Amphenol Corporation

an overview of the business and current market trends. Then, of course, we will take your questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements, so please refer to the relevant disclosures in our press release for further information. The company closed the third quarter of 2025 with record sales of $6,194,000,000, a record GAAP and adjusted EPS of $0.97 and $0.93, respectively. Third quarter sales were up 53% in U.S. dollars, 52% in local currencies, and 41% organically compared to the third quarter of 2024. Sequentially, sales were up 10% in U.S. dollars and local currencies and up 9% organically. Adam will comment further on trends by market in a few minutes. Orders in the quarter were a record $6,111,000,000. up a strong 38% compared to the third quarter of 2024, and up 11% sequentially, resulting in a book-to-bill ratio of 0.99 to 1. Gap in adjusted operating income were both $1,702,000,000 in the quarter, and operating margin was a record 27.5%. On an adjusted basis, operating margin increased by a strong 560 basis points from the prior year quarter and 190 basis points sequentially. The year-over-year increase in adjusted operating margin was primarily driven by strong operating leverage on significantly higher sales volumes, which was only modestly offset by the dilutive impact of acquisitions. On a sequential basis, the increase in adjusted operating margin reflected strong conversion on the higher sales levels, as well as further progress on profitability improvement on acquired businesses. I'm extremely proud of the company's record operating margin performance in the third quarter, which reflects continued strong execution by our team. Breaking down third quarter results by segment, compared to the third quarter of 2024, sales in the communication solution segment were $3,309,000,000 and increased by 96% in U.S. dollars and 75% organically. Second operating margin was 32.7%. Sales in the harsh environment solution segment were $1,516,000,000, and increased by 27% in U.S. dollars and 19% organically, and segment operating margin was 27.1%. Sales in the interconnect and sensor system segment were $1,369,000,000, and increased by 18% in U.S. dollars and 15% organically, and segment operating margin was 20%. The company's gap effective tax rate for the third quarter was 23.5%, and the adjusted effective tax rate was 27%, which compared to 21.4% and 24% in the third quarter of 24, respectively. The increase in our adjusted effective tax rate this quarter is due to some shift in income mix to higher tax jurisdictions during 2025. The third quarter includes an adjustment to bring the year-to-date taxes to 25.5% adjusted effective tax rate. which resulted in a $0.03 impact to our third quarter EPS. Our fourth quarter and full year guidance assumes this higher 25.5% tax rate, and we expect this higher tax rate to continue into 2026. GAAP diluted EPS with a record $0.97 in the third quarter, up 102% compared to the prior year period, and on an adjusted basis, diluted EPS increased 86% to a record $0.93 compared to $0.50 in the third quarter of 24. This was an outstanding result. Operating cash flow in the third quarter was $1,471,000,000, or 117% of net income, and free cash flow was $1,215,000,000, or 97% of net income, also an excellent result. From a capital standpoint, inventory days, day sales outstanding, and payable days were all within a normal range. During the quarter, the company repurchased 1.4 million shares of common stock at an average price of approximately $109, and when combined with our normal quarterly dividend, total capital returned to shareholders in the third quarter of 2025 was approximately $354 million. As noted in the earnings release, the company has increased its quarterly dividend by 52% to 25 cents per share, effective for payments beginning in January of 2026. Total debt on September 30th was $8.1 billion, and net debt was $4.2 billion. Total liquidity at the end of the quarter was $10.9 billion, and this included cash and short-term investments on hand of $3.9 billion, plus availability under our existing credit facilities, including the $4 billion term loan facility recently put in place in anticipation of the CCS acquisition. Third quarter, 2025 EBITDA. was $2 billion, and our net leverage ratio was 0.7 times at the end of the quarter. As of September 30th, the company had no outstanding borrowings under its revolving credit facility or its commercial paper programs. I will now turn the call over to Adam, who will provide some commentary on current market trends.

Well, thank you very much, Craig, and thank you to everybody for taking the time to join our call today. And I hope that all of you are having an enjoyable fall. I can tell you it's a beautiful day here in Connecticut. I'm going to highlight our achievements in the third quarter. I'll discuss our trends and progress across our served markets and then comment on our outlook for the fourth quarter and the full year. And then, of course, we'll have time for questions thereafter. There's no doubt that our results in the third quarter were much stronger than expected, exceeding the high end of our guidance in sales, and adjusted diluted earnings per share. Sales grew from prior year by a very strong 53% in U.S. dollars and 52% in local currencies, reaching a new record $6,194,000,000, nearly $6.2 billion. On an organic basis, sales increased by a very strong 41%, the same level that we actually achieved in the second quarter. And this was driven by double-digit organic growth in all but one of our end markets. We're very pleased that the company booked a record $6,111,000,000 in orders in the third quarter, and that represented a book-to-bill of 0.99 to 1. Orders grew by a very strong 38% from prior year and were also up 11% sequentially. I have to say that we're particularly pleased to have delivered record operating margins of 27.5% in the quarter, an increase of 560 basis points from our prior year adjusted operating margin and 190 basis points sequentially. This strong profitability is a direct result of the outstanding execution of the Amphenol team around the world, all of whom continue to manage extremely well in a very dynamic environment. Craig mentioned, our adjusted diluted EPS also grew a very strong 86% from prior year, reaching a new record of 93 cents. And the company converted those earnings into record operating and free cash flow in the quarter of $1,471,000,000 and $1,215,000,000 respectively, both clear demonstrations of the quality of the company's earnings. Finally, I'm very pleased that our board has approved a 52% increase in the company's quarterly dividend to $0.25 per share. I just can't express enough my pride in the Amphenol team. I would just say that our results this quarter once again reaffirm the value of the passion, discipline, and agility of our entrepreneurial organization as we continue to drive superior performance. Now, as we announced in mid-August, we're very excited that we signed a definitive agreement to acquire Trexon for approximately $1 billion in cash. Trexon is a leading provider of high-reliability interconnect and cable assemblies, primarily for the defense market, and expects to generate 2025 sales and EBITDA of approximately 290 million and 26% respectively. We're very excited about the incremental potential that Trexon's capabilities will bring to Amphenol, and we look forward to welcoming the entire Trexon team to the Amphenol family. We continue to expect this acquisition to close by the end of the fourth quarter. We're pleased as well to announce that we closed on the acquisition of Rochester sensors earlier in the third quarter, based in the Dallas, Texas area, and with annual sales of approximately $100 million, Rochester is a leading manufacturer of highly engineered, application-specific liquid level sensors for the industrial market, with a particular focus on propane, heavy vehicle, and refrigeration. The company has a strong and long respected brand in the sensor industry, and no doubt will be a great complement to our already broad sensor offering. In addition, we remain excited about the pending acquisition of the CCS business from CommScope. Given our good progress on the path towards closing, we now expect to close CCS by the end of the first quarter of 2026, about a quarter sooner than originally anticipated. We remain confident that our acquisition program will continue to create great value for Amphenol. In fact, it is our ability to identify and execute upon acquisitions And then to successfully bring these new companies into the Amphenol family, that remains a core competitive advantage for the company. Now, turning to our trends across our served end markets, I would just note that we continue to be very pleased that the company's end market exposure remains diversified, balanced, and broad. This diversification continues to create great value for the company, enabling us to participate across all areas of the global electronics industry, while not being disproportionately exposed to the volatility of any given market or application. The defense market represented 9% of our sales in the quarter, and sales grew from prior year by a strong 29% in U.S. dollars and 23% organically. And this is really driven by robust growth across virtually all segments of the defense market with with contributions in particular related to space, naval, communications, and ground vehicle applications. Sequentially, our sales grew by 8%, which was higher than our expectations coming into the corner. And looking into the fourth quarter, we expect a mid-single-digit increase in sales from these already lofty third-quarter levels. And for the full year 2025, we expect sales to increase by more than 25%. I would just note that this outlook does not include any impact from the Trexon acquisition. We remain encouraged by the company's leading position in the defense interconnect market, where we offer the industry's widest range of high technology products. Amidst the current dynamic geopolitical environment, countries around the world continue to expand their investments into both current and next generation defense technologies. With our existing offerings, as well as the complementary capabilities that Trexon will bring, we're positioned better than ever to capitalize on this long-term demand trend. The commercial aerospace market represented 5% of our sales in the quarter. Sales increased by 17% from prior year and 16% organically, as we benefited from increasing production levels of our customers together with our continued progress in expanding our content on next generation commercial aircraft. Sequentially, our sales grew by 7% from the second quarter, which was better than our expectations coming into the quarter. Now looking into the fourth quarter, we expect a mid single digit sales increase from these third quarter levels. And for the full year 2025, we expect sales to increase in the high 30% range from last year. helped by the acquisition of CIT back in 2024. I'm truly proud of our team working in the commercial air market. With the ongoing growth and demand for jetliners, our efforts to expand our product offering both organically and through our acquisition program continue to pay real dividends. In particular, I just want to mention that we're very pleased with the progress of the CIT team, who's now completed more than a full year as part of the Amphenol family. We look forward to further capitalizing on our expanded range of product solutions for the commercial air market long into the future. The industrial market represented 18% of our sales in the quarter, and sales in this market grew by 21% in U.S. dollars and 11% organically, and that was really driven by organic growth in all three geographies. In particular, our organic growth was driven by strong performance in factory automation, medical instrumentation, industrial electric vehicles, and our heavy equipment segments. On a sequential basis, sales grew by 5% from the second quarter, which was better than our expectations coming into the quarter. As we look into the fourth quarter, we expect sales to moderate slightly from these third quarter levels. And for the full year of 2025, We expect our sales to grow by approximately 20%, reflecting both strong organic growth as well as the benefit of acquisitions. We remain encouraged by the company's strength across the many diversified segments of this important market. As demand continues to recover, I am confident in our long-term strategy to expand our high-technology interconnect, antenna, and sensor offering both organically as well as through complementary acquisitions. Indeed, with the acquisition of Rochester sensors, we have further broadened our sensor offering for the industrial market. And that strategy has really enabled Amphenol to capitalize on the many electronic revolutions that are taking place across the diversified industrial markets, thereby creating continued opportunities for outstanding team working in this important area. The automotive market represented 14% of our sales in the quarter, And sales in the third quarter grew by 13% in U.S. dollars and 12% organically, as we once again drove growth in all regions. Sequentially, our sales grew by 8% from the second quarter, which was actually much better than our expectations coming into the quarter. And that really reflected the ability of our team to quickly execute on a wide range of opportunities around the world. For the fourth quarter, we expect a moderate sales decline from these third quarter levels. And for the full year of 2025, we expect sales to increase in the mid to high single digit range from 2024. I remain very proud of our team working in this important market. And, you know, while there are no doubt many areas of uncertainty in the global automotive market, our team continues to be focused on driving new design wins with customers who are implementing a wide array of new technologies into their vehicles. We look forward to benefiting from our strength and position in the automotive market for many years to come. The communications networks market represented 11% of our sales in the quarter. Sales grew from prior year by 165% in US dollars and a strong 25% organically. As we benefited from the Andrew acquisition that we completed earlier this year, as well as from increased spending by both communications network operators and equipment manufacturers. Sequentially, our sales grew by 8% from the second quarter, which was better than our expectation for sales to remain flat. As we look into the fourth quarter, we do expect sales to decline in the low teens range on normal seasonality. And for the full year 2025, we expect more than 130% growth driven by the acquisition of Andrew, together with robust organic growth. With our expanded range of technology offerings following the acquisition of Andrew earlier this year, we're well positioned with both service provider and OEM customers across the global communications networks market. Our deep and broad range of products, coupled with an expansive manufacturing footprint, have positioned us to better support customers around the world. And as those customers continue to drive their systems to higher levels of performance, we look forward to enabling these important networks for many years to come. The mobile device market represented 6% of our sales in the quarter and sales moderated by 3% in U.S. dollars and organically as growth in wearables, as well as basically flat sales enhanced year over year was more than offset by moderations in sales related to laptops and tablets. Sequentially, our sales did grow by 18% from the second quarter, which was much better than our expectations coming into the third quarter. As we look into the fourth quarter, we expect sales to increase modestly from these levels. And for the full year 2025, we expect sales to grow in the low single-digit range compared to 2024. I remain very proud of our team working in the always dynamic mobile devices market, as their agility and reactivity have once again enabled us to capture incremental sales in the quarter. I'm confident that with our leading array of antennas, interconnect product, and mechanisms designed in across a broad range of next-generation mobile devices, we're well-positioned for the long term. And finally, the IT Datacom market represented 37% of our sales in the quarter. Sales in the quarter grew by a very strong 128% in US dollars and organically. And that was driven by the continued acceleration in demand for our products used in artificial intelligence applications, together with continued robust growth in our base IT Datacom business. I'm really proud of our team's outstanding execution here in the third quarter. as we were once again able to significantly outperform our expectations in this very exciting market. On a sequential basis, sales increased by 13% from the second quarter, and that was substantially better than our expectation for mid to high single-digit decline. This outperformance was actually driven both by sales of AI-related products as well as by growth in our base IT Datacom business. As we look towards the fourth quarter, We expect sales to increase slightly from these very strong third quarter levels. And for the full year of 2025, we expect our IT Datacom sales to more than double compared to prior year. We are more than ever encouraged by the company's position in the global IT Datacom market. There's no doubt that our team has done an outstanding job securing future business on next generation systems with a broad array of customers. The revolution in AI continues to create a unique opportunity for Amphenol, given our leading high-speed and power interconnect products. Whether high-speed, power, or fiber-optic interconnects, our products are critical components in these next-generation systems, and that creates a continued long-term growth opportunity for the company. Turning to our outlook and obviously assuming the continuation of current market conditions as well as constant exchange rates, for the fourth quarter, we now expect sales in the range of $6 billion to $6.1 billion and adjusted diluted EPS in the range of $0.89 to $0.91. This would represent a sales increase of 39% to 41% and an adjusted diluted EPS increase of 62% to 65%. compared to prior year fourth quarter. Our fourth quarter guidance also represents an expectation for full year sales of $22,660,000,000 to $22,760,000,000 and full year adjusted diluted EPS of $3.26 to $3.28. This outlook represents full year sales and adjusted EPS increases of 49% to 50% and 72% to 74% respectively. There's no doubt that 2025 has been a very strong year for Amphenol thus far. I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current environment and to thereby continue to grow our market position, all while driving sustainable and strong profitability through this year and into the long term. Finally, I'd like to take this opportunity once again to thank our entire global team for what were truly incredible efforts here in the third quarter. They worked unbelievably hard to deliver this level of growth and performance. And I'm truly grateful to each and every one of them. And with that operator, we'd be very happy to take any questions that there may be.

Thank you, Mr. Norwood. The question and answer period will now begin. Please limit to one question per caller. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We have a question from Steve Fox from Fox Advisors. Please go ahead, Steve.