Amphenol Q3 Earnings Call Highlights

Key Points

• Record Q3 performance: Amphenol reported $10.2 billion in sales, up 65% year over year, and adjusted EPS of $0.80, up 74%. Record orders of $12.17 billion produced a 1.19-to-1 book-to-bill ratio.
• AI drove datacom growth: IT datacom sales rose 117% year over year and represented 48% of revenue, with roughly three-quarters tied to AI applications. The company expects datacom sales to more than double for full-year 2026.
• Positive outlook and capital returns: Amphenol forecast fourth-quarter sales of $10.3 billion to $10.5 billion and raised its dividend 20% to $0.15 per share. The board also authorized a new three-year, $4 billion share-repurchase program beginning in January 2027.

Amphenol NYSE: APH reported record third-quarter 2026 sales and earnings, driven by continued strength in artificial intelligence-related IT datacom demand, broad industrial growth and contributions from recent acquisitions.

The company posted third-quarter sales of $10.2 billion, up 65% from the prior-year period and 37% organically. Adjusted diluted earnings per share rose 74% to a record $0.80, while GAAP diluted EPS increased 61% to $0.79. Sales and adjusted earnings exceeded the high end of the company’s guidance, Chairman and CEO Adam Norwitt said.

Orders reached a record $12.17 billion, up 99% year over year and 13% sequentially, producing a book-to-bill ratio of 1.19-to-1. Amphenol said bookings were positive in all but one of its end markets during the quarter.

Margins, Cash Flow and Capital Returns

GAAP operating income was about $3 billion, with a 29.5% operating margin. Adjusted operating income was also approximately $3 billion, and adjusted operating margin was 29.7%, up 220 basis points from a year earlier.

CFO Craig Lampo said the year-over-year margin improvement reflected operating leverage from higher sales volumes, which more than offset dilution from acquisitions. On a sequential basis, adjusted margin declined 10 basis points, primarily because the second quarter had a larger benefit from tariff recoveries. Excluding those benefits, adjusted margin improved by roughly 70 basis points sequentially, aided by higher sales and profitability progress at recent acquisitions, particularly CommScope.

Operating cash flow totaled $2.1 billion, or 102% of net income, while free cash flow was $1.6 billion, or 80% of net income. Amphenol repurchased 3 million shares at an average price of about $81 during the quarter. Combined with its regular dividend, total shareholder returns were approximately $553 million.

The board approved a 20% increase in the quarterly dividend to $0.15 per share, effective with payments beginning in January 2027. It also authorized a new three-year, $4 billion share repurchase program starting Jan. 1, 2027.

IT Datacom Growth Led by AI Demand

IT datacom represented 48% of quarterly sales and was Amphenol’s largest end market. Segment sales rose 117% year over year and 77% organically, with sales increasing 30% sequentially. Norwitt said the vast majority of sequential growth was tied to AI applications, which accounted for about three-quarters of IT datacom sales.

The company expects IT datacom sales to increase by a mid-single-digit percentage in the fourth quarter from already elevated third-quarter levels. For the full year, Amphenol expects sales in the market to more than double, driven primarily by organic growth and contributions from acquisitions including CommScope.

Norwitt said customers developing next-generation AI and accelerated-computing systems require more copper, optical and power interconnect products. He also highlighted the company’s power interconnect portfolio, describing it as a meaningful part of the company’s AI business and a growth opportunity as customers move toward higher-voltage designs, including 800-volt architectures.

Other Markets and Acquisitions

Industrial sales increased 60% year over year and 25% organically, benefiting from broad-based demand and the addition of CommScope’s building connectivity business. Automotive revenue rose 13%, including 9% organic growth, while mobile devices sales climbed 31%, including 29% organic growth. Defense sales rose 42%, including 30% organic growth, and commercial aerospace revenue increased 23%.

Communications networks was the exception among major markets. Revenue increased 25% due to CommScope, but declined 28% organically as broadband and other network-operator demand moderated. Amphenol expects a further communications networks sales decline in the fourth quarter.

The company closed its acquisition of Empire Electronics in September. Empire, a manufacturer of complex automotive interconnect assemblies with an emphasis on lighting applications, is expected to generate approximately $320 million in 2026 revenue.

Amphenol also signed agreements to acquire AdvancedPCB, Dexgreen Limited and Humanetics Sensors, with closings expected by the end of the first quarter. The companies are expected to contribute approximately $270 million, $90 million and $70 million in 2026 sales, respectively.

CommScope continued to exceed Amphenol’s expectations, according to management. The company raised its outlook for CommScope to $5.1 billion in 2026 sales and a $0.18 contribution to adjusted EPS. Lampo said CommScope’s operating margins were already in the low 20% range and that management sees an opportunity for profitability to reach Amphenol’s corporate average over time.

Fourth-Quarter and Full-Year Outlook

For the fourth quarter, Amphenol forecast sales of $10.3 billion to $10.5 billion and adjusted diluted EPS of $0.81 to $0.83. The outlook implies year-over-year sales growth of 60% to 63% and adjusted EPS growth of 65% to 69%.

The company’s guidance excludes acquisitions that have not yet closed, including AdvancedPCB, Dexgreen and Humanetics Sensors. For full-year 2026, Amphenol expects sales of $36.9 billion to $37.1 billion and adjusted EPS of $2.82 to $2.84, representing approximately 60% sales growth and roughly 70% adjusted EPS growth from 2025.

About Amphenol (NYSE:APH)

Amphenol Corporation NYSE: APH is a global manufacturer of electrical, electronic and fiber-optic connectors, interconnect systems and related products. Its portfolio includes cable assemblies, sensors, antennas, backplane systems, radio-frequency components and other specialized electronic hardware.

The company serves customers across a range of industries, including automotive, aerospace and defense, information technology and data communications, industrial, mobile networks, commercial aerospace, medical and other markets.

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