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Item 2. Management’s Discussion and Analysis

2021-10-29 compared with 2021-07-30 · 143 added, 133 removed, 246 unchanged (53% of the section changed)

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(amounts in millions, except share and per share data, unless otherwise noted)

The following discussion and analysis of the results of operations and financial condition for the three and six months ended June 30, 2021 and 2020 has been derived from and should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”), which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The following discussion and analysis of the results of operations and financial condition for the three and nine months ended September 30, 2021 and 2020 has been derived from and should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”), which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP” or “GAAP”).

Any references to the Company’s results in this Item 2 are specifically to our continuing operations only and exclude discontinued operations, unless otherwise noted.

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Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.

There are risks and uncertainties that could cause actual results to differ materially from these forward-looking statements, which include, but are not limited to, the following:

future risks and existing uncertainties

associated with adverse public health developments, including epidemics and pandemics such as the COVID-19 pandemic, which continues to disrupt our operations, including, depending on the specific location, government regulations that limit our ability to operate certain of our facilities at full capacity or at all and to adjust certain costs, travel restrictions, “work-from-home” orders, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers;

There are risks and uncertainties that could cause actual results to differ materially from these

forward-looking statements, which include, but are not limited to, the following:

future risks and existing uncertainties associated with adverse public health developments, including epidemics and pandemics such as the COVID-19 pandemic, which continues to disrupt our operations including, depending on the specific location, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course and to adjust certain costs, travel restrictions, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers;

uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers;

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governmental export and import controls that certain of our products may be subject to, including export licensing, customs regulations, economic sanctions or other laws;

cybersecurity threats, malware, phishing, ransomware or other increasingly sophisticated attacks, that could impair our information technology systems and could disrupt business operations, result in a loss of or inability to access confidential information and critical business, financial or other data, and/or cause the release of highly sensitive confidential information and adversely impact our reputation and operating results and potentially lead to litigation and/or governmental investigations;

changes in fiscal and tax policies, audits and examinations by taxing authorities, laws, regulations and guidance in the United States and foreign jurisdictions;

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and litigation, customer claims, product recalls, governmental investigations, criminal liability or environmental matters including changes to laws and regulations to which the Company may be subject.

In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, any potential resurgence of the crisis including from the recent, more transmissible Delta variant strain, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, any potential resurgence of the crisis including from the more transmissible Delta variant strain and any future strains that may arise, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

A further description of these uncertainties and other risks can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q and the Company’s other reports filed with the Securities and Exchange Commission.

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Impact of COVID-19 on our Operations, Financial Condition, Liquidity and Results of Operations

The COVID-19 pandemic caused widespread disruptions to our Company during 2020, particularly during the first half of that year, and as of June 30, 2021, we continue to experience some disruptions, and at a minimum, we expect those disruptions to continue through the third quarter of 2021 and they could, potentially, extend for the full year and

These disruptions have included and may continue to include, depending on the specific location, government regulations that limit our ability to operate certain of our facilities at full capacity or at all and to adjust certain costs, travel restrictions, “work-from-home” orders, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers.

In the second half of 2020 and into the first half of 2021, in several regions around the world, there was a resurgence in COVID-19 cases.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, any potential resurgence of the crisis including from the recent, more transmissible Delta variant strain, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

The COVID-19 pandemic caused widespread disruptions to our Company during 2020, particularly during the first half of that year, and as of September 30, 2021, we continue to experience some disruptions, and at a minimum, we

expect those disruptions to continue through the fourth quarter of 2021 and they could, potentially, extend into 2022 and beyond.

These disruptions have included and may continue to include, depending on the specific location, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course and to adjust certain costs, travel restrictions, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers.

In 2021, t here have been resurgences in COVID-19 cases in s everal regions around the world.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, any potential resurgence of the crisis including from the more transmissible Delta variant strain and any future strains that may arise, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

In addition, the COVID-19 pandemic could impact the health of our management team and other employees.

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Results of Operations

Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020

Net sales were $2,653.9 in the second quarter of 2021 compared to $1,987.5 in the second quarter of 2020, which represented an increase of 34% in U.S.

Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020

Net sales were $2,818.5 in the third quarter of 2021 compared to $2,323.4 in the third quarter of 2020, which represented an increase of 21% in U.S.

dollars, 20% in constant currencies and 13% organically, over the respective prior year period.

Net sales were $5,031.0 in the first six months of 2021 compared to $3,849.5 in the first six months of 2020, which represented an increase of 31% in U.S.

Net sales were $7,849.5 in the first nine months of 2021 compared to $6,172.9 in the first nine months of 2020, which represented an increase of 27% in U.S.

dollars, 25% in constant currencies and 19% organically, over the respective prior year period.

The increase in net sales during the second quarter and first six months of 2021 was driven primarily by growth in several markets in the Interconnect Products and Assemblies segment, as described below.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) in the second quarter of 2021 increased 34% in U.S.

dollars, 30% in constant currencies and 22% organically, compared to the second quarter of 2020.

The increase in the second quarter of 2021 compared to the second quarter of 2020 was driven by growth in several markets, in particular by strong growth in the automotive, industrial, and military markets, and moderate growth in the information technology and data communications and commercial aerospace markets, which included contributions from the Company’s acquisition program, all of which were slightly offset by a moderate decline in the mobile devices market.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) in the first six months of 2021 increased 31% in U.S.

dollars, 27% in constant currencies and 22% organically, compared to the first six months of 2020.

The increase in the first six months of 2021 compared to the first six months of 2020 was driven by growth in several markets, in particular by strong growth in the automotive, industrial, information technology and data communications, military and mobile devices markets, and moderate growth in the mobile networks market, along with contributions from the Company’s acquisition program, all of which were slightly offset by a significant decline in the commercial aerospace market which continued to be negatively impacted by the COVID-19 pandemic.

The strong sales growth in 2021 in the Interconnect Products and Assemblies segment also reflected a recovery in certain markets from the negative impact resulting from the COVID-19 pandemic during both the second quarter and first six months of 2020.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales) in the second quarter of 2021, which primarily serves the broadband communications market, increased 27% in U.S.

dollars, 24% in constant currencies and 15% organically, compared to the second quarter of 2020.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales) in the first six months of 2021, which primarily serves the broadband communications market, increased 22% in U.S.

dollars, 21% in constant currencies and 16% organically, compared to the first six months of 2020.

The increase in both periods in 2021 was primarily driven by increased market demand at broadband operators, coupled with the market recovery from the negative impact of the COVID-19 pandemic that impacted the first six months of 2020 as well as the contribution from one acquisition in this segment that closed during the first quarter of 2021.

The increase in net sales in the third quarter and first nine months of 2021 was driven primarily by growth in several markets in the Interconnect Products and Assemblies segment, as described below.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) in the third quarter of 2021 increased 21% in U.S.

dollars, 20% in constant currencies and 13% organically, compared to the third quarter of 2020.

The increase in the third quarter of 2021 was driven by growth in several markets, in particular by strong growth in the industrial, automotive, information technology and data communications, and mobile networks markets, and moderate growth in the military market, along with contributions from the Company’s acquisition program, all of which were slightly offset by a decline in the mobile devices market.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) in the first nine months of 2021 increased 27% in U.S.

dollars, 25% in constant currencies and 19% organically, compared to the first nine months of 2020.

The increase in the first nine months of 2021 was driven by growth in most of our markets, in particular by strong growth in the automotive, industrial, information technology and data communications, and military markets, and moderate growth in the mobile devices and mobile networks markets, along with contributions from the Company’s acquisition program, all of which were slightly offset by a significant decline in the commercial aerospace market, which continued to be negatively impacted by the COVID-19 pandemic.

The strong sales growth for the first nine months of 2021 in the Interconnect Products and Assemblies segment also reflected a recovery in certain markets from the negative impact resulting from the COVID-19 pandemic during the first nine months of 2020.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales) in the third quarter of 2021, which primarily serves the broadband communications market, increased 18% in U.S.

dollars, 17% in constant currencies and 11% organically, compared to the third quarter of 2020.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales) in the first nine months of 2021 increased 20% in U.S.

dollars, 20% in constant currencies and 15% organically, compared to the first nine months of 2020.

The increase in the third quarter of 2021 was primarily driven by increased demand from mobile network service providers, as well as the contribution from one acquisition in this segment that closed during the first quarter of 2021, partially offset by a reduction in demand from broadband operators.

The increase in the first nine months of 2021 was primarily driven by increased market demand from broadband operators and mobile network service providers, coupled with the market recovery from the negative

impact of the COVID-19 pandemic during the first nine months of 2020, as well as the contribution from one acquisition in this segment that closed during the first quarter of 2021.

The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S.

GAAP financial measures for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020:

GAAP financial measures for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020:

Percentage Growth (relative to same prior year period)

Sales Growth (3)

Three Months Ended June 30:

Three Months Ended September 30:

Interconnect Products and Assemblies

Cable Products and Solutions

Six Months Ended June 30:

Nine Months Ended September 30:

Interconnect Products and Assemblies

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Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis.

Geographically, sales in the United States in the second quarter of 2021 increased 37% in U.S.

dollars ($779.1 in 2021 versus $569.8 in 2020) and 24 % organically, compared to the second quarter of 2020.

Sales in the United States in the first six months of 2021 increased 23% in U.S.

dollars ($1,453.0 in 2021 versus $1,185.2 in 2020) and 16% organically, compared to the first six months of 2020.

Foreign sales in the second quarter of 2021 increased 32% in U.S.

dollars ($1,874.8 in 2021 versus $1,417.7 in 2020), 27% in constant currencies and 21% organically, compared to the second quarter of 2020.

Foreign sales in the first six months of 2021 increased approximately 34% in U.S.

dollars ($3,578.0 in 2021 versus $2,664.3 in 2020), 30% in constant currencies and 25% organically, compared to the first six months of 2020.

Geographically, sales in the United States in the third quarter of 2021 increased 24% in U.S.

dollars ($830.0 in 2021 versus $668.8 in 2020) and 14 % organically, compared to the third quarter of 2020.

Sales in the United States in the first nine months of 2021 increased 23% in U.S.

dollars ($2,283.0 in 2021 versus $1,854.0 in 2020) and 15% organically, compared to the first nine months of 2020.

Foreign sales in the third quarter of 2021 increased 20% in U.S.

dollars ($1,988.5 in 2021 versus $1,654.6 in 2020), 18% in constant currencies and 13% organically, compared to the third quarter of 2020.

Foreign sales in the first nine months of 2021 increased 29% in U.S.

dollars ($5,566.5 in 2021 versus $4,318.9 in 2020), 25% in constant currencies and 21% organically, compared to the first nine months of 2020.

The comparatively weaker U.S.

dollar for the second quarter and first six months of 2021 had the effect of increasing sales by approximately $74.0 and $130.5, respectively, relative to the comparable periods in 2020.

Selling, general and administrative expenses increased to $311.6, or 11.7% of net sales, and $574.3, or 11.4% of net sales, for the second quarter and first six months of 2021, respectively, compared to $246.4, or 12.4% of net sales, and $489.3, or 12.7% of net sales, for the second quarter and first six months of 2020, respectively.

The decrease in selling, general and administrative expenses as a percentage of net sales in both the second quarter and first six months of 2021 is primarily driven by higher sales during both periods of 2021, relative to the comparable periods of 2020, slightly offset by the impact of the MTS Sensors business which currently has significantly higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.

Administrative expenses represented approximately 4.6% and 4.4% of net sales for the second quarter and first six months of 2021, respectively, and represented approximately 5.0% and 5.1% o f net sales for the second quarter and first six months of 2020, respectively.

Research and development expenses represented approximately 3.1% of net sales for both the second quarter and first six months of 2021, and represented approximately 3.1% of net sales for both the second quarter and first six months of 2020.

Selling and marketing expenses represented approximately 4.1% and 3.9% of net sales for the second quarter and first six months of 2021, respectively, and represented approximately 4.3% and 4.5% of net sales for the second quarter and first six months of 2020, respectively.

Operating income was $476.2, or 17.9% of net sales, and $941.0, or 18.7% of net sales, for the second quarter and first six months of 2021, respectively, compared to $357.4, or 18.0% of net sales, and $674.3, or 17.5% of net sales, for

the second quarter and first six months of 2020, respectively.

Operating income for the second quarter and first six months of 2021 included $55.4 of acquisition-related expenses (separately presented in the Condensed Consolidated Statements of Income) primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the acquisition of MTS Systems Corporation (“MTS”).

For the three and six months ended June 30, 2021, these acquisition-related expenses had the effect of decreasing net income from continuing operations by $44.6, or $0.07 per share.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $531.6, or 20.0% of net sales and $996.4, or 19.8% of net sales, for the three and six months ended June 30, 2021, respectively.

The increase in Adjusted Operating Income and Adjusted Operating Margin for the second quarter and first six months of 2021 relative to the comparable period in 2020 was primarily driven by the Interconnect Products and Assemblies segment, as discussed further below.

Operating income for the Interconnect Products and Assemblies segment for the second quarter and first six months of 2021 was $559.7, or 22.0% of net sales, and $1,049.0, or 21.8% of net sales, respectively, compared to $379.5, or 20.0% of net sales, and $719.2, or 19.6% of net sales, for the second quarter and first six months of 2020, respectively.

The increase in operating margin for the Interconnect Products and Assemblies segment for the second quarter and first six months of 2021 relative to the comparable periods in 2020 was primarily driven by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to the second quarter and first six months of 2020, partially offset by the impact of the more challenging commodity and supply chain environment experienced to date in 2021.

Operating income for the Cable Products and Solutions segment for the second quarter and first six months of 2021 was $6.9, or 6.1% of net sales, and $15.4, or 7.4% of net sales, respectively, compared to $8.4, or 9.4% of net sales, and $14.8, or 8.6% of net sales, for the second quarter and first six months of 2020, respectively.

The decrease in operating margin for the Cable Products and Solutions segment for the second quarter and first six months of 2021 relative to the comparable periods in 2020 is primarily driven by the impact of the more challenging commodity and supply chain environment experienced to date in 2021.

Interest expense for the second quarter and first six months of 2021 was $29.1 and $57.7, respectively, compared to $30.2 and $59.0 for the second quarter and first six months of 2020, respectively.

dollar for the third quarter and first nine months of 2021 had the effect of increasing sales by approximately $31.7 and $162.1, respectively, relative to the comparable periods in 2020.

Selling, general and administrative expenses increased to $318.7, or 11.3% of net sales, and $893.0, or 11.4% of net sales, for the third quarter and first nine months of 2021, respectively, compared to $259.1, or 11.2% of net sales, and $748.4, or 12.1% of net sales, for the third quarter and first nine months of 2020, respectively.

The decrease in selling, general and administrative expenses as a percentage of net sales in the first nine months of 2021 is primarily driven by higher sales during the first nine months of 2021, relative to the comparable period of 2020 which was more negatively impacted by the COVID-19 pandemic, slightly offset by the impact of the MTS Sensors business which currently has higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.

Administrative expenses represented approximately 4.6% and 4.5% of net sales for the third quarter and first nine months of 2021, respectively, and represented approximately 4.4% and 4.8% o f net sales for the third quarter and first nine months of 2020, respectively.

Research and development expenses represented approximately 2.9% and 3.0% of net sales for the third quarter and first nine months of 2021, respectively, and represented approximately 3.0% and 3.1% of net sales for the third quarter and first nine months of 2020, respectively.

Selling and marketing expenses represented approximately 3.8% and 3.9% of net sales for the third quarter and first nine months of 2021, respectively,

and represented approximately 3.7% and 4.2% of net sales for the third quarter and first nine months of 2020, respectively.

Operating income was $571.2, or 20.3% of net sales, and $1,512.2, or 19.3% of net sales, for the third quarter and first nine months of 2021, respectively, compared to $475.8, or 20.5% of net sales, and $1,150.1, or 18.6% of net sales, for the third quarter and first nine months of 2020, respectively.

Operating income for the first nine months of 2021 included $55.4 of acquisition-related expenses (separately presented in the Condensed Consolidated Statements of Income) primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the acquisition of MTS Systems Corporation (“MTS”).

For the nine months ended September 30, 2021, these acquisition-related expenses had the effect of decreasing net income from continuing operations by $44.6, or $0.07 per share.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $1,567.6, or 20.0% of net sales, for the nine months ended September 30, 2021.

The increase in Adjusted Operating Income and Adjusted Operating Margin for the first nine months of 2021 relative to the comparable period in 2020 was primarily driven by the Interconnect Products and Assemblies segment, as discussed further below.

Operating income for the Interconnect Products and Assemblies segment for the third quarter and first nine months of 2021 was $603.3, or 22.4% of net sales, and $1,652.3, or 22.0% of net sales, respectively, compared to $498.4, or 22.4% of net sales, and $1,217.6, or 20.6% of net sales, for the third quarter and first nine months of 2020, respectively.

The increase in operating margin for the Interconnect Products and Assemblies segment for the first nine months of 2021 relative to the comparable period in 2020 was primarily driven by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to the first nine months of 2020, partially offset by the impact of the more challenging commodity and supply chain environment experienced to date in 2021.

Operating income for the Cable Products and Solutions segment for the third quarter and first nine months of 2021 was $4.6, or 3.8% of net sales, and $20.0, or 6.1% of net sales, respectively, compared to $10.9, or 10.7% of net sales, and $25.7, or 9.4% of net sales, for the third quarter and first nine months of 2020, respectively.

The decrease in operating margin for the Cable Products and Solutions segment for the third quarter and first nine months of 2021 relative to the comparable periods in 2020 is primarily driven by the impact of the more challenging commodity, logistics and supply chain environment experienced to date in 2021.

Interest expense for the third quarter and first nine months of 2021 was $29.0 and $86.7, respectively, compared to $28.0 and $87.1 for the third quarter and first nine months of 2020, respectively.

Refer to Note 4 of the Condensed Consolidated Financial Statements for further information related to the Company’s debt.

Provision for income taxes for the second quarter and first six months of 2021 was at an effective tax rate of 17.5% and 20.6%, respectively.

Provision for income taxes for the second quarter and first six months of 2020 was at an effective tax rate of 20.7% and 18.5%, respectively.

For the second quarter and first six months of 2021 and 2020, the excess tax benefits resulting from stock option exercise activity had the impact of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the tables below.

For the second quarter and first six months of 2021, the effective tax rate was further impacted by the tax effect of acquisition-related expenses and the discrete tax benefit related to the settlement of uncertain tax positions in certain non-U.S.

Provision for income taxes for the third quarter and first nine months of 2021 was at an effective tax rate of 22.2% and 21.2%, respectively.

Provision for income taxes for the third quarter and first nine months of 2020 was at an effective tax rate of 22.1% and 20.0%, respectively.

For the third quarter and first nine months of 2021 and 2020, the excess tax benefits resulting from stock option exercise activity had the impact of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the tables below.

For the first nine months of 2021, the effective tax rate was further impacted by the tax effect of acquisition-related expenses and the discrete tax benefit related to the settlement of uncertain tax positions in certain non-U.S.

jurisdictions, each of which had the impact on the effective tax rate and earnings per share by the amounts noted in the tables below.

For the first six months of 2020, the effective tax rate was also impacted by a discrete tax benefit related to the settlements of refund claims in a non-U.S.

For the first nine months of 2020, the effective tax rate was also impacted by a discrete tax benefit related to the settlements of refund claims in a non-U.S.

jurisdiction and the resulting adjustments to deferred taxes, which had the impact of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the tables below.

Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 2, for the three and six months ended June 30, 2021 and 2020 was 24.5% for all periods, as reconciled in the tables below to the comparable effective tax rate based on GAAP results.

Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 2, for the three and nine months ended September 30, 2021 and 2020 was 24.5% for all periods, as reconciled in the tables below to the comparable effective tax rate based on GAAP results.

Refer to Note 6 of the Condensed Consolidated Financial Statements for further information related to income taxes.

Net income from continuing operations attributable to Amphenol Corporation and Net income (from continuing operations) per common share attributable to Amphenol Corporation - Diluted (“Diluted EPS”) were $367.2 and $0.59, respectively, for the second quarter of 2021, compared to $257.7 and $0.42, respectively, for the second quarter of 2020.

Excluding the effect of the aforementioned items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 2, were $377.6 and $0.61, respectively, for the second

quarter of 2021, compared to $245.3 and $0.40, respectively, for the second quarter of 2020.

Net income from continuing operations attributable to Amphenol Corporation and Diluted EPS were $696.7 and $1.12, respectively, for the first six months of 2021, compared to $499.8 and $0.82, respectively, for the first six months of 2020.

Excluding the effect of the aforementioned items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS were $704.4 and $1.13, respectively, for the first six months of 2021, compared to $462.5 and $0.76, respectively, for the first six months of 2020.

respectively, for the third quarter of 2021, compared to $346.6 and $0.56, respectively, for the third quarter of 2020.

Net income from continuing operations attributable to Amphenol Corporation and Diluted EPS were $1,115.5 and $1.79, respectively, for the first nine months of 2021, compared to $846.4 and $1.38, respectively, for the first nine months of 2020.

Excluding the effect of the aforementioned items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS were $1,110.9 and $1.78, respectively, for the first nine months of 2021, compared to $798.4 and $1.30, respectively, for the first nine months of 2020.

The following tables reconcile Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.

GAAP financial measures for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

GAAP financial measures for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Reported (GAAP)

Acquisition-related expenses

Excess tax benefits related to stock-based compensation

Discrete tax item

Adjusted (non-GAAP) (2)

Six Months Ended June 30,

Nine Months Ended September 30,

Reported (GAAP)

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(1) While the terms “operating margin” and “effective tax rate” are not considered U.S.

GAAP financial measures, for purposes of this table, we derive the reported (GAAP) measures based on GAAP results, which serve as the basis for the reconciliation to their comparable non-GAAP financial measure.

(2) All percentages and per share amounts in this table were calculated using actual, unrounded results;

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Following the acquisition of MTS, the Company concluded that the MTS T&S business met the discontinued operations reporting criteria as of the MTS acquisition date of April 7, 2021 in light of our definitive agreement to sell the MTS T&S business to ITW.

As a result, the financial results of the MTS T&S business are reported as discontinued operations for the three and six months ended June 30, 2021.

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes, was $2.6 for both the second quarter and first six months of 2021.

As a result, the financial results of the MTS T&S business are reported as discontinued operations for the three and nine months ended September 30, 2021.

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes, was $7.7 and $10.3 for the third quarter and first nine months of 2021, respectively.

Income from discontinued operations relates to the results associated with the MTS T&S business that was acquired as part of the MTS acquisition.

The Company will continue to account for the MTS T&S business as discontinued operations until the business is sold to ITW upon the receipt of all required regulatory approvals and the satisfaction of other customary closing conditions, which we expect to occur within one year of the date of the acquisition of MTS.

The Company expects to incur certain transaction fees and other professional and external costs associated with the planned sale of the

MTS T&S business.

The Company will incur certain transaction fees and other professional and external costs

associated with the planned sale of the MTS T&S business.

Refer to Note 12 of the Notes to Condensed Consolidated Financial Statements for further details related to the planned divestiture of the MTS T&S business.

Liquidity and Capital Resources

As of June 30, 2021 and December 31, 2020, the Company had cash, cash equivalents and short-term investments of $1,242.6 and $1,738.1, respectively, with the majority of such funds located outside of the United States.

As of September 30, 2021 and December 31, 2020, the Company had cash, cash equivalents and short-term investments of $1,302.5 and $1,738.1, respectively, with the majority of such funds located outside of the United States.

On April 7, 2021, the Company used a combination of cash and cash equivalents on hand and borrowings under its U.S.

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The Company intends to distribute certain post-2017 foreign earnings and has accrued foreign and U.S.

state and local taxes, if applicable, on those earnings as appropriate as of June 30, 2021, and intends to indefinitely reinvest all remaining post-2017 foreign earnings.

state and local taxes, if applicable, on those earnings as appropriate as of September 30, 2021, and intends to indefinitely reinvest all remaining post-2017 foreign earnings.

The Company intends to evaluate future earnings for distribution, and accrue for those distributions where appropriate, and to indefinitely reinvest all other foreign earnings.

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The Company’s primary sources of liquidity are internally generated cash flow, our cash, cash equivalents and short-term investments on hand, the Commercial Paper Programs and the Revolving Credit Facility (each as defined and discussed further within this Item 2).

Commercial Paper Program to partially fund the acquisition of MTS, provide adequate liquidity to meet its obligations for at least the next twelve months.

The Company believes that its cash, cash equivalents and short-term investment position on hand, ability to generate future cash flow from operations, availability under its credit facilities, and access to capital markets (including the recent issuance of the Company’s $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”) in September 2021, as well as recent borrowings under the U.S.

Commercial Paper Program that were used to both partially fund the acquisition of MTS and to redeem in full the Company’s 3.125% Senior Notes due September 15, 2021 (the “3.125% Senior Notes”)), provide adequate liquidity to meet its obligations for at least the next twelve months.

The Company’s primary ongoing cash requirements will be for operating and capital expenditures, product development activities, repurchases of its Common Stock, dividends, debt service, payments associated with the Transition Tax (which is payable in annual installments until 2025), taxes due upon the repatriation of foreign earnings (which will be payable upon the repatriation of such earnings), and funding of pension obligations.

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Cash Flow Summary

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the six months ended June 30, 2021 and 2020, as reflected in the Condensed Consolidated Statements of Cash Flow:

Six Months Ended June 30,

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the nine months ended September 30, 2021 and 2020, as reflected in the Condensed Consolidated Statements of Cash Flow:

Nine Months Ended September 30,

Net cash provided by operating activities from continuing operations

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The ability to generate cash from operating activities is one of the Company’s fundamental financial strengths.

Net cash provided by operating activities from continuing operations (“Operating Cash Flow”) was $ 732.0 in the first six months of 2021 compared to $752.4 in the first six months of 2020.

The decrease in Operating Cash Flow for the first six months of 2021 compared to the first six months of 2020 is primarily due to a higher usage of cash related to the change in working capital, partially offset by an increase in net income from continuing operations.

In the first six months of 2021, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $194.9, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in inventories of $165.4, accounts receivable of $42.4 and prepaid expenses and other current assets of $15.0 and a decrease in accrued liabilities, including income taxes, of $24.6, partially offset by an increase in accounts payable of $52.5.

In the first six months of 2020, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow decreased $70.8, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts payable of $72.3 and accrued liabilities, including income taxes, of $34.8, along with a decrease in accounts receivable of $54.8, partially offset by increases in inventories of $69.3 and prepaid expenses and other current assets of $21.8.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at June 30, 2021 as compared to December 31, 2020.

Accounts receivable increased $ 121.2 to $2,072.8, primarily due to higher sales in the second quarter of 2021 relative to the fourth quarter of 2020, along with the impact of the MTS acquisition and the other five acquisitions (collectively, the “2021 acquisitions”) that closed during the first six months of 2021, partially offset by the effect of translation from exchange rate changes (“Translation”) at June 30, 2021 compared to December 31, 2020.

Days sales outstanding at June 30, 2021 and December 31, 2020 were 71 days and 72 days, respectively.

Inventories increased $ 309.2 to $1,771 .4, primarily due to higher sales in addition to the impact of recent supply chain disruptions experienced during the first six months of 2021, along with the impact of the 2021 acquisitions, partially offset by Translation.

Inventory days at June 30, 2021 and December 31, 2020 were 85 days and 79 days, respectively.

Net cash provided by operating activities from continuing operations (“Operating Cash Flow”) was $ 1,060.4 in the first nine months of 2021 compared to $1,151.0 in the first nine months of 2020.

The decrease in Operating Cash Flow for the first nine months of 2021 compared to the first nine months of 2020 is primarily due to a higher usage of cash related to the change in working capital, partially offset by an increase in net income from continuing operations.

In the first nine months of 2021, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $414.1, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in inventories of $358.3, accounts receivable of $186.9 and prepaid expenses and other current assets of $50.5, partially offset by increases in accounts payable of $152.9 and accrued liabilities, including income taxes, of $28.7.

In the first nine months of 2020, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow decreased $38.6, excluding the impact of acquisitions and foreign currency translation, due to increases in accounts payable of $191.7 and accrued liabilities, including income taxes, of $80.6, partially offset by increases in accounts receivable of $126.4, inventories of $65.2, and prepaid expenses and other current assets of $42.1.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at September 30, 2021 as compared to December 31, 2020.

Accounts receivable increased $ 252.9 to $2,204.5, primarily due to higher sales in the third quarter of 2021 relative to the fourth quarter of 2020, along with the impact of the MTS acquisition and the other five acquisitions (collectively, the “2021 acquisitions”) that closed during the first nine months of 2021, partially offset by the effect of translation from exchange rate changes (“Translation”) at September 30, 2021 compared to December 31, 2020.

Days sales outstanding at September 30, 2021 and December 31, 2020 were 70 days and 72 days, respectively.

Inventories increased $ 490.3 to $1,952 .5, primarily due to higher sales in addition to the impact of recent supply chain disruptions experienced during the first nine months of 2021, along with the impact of our 2021 acquisitions, which carry more days of inventory than the Company average, partially offset by Translation.

Inventory days at September 30, 2021 and December 31, 2020 were 91 days and 79 days, respectively.

Prepaid expenses and other current assets increased $53.2 to $392.1, primarily due to increases in certain prepaid expenses and other current receivables as well as the impact of the 2021 acquisitions.

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Other intangible assets, net increased $206.1 to $603.6, primarily due to the recognition of certain intangible assets related to the 2021 acquisitions, primarily from the MTS acquisition, partially offset by amortization.

Other long-term assets increased $33.8 to $386.1, primarily due to an increase in operating lease right-of-use assets resulting from both leases assumed from the 2021 acquisitions as well as new and renewed lease agreements entered into during the first six months of 2021.

Accounts payable increased $84.0 to $1,204.7, primarily due to increased purchasing activity related to higher sales levels, along with the impact of the 2021 acquisitions.

Payable days at June 30, 2021 and December 31, 2020 were 60 days and 61 days, respectively.

Other long-term assets increased $35.6 to $387.9, primarily due to an increase in operating lease right-of-use assets resulting from both leases assumed from the 2021 acquisitions as well as new and renewed lease agreements entered into during the first nine months of 2021.

Accounts payable increased $179.3 to $1,300.0, primarily due to increased purchasing activity related to higher sales levels, along with the impact of the 2021 acquisitions, partially offset by Translation.

Payable days at September 30, 2021 and December 31, 2020 were 61 days.

Total accrued expenses, including accrued income taxes, increased $125.6 to $1,078.9, primarily as a result of the MTS acquisition and the other 2021 acquisitions, along with an increase in accrued salaries and wages and other accrued expenses, partially offset by a decrease in accrued income taxes, primarily resulting from certain tax payments.

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The following table reconciles Free Cash Flow to its most directly comparable U.S.

GAAP financial measure for the six months ended June 30, 2021 and 2020.

The decrease in Free Cash Flow was

primarily driven by an increase in capital expenditures, and to a lesser extent, the decrease in Operating Cash Flow, as described above.

GAAP financial measure for the nine months ended September 30, 2021 and 2020.

The decrease in Free Cash Flow was primarily driven by a decrease in Operating Cash Flow, as described above, and to a lesser extent, an increase in capital expenditures.

The following table is on a continuing operations basis only and excludes any cash flows related to discontinued operations:

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Cash Flow (GAAP)

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Cash flows from investing activities consist primarily of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment, net sales and maturities (purchases) of short-term investments, and acquisitions.

Net cash used in investing activities from continuing operations was $1,721.3 in the first six months of 2021, compared to $151.7 in the first six months of 2020.

In the first six months of 2021, net cash used in investing activities from continuing operations was driven primarily by the use of $1,531.0 to fund acquisitions and capital expenditures (net of disposals) of $181.7, partially offset by net sales and maturities of short-term investments of $2.6.

In the first six months of 2020, net cash used in investing activities was driven primarily by capital expenditures (net of disposals) of $126.4, the use of $16.5 to fund acquisitions, and net purchases of short-term investments of $8.8.

Net cash used in investing activities from continuing operations was $1,810.0 in the first nine months of 2021, compared to $262.5 in the first nine months of 2020.

In the first nine months of 2021, net cash used in investing activities from continuing operations was driven primarily by the use of $1,531.0 to fund acquisitions and capital expenditures (net of disposals) of $271.8, partially offset by net sales and maturities of short-term investments of $1.3.

In the first nine months of 2020, net cash used in investing activities was driven primarily by capital expenditures (net of disposals) of $194.0, the use of $50.3 to fund acquisitions, and net purchases of short-term investments of $18.2.

Financing Activities

Cash flows from financing activities consist primarily of cash flows associated with borrowings and repayments of the Company’s credit facilities and other long-term debt, repurchases of Common Stock, proceeds from stock option exercises, dividend payments, and distributions to and purchases of noncontrolling interests.

Net cash provided by financing activities from continuing operations was $613.0 in the first six months of 2021, compared to net cash used in financing activities from continuing operations of $191.4 in the first six months of 2020.

For the first six months of 2021, net cash provided by financing activities from continuing operations was driven primarily by (i) net borrowings of $1,402.7 comprised primarily of borrowings under the U.S.

Commercial Paper Program, most of the proceeds of which were used for the MTS acquisition and (ii) cash proceeds of $103.3 from the exercise of stock options, partially offset by (i) debt repayments of $387.1, primarily related to the repayment of the then-outstanding MTS senior notes, (ii) repurchases of the Company’s common stock of $320.1, (iii) dividend payments of $173.4, (iv) distributions to and purchases of noncontrolling interests of $8.3, and (v) payments of $4.1 associated with the deferred purchase price related to acquisitions.

For the first six months of 2020, net cash used in financing activities was driven primarily by (i) the repayment of the Company’s 2.20% U.S.

Senior Notes due April 2020 and other debt of $401.3, (ii) net repayments related to the Company’s commercial paper programs of $385.2, (iii) repurchases of the Company’s common stock of $257.2, (iv) dividend payments of $148.4, (v) payment related to acquisition-related contingent consideration of $75.0, (vi) distributions to and purchases of noncontrolling interests of $9.7, (vii) payments of costs of $8.7 related to debt financing primarily associated with the 2025 Senior Notes and 2026 Euro Notes (each as defined below), and (viii) net repayments under the Company’s credit facilities of $0.7, partially offset by the (i) net cash proceeds from both the February 2020 issuance of the 2025 Senior Notes and the May 2020 issuance of the 2026 Euro Notes of $942.3 and (ii) cash proceeds of $152.5 from the exercise of stock options.

Net cash provided by financing activities from continuing operations was $438.4 in the first nine months of 2021, compared to net cash used in financing activities from continuing operations of $384.2 in the first nine months of 2020.

For the first nine months of 2021, net cash provided by financing activities from continuing operations was driven primarily by (i) net borrowings of $925.0 primarily under the U.S.

Commercial Paper Program, the majority of the proceeds of which were used for the MTS acquisition and to redeem the 3.125% Senior Notes, (ii) net cash proceeds of $749.9, primarily related to the September 2021 issuance of the 2031 Senior Notes, and (iii) cash proceeds of $180.9 from the exercise of stock options, partially offset by (a) debt repayments of $616.2, primarily related to the repayment of the assumed outstanding MTS senior notes in the second quarter of 2021 as well as the redemption of the 3.125% Senior Notes in the third quarter of 2021, (b) repurchases of the Company’s Common Stock of $491.0, (c) dividend payments of $260.0, (d) cash transfer of $28.7 made by the Company’s continuing operations to its discontinued operations in order to fund the September 2021 payment of contingent consideration assumed as part of MTS’s acquisition accounting, (e) distributions to and purchases of noncontrolling interests of $11.3, (f) payments of $6.1 related to debt financing costs associated with the 2031 Senior Notes, and (g) payments of $4.1 associated with the deferred purchase price related to acquisitions.

For the first nine months of 2020, net cash used in financing activities was driven primarily by (i) repurchases of the Company’s Common Stock of $459.2, (ii) debt repayments of $402.9 related to the Company’s 2.20% U.S.

Senior Notes due April 2020 and other debt, (iii) net repayments of $385.9 related to the Company’s commercial paper programs, (iv) dividend payments of $223.0, (v) payment of $75.0 related to acquisition-related contingent consideration, (vi) payment of $16.2 associated with the deferred purchase price related to an acquisition, (vii) distributions to and purchases of noncontrolling interests of $11.5, (viii) payments of $8.7 related to

debt financing costs primarily associated with the 2025 Senior Notes and 2026 Euro Notes (each as defined below), and (ix) net repayments of $0.7 under the Company’s credit facilities, partially offset by the (a) net cash proceeds of $942.3 from both the February 2020 issuance of the 2025 Senior Notes and the May 2020 issuance of the 2026 Euro Notes and (b) cash proceeds of $256.6 from the exercise of stock options.

The Company has significant flexibility to meet its financial commitments.

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The Company may utilize the Revolving Credit Facility for general corporate purposes.

As of June 30, 2021 and December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

As of September 30, 2021 and December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.

At June 30, 2021, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

At September 30, 2021, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

Pursuant to the terms of the U.S.

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The maximum aggregate principal amount outstanding of USCP Notes at any time is $2,500.0.

The amount of USCP Notes outstanding as of June 30, 2021 was $1,401.0, with a weighted average interest rate of 0.21%.

On April 7, 2021, a combination of borrowings under the U.S.

Commercial Paper Program and cash and cash equivalents on hand were used to fund the acquisition of MTS Systems Corporation.

In addition, in the third quarter of 2021, the Company used borrowings under the U.S.

Commercial Paper Program to redeem the 3.125% Senior Notes, of which $227.7 aggregate principal amount was outstanding.

The amount of USCP Notes outstanding as of September 30, 2021 was $924.3, with a weighted average interest rate of 0.19%.

As of December 31, 2020, there were no USCP Notes outstanding.

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The maximum aggregate principal amount outstanding of ECP Notes at any time is $2,000.0.

As of June 30, 2021 and December 31, 2020, there were no ECP Notes outstanding.

As of September 30, 2021 and December 31, 2020, there were no ECP Notes outstanding.

Amounts available under the Commercial Paper Programs may be borrowed, repaid and re-borrowed from time to time.

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The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of Commercial Paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future.

As of June 30, 2021, the Company has outstanding senior notes (the “Senior Notes”) as follows:

September 2021

As of September 30, 2021, the Company has outstanding senior notes (the “Senior Notes”) as follows:

February 2022

February 2030

September 2031

May 2026 (Euro Notes)

October 2028 (Euro Notes)

On September 14, 2021, the Company issued the 2031 Senior Notes at 99.634% of face value.

The Company used the net proceeds from the 2031 Senior Notes to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

On February 20, 2020, the Company issued $400.0 principal amount of unsecured 2.050% Senior Notes due March 1, 2025 at 99.829% of face value (the “2025 Senior Notes”).

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Senior Notes, subject to certain terms and conditions.

The remaining principal amounts outstanding associated with the Company’s 3.125% Senior Notes due in September 2021 and 4.00% Senior Notes due in February 2022 are each recorded, net of the related unamortized discount and debt issuance costs, within Current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021.

The remaining principal amount outstanding associated with the Company’s 4.00% Senior Notes (“2022 Senior Notes”) due in February 2022 is recorded, net of the related unamortized discount and debt issuance costs, within Current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2021.

On October 1, 2021, the Company issued a notice of full redemption to the holders of the 2022 Senior Notes, which will be redeemed at par value on November 1, 2021.

On May 4, 2020, the Euro Issuer issued €500.0 (approximately $545.4 at date of issuance) principal amount of unsecured 0.750% Senior Notes due May 4, 2026 at 99.563% of face value (the “2026 Euro Notes” or the “0.750% Euro Senior Notes” and collectively with the Euro Notes due October 2028, the “Euro Notes”).

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In April 2018, the Company’s Board of Directors authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of the Company’s Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

During the three and six months ended June 30, 2021, the Company repurchased 0.8 million and 3.1 million shares of its Common Stock for $51.0 and $203.8, respectively, under the 2018 Stock Repurchase Program.

During the first nine months of 2021, the Company repurchased 3.1 million shares of its Common Stock for $203.8 under the 2018 Stock Repurchase Program.

As a result of these purchases, the Company completed all purchases authorized under the 2018 Stock Repurchase Program and, therefore, the 2018 Stock Repurchase Program has terminated.

Of the total repurchases made during the first six months of 2021, 0.3 million shares, or $19.8, have been retained in Treasury stock at the time of repurchase;

the remaining 2.8 million shares, or $184.0, have been retired by the Company.

The Company did not repurchase any of its Common Stock during the three months ended June 30, 2020, while during the six months ended June 30, 2020, the Company repurchased 5.4 million shares of its Common Stock for $257.2 under the 2018 Stock Repurchase Program.

All of the shares repurchased during the first six months of 2020 were retired by the Company.

Of the total repurchases made during the first nine months of 2021, 0.3 million shares, or $19.8, were retained in Treasury stock at the time of repurchase;

the remaining 2.8 million shares, or $184.0, were retired by the Company.

During the three and nine months ended September 30, 2020, the Company repurchased 3.7 million and 9.1 million shares of its Common Stock for $201.9 and $459.2, respectively, under the 2018 Stock

Repurchase Program.

Of the total repurchases made during the first nine months of 2020, 2.0 million shares, or $110.3, were retained in Treasury stock at the time of repurchase;

the remaining 7.1 million shares, or $348.9, were retired by the Company.

On April 27, 2021, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may purchase up to $2,000.0 of the Company’s Common Stock during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act.

During the three months ended June 30, 2021, the Company repurchased 1.7 million shares of its Common Stock for $116.3 under the 2021 Stock Repurchase Program.

All of the shares repurchased under the 2021 Stock Repurchase Program during the second quarter of 2021 have been or will be retired by the Company.

From July 1, 2021 to July 27, 2021, the Company repurchased 0.7 million additional shares of its Common Stock for $48.8 under the 2021 Stock Repurchase Program, and has remaining authorization to purchase up to $1,834.9 of its Common Stock under the 2021 Stock Repurchase Program.

During the three and nine months ended September 30, 2021, the Company repurchased 2.3 million and 4.1 million shares of its Common Stock for $170.9 and $287.2, respectively, under the 2021 Stock Repurchase Program.

All of the shares repurchased under the 2021 Stock Repurchase Program during the nine months ended September 30, 2021 have been or will be retired by the Company.

From October 1, 2021 to October 26, 2021, the Company repurchased 0.6 million additional shares of its Common Stock for $46.1 under the 2021 Stock Repurchase Program, and has remaining authorization to purchase up to $1,666.6 of its Common Stock under the 2021 Stock Repurchase Program.

The price and timing of any future purchases under the 2021 Stock Repurchase Program will depend on a number of factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Company’s Common Stock.

Contingent upon declaration by the Company’s Board of Directors, the Company pays a quarterly dividend on shares of its Common Stock.

The following table summarizes the declared quarterly dividends per share as well as the dividends declared and paid for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

The following table summarizes the declared quarterly dividends per share as well as the dividends declared and paid for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September 30,

Dividends declared per share

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Dividends paid (including those declared in the prior year)

On October 20, 2020, the Company’s Board of Directors approved an increase to its quarterly dividend rate from $0.125 per share to $0.145 per share effective with dividends declared in the fourth quarter of 2020, and then on October 26, 2021, approved a further increase to its quarterly dividend rate from $0.145 per share to $0.20 per share effective with dividends declared in the fourth quarter of 2021, contingent upon declaration by the Company’s Board of Directors.

Acquisitions and Divestitures

During the first six months of 2021, the Company completed six acquisitions, all but one of which is included within the Interconnect Products and Assemblies segment, for approximately $1,531.0, net of cash acquired.

During the first nine months of 2021, the Company completed six acquisitions, all but one of which is included within the Interconnect Products and Assemblies segment, for approximately $1,531.0, net of cash acquired.

These 2021 acquisitions were not material, either individually or in the aggregate, to the Company.

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The MTS Sensors business further expands the Company’s range of sensor and sensor-based products across a wide array of industries and is reported as part of our continuing operations and within our Interconnect Products and Assemblies segment.

In the second quarter of 2021, the Company incurred $55.4 ($44.6 after-tax, or $0.07 per diluted share) of acquisition-related expenses, primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the MTS acquisition.

In the second quarter of 2021, the Company

incurred $55.4 ($44.6 after-tax, or $0.07 per diluted share) of acquisition-related expenses, primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the MTS acquisition.

On January 19, 2021 and prior to the closing of the MTS acquisition, the Company entered into a definitive agreement to sell the MTS T&S business to Illinois Tool Works Inc.

The agreed-upon sale price is approximately $750, subject to certain post-closing adjustments and excluding any outstanding net debt assumed by Amphenol related to the MTS T&S business.

The agreed-upon sale price is approximately $750, excluding any outstanding net debt assumed by Amphenol related to the MTS T&S business and subject to post-closing adjustment.

The Company expects to close on the sale of the MTS T&S business upon the receipt of all required regulatory approvals and the satisfaction of other customary closing conditions, which is expected to be within one year of the date of the acquisition of MTS.

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The Company did not assign the MTS T&S business to either of our two reportable business segments due to its planned sale.

The Company will incur certain transaction fees and other professional and external costs associated with the planned sale of the MTS T&S business.

Amphenol will not have any continuing involvement with the MTS T&S business after the date of its divestiture.

For further discussion of the Company’s 2021 acquisitions, including MTS, refer to Note 11 of the Notes to Condensed Consolidated Financial Statements.

For further details related to the Company’s discontinued operations as

well as the planned divestiture of the MTS T&S business, refer to Note 12 of the Notes to Condensed Consolidated Financial Statements.

For further details related to the Company’s discontinued operations as well as the planned divestiture of the MTS T&S business, refer to Note 12 of the Notes to Condensed Consolidated Financial Statements.

Environmental Matters

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The reconciliations of these non-GAAP financial measures to the most directly comparable U.S.

GAAP financial measures for the three and six months ended June 30, 2021 and 2020 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 2:

GAAP financial measures for the three and nine months ended September 30, 2021 and 2020 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 2:

● Adjusted Diluted EPS is defined as diluted earnings per share from continuing operations (as reported in accordance with U.S.

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Adjusted Diluted EPS is calculated as Adjusted Net Income from continuing operations attributable to Amphenol Corporation, as defined below, divided by the weighted average outstanding diluted shares as reported in the Condensed Consolidated Statements of Income.

● Adjusted Effective Tax Rate is defined as Provision for income taxes, as reported in the Condensed Consolidated Statements of Income, expressed as a percentage of Income from continuing operations before income taxes, as reported in the Condensed Consolidated Statements of Income, each excluding the income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the periods presented.

Statements of Income, excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the periods presented.

● Adjusted Effective Tax Rate is defined as Provision for income taxes, as reported in the Condensed Consolidated Statements of Income, expressed as a percentage of Income from continuing operations before income taxes, as reported in the Condensed Consolidated Statements of Income, each excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the periods presented.

● Adjusted Net Income from continuing operations attributable to Amphenol Corporation is defined as Net income from continuing operations attributable to Amphenol Corporation, as reported in the Condensed Consolidated Statements of Income, excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the periods presented.

● Adjusted Operating Income is defined as Operating income, as reported in the Condensed Consolidated Statements of Income, excluding income and expenses that are not directly related to the Company’s operating performance during the periods presented.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis