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Item 2. Management’s Discussion and Analysis

2023-04-28 compared with 2022-10-28 · 171 added, 267 removed, 175 unchanged (71% 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 financial condition and results of operations for the three and nine months ended September 30, 2022 and 2021 has been derived from and should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes thereto included in Part I, Item 1 herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our” or “us”).

The following discussion and analysis of the financial condition and results of operations for the three months ended March 31, 2023 and 2022 has been derived from and should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes thereto included in Part I, Item 1 herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”).

The following discussion and analysis should also 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, 2022 (the “2022 Annual Report”).

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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.

The following discussion and analysis also includes references to certain non-GAAP financial measures, which are defined in the “Non-GAAP Financial Measures” section below, including “Constant Currency Net Sales Growth” and “Organic Net Sales Growth”.

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All statements that address events or developments that we expect or believe may or will occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Such forward-looking statements are based on our management’s assumptions and beliefs about future events or circumstances using information currently available, and as a result, they are subject to risks and uncertainties.

The forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, may contain words and terms such as:

“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “look ahead,” “may,” “ongoing,” “optimistic,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or “would” and other words and terms of similar meaning.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected earnings, revenues, growth, liquidity, effective tax rate or other matters.

Although the Company believes the expectations reflected in all forward-looking statements, including those we may make with regards to expected earnings, revenues, growth, liquidity, the Company’s effective tax rate, interest rates, and other matters discussed herein, are based upon reasonable assumptions, the expectations may not be attained or there may be material deviation.

Although the Company believes the expectations reflected in all forward-looking statements are based upon reasonable assumptions, the expectations may not be attained or there may be material deviation.

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

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trade policies (including but not limited to sanctions) and other factors beyond the Company’s control;

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 government regulations that inhibit our ability to operate certain of our facilities in the ordinary course, travel restrictions, supplier constraints, supply chain interruptions, logistics challenges and limitations, labor disruptions and reduced demand from certain customers;

uncertainties associated with an economic slowdown or recession that could negatively affect the financial condition of our customers and could result in reduced demand;

risks associated with our inability to obtain certain raw materials and components in the current challenging supply chain environment, as well as inflationary risks, including the risk that the cost of certain of the Company’s raw materials and components is increasing;

negative impacts caused by extreme weather conditions and natural catastrophic events, including those caused by climate change and global warming;

risks associated with the improper conduct by any of our

employees, customers, suppliers, distributors or any other business partners which could impair our business reputation and financial results and could result in our non-compliance with anti-corruption laws and regulations of the U.S.

uncertainties associated with an economic slowdown or recession in any of the Company’s end markets that could negatively affect the financial condition of our customers and could result in reduced demand;

risks and impacts associated with adverse public health developments, including epidemics and pandemics, such as the COVID-19 pandemic, which disrupted our operations from 2020 through early 2023 and could disrupt them again in the future;

risks associated with our inability to obtain certain raw materials and components, in light of supply chain and logistical challenges that caused and continue to cause supply chain constraints and commodity price increases on certain raw materials and components used by the Company;

cybersecurity threats and techniques used to disrupt operations and gain unauthorized access to our information technology systems, including, but not limited to, malware, phishing, credential harvesting, ransomware and other increasingly sophisticated attacks, that continue to expand and evolve globally, which could, among other things, impair our information technology systems and disrupt business operations, result in reputational damage, loss of our intellectual property, the 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 potentially lead to litigation and/or governmental investigations and fines, among other risks;

negative impacts caused by extreme weather conditions and natural catastrophic events, including those caused or intensified by climate change and global warming;

risks associated with the improper conduct by any of our employees, customers, suppliers, distributors or any other business partners which could impair our business reputation and financial results and could result in our non-compliance with anti-corruption laws and regulations of the U.S.

government and various foreign jurisdictions;

changes in exchange rates of the various currencies in which the Company conducts business;

risks associated with the Company’s dependence on attracting, recruiting, hiring and retaining skilled employees, including as part of our various management teams;

the Company’s dependence on sales to the communications industry, which markets are dominated by large manufacturers and operators who regularly exert significant pressure on suppliers, including the Company;

changes in defense expenditures in the military market, including the impact of reductions or changes in the defense budgets of U.S.

and foreign governments;

the risks associated with the Company’s dependence on attracting, recruiting, hiring and retaining skilled employees, including as part of our various management teams;

risks associated with the increasing scrutiny and expectations regarding environmental, social and corporate governance matters that could result in additional costs or risks or otherwise adversely impact our business;

risks and difficulties in trying to compete successfully on the basis of technology innovation, product quality and performance, price, customer service and delivery time;

the Company’s dependence on end market dynamics to sell its products, particularly in the communications, automotive and military end markets, pricing pressures resulting from large customers that regularly exert pressure on their suppliers, including the Company, and changes in defense expenditures of the U.S.

governments, which are subject to political and budgetary fluctuations and constraints, all of which could adversely affect our operating results;

difficulties and unanticipated expenses in connection with purchasing and integrating newly acquired businesses, including the potential for the impairment of goodwill and other intangible assets;

events beyond the Company’s control that could lead to an inability to meet its financial and other covenants, which could result in a default under the Company’s revolving credit facility or unsecured term loan credit facility;

events beyond the Company’s control that could lead to an inability to meet its financial and other covenants and requirements, which could result in a default under the Company’s revolving credit facility, unsecured term loan credit facility or any of our various senior notes;

risks associated with the Company’s inability to access the global capital markets on favorable terms, including as a result of significant deterioration of general economic or capital market conditions, or as a result of a downgrade in the Company’s credit rating;

changes in interest rates;

cybersecurity threats, including but not limited to malware, phishing, credential harvesting, ransomware and other increasingly sophisticated attacks, that could impair our information technology systems and could disrupt business operations, result in the 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, any of which could adversely impact our reputation and operating results and potentially lead to litigation and/or governmental investigations and fines;

government contracting risks that the Company may be subject to, including laws and regulations governing reporting obligations, performance of government contracts and related risks associated with conducting business with the U.S.

and other foreign governments or their suppliers (both directly and indirectly);

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

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

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

any difficulties in protecting the Company’s intellectual property rights;

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;

and incremental costs and other risks that may arise in connection with regulatory efforts to combat the negative effects of climate change.

any difficulties in enforcing and protecting the Company’s intellectual property rights;

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

and incremental costs, risks and regulations associated with efforts to combat the negative effects of climate change.

A further description of these uncertainties and other risks can be found in the 2022 Annual Report, Quarterly Reports on Form 10-Q and the Company’s other reports filed with the Securities and Exchange Commission.

These or other uncertainties may cause the Company’s actual future results to be materially different from those expressed in any forward-looking statements.

These or other uncertainties not identified in these documents (that we either currently do not expect to have an adverse effect on our business or that we are unable to predict or identify at this time) may cause the Company’s actual future results to be materially different from those expressed in any forward-looking statements.

The Company undertakes no obligation to update or revise any forward-looking statements except as required by law.

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

The COVID-19 pandemic has affected our offices and manufacturing facilities throughout the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.

The COVID-19 pandemic caused widespread disruptions to our Company during the first half of 2020, and to a lesser extent, those disruptions have continued since then.

As of September 30, 2022, we continue to experience some disruptions, and at a minimum, we expect disruptions to continue for the remainder of 2022 and potentially beyond.

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

More recently, during most of the first half of 2022, COVID-19 outbreaks in China resulted in new government-imposed lockdowns in certain regions, which impacted the ability of several of our operations and manufacturing facilities to operate in the ordinary course .

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, the impact of any additional resurgences from known or new variants, current and future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines and treatments, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain uncertain and unpredictable.

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

There can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, operations, financial condition, liquidity and results of operations in the future.

New Reportable Business Segments

Effective January 1, 2022, the Company aligned its businesses into the following three newly formed reportable business segments, which have replaced our historic reportable business segments :

Reportable Business Segments

The Company aligns its businesses into the following three reportable business segments :

● Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products for use in the industrial, military, commercial aerospace, automotive, mobile networks and information technology and data communications end markets.

● Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas, for use in the information technology and data communications, mobile devices, industrial, mobile networks, broadband communications, automotive, commercial aerospace and military end markets.

communications, mobile devices, industrial, mobile networks, broadband communications, automotive, commercial aerospace and military end markets.

● Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems used in the automotive, industrial, information technology and data communications, mobile networks, military and commercial aerospace end markets.

This new alignment reinforces the Company’s entrepreneurial culture and the clear accountability of each of our business unit general managers, while enhancing the scalability of Amphenol’s business for the future.

The Company began reporting under its new reportable segments in connection with its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.

As part of this Quarterly Report on Form 10-Q, the Company has included the recasting of relevant prior year period segment information in order to enable year-over-year segment comparisons.

Refer to Note 13 o f the Notes to Condensed Consolidated Financial Statements, as well as the 2021 Annual Report, for further details related to the Company’s change in its reportable business segments effective January 1, 2022.

Refer to Note 13 o f the Notes to Condensed Consolidated Financial Statements, as well as the 2022 Annual Report, for further details related to the Company’s reportable business segments.

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 buybacks.

Companies will be required to reassess their valuation allowances for certain affected deferred tax assets in the period of enactment but will not need to remeasure deferred tax balances for the related tax accounting implications of the CAMT.

The impact of these provisions, which will become effective for Amphenol beginning on January 1, 2023, will depend on several factors, including interpretive regulatory guidance which has not yet been released.

The Company continues to review and assess the provisions of the IRA, including several other non-tax related provisions, and its potential impact on our financial condition, results of operations, liquidity and cash flows.

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, 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 our financial condition, results of operations, liquidity and cash flows.

Results of Operations

Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021

Net sales were $3,295.2 in the third quarter of 2022 compared to $2,818.5 in the third quarter of 2021, which represented an increase of 17% in U.S.

dollars, 21% in constant currencies and 18% organically, over the prior year period.

Net sales were $9,383.8 in the first nine months of 2022 compared to $7,849.5 in the first nine months of 2021, which represented an increase of 20% in U.S.

Three months ended March 31, 2023 compared to the three months ended March 31, 2022

Net sales were $2,974.0 in the first quarter of 2023 compared to $2,951.9 in the first quarter of 2022, which represented an increase of 1% in U.S.

dollars, 3% in constant currencies and 1% organically, over the prior year period.

The increases in net sales in the third quarter and first nine months of 2022 were driven by robust growth across all three reportable business segments, as described below.

From a market standpoint, the increase in net sales in the third quarter of 2022 was driven by robust organic growth across virtually all markets, including the automotive, industrial, information technology and data communications, mobile devices, broadband communications, commercial aerospace and mobile networks markets, moderate growth in the military market, and contributions from the Company’s acquisition program.

The increase in net sales in the first nine months of 2022 was driven by robust organic growth across virtually all markets, including the automotive, information technology and data communications, industrial, mobile devices, broadband communications, and commercial aerospace markets, moderate growth in the mobile networks and military markets, and contributions from the Company’s acquisition program.

Net sales in the Harsh Environment Solutions segment (approximately 24% of net sales) in the third quarter of 2022 increased 12% in U.S.

dollars, 17% in constant currencies and 14% organically, compared to the third quarter of 2021.

The increase in the third quarter of 2022 was driven primarily by strong organic growth in the industrial, commercial aerospace, automotive and mobile networks markets and moderate growth in the military market, along with contributions from the Company’s acquisition program.

Net sales in the Harsh Environment Solutions segment (approximately 25% of net sales) in the first nine months of 2022 increased 14% in U.S.

dollars, 17% in constant currencies and 16% organically, compared to the first nine months of 2021.

The increase in the first nine months of 2022 was driven primarily by strong organic growth in the industrial, automotive, and commercial aerospace markets and moderate growth in the information technology and data communications market, along with contributions from the Company’s acquisition program.

Net sales in the Communications Solutions segment (approximately 46% of net sales) in the third quarter of 2022 increased 19% in U.S.

dollars, 22% in constant currencies and 17% organically, compared to the third quarter of 2021.

Net sales in the Communications Solutions segment (approximately 45% of net sales) in the first nine months of 2022 increased 23% in U.S.

dollars, 25% in constant currencies and 19% organically, compared to the first nine months of 2021.

The increases in the third quarter and first nine months of 2022 were driven by strong organic growth across virtually all markets, along with contributions from the Company’s acquisition program.

Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) in the third quarter of 2022 increased 17% in U.S.

dollars, 24% in constant currencies and 23% organically, compared to the third quarter of 2021.

The increase in the third quarter of 2022 was driven primarily by strong organic growth in the automotive, industrial, information technology and data communications, mobile networks and commercial aerospace markets.

Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) in the first nine months of 2022 increased 19% in U.S.

dollars, 24% in constant currencies and 19% organically, compared to the first nine months of 2021.

The increase in the first nine months of 2022 was driven primarily by strong organic growth in the automotive, information technology and data communications, and industrial markets, along with contributions from the Company’s acquisition program, partially offset by moderate declines in the mobile networks and military markets.

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

GAAP financial measures, by segment, geography and consolidated, for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021:

The organic increase in net sales in the first quarter of 2023 was driven by strong growth in the Harsh Environment Solutions and Interconnect and Sensor Systems segments, which was largely offset by a decline in the Communications Solutions segment, as described below.

From a market standpoint, the increase in net sales in the first quarter of 2023 was driven by organic growth in the commercial aerospace, broadband communications, military, automotive and industrial markets, along with contributions from the Company’s acquisition program, which was largely offset by organic sales declines in the information technology and data communications, mobile networks, and mobile devices markets.

Net sales in the Harsh Environment Solutions segment (approximately 29% of net sales) in the first quarter of 2023 increased 17% in U.S.

dollars, 20% in constant currencies and 15% organically, compared to the first quarter of 2022.

The increase in the first quarter of 2023 was primarily driven by organic growth in the commercial aerospace, automotive, military, and industrial markets, as well as contributions from the Company’s acquisition program, all of which were partially offset by organic sales declines in the information technology and data communications and mobile networks markets.

Net sales in the Communications Solutions segment (approximately 38% of net sales) in the first quarter of 2023 decreased 15% in U.S.

dollars, 13% in constant currencies and 13% organically, compared to the first quarter of 2022.

The decrease in the first quarter of 2023 was driven by organic sales declines in the information technology and data communications, industrial, mobile networks, and mobile devices markets, partially offset by organic growth in the broadband communications and automotive markets.

Net sales in the Interconnect and Sensor Systems segment (approximately 33% of net sales) in the first quarter of 2023 increased 10% in U.S.

dollars, 13% in constant currencies and 10% organically, compared to the first quarter of 2022.

The increase in the first quarter of 2023 was primarily driven by organic growth in the industrial and automotive

markets, along with contributions from the Company’s acquisition program, partially offset by organic sales declines in the mobile networks and information technology and data communications markets.

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

GAAP financial measures, by segment, geography and consolidated, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022:

Percentage Growth (relative to same prior year period) (1)

Sales Growth (4)

Three Months Ended September 30,

Net sales by:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Geography (6) :

United States

Nine Months Ended September 30,

Three Months Ended March 31,

Net sales by:

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The comparatively stronger U.S.

dollar for the third quarter and first nine months of 2022 had the effect of decreasing sales by approximately $120.7 and $231.1, respectively, relative to the comparable periods in 2021.

Selling, general and administrative expenses were $366.9, or 11.1% of net sales, and $1,059.0, or 11.3% of net sales, for the third quarter and first nine months of 2022, respectively, compared 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.

The decrease in selling, general and administrative expenses as a percentage of net sales in the third quarter and first nine months of 2022 is primarily driven by leverage on the higher sales volumes during both periods in 2022, relative to the comparable periods of 2021.

Administrative expenses represented approximately 4.5% and 4.6% of net sales for the third quarter and first nine months of 2022, respectively, and represented approximately 4.6% and 4.5% of net sales for the third quarter and first nine months of 2021, respectively.

Research and development expenses represented approximately 2.6% of net sales for both the third quarter and first nine months of 2022, and represented approximately 2.9% and 3.0% of net sales for the third quarter and first nine months of 2021, respectively.

Selling and marketing expenses represented

approximately 4.1% of net sales for both the third quarter and first nine months of 2022, and represented approximately 3.8% and 3.9% of net sales for the third quarter and first nine months of 2021, respectively.

Operating income was $681.1, or 20.7% of net sales, and $1,919.7, or 20.5% of net sales, for the third quarter and first nine months of 2022, respectively, compared to $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.

Operating income for both the third quarter and first nine months of 2022 includes $12.0 of acquisition-related expenses (separately presented in the Condensed Consolidated Statements of Income) comprised primarily of external transaction costs as well as the amortization related to the value associated with acquired backlog resulting from an acquisition that closed in 2022.

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

For both the three and nine months ended September 30, 2022, the acquisition-related expenses had the effect of decreasing net income from continuing operations by $10.5, or $0.02 per share.

For the nine months ended September 30, 2021, the 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 $693.1, or 21.0% of net sales, and $1,931.7, or 20.6% of net sales, for the three and nine months ended September 30, 2022, respectively, and $571.2, or 20.3% of net sales, and $1,567.6, or 20.0% of net sales, for the three and nine months ended September 30, 2021, respectively.

The increases in Adjusted Operating Income and Adjusted Operating Margin for the third quarter and first nine months of 2022 relative to the comparable periods in 2021 were primarily driven by normal operating leverage on the higher sales volumes, combined with the benefit of ongoing pricing actions, partially offset by the continued impact of the more challenging cost environment.

Operating income for the Harsh Environment Solutions segment for the third quarter and first nine months of 2022 was $207.1, or 26.1% of net sales, and $596.8, or 25.8% of net sales, respectively, compared to $184.7, or 26.1% of net sales, and $524.0, or 25.8% of net sales, for the third quarter and first nine months of 2021, respectively.

Operating margin for the Harsh Environment Solutions segment for the third quarter and first nine months of 2022 remained flat relative to the comparable periods in 2021, as normal operating leverage on the higher sales volumes, combined with the benefit of ongoing pricing actions, were offset by the continued impact of the more challenging cost environment.

Operating income for the Communications Solutions segment for the third quarter and first nine months of 2022 was $341.6, or 22.5% of net sales, and $927.2, or 22.0% of net sales, respectively, compared to $276.7, or 21.8% of net sales, and $716.3, or 21.0% of net sales, for the third quarter and first nine months of 2021, respectively.

The increases in operating margin for the Communications Solutions segment for the third quarter and first nine months of 2022 relative to the comparable periods in 2021 were primarily driven by normal operating leverage on the higher sales volumes, combined with the benefit of ongoing pricing actions, partially offset by the continued impact of the more challenging cost environment.

Operating income for the Interconnect and Sensor Systems segment for the third quarter and first nine months of 2022 was $185.3, or 18.8% of net sales, and $522.8, or 18.3% of net sales, respectively, compared to $146.5, or 17.4% of net sales, and $432.0, or 18.0% of net sales, for the third quarter and first nine months of 2021, respectively.

The increases in operating margin for the Interconnect and Sensor Systems segment for the third quarter and first nine months of 2022 relative to the comparable periods in 2021 were primarily driven by n ormal operating leverage on the higher sales volumes, combined with the benefit of ongoing pricing actions, partially offset by the continued impact of the more challenging cost environment.

Interest expense for the third quarter and first nine months of 2022 was $32.8 and $91.3, respectively, compared to $29.0 and $86.7 for the third quarter and first nine months of 2021, respectively.

The increase in interest expense is driven by the rising interest rate environment and its impact on the balance outstanding under the Company’s U.S.

dollar for the first quarter of 2023 had the effect of decreasing sales by approximately $68.2 relative to the comparable period in 2022.

Selling, general and administrative expenses were $346.3, or 11.6% of net sales for the first quarter of 2023, compared to $336.8, or 11.4% of net sales, for the first quarter of 2022.

Administrative expenses represented approximately 4.7% of net sales for the first quarter of 2023, and represented approximately 4.5% of net sales for the first quarter of 2022.

Research and development expenses represented approximately 2.8% of net sales for both the first quarter of 2023 and first quarter of 2022.

Selling and marketing expenses represented approximately 4.2% of net sales for the first quarter of 2023, and represented approximately 4.1% of net sales for the first quarter of 2022.

Operating income was $591.7, or 19.9% of net sales, for the first quarter of 2023, compared to $589.8, or 20.0% of net sales, for the first quarter of 2022.

Operating income for the first quarter of 2023 includes $5.4 of acquisition-related expenses (presented separately in the Condensed Consolidated Statements of Income) comprised of the amortization related to the value associated with acquired backlog resulting from an acquisition that closed in the first quarter of 2023.

For the three months ended March 31, 2023, the acquisition-related expenses had the effect of decreasing net income by $4.0, or $0.01 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 $597.1, or 20.1% of net sales, for the three months ended March 31, 2023, and $589.8, or 20.0% of net sales, for the three months ended March 31, 2022.

The increase in Adjusted Operating Income and Adjusted Operating Margin for the first quarter of 2023 relative to the comparable period in 2022 was primarily driven by normal operating leverage on the slightly higher sales volumes combined with the benefit of ongoing pricing actions.

Operating income for the Harsh Environment Solutions segment for the first quarter of 2023 was $226.3, or 26.5% of net sales, compared to $183.2, or 25.2% of net sales, for the first quarter of 2022.

The increase in operating margin for the Harsh Environment Solutions segment for the first quarter of 2023 relative to the comparable period in 2022 was primarily driven by normal operating leverage on the higher sales volumes combined with the benefit of ongoing pricing actions.

Operating income for the Communications Solutions segment for the first quarter of 2023 was $230.6, or 20.5% of net sales, compared to $282.5, or 21.4% of net sales, for the first quarter of 2022.

The decrease in operating margin for the Communications Solutions segment for the first quarter of 2023 relative to the comparable period in 2022 was primarily driven by the normal operating leverage from lower sales volumes, which was partially offset by the benefit of ongoing pricing actions.

Operating income for the Interconnect and Sensor Systems segment for the first quarter of 2023 was $178.8, or 18.0% of net sales, compared to $160.0, or 17.7% of net sales, for the first quarter of 2022.

The increase in operating margin for the Interconnect and Sensor Systems segment for the first quarter of 2023 relative to the comparable period in 2022 was primarily driven by n ormal operating leverage on the higher sales volumes combined with the benefit of ongoing pricing actions.

Interest expense for the first quarter of 2023 was $35.9, compared to $28.1 for the first quarter of 2022.

The increase in interest expense is driven by the rising interest rate environment, which primarily impacted borrowings under the Company’s U.S.

Commercial Paper Program.

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

Provision for income taxes for the third quarter and first nine months of 2022 was at an effective tax rate of 23.1% and 23.4%, respectively.

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.

For the third quarter and first nine months of 2022 and 2021, 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 third quarter and first nine months of 2022, the effective tax rate was further impacted by the tax effect of acquisition-related expenses, which had the impact on the effective tax rate and 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.

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, 2022 and 2021 was 24.5% for all periods, as reconciled in the tables below to the comparable effective tax rate based on GAAP results.

Provision for income taxes for the first quarter of 2023 was at an effective tax rate of 20.9%, compared to 23.8% for the first quarter of 2022.

For the first quarter of 2023 and 2022, 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 table below.

For the first quarter of 2023, the effective tax rate was further impacted by the tax effect of acquisition-related expenses, which impacted the effective tax rate and earnings per share by the amounts noted in the table 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 months ended March 31, 2023 and 2022 was 24.0% and 24.5%, respectively, as reconciled in the table below to the comparable effective tax rate based on GAAP results.

Refer to Note 6 of the Notes to 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 $496.6 and $0.80, respectively, for the third quarter of 2022, compared to $418.8 and $0.67, respectively, for the third quarter of 2021.

Excluding the effect of the items listed in the tables below, 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 $496.5 and $0.80, respectively, for the third quarter of 2022, compared to $406.5 and $0.65, respectively, for the third quarter of 2021.

Net income from continuing operations attributable to Amphenol Corporation and Diluted EPS were $1,394.8 and $2.24, respectively, for the first nine months of 2022, compared to $1,115.5 and $1.79, respectively, for the first nine months of 2021.

Excluding the effect of the items listed in the tables below, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS were $1,383.4 and $2.23, respectively, for the first nine months of 2022, compared to $1,110.9 and $1.78, respectively, for the first nine months of 2021.

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 nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Reported (GAAP)

Acquisition-related expenses

Excess tax benefits related to stock-based compensation

Adjusted (non-GAAP) (2)

Nine Months Ended September 30,

Net income attributable to Amphenol Corporation and Net income per common share attributable to Amphenol Corporation - Diluted (“Diluted EPS”) were $439.2 and $0.71, respectively, for the first quarter of 2023, compared to $425.7 and $0.68, respectively, for the first quarter of 2022.

Excluding the effect of the items listed in the table below, Adjusted Net Income 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 $426.1 and $0.69, respectively, for the first quarter of 2023, compared to $421.9 and $0.67, respectively, for the first quarter of 2022.

The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.

GAAP financial measures for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Reported (GAAP)

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Excess tax benefits related to stock-based compensation

Discrete tax item

Adjusted (non-GAAP) (2)

All data in the tables above are on a continuing operations basis only and exclude results associated with discontinued operations.

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

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Liquidity and Capital Resources

As of September 30, 2022 and December 31, 2021, the Company had cash, cash equivalents and short-term investments of $1,252.0 and $1,241.4, respectively, with the majority of the Company’s cash, cash equivalents and short-term investments on hand located outside of the United States.

Liquidity and Cash Requirements

As of March 31, 2023 and December 31, 2022, the Company had cash, cash equivalents and short-term investments of $1,498.7 and $1,434.2, respectively, with the majority of the Company’s cash, cash equivalents and short-term investments on hand located outside of the United States.

The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash, cash equivalents and short-term investments on hand, as well as availability under the U.S.

Commercial Paper Program, the Euro Commercial Paper Program, the Revolving Credit Facility, and the recently executed two-year $750.0 unsecured delayed draw loan credit agreement (the “2022 Term Loan”) (all of which are defined and discussed further below within this Item 2).

The Company believes that these sources of liquidity, along with access to capital markets, provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations.

Commercial Paper Program, the Euro Commercial Paper Program, the Revolving Credit Facility, and the 2022 Term Loan (all of which are defined and discussed in more detail below within this Item 2).

The Company believes that these sources of liquidity, along with access to capital markets (including the recent issuance of the 2026 Senior Notes in March 2023, as defined and discussed in more detail below within this Item 2), provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations.

Cash Requirements from Known Contractual and Other Obligations

The Company’s primary ongoing cash requirements will be for operating and working capital needs, capital expenditures, product development activities, repurchases of our Common Stock, dividends, debt service, payments associated with the one-time tax on the deemed repatriation of all of the Company’s pre-2018 accumulated unremitted earnings and profits of foreign subsidiaries (“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), funding of pension obligations, and other contractual obligations and commitments included in Item 7 of the 2022 Annual Report.

The Company may also use cash to fund all or part of the cost of future acquisitions.

The Company’s debt service

requirements consist primarily of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and the 2022 Term Loan (all as defined below).

As of September 30, 2022, outstanding borrowings under the U.S.

The Company’s debt service requirements primarily consist of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and the 2022 Term Loan (all as defined below).

As of March 31, 2023, outstanding borrowings under the U.S.

Commercial Paper Program were at a weighted average floating interest rate of 5.29%, while there were no outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan and Euro Commercial Paper Program.

As a result of the substantial increases in interest rates during the second and third quarters of 2022 and the expected further increases during the fourth quarter of 2022, the Company currently expects the floating interest rates related to its U.S.

Commercial Paper Program borrowings to continue to increase in the fourth quarter of 2022 and into 2023, which would result in increased interest expense.

Although the Company does not expect changes in interest rates to have a material effect on income or cash flows in 2022, there can be no assurance that interest rates will not increase significantly from current levels.

As a result of recent increases in the federal funds rate by the U.S.

Federal Reserve beginning in March 2022 through the first quarter of 2023, the floating interest rates related to our U.S.

Commercial Paper Program have increased substantially.

To the extent that the interest rates related to our floating rate debt continue to increase, interest expense will increase for the remainder of 2023.

Although the Company does not expect changes in interest rates to have a material effect on income or cash flows for the

remainder of 2023, primarily due to our current expected limited reliance on borrowings tied to floating rates of interest, there can be no assurance that interest rates will not change significantly from current levels.

Repatriation of Foreign Earnings and Related Income Taxes

The Company has previously indicated an intention to repatriate most of its pre-2023 accumulated earnings and has accrued the foreign and U.S.

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The Company intends to indefinitely reinvest the remaining pre-2023 foreign earnings.

As of September 30, 2022, the Company has accrued the foreign and U.S.

state and local taxes associated with the foreign earnings that we intend to repatriate.

As of March 31, 2023, the Company has accrued the foreign and U.S.

state and local taxes associated with the foreign earnings that it intends to repatriate.

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

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Cash Flow Summary

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the nine months ended September 30, 2022 and 2021, as reflected in the Condensed Consolidated Statements of Cash Flow:

Nine Months Ended September 30,

Net cash provided by operating activities from continuing operations

Net cash used in investing activities from continuing operations

Net cash (used in) provided by financing activities from continuing operations

Net cash change from discontinued operations

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the three months ended March 31, 2023 and 2022, as reflected in the Condensed Consolidated Statements of Cash Flow:

Three Months Ended March 31,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Operating Activities

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 $ 1,469.3 in the first nine months of 2022 compared to $1,060.4 in the first nine months of 2021.

The increase in Operating Cash Flow for the first nine months of 2022 compared to the first nine months of 2021 is primarily due to the increase in net income from continuing operations, along with a lower usage of cash related to the change in working capital.

In the first nine months of 2022, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $274.3, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts receivable of $341.0 and inventories of $310.4, partially offset by increases in accounts payable of $174.8 and accrued liabilities, including income taxes, of $149.4, and a decrease in prepaid expenses and other current assets of $52.9 .

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.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at September 30, 2022 as compared to December 31, 2021.

Accounts receivable increased $ 185.3 to $2,640.1, primarily due to higher sales in the third quarter of 2022 relative to the fourth quarter of 2021, along with the impact of two acquisitions that closed during the first nine months of 2022 (the “2022 Acquisitions”), partially offset by the effect of translation from exchange rate changes (“Translation”) at September 30, 2022 compared to December 31, 2021.

Days sales outstanding at both September 30, 2022 and December 31, 2021 were 71 days.

Inventories increased $ 186.0 to $2,080 .1, which was primarily driven by the impact of higher sales and the 2022 Acquisitions, along with the impact of the ongoing supply chain disruptions that we continued to experience during the first nine months of 2022, partially offset by Translation.

Inventory days at September 30, 2022 and December 31, 2021 were 83 days and 80 days, respectively.

Property, plant and equipment, net, decreased $ 8.4 to $1,166.9, primarily due to depreciation of $223.5 and Translation, partially offset by capital expenditures of $290.2 and the impact of the 2022 Acquisitions.

Goodwill decreased $39.3 to $6,337.5, primarily driven by Translation, partially offset by goodwill recorded resulting from the 2022 Acquisitions.

Other long-term assets increased $101.6 to $512.8, primarily due to the purchase of long-term certificates of deposit investments, along with an increase in operating lease right-of-use assets resulting from new and renewed lease agreements entered into during the first nine months of 2022 and leases assumed from acquisitions.

Accounts payable increased $81.6 to $1,393.6, primarily due to increased purchasing activity related to higher sales levels in the third quarter of 2022 relative to the fourth quarter of 2021, along with the effect of the 2022 Acquisitions, partially offset by Translation.

Payable days at both September 30, 2022 and December 31, 2021 were 56 days.

Total accrued expenses, including accrued income taxes, increased $127.3 to $1,258.4, primarily as a result of increases in accrued income taxes and certain other accrued expenses, along with the effect of the 2022 Acquisitions, partially offset by Translation.

Accrued pension and postretirement benefit obligations decreased $28.1 to $165.3, primarily due to Translation.

Net cash provided by operating activities (“Operating Cash Flow”) was $ 532.4 in the first three months of 2023 compared to $350.8 in the first three months of 2022.

The increase in Operating Cash Flow for the first three months of 2023 compared to the first three months of 2022 is primarily due to a lower usage of cash related to the change in working capital.

In the first three months of 2023, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $23.8, excluding the impact of acquisitions and foreign currency translation, primarily due to decreases in accounts payable of $147.7 and accrued liabilities, including income taxes, of $119.4, and an increase in prepaid expenses and other current assets of $47.4 , partially offset by decreases in accounts receivable of $261.7 and inventories of $29.0.

In the first three months of 2022, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $182.9, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in inventories of $113.8 and prepaid expenses and other current assets of $30.4, along with decreases in accounts payable of $36.3 and accrued liabilities, including income taxes, of $29.9, partially offset by a decrease in accounts receivable of $27.5.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at March 31, 2023 as compared to December 31, 2022.

Accounts receivable decreased $ 219.4 to $2,411.9, primarily due to lower sales in the first quarter of 2023 relative to the fourth quarter of 2022, partially offset by the impact of the acquisition that closed during the first three months of 2023 (the “2023 Acquisition”) and the effect of translation from exchange rate changes (“Translation”) at March 31, 2023 compared to December 31, 2022.

Days sales outstanding at March 31, 2023 and December 31, 2022 were 72 days and 73 days, respectively.

Inventories increased $ 11.5 to $2,105 .1, which was impacted by the 2023 Acquisition and Translation.

Inventory days at March 31, 2023 and December 31, 2022 were 93 days and 86 days, respectively.

The increase in inventory days was primarily driven by the lower sales levels in the first quarter of 2023 compared to the fourth quarter of 2022.

Prepaid expenses and other current assets increased $58.3 to $378.3, primarily due to increases in various prepaid expenses and other current receivables.

Property, plant and equipment, net, increased $ 39.2 to $1,243.5, primarily due to capital expenditures of $97.7 and Translation, partially offset by depreciation of $71.7.

Goodwill increased $93.5 to $6,539.6, primarily driven by goodwill recognized associated with the 2023 Acquisition, along with Translation.

Other intangible assets, net, increased $9.1 to $743.2, primarily due to the recognition of certain intangible assets related to acquisitions, partially offset by amortization associated with the Company’s current intangible assets.

Accounts payable decreased $127.0 to $1,182.1, primarily due to decreased purchasing activity related to lower sales levels in the first quarter of 2023 relative to the fourth quarter of 2022, partially offset by the effect of the 2023 Acquisition and Translation.

Payable days at March 31, 2023 and December 31, 2022 were 52 days and 54 days, respectively.

Total accrued expenses, including accrued income taxes, decreased $123.1 to $1,241.2, primarily as a result of decreases in accrued salaries, wages and employee benefits and accrued income taxes, partially offset by the effect of the 2023 Acquisition and Translation.

There is no current requirement for cash contributions to any of the Company’s defined benefit pension plans in the U.S., and the Company plans to evaluate annually, based on actuarial calculations and the investment performance of the pension plans’ assets, the timing and amount of cash contributions in the future, if any, as discussed in more detail in Note 10 of the Notes to Condensed Consolidated Financial Statements.

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

GAAP financial measure for the nine months ended September 30, 2022 and 2021.

GAAP financial measure for the three months ended March 31, 2023 and 2022.

The increase in Free Cash Flow was driven by an increase in Operating Cash Flow, as described above:

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

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Cash Flow (GAAP)

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Investing Activities

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

Net cash used in investing activities from continuing operations was $650.5 in the first nine months of 2022, compared to $1,810.0 in the first nine months of 2021.

In the first nine months of 2022, net cash used in investing activities from continuing operations was driven primarily by the use of $288.2 to fund acquisitions, capital expenditures (net of disposals) of $285.7, net purchases of long-term investments of $56.0, and net purchases of short-term investments of $28.0.

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.

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

Net cash used in investing activities was $256.6 in the first quarter of 2023, compared to $144.1 in the first quarter of 2022.

In the first quarter of 2023, net cash used in investing activities was primarily driven by the use of $113.2 to fund the 2023 Acquisition, capital expenditures (net of disposals) of $96.9, and net purchases of short- and long-term investments of $46.7.

In the first quarter of 2022, net cash used in investing activities was primarily driven by capital expenditures (net of disposals) of $76.3, purchases of long-term investments of $55.9, and net purchases of short-term investments of $8.6.

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 used in financing activities from continuing operations was $701.9 in the first nine months of 2022, compared to net cash provided by financing activities from continuing operations of $438.4 in the first nine months of 2021.

For the first nine months of 2022, net cash used in financing activities from continuing operations was driven primarily by (i) repurchases of the Company’s Common Stock of $560.1, (ii) dividend payments of $358.4, (iii) debt repayments of $52.4, primarily related to short-term debt, and (iv) distributions to and purchases of noncontrolling interests of $4.4, partially offset by (a) cash proceeds of $114.1 from the exercise of stock options, (b) net borrowings of $111.9, primarily under the U.S.

Commercial Paper Program, and (c) debt proceeds of $47.8 primarily related to short-term borrowings.

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 and then-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) a 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.

Cash flows from financing activities primarily consist 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 used in financing activities was $265.4 in the first quarter of 2023, compared to $151.2 in the first quarter of 2022.

In the first quarter of 2023, net cash used in financing activities was primarily driven by (i) net repayments of $387.5 related to the Company’s commercial paper programs, primarily the U.S.

Commercial Paper Program, (ii) repurchases of the Company’s Common Stock of $166.9, (iii) dividend payments of $124.9, (iv) distributions to and purchases of noncontrolling interests of $5.2, (v) other debt repayments of $3.1 related to other long-term debt, and (vi) payments of $2.3 related to debt financing costs associated with the March 2023 issuance of the 2026 Senior Notes (defined below), partially offset by (a) net cash proceeds from borrowings of $350.2, primarily related to the issuance of the 2026 Senior Notes and (b) cash proceeds of $74.3 from the exercise of stock options.

In the first quarter of 2022, net cash used in financing activities was primarily driven by (i) repurchases of the Company’s Common Stock of $204.0, (ii) dividend payments of $119.8, (iii) distributions to and purchases of noncontrolling interests of $3.6, and (iv) debt repayments of $2.5 related to other long-term debt, partially offset by (a) net borrowings of $138.4, primarily under the U.S.

Commercial Paper Program, (b) proceeds of $20.3, primarily related to short-term borrowings, and (c) cash proceeds of $20.0 from the exercise of stock options.

The Company has significant flexibility to meet its financial commitments.

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The Company’s debt financing includes the use of commercial paper programs, the Revolving Credit Facility, the 2022 Term Loan, and senior notes as part of its overall cash management strategy.

On November 30, 2021, the Company amended and restated its $2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).

As a result, the Revolving Credit Facility no longer references LIBOR for interest rate determinations.

The Revolving Credit Facility maintains the lenders’ aggregate commitments under the facility at $2,500.0.

The Company has an amended and restated $2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).

The Revolving Credit Facility matures in November 2026 and gives the Company 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.

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

As of September 30, 2022 and December 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility.

As of March 31, 2023 and December 31, 2022, 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.

On September 30, 2022, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

On March 31, 2023, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

On April 19, 2022, the Company entered into a two-year, $750.0 unsecured delayed draw term loan credit agreement (the “2022 Term Loan”), which is scheduled to mature on April 19, 2024.

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Interest rates under the 2022 Term Loan are based on a spread over either the base rate or the adjusted term SOFR, which spread varies based on the Company’s debt rating.

As of September 30, 2022, the Company had not yet drawn upon the 2022 Term Loan, and as such, there were no outstanding borrowings under the 2022 Term Loan.

The 2022 Term Loan requires payment of certain

commitment fees and requires that the Company satisfy certain financial covenants, which financial covenants are the same as those under the Revolving Credit Facility.

On September 30, 2022, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Pursuant to the terms of the U.S.

As of March 31, 2023, the Company had not yet drawn upon the 2022 Term Loan, and as such, there were no outstanding borrowings under the 2022 Term Loan.

The 2022 Term Loan requires payment of certain commitment fees and requires that the Company satisfy certain financial covenants, which financial covenants are the same as those under the Revolving Credit Facility.

On March 31, 2023, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Pursuant to the terms of its U.S.

commercial paper program, the Company may issue short-term unsecured commercial paper notes (the “USCP Notes”) in one or more private placements in the United States (the “U.S.

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The Company utilizes borrowings under the U.S.

Commercial Paper Program for general corporate purposes, which recently has included fully or partially funding acquisitions, as well as to repay certain outstanding senior notes .

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, 2022 was $903.8, with a weighted average interest rate of 3.40%.

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 .

In the first quarter of 2023, the Company used proceeds from the 2026 Senior Notes (defined below) to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

The amount of USCP Notes outstanding as of March 31, 2023 was $245.1, with a weighted average interest rate of 5.29%.

As of December 31, 2022, the amount of USCP Notes outstanding was $632.8, with a weighted average interest rate of 4.69%.

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

As of September 30, 2022 and December 31, 2021, there were no ECP Notes outstanding.

The Company utilizes borrowings under the Euro Commercial Paper Program for general corporate purposes, which may include, for example, fully or partially funding acquisitions.

In the first quarter of 2023, the Company used borrowings under its Euro Commercial Paper Program, along with cash on hand, to fund the 2023 Acquisition, as discussed in Note 11 of the Notes to Condensed Consolidated Financial Statements.

These borrowings under the Euro Commercial Paper Program were repaid in their entirety by the end of the first quarter of 2023.

As of March 31, 2023 and December 31, 2022, 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, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum 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 $2,500.0 in the aggregate.

In conjunction with the Revolving Credit Facility, as of March 31, 2023, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum 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 $2,500.0 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 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.

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 September 30, 2022, the Company has outstanding senior notes (the “Senior Notes”) as follows:

The Company reviews its optimal mix of short- 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 March 31, 2023, the Company has outstanding senior notes (the “Senior Notes”) as follows:

February 2030

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October 2028 (Euro Notes)

On September 14, 2021, the Company issued $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”).

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

On March 30, 2023, the Company issued $350.0 principal amount of unsecured 4.750% Senior Notes due March 30, 2026 (the “2026 Senior Notes”).

The Company used the net proceeds from the 2026 Senior Notes primarily to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

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Senior Notes at any time, subject to certain terms and conditions.

The Euro Issuer has two outstanding senior notes in Europe (collectively, the “Euro Notes” and, together with the U.S.

The Euro Issuer has two outstanding unsecured senior notes issued in Europe (collectively, the “Euro Notes” and, together with the U.S.

Senior Notes, the “Senior Notes”), each of which were issued with a principal amount of €500.0, with one series of the Euro Notes maturing in May 2026 and the other in October 2028.

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The Company’s Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.

On September 30, 2022, the Company was in compliance with all requirements under its Senior Notes.

On March 31, 2023, the Company was in compliance with all requirements under its Senior Notes.

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

On April 27, 2021, the Board authorized a 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 and nine months ended September 30, 2022, the Company repurchased 2.4 million and 7.6 million shares of its Common Stock for $170.1 and $560.1, respectively, under the 2021 Stock Repurchase Program.

Of the total repurchases made during the first nine months of 2022, 0.6 million shares, or $40.8, were retained in Treasury stock at the time of repurchase.

The remaining 7.0 million shares, or $519.3, have been retired by the Company.

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 first nine months of 2021 were retired by the Company.

From October 1, 2022 to October 25, 2022, the Company repurchased 0.6 million additional shares of its Common Stock for $41.9 under the 2021 Stock Repurchase Program, and, as of October 26, 2022, the Company has remaining authorization to purchase up to $940.2 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 options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Common Stock.

On April 24, 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of 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 Exchange Act.

During the nine months ended September 30, 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 was terminated.

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.

On April 27, 2021, the Board authorized a stock repurchase program under which the Company may purchase up to $2,000.0 of the Company’s Class A Common Stock (“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 March 31, 2023, the Company repurchased 2.1 million shares of its Common Stock for $166.9 under the 2021 Stock Repurchase Program.

All of the repurchased shares during the first three months of 2023 were retired by the Company.

During the three months ended March 31, 2022, the Company repurchased 2.6 million shares of its Common Stock for $204.0 under the 2021 Stock Repurchase Program.

Of the total repurchases made during the first three months of 2022, 2.3 million shares, or $183.0, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

From April 1, 2023 to April 25, 2023, the Company repurchased 0.5 million additional shares of its Common Stock for $39.5, and, as of April 26, 2023, the Company has remaining authorization to purchase up to $605.2 of its Common Stock under the 2021 Stock Repurchase Program.

The price and timing of any future purchases will depend on a number of factors, such as levels of cash generation from operations, the volume of stock options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Common Stock.

Contingent upon declaration by the Board, 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 nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes the declared quarterly dividends per share as well as the dividends declared and paid for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Dividends declared per share

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Dividends paid (including those declared in the prior year)

On October 26, 2021, the Board approved an increase to the Company’s quarterly dividend rate from $0.145 per share to $0.20 per share, effective with dividends declared in the fourth quarter of 2021, and on October 25, 2022,

approved an additional increase to the Company’s quarterly dividend rate from $0.20 per share to $0.21 per share, effective with dividends declared in the fourth quarter of 2022, contingent upon declaration by the Board.

LIBOR Transition

In July 2017, the United Kingdom's Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), announced its intent to phase out the use of LIBOR by the end of 2021.

In December 2020, the ICE Benchmark Administration published a consultation on its intention to extend the publication of certain U.S.

dollar LIBOR (“USD LIBOR”) rates until June 30, 2023.

Subsequently in March 2021, the FCA announced some USD LIBOR tenors (overnight, 1-month, 3-month, 6-month and 12-month) will continue to be published until June 30, 2023.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, identified the SOFR as its preferred benchmark alternative to USD LIBOR.

The SOFR represents a measure of the cost of borrowing cash overnight, collateralized by U.S.

Treasury securities, and is calculated based on directly observable U.S.

Treasury-backed repurchase transactions.

In March 2020, in response to this transition, the Financial Accounting Standards Board (“FASB”) issued accounting guidance providing certain optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued by reference rate reform, and addresses operational issues likely to arise in modifying contracts to replace discontinued reference rates with new rates.

In January 2021, the FASB issued further clarifying guidance surrounding derivatives, as it relates to this transition.

Effective November 30, 2021, the Company’s Revolving Credit Facility no longer references LIBOR for interest rate determinations.

Due to our current limited reliance on borrowings tied to LIBOR, the Company currently believes that the LIBOR transition will not have a material impact on its financial condition, results of operations or cash flows.

Acquisitions and Divestitures

During the nine months ended September 30, 2022, the Company completed two acquisitions for approximately $288.2, net of cash acquired, one of which has been included in the Harsh Environment Solutions segment and the other of which has been included in the Interconnect and Sensor Systems segment.

On October 25, 2022, the Board approved an increase to the Company’s quarterly dividend rate from $0.20 per share to $0.21 per share, effective with dividends declared in the fourth quarter of 2022, contingent upon declaration by the Board.

During the three months ended March 31, 2023, the Company completed one acquisition, the 2023 Acquisition, for approximately $113.2, net of cash acquired, which was included in the Harsh Environment Solutions segment.

This acquisition, which was funded through a combination of borrowings under the Euro Commercial Paper Program and cash on hand, was not material to the Company’s financial results.

During the three months ended March 31, 2023, the

Company incurred $5.4 ($4.0 after-tax) of acquisition-related expenses, comprised of the amortization related to the value associated with acquired backlog resulting from the 2023 Acquisition.

During the year ended December 31, 2022, the Company completed two acquisitions for approximately $288.2, net of cash acquired, one of which has been included in the Harsh Environment Solutions segment and the other of which has been included in the Interconnect and Sensor Systems segment.

These acquisitions, which were funded through a combination of borrowings under the U.S.

Commercial Paper Program and cash on hand, were not material, either individually or in the aggregate, to the Company’s financial results.

For both the three and nine months ended September 30, 2022, the Company incurred $12.0 ($10.5 after-tax, or $0.02 per diluted share) of acquisition-related expenses, comprised primarily of external transaction costs as well as the amortization related to the value associated with acquired backlog resulting from an acquisition that closed in 2022.

During 2021, the Company completed seven acquisitions for $2,225.4, net of cash acquired, while also completing the divestiture of the Divested MTS business, as defined and discussed below.

One of the acquisitions was included in the Harsh Environment Solutions segment, three acquisitions were included in the Communications Solutions segment and three acquisitions were included in the Interconnect and Sensor Systems segment.

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

Acquisition of MTS

On April 7, 2021, pursuant to a definitive agreement dated December 9, 2020, by and among the Company and MTS Systems Corporation (“MTS”), the Company completed the acquisition of MTS for a total enterprise value of approximately $1,700, net of cash acquired and including the repayment of all outstanding debt and certain liabilities.

The MTS acquisition was funded through a combination of borrowings under the U.S.

Commercial Paper Program and cash on hand.

At closing, the Company paid approximately $1,300, net of cash acquired, for 100% of the common stock of MTS, including certain liabilities settled at closing, which was reflected within Net cash used in investing activities from continuing operations in the Consolidated Statements of Cash Flow for the year ended December 31, 2021.

In addition, the Company also assumed MTS’s then-outstanding $350.0 principal amount of senior notes due August 15, 2027.

Shortly after the closing, the Company repaid and settled the MTS senior notes for approximately $387.3, which included accrued interest and a make-whole premium incurred as a result of the early extinguishment of the senior notes.

MTS was historically organized into two business segments:

Sensors (“MTS Sensors”) and Test & Simulation (“MTS T&S”).

The retained MTS Sensors business is reported within our Interconnect and Sensor Systems segment.

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

Sale of the Divested MTS Business

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

Throughout this Quarterly Report on Form 10-Q, we refer to MTS (including the MTS T&S business, but excluding the MTS Sensors business) as the “Divested MTS business”.

As a result of the agreement to sell the Divested MTS business to ITW, the Divested MTS business met the “held for sale” criteria at its acquisition date, and accordingly, the Company did not assign the Divested MTS business to any of its reportable business segments.

The Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations in the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flow, respectively, as of the MTS acquisition date of April 7, 2021 through September 30, 2021, and ultimately, through December 1, 2021, the date of the sale of the Divested MTS business.

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, and $21.4 for the year ended December 31, 2021.

On December 1, 2021, the Company completed the sale of the Divested MTS business for approximately $750, net of cash divested and excluding related transaction fees and expenses.

The proceeds from the sale of the Divested MTS business were included in Net cash provided by investing activities from discontinued operations in the Consolidated Statements of Cash Flow for the year ended December 31, 2021.

Amphenol has had no continuing involvement with the Divested MTS business after the completion of the sale.

After giving effect to the sale of the Divested MTS business as well as the repayment of the aforementioned MTS senior notes as part of the MTS acquisition, the Company paid approximately $950, net of cash acquired and excluding related transaction fees and expenses, for the retained MTS Sensors business.

Acquisition of Halo Technology Limited

On December 1, 2021, the Company completed the acquisition of approximately 97% of the common stock of Halo Technology Limited (“Halo”) for a purchase price of approximately $694, net of cash acquired.

The sellers retained a noncontrolling interest of less than 3% in Halo, which includes redeemable features that are outside the control of the Company and therefore, has been classified as temporary equity on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, as discussed in more detail in Note 5 of the Notes to Condensed Consolidated Financial Statements, as well as Note 1 of the Notes to Consolidated Financial Statements in the 2021 Annual Report.

The acquisition was funded with cash on hand.

The operating results for Halo have been included in the Company’s Condensed Consolidated Statements of Income since the acquisition date.

Halo is reported within our Communications Solutions segment.

Refer to Note 11 of the Notes to Condensed Consolidated Financial Statements, as well as the 2021 Annual Report, for further discussion of the Company’s acquisitions, as well as its discontinued operations and the completed divestiture of the Divested MTS business in 2021.

During the year ended December 31, 2022, the Company incurred $21.5 ($18.4 after-tax) of acquisition-related expenses, primarily comprised of the amortization related to the value associated with acquired backlog resulting from these two acquisitions, along with external transaction costs.

Environmental Matters

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In addition to assessing the Company’s financial condition, results of operations, liquidity and cash flows in accordance with U.S.

GAAP, management utilizes certain non-GAAP financial measures, defined below, as part of its

internal reviews for purposes of monitoring, evaluating and forecasting the Company’s financial performance, communicating operating results to the Board and assessing related employee compensation measures.

GAAP, management utilizes certain non-GAAP financial measures, defined below, as part of its internal reviews for purposes of monitoring, evaluating and forecasting the Company’s financial performance, communicating operating results to the Board and assessing related employee compensation measures.

Management believes that these non-GAAP financial measures may be helpful to investors in assessing the Company’s overall financial performance, trends and period-over-period comparative results, in addition to the reasons noted below.

Non-GAAP financial measures related to operating income, operating margin, net income from continuing operations attributable to Amphenol Corporation, effective tax rate and diluted EPS from continuing operations exclude income and expenses that are not directly related to the Company’s operating performance during the periods presented.

Non-GAAP financial measures related to operating income, operating margin, net income attributable to Amphenol Corporation, effective tax rate and diluted EPS exclude income and expenses that are not directly related to the Company’s operating performance during the periods presented.

Items excluded in the presentation of such non-GAAP financial measures in any period may consist of, without limitation, acquisition-related expenses, refinancing-related costs, and certain discrete tax items including but not limited to (i) the excess tax benefits related to stock-based compensation and (ii) the impact of significant changes in tax law.

Non-GAAP financial measures related to net sales exclude the impact of foreign currency exchange rates and acquisitions.

Non-GAAP financial measures and their most directly comparable U.S.

GAAP financial measures presented within this Item 2 are on a continuing operations basis only and exclude any results associated with discontinued operations.

The non-GAAP financial information contained herein is included for supplemental purposes only and should not be considered in isolation, as a substitute for or superior to the related U.S.

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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 nine months ended September 30, 2022 and 2021 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.

GAAP financial measures for the three months ended March 31, 2023 and 2022 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 (as reported in accordance with U.S.

GAAP), 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 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 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 Diluted EPS is calculated as Adjusted Net Income 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 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 attributable to Amphenol Corporation is defined as Net income 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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dollars, as well as Organic Net Sales Growth (defined below) and Constant Currency Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends.

● Free Cash Flow is defined as (i) Net cash provided by operating activities from continuing operations (“Operating Cash Flow” - as reported in accordance with U.S.

● Free Cash Flow is defined as (i) Net cash provided by operating activities (“Operating Cash Flow” - as reported in accordance with U.S.

GAAP) less (ii) capital expenditures (as reported in accordance with U.S.

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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