unsecured revolving credit facility, increasing the lenders’ aggregate unsecured revolving commitments under the facility by $500.0 to $3,000.0 (the “Revolving Credit Facility”). The Revolving Credit Facility matures in March 2029 and gives the Company and certain of its subsidiaries the ability to borrow, in various currencies, at a spread that varies, based on the Company’s debt rating, over certain currency-specific benchmark rates, which benchmark rates, in the case of U.S. dollar borrowings, are either the base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”). The Revolving Credit Facility was undrawn on the date of the amendment. The Company may utilize the Revolving Credit Facility for general corporate purposes. As of March 31, 2024 and December 31, 2023, there were no outstanding borrowings under the revolving credit facility then in effect. The carrying value of any borrowings under the Revolving Credit Facility would approximate their fair value, primarily due to their market interest rates, and would be classified as Level 2 in the fair value hierarchy (Note 5). Any outstanding borrowings under the Revolving Credit Facility are classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the

7

Company satisfy certain financial covenants. On March 31, 2024, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

Term Loan Credit Facility

On April 19, 2022, the Company entered into a two-year, $750.0 unsecured delayed draw term loan credit agreement (the “Term Loan”), which was scheduled to mature on April 19, 2024. The Term Loan was undrawn at closing and was permitted to be drawn on up to five occasions over the life of the facility. The Term Loan could be repaid at any time without premium or penalty, and, once repaid, could not be reborrowed. If drawn upon, the proceeds from the Term Loan were expected to be used for general corporate purposes. Interest rates under the Term Loan were based on a spread over either the base rate or the adjusted term SOFR, which spread varied based on the Company’s debt rating. The carrying value of any borrowings under the Term Loan would approximate their fair value, primarily due to its market interest rates, and would be classified as Level 2 in the fair value hierarchy (Note 5). As of March 31, 2024, the Company had not drawn upon the Term Loan, and, as such, there were no outstanding borrowings under the Term Loan. The Term Loan required payment of certain commitment fees and required that the Company satisfy certain financial covenants. On March 31, 2024, the Company was in compliance with the financial covenants under the Term Loan. The Term Loan matured on April 19, 2024 without the Company drawing upon it throughout its term.

Commercial Paper Programs

The Company has a commercial paper program (the “U.S. Commercial Paper Program”) pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes” or “U.S. Commercial Paper”) in one or more private placements in the United States. The maturities of the USCP Notes vary but may not exceed 397 days from the date of issue. The USCP Notes are sold under customary terms in the commercial paper market and may be issued at par or a discount therefrom, and bear varying interest rates on a fixed or floating basis. On March 21, 2024, in conjunction with the increase in the capacity of the Revolving Credit Facility, the Company increased the borrowings available under its U.S. Commercial Paper Program by $500.0. As of March 31, 2024, the maximum aggregate principal amount outstanding of USCP Notes at any time is $3,000.0. The Company utilizes borrowings under the U.S. Commercial Paper Program for general corporate purposes, which, in recent years, have included fully or partially funding acquisitions, as well as repaying certain outstanding senior notes. The Company borrowed under the U.S. Commercial Paper Program throughout much of the first quarter of 2024, the proceeds of which were used for general corporate purposes. Before the end of the first quarter of 2024, the Company repaid all of its USCP Notes then outstanding. As of March 31, 2024 and December 31, 2023, there were no USCP Notes outstanding.

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have 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, the “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States.  The maturities of the ECP Notes will vary but may not exceed 183 days from the date of issue.  The ECP Notes are sold under customary terms in the commercial paper market and may be issued at par or a discount therefrom or a premium thereto and bear varying interest rates on a fixed or floating basis. 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. The Company utilizes borrowings under the Euro Commercial Paper Program for general corporate purposes, which may include, for example, fully or partially funding acquisitions. The Company did not borrow under the Euro Commercial Paper Program during the first quarter of 2024, and, as of March 31, 2024 and December 31, 2023, 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, as of March 31, 2024, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum aggregate 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 $3,000.0 in the aggregate. The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the

8

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. Any outstanding Commercial Paper is classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Company’s Revolving Credit Facility. The carrying value of Commercial Paper approximates its fair value, primarily due to its market interest rates, and is classified as Level 2 in the fair value hierarchy (Note 5). 

U.S. Senior Notes

On April 5, 2024, the Company issued three series of unsecured senior notes (collectively, the “New Senior Notes”): (i) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2027 at 99.887% of face value (the “2027 Senior Notes”), (ii) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2029 at 99.900% of face value (the “2029 Senior Notes”) and (iii) $600.0 aggregate principal amount of unsecured 5.250% Senior Notes due April 5, 2034 at 99.900% of face value (the “2034 Senior Notes”). The New Senior Notes are unsecured and rank equally in right of payment with all of the Company’s other senior unsecured and unsubordinated indebtedness, including the Company’s guarantee of the Euro Issuer’s obligations under the Euro Notes. Interest on the New Senior Notes is payable semiannually on April 5 and October 5 of each year, commencing on October 5, 2024. Prior to March 5, 2027, the Company may redeem, from time to time, some or all of the 2027 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a make-whole premium. Prior to March 5, 2029, the Company may redeem, from time to time, some or all of the 2029 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a make-whole premium. Prior to January 5, 2034, the Company may redeem, from time to time, some or all of the 2034 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a make-whole premium. On or after such dates, the Company may redeem, from time to time, some or all of the respective series of the New Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. If the Company’s pending acquisition of the Carlisle Interconnect Technologies (“CIT”) business is not consummated on or prior to an agreed upon date or if the Company notifies the trustee that the acquisition will not be pursued at all, under certain circumstances, each series of the New Senior Notes will be subject to a special mandatory redemption, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest from the date of initial issuance, or the most recent date to which interest has been paid or provided for, whichever is later, to, but not including, the special mandatory redemption date. Absent a special mandatory redemption, the Company intends to use the net proceeds from the New Senior Notes, together with a combination of cash on hand and other debt financing (which could include borrowings under the Company’s Revolving Credit Facility and/or U.S. Commercial Paper Program), to fund the cash consideration for the Company’s pending CIT acquisition, as discussed in further detail in Note 11 herein, along with the fees and expenses related thereto. To the extent that the net proceeds from the New Senior Notes are not used for such purposes, such net proceeds shall be used for general corporate purposes.

On April 1, 2024, the Company used cash on hand to repay the $350.0 aggregate principal amount of unsecured 3.20% Senior Notes due April 1, 2024 upon maturity.

On March 30, 2023, the Company issued $350.0 aggregate principal amount of unsecured 4.750% Senior Notes due March 30, 2026 at 99.658% of face value (the “2026 Senior Notes”). The 2026 Senior Notes are unsecured and rank equally in right of payment with all of the Company’s other senior unsecured and unsubordinated indebtedness, including the Company’s guarantee of the Euro Issuer’s obligations under the Euro Notes. Interest on the 2026 Senior Notes is payable semiannually on March 30 and September 30 of each year, commencing on September 30, 2023. The Company may redeem, from time to time at its option, some or all of the 2026 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, plus a make-whole premium. The Company used the net proceeds from the 2026 Senior Notes to repay certain outstanding borrowings under the U.S. Commercial Paper Program.

9

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 all of the Company’s other senior unsecured and unsubordinated indebtedness, including the Company’s guarantee of the Euro Issuer’s obligations under the Euro Notes. 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 at any time, subject to certain terms and conditions, which include paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of redemption, and, with certain exceptions, a make-whole premium.

Euro Senior Notes

The Euro Issuer has two outstanding unsecured senior notes issued in Europe (collectively, the “Euro Notes” and the Euro Notes, together with the U.S. Senior Notes, the “Senior Notes”), each of which was issued with an aggregate principal amount of €500.0. The 0.750% Euro Senior Notes, which were issued in May 2020 at 99.563% of face value, mature on May 4, 2026, while the 2.000% Euro Senior Notes, which were issued in October 2018 at 99.498% of face value, mature on October 8, 2028. The Euro Notes are unsecured and rank equally in right of payment with all of the Euro Issuer’s senior unsecured and unsubordinated indebtedness and are fully and unconditionally guaranteed on a senior unsecured basis by the Company. Interest on each series of Euro Notes is payable annually. The Company may, at its option, redeem some or all of either series of Euro Notes at any time, subject to certain terms and conditions, which include paying 100% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, and, with certain exceptions, a make-whole premium.

The fair value of each series of Senior Notes is based on recent bid prices in an active market and is therefore classified as Level 1 in the fair value hierarchy (Note 5). The Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements. On March 31, 2024, the Company was in compliance with all requirements under its Senior Notes.

Note 5—Fair Value Measurements

Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. These requirements establish market or observable inputs as the preferred source of values. Assumptions based on hypothetical transactions are used in the absence of market inputs. The Company does not have any non-financial instruments accounted for at fair value on a recurring basis.

The valuation techniques required are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1           Quoted prices for identical instruments in active markets.

Level 2           Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3           Significant inputs to the valuation model are unobservable.

10

The Company believes that the assets or liabilities currently subject to such standards with fair value disclosure requirements are primarily (i) debt instruments, (ii) pension plan assets, (iii) short- and long-term investments, (iv) derivative instruments and (v) assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting. Each of these assets and liabilities is discussed below, with the exception of debt instruments, pension plan assets, and the fair value of assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting, which are discussed in Note 4, Note 10 and Note 11, respectively, herein, in addition to the Notes to Consolidated Financial Statements in the 2023 Annual Report. Substantially all of the Company’s short- and long-term investments consist of certificates of deposit, which are considered as Level 2 in the fair value hierarchy. Long-term investments are recorded in Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. The carrying amounts of these short- and long-term instruments, the vast majority of which are in non-U.S. bank accounts, approximate their respective fair values. The Company’s derivative instruments primarily consist of foreign exchange forward contracts, which are valued using bank quotations based on market observable inputs, such as forward and spot rates, and are therefore classified as Level 2 in the fair value hierarchy. The impact of the credit risk related to these derivative financial assets is immaterial.

The Company reviews the fair value hierarchy classifications on a quarterly basis and determines the appropriate classification of such assets and liabilities subject to the fair value hierarchy standards based on, among other things, the ability to observe valuation inputs. The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of March 31, 2024 and December 31, 2023 are as follows:

Fair Value Measurements

Quoted Prices in

Significant

Significant

Active Markets

Observable

Unobservable

for Identical

Inputs

Inputs

Total

Assets (Level 1)

(Level 2)

(Level 3)

March 31, 2024:

Short-term investments

$

106.4

$

$

106.4

$

Long-term investments

0.4

0.4

Forward contracts

(0.2)

(0.2)

Redeemable noncontrolling interests

(30.9)

(30.9)

Total

$

75.7

$

$

106.6

$

(30.9)

December 31, 2023:

Short-term investments

$

185.2

$

$

185.2

$

Long-term investments

0.4

0.4

Forward contracts

(0.5)

(0.5)

Redeemable noncontrolling interests

(30.7)

(30.7)

Total

$

154.4

$

$

185.1

$

(30.7)

The Company utilizes foreign exchange forward contracts, hedging instruments accounted for as cash flow hedges, in the management of foreign currency exposures. In addition, the Company also enters into foreign exchange forward contracts, accounted for as net investment hedges, to hedge our exposure to variability in the U.S. dollar equivalent of the net investments in certain foreign subsidiaries. As of March 31, 2024 and December 31, 2023, the Company had no outstanding foreign exchange forward contracts accounted for as either net investment hedges or cash flow hedges. As of March 31, 2024 and December 31, 2023, the fair value of such foreign exchange forward contracts in the table above consisted of various outstanding foreign exchange forward contracts that are not designated as hedging instruments. During the three months ended March 31, 2024 and 2023, the amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts, as well as the amounts reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss), included in Cost of sales in the accompanying Condensed Consolidated Statements of Income, were not material. The fair values of the Company’s forward contracts are recorded within Prepaid expenses and other current assets, Other long-term assets, Other accrued expenses and Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets, depending on their value and remaining contractual period.

11

Certain acquisitions may result in noncontrolling interest holders who, in certain cases, are entitled to a put option, giving them the ability to put some or all of their redeemable interest in the shares of the acquiree to the Company. Specifically, if exercised by the noncontrolling interest holder, Amphenol would be required to purchase some or all of the option holder’s redeemable interest, at a redemption price during specified time period(s) stipulated in the respective acquisition agreement. The redeemable noncontrolling interests recorded on the accompanying Condensed Consolidated Balance Sheets relate to recent acquisitions, which, based on the terms of the respective acquisition agreements, will remain in temporary equity until the applicable put option is either fully exercised or expires. The redemption value of the redeemable noncontrolling interests is generally calculated using Level 3 unobservable inputs based on a multiple of earnings, which, for the redeemable noncontrolling interests currently outstanding, approximate fair value. As such, the redemption value is classified as Level 3 in the fair value hierarchy and is recorded as Redeemable noncontrolling interests on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023. Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interests for the three months ended March 31, 2024 and 2023.

With the exception of the fair value of the assets acquired and liabilities assumed in connection with acquisition accounting, the Company does not have any other significant financial or non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

Note 6—Income Taxes

Three Months Ended

    

March 31, 

    

2024

2023

Provision for income taxes

$

(110.7)

$

(117.2)

Effective tax rate

 

16.7

%  

 

20.9

%  

For the three months ended March 31, 2024 and 2023, stock option exercise activity had the impact of decreasing our Provision for income taxes by $29.7 and $17.1, respectively, and decreasing our effective tax rate by approximately 450 basis points and 310 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income. In addition, for the three months ended March 31, 2024, a discrete tax benefit of $18.6, related to the settlement of tax audits and associated lapses of statutes of limitation, along with a difference in a non-U.S. tax filing position, had the effect of decreasing our effective tax rate by approximately 280 basis points. Acquisition-related expenses incurred during the three months ended March 31, 2023 had an immaterial effect on our effective tax rate.

The United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”) in December 2017. As a result, in 2017, the Company recorded a transition tax (“Transition Tax”) related to the deemed repatriation of the accumulated unremitted earnings and profits of the Company’s foreign subsidiaries. The Company expects to pay its seventh annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2024, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, in 2025, as permitted under the Tax Act. The current and long-term portions of the Transition Tax are recorded in Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

The Company operates in the U.S. and numerous foreign taxable jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2017 and after. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of March 31, 2024, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $201.5. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing

12

facts and circumstances, including the progress of tax audits and the closing of statutes of limitations. Based on information currently available, management anticipates that over the next 12-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $24.8.

Inflation Reduction Act of 2022

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022 (the “IRA”), a tax and spending package that introduces several tax-related provisions, including a 15% corporate alternative minimum tax (“CAMT”) on certain large corporations and a 1% excise tax on certain corporate stock repurchases. Companies are required to reassess their valuation allowances for certain affected deferred tax assets in the period of enactment but do not need to remeasure deferred tax balances for the related tax accounting implications of the CAMT. The IRA provisions, which became effective for Amphenol beginning on January 1, 2023, did not have a material impact on the Company during the three months ended March 31, 2024 and 2023. While the full impact of these provisions in the future depends on several factors, including interpretive regulatory guidance, which has not yet been released, the Company does not currently believe that the provisions of the IRA, including several other non-tax related provisions, will have a material impact on its financial condition, results of operations, liquidity and cash flows.

Note 7—Stockholders’ Equity and Noncontrolling Interests

Net income attributable to noncontrolling interests is classified below net income. Earnings per share is determined after the impact of the noncontrolling interests’ share in net income of the Company. In addition, the equity attributable to noncontrolling interests is presented as a separate caption within equity.

A rollforward of consolidated changes in equity and redeemable noncontrolling interests for the three months ended March 31, 2024 is as follows:

  

Stockholders’ equity attributable to Amphenol Corporation

  

Accumulated

Redeemable

  

Common Stock

Treasury Stock

Additional

Other

Non-

Non-

  

Shares

Shares

Paid-In

Retained

Comprehensive

controlling

Total

controlling

  

(in millions)

   

Amount

   

(in millions)

   

Amount

   

Capital

   

Earnings

   

Loss

   

Interests (1)

   

Equity

   

Interests

  

Balance as of December 31, 2023

  

600.6

 

$

0.6

 

(1.7)

 

$

(142.8)

 

$

3,101.2

 

$

5,921.1

 

$

(533.6)

 

$

49.3

 

$

8,395.8

 

$

30.7

Net income

  

 

548.7

 

2.9

 

551.6

0.4

Other comprehensive income (loss)

  

 

(69.3)

 

(0.8)

 

(70.1)

(0.2)

Capital contributions from noncontrolling interests

  

 

0.8

 

0.8

Purchase of treasury stock

  

(1.4)

 

(153.8)

 

(153.8)

Retirement of treasury stock

  

(1.4)

1.4

 

153.8

 

(153.8)

 

Stock options exercised

  

2.8

0.4

39.0

 

99.1

(20.4)

 

117.7

Dividends declared ($0.22 per common share)

  

 

(132.1)

 

(132.1)

Stock-based compensation expense

  

 

23.8

 

23.8

Balance as of March 31, 2024

  

602.0

$

0.6

(1.3)

$

(103.8)

$

3,224.1

$

6,163.5

$

(602.9)

$

52.2

$

8,733.7

$

30.9

(1) Excludes redeemable noncontrolling interests.

13

A rollforward of consolidated changes in equity and redeemable noncontrolling interests for the three months ended March 31, 2023 is as follows:

  

Stockholders’ equity attributable to Amphenol Corporation

  

Accumulated

Redeemable

  

Common Stock

Treasury Stock

Additional

Other

Non-

Non-

  

Shares

Shares

Paid-In

Retained

Comprehensive

controlling

Total

controlling

  

(in millions)

   

Amount

   

(in millions)

   

Amount

   

Capital

   

Earnings

   

Loss