Amphenol Corporation (NYSE:APH) Q4 2023 Earnings Call Transcript

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That was really driven by broad-based strength across most automotive applications, including electric and hybrid electric vehicles. Sequentially, our automotive sales increased by 8%, which was better than our expectations coming into the quarter. For the full year 2023, I’m pleased that our sales increased by a strong 12% in U.S. dollars, 13% in local currency and 12% organically, and that reflected broad strength across the automotive market, including, in particular, next-generation electronics, for example, electric and hybrid drivetrains. Looking into 2024, we expect a high single-digit sequential seasonal moderation in sales in the first quarter from these levels. I’m truly proud of our team working in the automotive market. Their performance in 2023 is yet another confirmation of the benefits of their focus on driving new design wins with customers who are implementing a wide array of new technologies into their vehicles.

It’s really a multitude of applications, including electrified drivetrains, but not just that, many other applications. We look forward to benefiting from that strong position for many years to come. The mobile devices market represented 11% of our sales in the quarter and 10% of our sales for the full year 2023. Our fourth quarter sales moderated by 3% in U.S. dollars, local currency and organic as robust growth in smartphones was once again more than offset by declining sales into tablets, laptops and wearables. Sequentially, our sales increased by 9%, which was much better than our expectation coming into the quarter for a high single-digit decline. For the full year 2023, sales in the mobile devices market declined by 12% in U.S. dollars and 10% organically as strong growth in smartphones was more than offset by declines in other mobile device applications.

Looking into the first quarter, we do anticipate a typical seasonal sequential decline of approximately 35%. While mobile devices will always remain one of our most volatile of markets, our outstanding and agile team is poised as always to capture any opportunities for incremental sales that may arise in 2024 and beyond. Our leading array of antennas, interconnect products and mechanisms continues to enable a broad range of next-generation mobile devices, which positions us well for the long term. The mobile networks market represented 3% of our sales in the quarter and 4% of our sales for the full year. Sales in this market declined from prior year by 26% in U.S. dollars, 27% in local currency and 34% organically, as we continue to manage through a broad-based reduction in spending by network operators and wireless equipment manufacturers.

Sequentially, our sales decreased by 6%, which was in line with our expectations. For the full year, sales declined by 26% from prior year and 32% organically driven by the spending reductions that we’ve discussed throughout the year. Looking ahead, we expect a modest increase in sales from these fourth quarter levels. And despite this more challenging short-term wireless investment environment, our team continues to work aggressively to realize the benefits of our efforts, to expand our position in next-generation 5G equipment and networks around the world. When customers once again drive renewed wireless investments, we look forward to benefiting from the increased potential that comes from our position with both equipment manufacturers and mobile service providers.

The information technology and data communications market represented 20% of our sales in the quarter and 19% of our sales for the full year. We’re very pleased that our sales in the fourth quarter returned to growth compared to prior year, with sales in U.S. dollars and local currency increasing by 6% and organically by 5%. Sequentially, our sales increased by a much better-than-expected 6%. As we continue to benefit from our strong presence with AI data center customers as well as some overall improved demand. For the full year 2023, our sales in the IT Datacom market declined 13% in U.S. dollars and organically as strong demand for AI-related applications was more than offset by inventory adjustments that we saw amongst our traditional IT Datacom applications.

Looking ahead, we do expect in the first quarter a mid single-digit sequential seasonal decline in sales. I have to say coming out of what was a challenging year in the overall IT Datacom market that we’re more encouraged than ever by the company’s position in this space. Our team continues to do an outstanding job securing future business on next-generation IT systems, particularly those enabling artificial intelligence. Indeed, the revolution in AI has created a unique opportunity for Amphenol given our leading high-speed power and fiber optic interconnect products. With machine learning driving a more intensive usage of these highest technology interconnect products, we are very well positioned for the future. This creates a continued long-term growth opportunity for Amphenol.

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