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Item 2. Management’s Discussion and Analysis

2024-07-26 compared with 2024-04-26 · 200 added, 150 removed, 231 unchanged (60% 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 months ended March 31, 2024 and 2023 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 and six months ended June 30, 2024 and 2023 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, 2023 (the “2023 Annual Report”).

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Refer to “Non-GAAP Financial Measures” within this Item 2 for more information, including our reasons for including non-GAAP financial measures and material limitations with respect to the usefulness of the measures.

On May 20, 2024, the Company announced that its Board of Directors (the “Board”) approved a two-for-one split of the Company’s Class A Common Stock (“Common Stock”).

The stock split was effected in the form of a stock dividend paid to stockholders of record as of the close of business on May 31, 2024.

The additional shares were distributed on June 11, 2024, and the Common Stock began trading on a split-adjusted basis on June 12, 2024.

The shares of Common Stock retain a par value of $0.001 per share.

All current and prior year data impacted by the stock split and presented in this Item 2 and throughout this Form 10-Q herein, including number of shares and per share information, earnings per share, and dividends per share amounts, among others, have been retroactively adjusted to reflect the effect of the stock split.

Refer to Note 1 of the accompanying Notes to Condensed Consolidated Financial Statements for further information related to the stock split.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events and are subject to risks and uncertainties.

of the 2023 Annual Report.

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”).

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“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, interest rates or other matters.

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.

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.

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

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risks associated with our inability to obtain certain raw materials and components, as well as the increasing cost of certain of the Company’s raw materials and components;

disrupt business operations, result in reputational damage that may cause the loss of existing or future customers, 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 or personal information, and potentially lead to litigation and/or governmental investigations, fines and other penalties, among other risks, and risks and impacts associated with a demanding and evolving regulatory environment surrounding information security and privacy, including additional costs;

cybersecurity threats and techniques used to disrupt operations and gain unauthorized access to our information technology systems, including, but not limited to, malware, social engineering/phishing, credential harvesting, ransomware, malfeasance by insiders, human or technological error and other increasingly sophisticated attacks, that continue to expand and evolve, including through the use of artificial intelligence and machine learning, which could, among other things, impair our information technology systems and disrupt business operations, result in reputational damage that may cause the loss of existing or future customers, 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 or personal information, and potentially lead to litigation and/or governmental investigations, fines and other penalties, among other risks, and risks and impacts associated with an increasingly demanding regulatory environment surrounding information security and privacy, including additional fines, penalties and costs;

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

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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 and any other regulatory and other legal changes that may arise in any of the jurisdictions in which we operate;

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 enforcing and protecting the Company’s intellectual property rights;

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A further description of these uncertainties and other risks can be found in the 2023 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 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.

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.

Our forward-looking statements may also be impacted by, among other things, future tax, regulatory and other legal changes that may arise in any of the jurisdictions in which we operate.

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

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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, defense,

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 defense end markets.

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

The IRA provisions, which became effective for Amphenol beginning on January 1, 2023, did not have a material impact on the Company during the three months ended March 31, 2024 and 2023.

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 and six months ended June 30, 2024 and 2023.

While the full impact of these provisions in the future depends on several factors, including interpretive regulatory guidance, which has not yet been released, the Company does not currently believe that the provisions of the IRA, including several other non-tax related provisions, will have a material impact on its financial condition, results of operations, liquidity and cash flows.

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The Company has done a preliminary review of currently enacted legislation.

The initial implementation did not have a material impact on the Company’s condensed consolidated financial statements during the three months ended March 31, 2024, and it is not currently expected to have a material impact on the Company’s operations, financial condition or cash flows in the future.

The initial implementation did not have a material impact on the Company’s condensed consolidated financial statements during the three and six months ended June 30, 2024, and it is not currently expected to have a material impact on the Company’s operations, financial condition or cash flows in the future.

However, the Company will continue to evaluate the potential impact of Pillar Two on the Company and its results as additional countries adopt legislation and issue individual guidance on their enacted legislation.

Results of Operations

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

Net sales were $3,256.3 in the first quarter of 2024 compared to $2,974.0 in the first quarter of 2023, which represented an increase of 9% in U.S.

Three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

Net sales were $3,609.7 in the second quarter of 2024 compared to $3,053.9 in the second quarter of 2023, which represented an increase of 18% in U.S.

dollars, 19% in constant currencies and 11% organically (excluding both currency and acquisition impacts), compared to the prior year period.

The organic increase in net sales in the first quarter of 2024 was driven by strong growth in the Communications Solutions segment, along with moderate growth in the Harsh Environment Solutions segment and Interconnect and Sensor Systems segment, as described below.

From an end market standpoint, the increase in net sales in the first quarter of 2024 relative to the prior year period was driven by strong organic growth in the information technology and data communications (“IT datacom”), commercial aerospace, automotive, and defense markets and moderate growth in the mobile devices market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the mobile networks, broadband communications, and industrial markets.

Net sales in the Harsh Environment Solutions segment (approximately 28% of net sales) in the first quarter of 2024 increased 7% in U.S.

dollars, 7% in constant currencies and 3% organically, compared to the first quarter of 2023.

The increase in the first quarter of 2024 was primarily driven by strong organic growth in the commercial aerospace, defense, automotive, and IT datacom markets, along with contributions from the Company’s acquisition program, partially offset by organic declines in the industrial and mobile networks markets.

Net sales in the Communications Solutions segment (approximately 39% of net sales) in the first quarter of 2024 increased 12% in U.S.

dollars, 13% in constant currencies and 11% organically, compared to the first quarter of 2023.

The increase in the first quarter of 2024 was primarily driven by strong organic growth in the IT datacom and automotive markets and moderate growth in the mobile devices market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the broadband communications, mobile networks, and industrial markets.

Net sales in the Interconnect and Sensor Systems segment (approximately 33% of net sales) in the first quarter of 2024 increased 8% in U.S.

dollars, 9% in constant currencies and 2% organically, compared to the first quarter of 2023.

T he increase in the first quarter of 2024 was primarily driven by strong organic growth in the IT datacom market and moderate growth in the automotive market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the industrial, defense, and mobile networks markets.

The increase in net sales in the second quarter of 2024 was primarily driven by strong organic growth in the Communications Solutions segment and moderate organic growth in the Interconnect and Sensor Systems segment, along with contributions from the Company’s acquisition program, as described below.

From an end market standpoint, the increase in net sales in the second quarter of 2024 relative to the prior year period was driven by strong organic growth in the information technology and data communications (“IT datacom”) and defense markets and moderate growth in the commercial aerospace, mobile devices, mobile networks and automotive markets, along with contributions from the Company’s acquisition program, partially offset by organic declines in the broadband communications and industrial markets.

Net sales were $6,866.0 in the first six months of 2024 compared to $6,028.0 in the first six months of 2023, which represented an increase of 14% in U.S.

dollars, 15% in constant currencies and 9% organically (excluding both currency and acquisition impacts), compared to the prior year period.

The increase in net sales in the first six months of 2024 was primarily driven by strong organic growth in the Communications Solutions segment and moderate organic growth in the Interconnect and Sensor Systems segment, along with contributions from the Company’s acquisition program, as described below.

From an end market standpoint, the increase in net sales in the first six months of 2024 relative to the prior year period was driven by strong organic growth in the IT datacom, commercial aerospace, automotive and defense markets and moderate growth in the mobile devices market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the broadband communications, mobile networks and industrial markets.

Net sales in the Harsh Environment Solutions segment (approximately 29% of net sales) in the second quarter of 2024 increased 18% in U.S.

dollars, 18% in constant currencies and 1% organically, compared to the second quarter of 2023.

The increase in the second quarter of 2024 was primarily driven by contributions from the Company’s acquisition program, along with strong organic growth in the defense and IT datacom markets and moderate growth in the commercial aerospace market, partially offset by organic declines in the industrial, automotive and mobile networks markets.

Net sales in the Harsh Environment Solutions segment (approximately 29% of net sales) in the first six months of 2024 increased 13% in U.S.

dollars, 13% in constant currencies and 2% organically, compared to the prior year period.

The increase in the first six months of 2024 was primarily driven by contributions from the Company’s

acquisition program, along with strong organic growth in the defense, commercial aerospace and IT datacom markets, partially offset by organic declines in the industrial, automotive and mobile networks markets.

Net sales in the Communications Solutions segment (approximately 40% of net sales) in the second quarter of 2024 increased 24% in U.S.

dollars, 25% in constant currencies and 23% organically, compared to the second quarter of 2023.

The increase in the second quarter of 2024 was primarily driven by strong organic growth in the IT datacom, automotive, and mobile networks markets and moderate growth in the mobile devices and industrial markets, along with contributions from the Company’s acquisition program, partially offset by an organic decline in the broadband communications market.

Net sales in the Communications Solutions segment (approximately 39% of net sales) in the first six months of 2024 increased 18% in U.S.

dollars, 19% in constant currencies and 17% organically, compared to the first six months of 2023.

The increase in the first six months of 2024 was primarily driven by strong organic growth in the IT datacom and automotive markets and moderate growth in the mobile devices market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the broadband communications, mobile networks, and industrial markets.

Net sales in the Interconnect and Sensor Systems segment (approximately 31% of net sales) in the second quarter of 2024 increased 12% in U.S.

dollars, 13% in constant currencies and 7% organically, compared to the second quarter of 2023.

T he increase in the second quarter of 2024 was primarily driven by strong organic growth in the IT datacom market and moderate growth in the automotive market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the industrial, defense and mobile networks markets.

Net sales in the Interconnect and Sensor Systems segment (approximately 32% of net sales) in the first six months of 2024 increased 10% in U.S.

dollars, 11% in constant currencies and 5% organically, compared to the first six months of 2023.

T he increase in the first six months of 2024 was primarily driven by contributions from the Company’s acquisition program, along with strong organic growth in the IT datacom market and moderate growth in the automotive market, partially offset by organic declines in the industrial, defense, and mobile networks 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, 2024 compared to the three months ended March 31, 2023:

GAAP financial measures, by segment, geography and consolidated, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:

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

Sales Growth (4)

Three Months Ended March 31,

Three Months Ended June 30,

Net sales by:

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United States

Six Months Ended June 30,

Net sales by:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Geography (6) :

United States

(1) Percentages in this table were calculated using actual, unrounded results;

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The comparatively stronger U.S.

dollar for the first quarter of 2024 had the effect of decreasing sales by approximately $17.4, relative to the comparable period in 2023.

Selling, general and administrative expenses were $404.2, or 12.4% of net sales for the first quarter of 2024, compared to $346.3, or 11.6% of net sales for the first quarter of 2023.

The increase in Selling, general and administrative expenses as a percentage of net sales in the first quarter of 2024 was primarily driven by the effect of acquisitions, which currently have higher selling, general and administrative expenses as a percentage of net sales compared to the Company average.

Administrative expenses represented approximately 4.8% of net sales for the first quarter of 2024, and represented approximately 4.7% of net sales for the first quarter of 2023.

Research and development expenses represented approximately 3.0% of net sales for the first quarter of 2024, and represented approximately 2.8% of net sales for the first quarter of 2023.

Selling and marketing expenses represented approximately 4.6% of net sales for the first quarter of 2024, and represented approximately 4.2% of net sales for the first quarter of 2023.

Operating income was $684.8, or 21.0% of net sales, for the first quarter of 2024, compared to $591.7, or 19.9% of net sales, for the first quarter of 2023.

Operating income for the first quarter of 2023 included $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, each as defined in the “Non-GAAP Financial Measures” section below, were $684.8, or 21.0% of net sales, for the three months ended March 31, 2024, and $597.1, or 20.1% of net sales, for the three months ended March 31, 2023.

The increase in Adjusted Operating Income and Adjusted Operating Margin for the first quarter

of 2024 relative to the comparable period in 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Operating income for the Harsh Environment Solutions segment for the first quarter of 2024 was $244.4, or 26.7% of net sales, compared to $226.3, or 26.5% of net sales, for the first quarter of 2023.

The increase in operating margin for the Harsh Environment Solutions segment for the first quarter of 2024 relative to the comparable period in 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Operating income for the Communications Solutions segment for the first quarter of 2024 was $286.2, or 22.6% of net sales, compared to $230.6, or 20.5% of net sales, for the first quarter of 2023.

The increase in operating margin for the Communications Solutions segment for the first quarter of 2024 relative to the comparable period in 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Operating income for the Interconnect and Sensor Systems segment for the first quarter of 2024 was $195.4, or 18.2% of net sales, compared to $178.8, or 18.0% of net sales, for the first quarter of 2023.

The increase in operating margin for the Interconnect and Sensor Systems segment for the first quarter of 2024 relative to the comparable period in 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Interest expense for the first quarter of 2024 was $38.1, compared to $35.9 for the first quarter of 2023.

The slight increase in interest expense was primarily driven by the higher interest rate environment, partially offset by lower average borrowing levels.

Provision for income taxes for the first quarter of 2024 was at an effective tax rate of 16.7%, compared to 20.9%, for the first quarter of 2023.

For the first quarter of 2024 and 2023, 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 2024, the effective tax rate was further impacted by a discrete tax benefit related to the settlement of tax audits and associated lapses of statutes of limitation, along with a difference in a non-U.S.

tax filing position, while for the first quarter of 2023, the effective tax rate was further impacted by the tax effect of acquisition-related expenses, all of 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, 2024 and 2023 was 24.0%, as reconciled in the table below to the comparable effective tax rate based on GAAP results.

dollar for the second quarter and first six months of 2024 had the effect of decreasing sales by approximately $26.7 and $44.1, respectively, relative to the comparable periods in 2023.

Selling, general and administrative expenses were $444.3, or 12.3% of net sales, and $848.4, or 12.4% of net sales, for the second quarter and first six months of 2024, respectively, compared to $367.8, or 12.0% of net sales, and $714.1, or 11.8% of net sales, for the second quarter and first six months of 2023, respectively.

The increases in selling, general and administrative expenses as a percentage of net sales in the second quarter and first six months of 2024 were primarily driven by the effect of acquisitions, which currently have higher selling, general and administrative expenses as a percentage of net sales compared to the Company average.

Administrative expenses represented approximately 4.9% of net sales for both the second quarter and first six months of 2024, and represented approximately 4.9% and 4.8% of net sales for the second quarter and first six months of 2023, respectively.

Research and development expenses represented approximately 3.0% of net sales for both the second quarter and first six months of 2024, and represented

approximately 2.8% of net sales for both the second quarter and first six months of 2023.

Selling and marketing expenses represented approximately 4.3% and 4.5% of net sales for the second quarter and first six months of 2024, respectively, and represented approximately 4.4% and 4.3% of net sales for the second quarter and first six months of 2023, respectively.

Operating income was $698.8, or 19.4% of net sales, and $1,383.7, or 20.2% of net sales, for the second quarter and first six months of 2024, respectively, compared to $619.9, or 20.3% of net sales, and $1,211.6, or 20.1% of net sales, for the second quarter and first six months of 2023, respectively.

Operating income for the second quarter and first six months of 2024 includes $70.0 of acquisition-related expenses (presented separately in the Condensed Consolidated Statements of Income), comprised primarily of external transaction costs associated with the 2024 Acquisitions, as well as the amortization related to the value associated with acquired backlog and certain non-cash purchase accounting costs resulting from the Carlisle Interconnect Technologies (“CIT”) acquisition .

Operating income for the second quarter of 2023 included $4.0 of acquisition-related expenses (presented separately in the Condensed Consolidated Statements of Income) comprised of external transaction costs related to acquisitions.

Operating income for the first six months of 2023 included $9.4 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, as well as the external transaction costs incurred in the second quarter of 2023.

For the three and six months ended June 30, 2024, the acquisition-related expenses had the effect of decreasing net income by $59.9 in both periods, while for the three and six months ended June 30, 2023, the acquisition-related expenses had the effect of decreasing net income by $3.8 and $7.8, respectively, as shown in the tables below.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, each as defined in the “Non-GAAP Financial Measures” section below, were $768.8, or 21.3% of net sales, and $623.9, or 20.4% of net sales, for the three months ended June 30, 2024 and 2023, respectively.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin were $1,453.7, or 21.2% of net sales, and $1,221.0, or 20.3% of net sales, for the six months ended June 30, 2024 and 2023, respectively.

The increases in Adjusted Operating Income and Adjusted Operating Margin for both the second quarter and first six months of 2024 relative to the comparable periods in 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Operating income for the Harsh Environment Solutions segment for the second quarter and first six months of 2024 was $259.6, or 24.8% of net sales, and $504.1, or 25.7% of net sales, respectively, compared to $240.3, or 27.0% of net sales, and $466.6, or 26.8% of net sales, for the second quarter and first six months of 2023, respectively.

The decreases in operating margin for the Harsh Environment Solutions segment for both the second quarter and first six months of 2024 relative to the comparable periods in 2023 were primarily driven by the negative impact on operating margin related to acquisitions completed within the prior twelve months, particularly CIT, that are currently operating below the average operating margin of the Company.

Operating income for the Communications Solutions segment for the second quarter and first six months of 2024 was $350.6, or 24.3% of net sales, and $636.8, or 23.5% of net sales, respectively, compared to $238.5, or 20.5% of net sales, and $469.1, or 20.5% of net sales, for the second quarter and first six months of 2023, respectively.

The increases in operating margin for the Communications Solutions segment for both the second quarter and first six months of 2024 relative to the comparable periods in 2023 were primarily driven by strong operating performance on the higher sales volumes.

Operating income for the Interconnect and Sensor Systems segment for the second quarter and first six months of 2024 was $203.3, or 18.2% of net sales, and $398.7, or 18.2% of net sales, respectively, compared to $185.9, or 18.5% of net sales, and $364.7, or 18.3% of net sales, for the second quarter and first six months of 2023, respectively.

The decreases in operating margin for the Interconnect and Sensor Systems segment for both the second quarter and first six months of 2024 relative to the comparable periods in 2023 were primarily driven by the negative impact on operating margin related to acquisitions completed within the prior twelve months that are currently operating below the average operating margin of the Company.

Interest expense for the second quarter and first six months of 2024 was $56.3 and $94.4, respectively, compared to $35.0 and $71.0 for the second quarter and first six months of 2023, respectively.

The increases in interest expense for both the second quarter and first six months of 2024 were driven by higher average borrowing levels, primarily intended to fully or partially fund acquisitions, including the CIT acquisition, along with the higher interest rate environment.

Provision for income taxes for the second quarter and first six months of 2024 was at an effective tax rate of 20.4% and 18.5%, respectively.

Provision for income taxes for the second quarter and first six months of 2023 was at an effective tax rate of 21.9% and 21.4%, respectively.

For the second quarter and first six months of 2024 and 2023, the excess tax benefits resulting from stock option exercise activity, along with the tax effect of acquisition-related expenses incurred during each period, impacted the effective tax rate and earnings per share by the amounts noted in the tables below.

For the first six months of 2024, the effective tax rate was further impacted by a discrete tax benefit related to the settlement of tax audits and associated lapses of statutes of limitation, along with a difference in a non-U.S.

tax filing position.

For the second quarter and first six months of 2023, the effective tax rate was further impacted by the gain from the bargain purchase acquisition that closed in the second quarter of 2023, which impacted 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 both the three and six months ended June 30, 2024 and 2023 was 24.0%, as reconciled in the tables 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 attributable to Amphenol Corporation and Net income attributable to Amphenol Corporation per common share - Diluted (“Diluted EPS”) were $548.7 and $0.87, respectively, for the first quarter of 2024, compared to $439.2 and $0.71, respectively, for the first quarter of 2023.

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 $500.4 and $0.80, respectively, for the first quarter of 2024, compared to $426.1 and $0.69, respectively, for the first quarter of 2023.

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, 2024 and 2023:

Three Months Ended March 31,

Net income attributable to Amphenol Corporation and Net income attributable to Amphenol Corporation per common share - Diluted (“Diluted EPS”) were $524.8 and $0.41, respectively, for the second quarter of 2024, compared to $460.5 and $0.37, respectively, for the second quarter of 2023.

Excluding the effect of the items listed in the tables 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 $553.8 and $0.44, respectively, for the second quarter of 2024, compared to $447.0 and $0.36, respectively, for the second quarter of 2023.

Net income attributable to Amphenol Corporation and Diluted EPS were $1,073.5 and $0.85, respectively, for the first six months of 2024, compared to $899.7 and $0.73, respectively, for the first six months of 2023.

Excluding the effect of the items listed in the tables below, Adjusted Net Income attributable to Amphenol Corporation and Adjusted Diluted EPS were $1,054.2 and $0.84, respectively, for the first six months of 2024, compared to $873.1 and $0.71, respectively, for the first six months of 2023.

The following tables reconcile 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 and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Reported (GAAP)

Acquisition-related expenses

Gain on bargain purchase acquisition

Excess tax benefits related to stock-based compensation

Adjusted (non-GAAP) (2)

Six Months Ended June 30,

Reported (GAAP)

Acquisition-related expenses

Gain on bargain purchase acquisition

Excess tax benefits related to stock-based compensation

Discrete tax items

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Liquidity and Cash Requirements

As of March 31, 2024 and December 31, 2023, the Company had cash, cash equivalents and short-term investments of $1,963.5 and $1,660.2, respectively, with the majority of the Company’s cash, cash equivalents and short-term investments on hand located outside of the United States.

As of June 30, 2024 and December 31, 2023, the Company had cash, cash equivalents and short-term investments of $1,302.2 and $1,660.2, 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.

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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 2023 Annual Report.

The Company may also use cash to fund all or part of the cost of future acquisitions, as has been the case in recent years with the Company’s various acquisitions.

The Company may also use cash to fund all or part of the cost of future acquisitions, as has been the case in recent years with the Company’s various acquisitions, including the recent acquisition of CIT in May 2024.

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 and Commercial Paper Programs (all as defined below).

As of March 31, 2024 and December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility, Term Loan, U.S.

As of June 30, 2024 and December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility, U.S.

Commercial Paper Program and Euro Commercial Paper Program.

However, the Company borrowed under the U.S.

Commercial Paper Program throughout much of the first quarter of 2024, the proceeds of which were used for general corporate purposes.

Although all such borrowings were repaid before the end of the first quarter of 2024, the Company may make additional borrowings under any of its debt instruments in the future.

Commercial Paper Program throughout much of the first six months of 2024, the proceeds of which were used for general corporate purposes, including, but not limited to, partially funding the recent acquisition of CIT discussed later within this Item 2.

Although all such borrowings were repaid before the end of the second quarter of 2024, the Company may make additional borrowings under any of its debt instruments in the future.

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

Federal Reserve in recent years, the floating interest rates related to our U.S.

Commercial Paper Program (as well as our Revolving Credit Facility, to the extent drawn upon in the future) have increased substantially, a trend that could continue through the

remainder of 2024 and potentially beyond.

Commercial Paper Program (as well as our Revolving Credit Facility, to the extent drawn upon in the future) have increased substantially, a trend that could continue through the remainder of 2024 and potentially beyond.

To the extent that interest rates related to this floating rate debt increase further and the Company borrows under any of these floating interest rate instruments in the future, interest expense and interest payments would increase.

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The Company intends to indefinitely reinvest the remaining pre-2024 foreign earnings.

As of March 31, 2024, the Company has accrued the foreign and U.S.

As of June 30, 2024, 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.

In addition, the Transition Tax is being paid, net of applicable tax credits and deductions, in annual installments until 2025, as permitted under the Tax Act.

In addition, the Company will pay the balance of the Transition Tax, net of applicable tax credits and deductions, in 2025, as permitted under the Tax Act.

Cash Flow Summary

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the three months ended March 31, 2024 and 2023, as reflected in the Condensed Consolidated Statements of Cash Flow:

Three Months Ended March 31,

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023, as reflected in the Condensed Consolidated Statements of Cash Flow:

Six Months Ended June 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Net decrease 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 (“Operating Cash Flow”) was $599.5 in the first three months of 2024 compared to $532.4 in the first three months of 2023.

The increase in Operating Cash Flow for the first three months of 2024 compared to the first three months of 2023 is primarily due to the increase in net income, partially offset by a higher usage of cash related to the change in working capital.

In the first three months of 2024, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $73.9, excluding the impact of acquisitions and foreign currency translation, primarily due to decreases in accounts payable of $69.9 and accrued liabilities, including income taxes, of $52.3, and an increase in prepaid expenses and other current assets of $20.3 and inventories of $15.1, partially offset by a decrease in accounts receivable of $83.7.

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.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at March 31, 2024 as compared to December 31, 2023.

Accounts receivable decreased $117.0 to $2,501.4, primarily due to the moderately lower sales in the first quarter of 2024 relative to the fourth quarter of 2023, along with the effect of translation from exchange rate changes (“Translation”) at March 31, 2024 compared to December 31, 2023.

Days sales outstanding at March 31, 2024 and December 31, 2023 were 70 days.

decreased $14.2 to $2,152.9.

Inventory days at March 31, 2024 and December 31, 2023 were 89 days and 85 days, respectively.

The increase in inventory days was primarily driven by the lower sales levels in the first quarter of 2024 compared to the fourth quarter of 2023.

Prepaid expenses and other current assets increased $34.3 to $423.9, primarily due to increases in certain prepaid expenses and other current receivables.

Property, plant and equipment, net, decreased $3.1 to $1,311.6, primarily due to depreciation of $81.4 and Translation, largely offset by capital expenditures of $94.3.

Goodwill increased $8.1 to $7,100.5, primarily driven by measurement period adjustments related to acquisitions that closed late in 2023, which were largely offset by Translation .

Other intangible assets, net, decreased $49.4 to $785.4, primarily due to measurement period adjustments related to certain intangible assets associated with acquisitions that closed late in 2023, as well as the amortization associated with the Company’s current intangible assets.

Other long-term assets increased $34.1 to $483.3, primarily due to an increase in operating lease right-of-use assets resulting from new and renewed lease agreements during the first quarter of 2024.

Accounts payable decreased $86.2 to $1,264.7, primarily due to decreased purchasing activity related to the moderately lower sales levels in the first quarter of 2024 relative to the fourth quarter of 2023, along with Translation.

Payable days at March 31, 2024 and December 31, 2023 were 53 days and 55 days, respectively.

Total accrued expenses, including accrued income taxes, decreased $42.1 to $1,405.9, primarily as a result of decreases in accrued salaries, wages and employee benefits and accrued income taxes.

Net cash provided by operating activities (“Operating Cash Flow”) was $1,263.6 in the first six months of 2024 compared to

$1,068.8 in the first six months of 2023.

The increase in Operating Cash Flow for the first six months of 2024 compared to the first six months of 2023 is primarily due to the increase in net income.

In the first six months of 2024, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $69.8, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts receivable of $141.9 and inventories of $23.5, and a decrease in accrued liabilities, including income taxes, of $14.9 , partially offset by an increase in accounts payable of $115.5.

In the first six months of 2023, the components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $57.7, excluding the impact of acquisitions and foreign currency translation, primarily due to decreases in accounts payable of $203.2 and accrued liabilities, including income taxes, of $156.6, and an increase in prepaid expenses and other current assets of $19.3, partially offset by decreases in accounts receivable of $199.9 and inventories of $121.5.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at June 30, 2024 as compared to December 31, 2023.

Accounts receivable increased $237.1 to $2,855.5, primarily due to the impact of the two acquisitions (the “2024 Acquisitions”) that closed during the second quarter of 2024, along with the higher sales in the second quarter of 2024 relative to the fourth quarter of 2023, partially offset by the effect of translation from exchange rate changes (“Translation”) at June 30, 2024 compared to December 31, 2023.

Days sales outstanding at June 30, 2024 and December 31, 2023 were 69 days and 70 days, respectively.

Inventories increased $231.7 to $2,398.8, primarily due to the impact of the 2024 Acquisitions, partially offset by Translation .

Inventory days at June 30, 2024 and December 31, 2023 were 84 days and 85 days, respectively.

Prepaid expenses and other current assets increased $25.7 to $415.3, primarily due to the impact of the 2024 Acquisitions .

Property, plant and equipment, net, increased $219.3 to $1,534.0, primarily due to capital expenditures of $235.6 and the impact of the 2024 Acquisitions, partially offset by depreciation of $162.4 and Translation.

Goodwill increased $1,169.4 to $8,261.8, primarily driven by goodwill recognized associated with the 2024 Acquisitions, in particular the CIT acquisition, partially offset by Translation .

Other intangible assets, net, increased $473.9 to $1,308.7, primarily due to the recognition of certain intangible assets related to the 2024 Acquisitions, partially offset by the amortization associated with the Company’s current intangible assets as well as measurement period adjustments related to certain intangible assets associated with acquisitions that closed late in 2023.

Other long-term assets increased $61.3 to $510.5, primarily due to an increase in operating lease right-of-use assets resulting from new and renewed lease agreements entered into during the first six months of 2024 as well as acquired leases resulting from acquisitions.

Accounts payable increased $170.5 to $1,521.4, primarily due to incr eased purchasing activity related to the higher sales levels in the second quarter of 2024 relative to the fourth quarter of 2023, along with the impact of the 2024 Acquisitions, partially offset by Translation.

Payable days at June 30, 2024 and December 31, 2023 were 56 days and 55 days, respectively.

Total accrued expenses, including accrued income taxes, increased $82.3 to $1,530.3, primarily as a result of the impact of the 2024 Acquisitions and an increase in various other accrued expenses, partially offset by a decrease in accrued income taxes and Translation.

Other long-term liabilities, including deferred tax liabilities, increased $83.1 to $903.8, primarily as a result of an increase in deferred tax liabilities resulting from the 2024 Acquisitions.

In addition to Operating Cash Flow, the Company also considers Free Cash Flow, a non-GAAP financial measure defined in the “Non-GAAP Financial Measures” section below, as a key metric in measuring the Company’s ability to generate cash.

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

GAAP financial measure for the three months ended March 31, 2024 and 2023.

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

Three Months Ended March 31,

GAAP financial

measure for the six months ended June 30, 2024 and 2023.

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

Six Months Ended June 30,

Operating Cash Flow (GAAP)

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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 $17.0 in the first quarter of 2024, compared to $256.6 in the first quarter of 2023.

In the first quarter of 2024, net cash used in investing activities was primarily driven by capital expenditures (net of disposals) of $93.8, partially offset by net sales and maturities of short-term investments of $75.7.

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

Net cash used in investing activities was $2,195.7 in the first six months of 2024, compared to $375.1 in the first six months of 2023.

In the first six months of 2024, net cash used in investing activities was primarily driven by the use of $2,099.8 to fund acquisitions and capital expenditures (net of disposals) of $230.2, partially offset by net sales and maturities of short-term investments of $132.4.

In the first six months of 2023, net cash used in investing activities was primarily driven by capital expenditures (net of disposals) of $191.5, the use of $113.2 to fund acquisitions, and net purchases of short- and long-term investments of $75.4.

Financing Activities

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 $176.2 in the first quarter of 2024, compared to $265.4 in the first quarter of 2023.

In the first quarter of 2024, net cash used in financing activities was primarily driven by (i) repurchases of the Company’s Common Stock of $153.8, (ii) dividend payments of $131.7, (iii) payments of $2.9 related to debt financing costs associated with the Company’s amended and restated revolving credit facility in March 2024, as discussed further below, and (iv) other debt repayments of $1.1, partially offset by cash proceeds of $113.3 from the exercise of stock

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 .

Net cash provided by financing activities was $743.4 in the first six months of 2024, compared to net cash used in financing activities of $704.0 in the first six months of 2023.

In the first six months of 2024, net cash provided by financing activities was primarily driven by (i) net cash proceeds from borrowings of $1,500.1, primarily related to the issuance of the New Senior Notes (as defined below), and (ii) cash proceeds of $234.7 from the exercise of stock options, partially offset by (a) debt repayments of $351.8, primarily related to the redemption of the 3.20% Senior Notes in the second quarter of 2024, (b) repurchases of the Company’s Common Stock of $344.2, (c) dividend payments of $263.8, (d) distributions to and purchases of noncontrolling interests of $17.5, and (e) payments of $14.7 related to debt financing costs associated with the Company’s amended and restated revolving credit facility in March 2024 as well as the issuances of the New Senior Notes in April 2024, as discussed further below.

In the first six months of 2023, net cash used in financing activities was primarily driven by (i) net repayments of $632.6 related to the Company’s commercial paper programs, primarily the U.S.

Commercial Paper Program, (ii) repurchases of the Company’s Common Stock of $320.5, (iii) dividend payments of $249.9, (iv) other debt repayments of $7.1 related to other long-term debt, (v) distributions to and purchases of noncontrolling interests of $6.5, and (vi) payments of $2.3 related to debt financing costs associated with the March 2023 issuance of the 2026 Senior Notes (as defined below), partially offset by (a) net cash proceeds from borrowings of $351.8, primarily related to the issuance of the 2026 Senior Notes, and (b) cash proceeds of $163.1 from the exercise of stock options .

The Company has significant flexibility to meet its financial commitments.

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dollar borrowings, are either the base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”).

The Revolving Credit Facility was undrawn on the date of the amendment.

The Revolving Credit Facility was undrawn on the date it was amended and restated.

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

As of March 31, 2024 and December 31, 2023, there were no outstanding borrowings under the revolving credit facility then in effect.

As of June 30, 2024 and December 31, 2023, there were no outstanding borrowings under the revolving credit facility then in effect.

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

On March 31, 2024, 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 “Term Loan”), which was scheduled to mature on April 19, 2024.

The Term Loan was undrawn at closing and was permitted to be drawn on up to five occasions over the life of the facility.

The Term Loan could be repaid at any time without premium or penalty, and, once repaid, could not be reborrowed.

If drawn upon, the proceeds from the Term Loan were expected to be used for general corporate purposes.

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

As of March 31, 2024, the Company had not drawn upon the Term Loan, and, as such, there were no outstanding borrowings under the Term Loan.

The Term Loan required payment of certain commitment fees and required that the Company satisfy certain financial covenants.

On March 31, 2024, the Company was in compliance with the financial covenants under the Term Loan.

On June 30, 2024, 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 “Term Loan”).

The Term Loan matured on April 19, 2024 without the Company drawing upon it throughout its term.

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Commercial Paper Program by $500.0.

As of March 31, 2024, the maximum aggregate principal amount outstanding of USCP Notes at any time is $3,000.0.

As of June 30, 2024, the maximum aggregate principal amount outstanding of USCP Notes at any time is $3,000.0.

The Company utilizes borrowings under the U.S.

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The Company borrowed under the U.S.

Commercial Paper Program throughout much of the first quarter of 2024, the proceeds of which were used for general corporate purposes.

Before the end of the first quarter of 2024, the Company repaid all of its USCP Notes then outstanding.

As of March 31, 2024 and December 31, 2023, there were no USCP Notes outstanding.

Before the end of the second quarter of 2024, the Company repaid all of its USCP Notes then outstanding.

As of June 30, 2024 and December 31, 2023, there were no USCP Notes outstanding.

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S.

Commercial Paper Program, the

“Commercial Paper Programs”), pursuant to which the Euro Issuer may issue short-term unsecured commercial paper notes (the “ECP Notes” and, together with the USCP Notes, the “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States.

Commercial Paper Program, the “Commercial Paper Programs”), pursuant to which the Euro Issuer may issue short-term unsecured commercial paper notes (the “ECP Notes” and, together with the USCP Notes, the “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States.

The ECP Notes may be issued in Euros, Sterling, U.S.

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

The Company did not borrow under the Euro Commercial Paper Program during the first quarter of 2024, and, as of March 31, 2024 and December 31, 2023, there were no ECP Notes outstanding.

The Company did not borrow under the Euro Commercial Paper Program during the first six months of 2024, and, as of June 30, 2024 and December 31, 2023, there were no ECP Notes outstanding.

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

In conjunction with the Revolving Credit Facility, as of March 31, 2024, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum aggregate principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $3,000.0 in the aggregate.

The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Company’s Revolving Credit Facility are available to repay Commercial Paper, if necessary.

In conjunction with the Revolving Credit Facility, as of June 30, 2024, the authorization from the Board limits the maximum aggregate principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $3,000.0 in the aggregate.

The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Revolving Credit Facility are available to repay Commercial Paper, if necessary.

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 March 31, 2024, the Company has outstanding senior notes (the “Senior Notes”) as follows:

As of June 30, 2024, the Company has outstanding senior notes (the “Senior Notes”) as follows:

February 2030

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October 2028 (Euro Notes)

On April 5, 2024, the Company issued three series of unsecured senior notes (collectively, the “New Senior Notes”):

(i) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2027 at 99.887% of face value (the “2027 Senior Notes”), (ii) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2029 at 99.900% of face value (the “2029 Senior Notes”) and (iii) $600.0 aggregate principal amount of unsecured 5.250% Senior Notes due April 5, 2034 at 99.900% of face value (the “2034 Senior Notes”).

The Company used net proceeds from the New Senior Notes, together with a combination of cash on hand and borrowings under the U.S.

Commercial Paper Program, to fund the cash consideration for the CIT acquisition in May 2024, as discussed in further detail in Note 11 of the accompanying Notes to Condensed Consolidated Financial Statements herein, along with the fees and expenses related thereto.

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

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

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Commercial Paper Program.

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

On April 5, 2024, the Company issued three series of unsecured senior notes (collectively, the “New Senior Notes”):

If the Company’s pending acquisition of the Carlisle Interconnect Technologies (“CIT”) business is not consummated on or prior to an agreed upon date or if the Company notifies the trustee that the acquisition will not be pursued at all, under certain circumstances, each series of the New Senior Notes will be subject to a special mandatory redemption, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest from the date of initial issuance, or the most recent date to which interest has been paid or provided for, whichever is later, to, but not including, the special mandatory redemption date.

Absent a special mandatory redemption, the Company intends to use the net proceeds from the New Senior Notes, together with a combination of cash on hand and other debt financing (which could include borrowings under the Company’s Revolving Credit Facility and/or U.S.

Commercial Paper Program), to fund the cash consideration for the

Company’s pending CIT acquisition, as discussed in Note 11 of the accompanying Notes to Condensed Consolidated Financial Statements herein, along with the fees and expenses related thereto.

To the extent that the net proceeds from the New Senior Notes are not used for such purposes, such net proceeds shall be used for general corporate purposes.

All of the Company’s outstanding senior notes in the United States (the “U.S.

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

On March 31, 2024, the Company was in compliance with all requirements under its Senior Notes.

On June 30, 2024, 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 Class A Common Stock (“Common Stock”) during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”).

During the three months ended March 31, 2024, the Company repurchased 1.4 million shares of its Common Stock for $153.8 under the 2021 Stock Repurchase Program.

All of the repurchased shares during the first three months of 2024 were retired by the Company.

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.

From April 1, 2024 to April 26, 2024, the Company repurchased 0.6 million additional shares of its Common Stock for $71.8, which were the final repurchases under the 2021 Stock Repurchase Program.

On April 23, 2024, the Board authorized a new stock repurchase program under which the Company may purchase up to $2,000.0 of the Company’s Common Stock during the three-year period ending on the close of business on April 28, 2027 (the “2024 Stock Repurchase Program”).

The 2024 Stock Repurchase Program becomes effective on April 29, 2024.

On April 23, 2024, the Board authorized a new stock repurchase program under which the Company may purchase up to $2,000.0 of its Common Stock during the three-year period ending on the close of business on April 28, 2027 (the “2024 Stock Repurchase Program”).

The 2024 Stock Repurchase Program became effective on April 29, 2024.

During the three months ended June 30, 2024, the Company repurchased 1.8 million shares of its Common Stock for $118.6 under the 2024 Stock Repurchase Program.

All of the repurchased shares under the 2024 Stock Repurchase Program during the three months ended June 30, 2024 have been retired by the Company.

From July 1, 2024 to July 23, 2024, the Company repurchased 0.6 million additional shares of its Common Stock for $39.9, and, as of July 24, 2024, the Company has remaining authorization to purchase up to $1,841.6 of its Common Stock under the 2024 Stock Repurchase Program.

The timing and amount of any future repurchases will depend on a number of factors, such as the 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 27, 2021, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of its Common Stock during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”).

During the three and six months ended June 30, 2024, the Company repurchased 1.3 million and 4.1 million shares of its Common Stock for $71.8 and $225.6, respectively, under the 2021 Stock Repurchase Program, which were the final repurchases under the 2021 Stock Repurchase Program.

All of the repurchased shares under the 2021 Stock Repurchase Program during the first six months of 2024 have been retired by the Company.

During the three and six months ended June 30, 2023, the Company repurchased 4.0 million and 8.2 million shares of its Common Stock for $153.6 and $320.5, respectively, under the 2021 Stock Repurchase Program.

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

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 during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table summarizes the declared quarterly dividends per share as well as the dividends declared and paid during the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Six Months Ended June 30,

Dividends declared per share

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Dividends paid (including those declared in the prior year)

On October 24, 2023, the Board approved an increase to the Company’s quarterly dividend rate from $0.21 per share to $0.22 per share, effective with dividends declared in the fourth quarter of 2023, contingent upon declaration by the Board.

On January 30, 2024, the Company entered into a definitive stock purchase agreement by and between the Company and Carlisle Companies Incorporated (“Carlisle”), agreeing to acquire the CIT business of Carlisle for an aggregate purchase price of $2,025 in cash, subject to customary post-closing adjustments.

The acquisition is expected to be completed by the end of the second quarter of 2024 and is subject to certain regulatory approvals and other customary closing conditions.

The Company expects to finance the CIT acquisition through a combination of the net proceeds from the New Senior Notes, as discussed earlier in this Item 2, together with a combination of cash on hand and other debt financing, which could include borrowings under the Company’s Revolving Credit Facility and/or U.S.

Commercial Paper Program.

On October 24, 2023, the Board approved an increase to the Company’s quarterly dividend rate from $0.105 per share to $0.11 per share, effective with dividends declared in the fourth quarter of 2023, and on July 23, 2024, the Board approved an additional increase to the Company’s quarterly dividend rate from $0.11 per share to $0.165 per share, effective with dividends declared in the third quarter of 2024, contingent upon declaration by the Board.

During the three and six months ended June 30, 2024, the Company completed two acquisitions, including the acquisition of CIT (collectively, the “2024 Acquisitions”), for approximately $2,099.8, net of cash acquired.

Both acquisitions have been included in the Harsh Environment Solutions segment.

The 2024 Acquisitions were each funded using cash on hand, proceeds from the New Senior Notes or borrowings under the U.S.

Commercial Paper Program, or a combination thereof .

The 2024 Acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.

On May 21, 2024, the Company completed the acquisition of CIT for approximately $1,995.3, net of cash acquired and subject to customary post-closing adjustments.

The Company funded the CIT acquisition through a combination of net proceeds from the New Senior Notes, as discussed earlier in this Item 2, together with borrowings under the U.S.

Commercial Paper Program and cash on hand .

CIT, headquartered in St.

Augustine, FL, is a leading global supplier of harsh environment interconnect solutions, primarily to the commercial aerospace, defense and industrial end markets.

Augustine, FL, is a leading global supplier of

harsh environment interconnect solutions, primarily to the commercial aerospace, defense and industrial end markets.

CIT’s wide range of products include wire and cable, cable assemblies, contacts, connectors and sensors, which management believes are highly complementary to Amphenol’s existing interconnect and sensor solutions.

If and when the acquisition is consummated, the Company expects to report the CIT business within its Harsh Environment Solutions segment.

CIT has been included in the Harsh Environment Solutions segment.

During the year ended December 31, 2023, the Company completed 10 acquisitions (the “2023 Acquisitions”) for approximately $970.4, net of cash acquired.

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One of the 2023 Acquisitions, which closed in the second quarter of 2023, represented a bargain purchase, where the estimated fair value of assets acquired, net of liabilities assumed, exceeded the purchase price.

The Company recognized a non-cash gain of $5.4 on the bargain purchase acquisition during the year ended December 31, 2023, which was recorded separately in the Company’s Consolidated Statements of Income.

The Company recognized a non-cash gain of $5.4 on the bargain purchase acquisition during the three and six months ended June 30, 2023, which was recorded separately in the Company’s Consolidated Statements of Income.

The 2023 Acquisitions were not material, either individually or in the aggregate, 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 an acquisition that closed in the first quarter of 2023.

During the three and six months ended June 30, 2024, the Company incurred $70.0 ($59.9 after-tax) of acquisition-related expenses, comprised primarily of external transaction costs associated with the 2024 Acquisitions, as well as the amortization related to the value associated with acquired backlog and certain non-cash purchase accounting costs resulting from the CIT acquisition.

During the three months ended June 30, 2023, the Company incurred $4.0 ($3.8 after-tax) of acquisition-related expenses, comprised of external transaction costs related to acquisitions.

During the six months ended June 30, 2023, the Company incurred $9.4 ($7.8 after-tax) of acquisition-related expenses, comprised of the amortization related to the value associated with acquired backlog resulting from an acquisition that closed in the first quarter of 2023, as well as the external transaction costs incurred in the second quarter of 2023.

During the year ended December 31, 2023, the Company incurred $34.6 ($30.2 after-tax) of acquisition-related expenses, comprised primarily of external transaction costs associated with the 2023 Acquisitions, as well as the amortization related to the value associated with acquired backlog resulting from three of the 2023 Acquisitions.

Subsequent Events

On July 18, 2024, the Company entered into a Purchase Agreement by and between the Company and CommScope Holding Company, Inc.

(“CommScope”), to acquire CommScope’s mobile networks-related businesses, specifically the Outdoor Wireless Networks segment and the Distributed Antenna Systems business (collectively, the “Mobile Networks Business”), for an aggregate purchase price of approximately $2,100 in cash, subject to customary post-closing adjustments.

The acquisition is expected to be completed in the first half of 2025, subject to the receipt of certain regulatory approvals and satisfaction of other customary closing conditions.

The Company expects to finance this acquisition through a combination of cash on hand and debt.

The Mobile Networks Business provides mobile networks solutions, with advanced technologies in the areas of base station antennas and related interconnect solutions, as well as distributed antenna systems.

The Mobile Networks Business’s wide range of products add advanced antenna and associated interconnect products, technologies and capabilities, which management believes are highly complementary to Amphenol’s existing product portfolio for next-generation wireless networks.

If and when the acquisition is consummated, the Company expects to report the Mobile Networks Business within its Communications Solutions segment.

Environmental Matters

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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.

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, gains associated with bargain purchase acquisitions, 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.

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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 months ended March 31, 2024 and 2023 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 2:

GAAP financial measures for the three and six months ended June 30, 2024 and 2023 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.

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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