Benefiting from the AI wave! "Nvidia supplier" Amphenol's Q4 profit margin hits a record high, and Q1 sales guidance exceeds expectations

Benefiting from the AI wave, Amphenol's net sales in the fourth quarter increased by 30% year-on-year, and both the fourth quarter and annual operating profit margins reached record highs, while the guidance for the first quarter also exceeded analysts' general expectations.

It is worth mentioning that Amphenol is a global leader in electrical, electronic, and fiber optic connectors and interconnect systems. It is also the primary supplier of copper cables for NVIDIA's GB200 servers, with the copper cables and connectors it supplies accounting for approximately 6% to 7% of the server's value.

After the earnings report was released, Amphenol's stock price rose over 4% in pre-market trading, and the company's stock price has achieved a 44.84% increase over the past year.

Specifically, the highlights of the fourth quarter performance are:

• Adjusted revenue of $965.7 million, expected to be $885.3 million; adjusted net income of $695.2 million, expected to be $643.2 million;
• GAAP earnings per share of $0.59, a year-on-year increase of 44%, expected to be $0.52. Adjusted earnings per share of $0.55, a year-on-year increase of 34%, market estimate was $0.51.
• Fourth quarter net sales of $4.32 billion, a year-on-year increase of 30%, market estimate was $4.08 billion; among them, net sales of harsh environment solutions were $1.26 billion, expected to be $1.21 billion; net sales of interconnect and sensor systems were $1.13 billion, expected to be $1.18 billion; net sales of communication solutions were $1.93 billion, expected to be $1.69 billion.
• In the fourth quarter, 2.4 million shares of common stock were repurchased at a cost of $169 million, and $199 million was paid in dividends, with a total of nearly $1.3 billion returned to shareholders in 2024.

Highlights of the full-year 2024 performance:

• Sales reached $15.2 billion, a year-on-year increase of 21% (in USD), with organic growth of 13%, an improvement compared to the full year of 2023.

• GAAP diluted earnings per share of $1.92, a year-on-year increase of 24%; adjusted diluted earnings per share of $1.89, a year-on-year increase of 25%.

• GAAP and adjusted operating profit margins were 20.7% and 21.7%, respectively. Cash flow from operating activities and free cash flow were $2.8 billion and $2.2 billion, respectively.

• Completed two acquisitions: Carlisle Interconnect Technologies and Luetze. Amphenol focuses on expanding growth opportunities through a commitment to developing enabling technologies for customers, ongoing market and geographic diversification strategies, and an active and successful acquisition plan.

Amphenol President and CEO R. Adam Norwitt stated that the 30% increase in sales in the fourth quarter compared to last year was driven by strong organic growth in IT data communications, mobile networks, commercial aviation, mobile devices, broadband, and defense markets, as well as contributions from the company's acquisition plans. Strong profitability was achieved during the quarter and the year, with adjusted operating profit margins reaching record highs of 22.4% and 21.7%, respectively It is worth mentioning that the sales guidance for the first quarter also exceeded analysts' average expectations:

Amphenol expects sales to be between $4 billion and $4.1 billion, a year-on-year increase of 23% to 26%. Adjusted diluted earnings per share are expected to be between $0.49 and $0.51, a year-on-year increase of 23% to 28%