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Amphenol Corporation reported GAAP Diluted Earnings Per Share (EPS) for the fourth quarter 2018 of $1.09 compared to a GAAP diluted loss per share of $0.34 for the comparable 2017 period. GAAP Diluted EPS for the fourth quarter 2018 includes (i) a benefit of approximately $15 million ($0.04 per share) as a result of the finalization of the provisional income tax charge recorded in the fourth quarter 2017 related to the enactment of the U.S. Tax Cuts and Jobs Act (the Tax Act) and (ii) an excess tax benefit of approximately $6 million ($0.02 per share) related to stock options exercised, partially offset by (iii) acquisition-related transaction costs of approximately $9.0 million ($0.02 per share). Fourth quarter 2017 GAAP diluted loss per share included (i) an estimated provisional income tax charge of approximately $400 million ($1.26 per share) related to the enactment of the Tax Act and (ii) the dilutive share impact due to the reported net loss for the quarter ($0.01 per share) partially offset by (iii) the excess tax benefit of approximately $21 million ($0.07 per share) related to stock options exercised during the quarter. Excluding the effect of these items, Adjusted Diluted EPS1 for the fourth quarter 2018 was a record $1.05 compared to $0.86 for the fourth quarter of 2017.
Sales for the fourth quarter 2018 were a record $2.225 billion compared to $1.944 billion for the comparable 2017 period. Currency translation had the effect of decreasing sales by approximately $28 million in the fourth quarter 2018 compared to the 2017 period.
For the year ended December 31, 2018, GAAP Diluted EPS was $3.85 compared to $2.06 for the full year 2017. GAAP Diluted EPS for the year ended December 31, 2018, includes (i) the previously mentioned benefit as a result of the finalization of the provisional income tax charge related to the Tax Act and (ii) an excess tax benefit of approximately $20 million ($0.06 per share) related to stock options exercised during such period, partially offset by (iii) the previously mentioned acquisition-related transaction costs. Full year 2017 GAAP Diluted EPS included the Tax Act charge and related dilutive share impact mentioned above, plus a charge for acquisition-related transaction costs of approximately $4 million ($0.01 per share) partially offset by an excess tax benefit of approximately $67 million ($0.21 per share) related to stock options exercised during the period. Excluding the effect of these items, Adjusted Diluted EPS for the year ended December 31, 2018 was a record $3.77 compared to $3.12 for the full year 2017.
Sales for the year ended December 31, 2018 were a record $8.202 billion compared to $7.011 billion for the full year 2017. Currency translation had the effect of increasing sales by approximately $60 million for the full year 2018 compared to 2017.
Amphenol President and Chief Executive Officer, R. Adam Norwitt, stated, “We are pleased to have achieved new records in sales, Adjusted Operating Margin and Adjusted Diluted EPS for the full year 2018. These record results were supported by a strong fourth quarter 2018, with sales well above the high end of our guidance due primarily to incremental strength in sales of products into the mobile devices market. Sales in the fourth quarter 2018 increased 14% from prior year, reflecting strong organic growth across most of the Company’s diversified end markets, including mobile devices, military, IT and datacom, mobile networks, commercial air and broadband. For the full year 2018, sales grew by a strong 17% in U.S. dollars, with superior organic growth in nearly every market we serve.”
“We are also very proud of the Company’s record levels of profitability in the fourth quarter and full year 2018. Compared to 2017, Adjusted Diluted EPS grew 22% and 21% for the quarter and full year, respectively, and we achieved record adjusted operating margins of 21.0% and 20.7% for those same periods. Operating cash flow in the quarter and full year 2018 was a strong $378 million and $1.113 billion, respectively. The Company’s full year operating cash flow was particularly strong considering the $81 million payment made in the first quarter 2018 to fully fund our U.S. defined benefit pension plans, as well as the Company’s higher than normal tax-related payments during 2018 resulting from the Tax Act. Our strong operating cash flow generation is a clear confirmation of the quality of the Company’s earnings.”
“The Company continues to pursue a balanced yet flexible approach to deploying our financial strength in order to increase shareholder value. Consistent with this strategy, in January 2019, the Company completed the previously announced acquisition of SSI Controls Technologies (“SSI”). Based in Janesville, Wisconsin, SSI is a leading designer and manufacturer of sensors and sensing solutions for the global automotive and industrial markets with annual sales of approximately $180 million. We are excited by the long-term potential that this acquisition creates for Amphenol as we continue to expand the breadth of our sensor offering while also building on our already strong position in the global automotive and industrial markets. Also consistent with our balanced approach to capital deployment, the Company repurchased approximately three million shares during the fourth quarter of 2018, bringing total share repurchases in 2018 to approximately 11 million shares.”
“We are pleased by the Company’s excellent performance in 2018, which reflects the benefits of our deep commitment to developing enabling technologies for customers across all of our end markets, our ongoing strategy of market and geographic diversification, as well as the Company’s successful acquisition program. Most importantly, these results are a clear reflection of the Amphenol team’s outstanding execution in 2018.”
“Looking ahead, there is a heightened level of uncertainty in the global economy, in particular related to trade policy. Considering this environment, together with our expectation for a higher than typical seasonal reduction in the mobile devices market related to the incremental sales we experienced in the fourth quarter of 2018, and assuming current currency exchange rates, we expect first quarter 2019 sales to be in the range of $1.898 billion to $1.938 billion and Adjusted Diluted EPS in the range of $0.86 to $0.88. For the full year 2019, we expect sales in the range of $8.190 billion to $8.350 billion, flat to an increase of 2% over 2018, and Adjusted Diluted EPS to be in the range of $3.88 to $3.96, an increase of 3% to 5% over 2018.”
“We are encouraged by the platform of strength created by the Company’s strong performance in 2018. The electronics revolution continues to create exciting new growth opportunities for Amphenol across each of our diversified end markets, with customers driving their products and networks to achieve ever higher levels of performance. This continues to create increased demand for our expanded range of high technology interconnect, sensor and antenna products. Our ongoing actions to leverage our competitive advantages and create sustained financial strength, as well as our initiatives to expand our high technology product offerings, both organically and through our successful acquisition program, have created an excellent base for future performance. I am confident in the ability of our outstanding, entrepreneurial management team to dynamically adjust to the always changing environment, to continue to generate strong profitability and to further capitalize on the many opportunities to expand our market position.”
About Amphenol Corporation
Amphenol Corporation is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. Amphenol has a diversified presence as a leader in high growth areas of the interconnect market including: Automotive, Broadband Communications, Commercial Aerospace, Industrial, Information Technology and Data Communications, Military, Mobile Devices and Mobile Networks.