APH Amphenol 10-Q 2026-09-30 section summaries

Amphenol (APH) — Q3 and first nine months of 2026

Consolidated results

Q3 sales increased 65.1% year over year; gross margin rose to approximately 39.3% from 38.1%, and operating margin to approximately 29.5% from 27.5%. Nine-month sales increased 59.8%, with gross margin of approximately 39.0% versus 36.4%. Interest expense rose to $633.9M from $238.1M for 9M, reflecting the enlarged debt load. The September 2026 two-for-one stock split is reflected retrospectively in share and per-share data.

Q3 segment results

Communications Solutions’ Q3 revenue grew approximately 99%, faster than its 9M growth of approximately 91%; Interconnect and Sensor Systems’ operating income grew approximately 17% in Q3 versus approximately 26% for 9M.

Cash flow and capital spending

Working-capital changes used $1.5925B of cash, compared with $435.2M in 9M 2025. Cash and cash equivalents declined $6.9575B during 9M to $4.1731B.

Balance sheet, debt and liquidity

Other intangible assets comprised customer relationships ($2.4536B, versus $1.2061B), proprietary technology ($2.0536B, versus $733.7M), trade names ($803.8M, versus $278.2M, including indefinite-lived trade names), and backlog and other ($33.0M, versus $23.4M). The increase in goodwill and intangibles primarily reflects acquisitions. On a total-equity basis, equity less goodwill and other intangible assets was negative $5.7771B at September 30, versus positive $0.6836B at year-end.

Amphenol completed four acquisitions in 9M for approximately $11.0558B, net of cash acquired. The January 9 CommScope acquisition contributed $3.683B in net sales and $471.4M in net income through September 30; that net income excludes acquisition interest and external transaction costs and includes acquired-backlog amortization and inventory step-up costs. Preliminary purchase accounting recorded $6.961B of CommScope goodwill, none expected to be tax deductible, and $3.289B of acquired finite-lived intangible assets. Acquisition-related costs were $287.9M pretax ($232.8M after tax, or $0.09 per diluted share), including $132.0M of noncash inventory step-up amortization recorded in cost of sales. The purchase-price allocation remains preliminary.

The debt increase reflects acquisition financing. Funding included $7.5B of U.S. senior notes issued in November 2025, delayed-draw term loans and cash; the three-year $1.5341B term loan remained outstanding at a 4.67% effective rate and matures January 2029. The 364-day loan was repaid in full during 2026. Euro-note issuances also helped repay commercial paper and fund general corporate purposes. No U.S. commercial paper was outstanding at September 30; the $3.0B revolving credit facility was undrawn, and the company reported covenant compliance.

Taxes, capital returns and share-based compensation

Tax accruals increased the effective tax rate by approximately 210 basis points in Q3 and 570 basis points for 9M; the 9M amount included $160.0M of additional China tax obligations. Amphenol paid $230.0M assessed by China authorities in Q2. Unrecognized tax benefits, including penalties and interest, were approximately $375.7M; management said about $30.5M could be resolved over the next 12 months. Stock-option exercises reduced the tax provision by $52.2M in Q3 and $183.6M for 9M.

Common shares outstanding rose from 2,457.9M at December 31, 2025, to 2,472.6M at September 30, 2026 (2,470.4M at June 30). The company repurchased 3.0M shares for $244.7M in Q3 and 8.5M shares for $630.6M in 9M. A new $4.0B repurchase authorization was approved for 2027–2029. Dividends declared were $308.5M in Q3 and $923.9M for 9M; the quarterly dividend was increased from $0.125 to $0.15 per share, effective for Q4 dividends subject to Board declaration.

Stock-based compensation expense was $47.0M in Q3 and $126.6M for 9M. At September 30, 165.759M options were outstanding, with aggregate intrinsic value of $10.198B; 115.7M options were included in Q3 diluted shares. The annual qualitative goodwill review found no impairment indicators requiring a quantitative test.

Amphenol (APH) — Q3 and 9M 2026

Dollar amounts in millions, except per-share data. Q3 and 9M periods ended September 30, 2026.

Consolidated results

Sales increased 65% in Q3 (65% in constant currency; 37% organic) and 60% in 9M (59% in constant currency; 34% organic). Thus, organic growth accelerated by 3 percentage points in Q3 versus the year-to-date rate. Higher sales volumes were the primary organic growth driver, with growth across all three segments and additional contribution from acquisitions. Operating margin expansion reflected leverage from higher sales and cost control; acquisitions, which generally had higher expense ratios than the company average, partly offset improvement.

Segment results

Communications Solutions’ reported and organic Q3 sales growth was 99% and 51%, respectively, versus 91% and 47% for 9M. AI-related IT datacom was particularly strong; industrial, mobile-device and automotive demand also contributed, while communications networks declined organically. Harsh Environment Solutions grew 35% reported and 29% organically in Q3, versus 32% and 25% for 9M; defense, industrial, commercial aerospace and IT datacom supported Q3 growth. Interconnect and Sensor Systems grew 17% reported and 11% organically in Q3, versus 19% and 13% for 9M; AI-related datacom and industrial demand drove growth. Segment operating income gains primarily reflected higher organic volume and operating leverage; 9M results also benefited from tariff recoveries.

Cash flow and investment

Operating cash flow rose with net income and depreciation and amortization, partly offset by higher working-capital use. Working-capital components increased $1,592.5, excluding acquisitions and currency translation, versus $435.2 in 9M 2025. Acquisition outflows drove investing cash use: $11,055.8 was spent on acquisitions, primarily CommScope. Other investing included $1,097.8 of capital expenditures net of disposals and $814.1 of net short-term investment purchases.

Acquisitions, balance sheet and financing

Four acquisitions were completed in 9M 2026 for approximately $11,055.8 net of cash acquired, primarily CommScope. Goodwill and other intangible assets increased mainly from acquisition accounting. APH also signed agreements to acquire three companies for approximately $1.2 billion; two were expected to close by Q4 2026 and one by Q1 2027, funded with cash and debt.

Acquisition funding and other borrowing contributed to the sharp increase in interest expense. At September 30, outstanding note principal included $13.4 billion of U.S. senior notes and €2.7 billion of Euro notes. The $1,534.1 drawn under the three-year delayed-draw term loan remained outstanding; the 364-day facility had been repaid. The $3,000.0 revolving facility had no borrowings, and the company reported covenant compliance. Cash and short-term investments had fallen from year-end, with most September liquidity held outside the U.S.; management considered operating cash flow and capital-market access adequate for needs. Floating-rate debt exposes interest expense to rate changes.

Earnings, taxes and capital returns

Q3 and 9M 2026 acquisition-related costs were $15.5 and $287.9, respectively; the 9M amount included $132.0 of noncash CommScope inventory step-up amortization and $155.9 of acquired-backlog amortization and transaction costs. The comparable 9M 2025 total was $133.8. Adjusted 9M operating income was $7,725.1 versus reported $7,437.2; adjusted net income/EPS were $5,174.7/$2.01 versus reported $4,736.5/$1.84.

The GAAP effective tax rate was 27.4% in Q3 and 30.3% in 9M, compared with 23.5% and 21.6%. Tax items included $60.0 of Q3 discrete accruals, primarily foreign tax settlements, and a previously disclosed $160.0 additional China tax obligation. China-related notices totaling $230.0 were paid in Q2; the company had accrued $130.0 in Q1 2026 and $100.0 in Q4 2025. A shift toward higher-tax jurisdictions also raised the adjusted 9M rate. Pillar Two and H.R. 1 had no material tax-rate impact in the periods.

APH repurchased 8.5 million shares for $630.6 in 9M, including 3.0 million for $244.7 in Q3; 6.0 million shares costing $452.5 had been retired. It bought a further 0.9 million shares for $74.6 from October 1–27. The remaining authorization was $165.9, which the company expected to use by year-end; on October 27, the Board authorized a new program of up to $4.0 billion for 2027–2029. Dividends declared were $308.5 in Q3 and $923.9 in 9M, versus $201.9 and $602.7; the quarterly dividend rate rose to $0.125 from $0.0825, with a further increase to $0.15 beginning with Q4 2026 declarations, subject to approval.

Management cites cyclical end-market demand, geopolitical and trade-policy changes, tariffs and export controls, material availability and cost, foreign exchange, cybersecurity, climate disruption, talent, competition and acquisition integration as risks. It also flags increased debt and interest expense from CommScope, covenant/default risk and access to capital markets. A two-for-one stock split was distributed September 2, 2026, with split-adjusted trading beginning September 3; filing share and per-share data are retroactively adjusted.

Market risk

APH reported no material change in its foreign-exchange risk sensitivity assessment from its 2025 Annual Report and no significant concentration with any single counterparty. Euro Notes are outstanding, and future borrowings under the Euro Commercial Paper Program or Revolving Credit Facility may be denominated in foreign currencies. A sharp decline in those currencies could increase repayment costs; APH cautioned that it cannot assure successful management of exchange-rate movements.

APH manages interest-rate exposure through a mix of fixed- and floating-rate debt and, in some cases, hedging. Floating-rate exposure includes borrowings under the revolving facility, commercial paper and delayed-draw loans, as well as Floating Rate Senior Notes, which reset quarterly at compounded SOFR plus 0.53%.

APH used U.S. commercial paper from time to time during the first nine months of 2026 for general corporate purposes. It did not expect interest-rate changes to materially affect net income or cash flows for the remainder of 2026, while noting that rates could change significantly and that it may use derivatives to hedge future debt issuance.

In August 2025, APH entered into treasury locks with notional principal of $1,500 million and $1,000 million to hedge interest rates ahead of issuing Senior Notes in November 2025. The locks settled upon issuance of the 4.625% and 5.300% Senior Notes, producing a cumulative loss of $88.0 million ($67.4 million after tax). The after-tax loss was recorded in accumulated other comprehensive income and is being amortized to interest expense over the respective notes’ terms.

Management, including the CEO and CFO, concluded that the company’s disclosure controls and procedures were effective at the reasonable-assurance level as of period-end. No change during the most recent fiscal quarter materially affected, or was reasonably likely to materially affect, internal control over financial reporting.

The company reported no material changes to the risk factors disclosed in Part I, Item 1A of its Form 10-K for the fiscal year ended December 31, 2025.

For the three months ended September 30, 2026, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. This section reports no financial metrics or other material business developments.