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Connecting the electronics world, the corporation is a primary producer of connectors and cables such as fiber optics and coaxial cables in the U.S.

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Amphenol Corporation designs, produces, and markets electrical, electronic, and fiber-optic connectors, which are used to transmit signal and power. In addition to connectors and connector systems, the company sells circuit boards, antennas, and power cables. Amphenol’s clients include automotive, broadband communication, and information technology companies.

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Amphenol (APH): Company Profile, Stock Price, News, Rankings

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Amphenol

amphenol

Hello, welcome to the second quarter 2026 earnings conference call for Amphenol Corporation. Following today's presentation, there will be a formal question and answer session. Until then, all lines will remain in a listen-only mode. At the request of the company, today's conference is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to introduce today's conference host, Mr. Craig Lampo. Sir, you may begin.

Great. Thank you so much. Good afternoon, everyone. This is Craig Lampo, Amphenol CFO, and I'm here together with Adam Norwitt, our CEO. We would like to welcome you to our second quarter 2026 conference call. Our second quarter 2026 results were released this morning. I will provide some financial commentary, and then Adam will give an overview of the business and current market trends, and then we'll take your questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements, so please refer to the relevant disclosures in our press release for further information. The company closed the second quarter of 2026 with record sales of $8.8 billion in GAAP and diluted EPS of $1.37 and $1.35, respectively.

Second quarter sales were up 55% in U.S. dollars, 54% in local currencies, and 30% organically compared to the second quarter of 2025. Sequentially, sales were up 15% in U.S. dollars and in local currencies, and up 13% organically. Adam will comment further on trends by market in a few minutes. Orders in the quarter were a record $10.732 billion, up a strong 94% compared to the second quarter of 2025 and up 14% sequentially, resulting in another very strong book-to-bill ratio of 1.23:1. This impressive book-to-bill was driven by robust bookings in all of our end markets, with every end market having a positive book-to-bill this quarter. GAAP operating income was $2.6 billion in the quarter, and GAAP operating margin was at 29.5%. GAAP operating income included $24 million of non-cash amortization of acquired backlog related to the CommScope acquisition.

Operating income also included an $80 million or $0.04 per share net benefit related to the recovery of IEEPA tariffs. Excluding the acquisition-related costs, but including the tariff recovery benefit, adjusted operating income and adjusted operating margin were $2.6 billion and 29.8%, respectively. On an adjusted basis, operating margin increased a strong 420 basis points from the prior year quarter and 250 basis points sequentially. The year-over-year increase in adjusted operating margin was primarily driven by robust operating leverage on significantly higher sales volumes and, to a lesser extent, the tariff recovery benefit, which more than offset the margin dilutive impact of recent acquisitions.

On a sequential basis, the increase in adjusted operating margin reflected a strong conversion on the higher sales levels as well as progress on profitability improvement actions at recent acquisitions, including, in particular, CommScope, and to a lesser extent, the tariff recovery benefit. I am very proud of the company's operating margin performance in the second quarter, which reflects continued strong execution by our team. Breaking down second quarter results by segment compared to the second quarter of 2025, sales in the Communications Solutions segment were $5.4 billion and increased by 85% in U.S. dollars and 42% organically. Segment operating margin was 33.6%. Sales in the Harsh Environment Solutions segment were $1.9 billion and increased by 28% in U.S. dollars and 22% organically, and segment operating margin was 30.1%.

Sales in the Interconnect and Sensor Systems segment were $1.5 billion, an increase by 17% in U.S. dollars and 13% organically, and segment operating margin was 21%. The company's GAAP effective tax rate for the second quarter was 25.3%, and the adjusted effective tax rate was 27%, which compared to 18.3% and 24.5% in the second quarter of 2025, respectively. As is our typical practice, our adjusted tax rate excludes the tax effect of acquisition-related costs and the excess tax benefit from stock option compensation, as well as other discrete tax items. GAAP diluted EPS was $1.37 in the second quarter, up 59% compared to the prior year period. On an adjusted basis, diluted EPS was a record $1.35, an increase by 67%, compared to $0.81 in the second quarter of 2025. This was an outstanding result.

Operating cash flow in the second quarter was $1.6 billion, or 88% of net income, and free cash flow was $1.2 billion, or 68% of net income. An excellent result considering the growth we have experienced. From a working capital standpoint, inventory days sales outstanding, and payable days were all within our normal ranges. During the quarter, the company repurchased 1.5 million shares of common stock at an average price of $141. When combined with our normal quarterly dividend, total capital return to shareholders in the second quarter of 2026 was approximately $515 million. Total debt at June 30th was $18.8 billion, and net debt was $13.4 billion. Total liquidity at the end of the second quarter was $8.4 billion, which included cash and short-term investments on hand of $5.4 billion, plus availability under our existing credit facilities.

Second quarter 2026 EBITDA was $3 billion, and our net leverage ratio was 1.3x at the end of the quarter, and we are very pleased with the company's financial position. I will now turn the call over to Adam, who will provide some commentary on current market trends.

Well, thank you very much, Craig. First, I hope that all of you on the call today, together with your family, friends, and colleagues, are enjoying a wonderful summer so far. As Craig mentioned, I'm going to highlight some of our achievements here in the second quarter. I'll talk about our trends in our served markets, make some comments on our outlook for the third quarter, then, of course, we'll have some time for questions at the end. With respect to the second quarter, I'm just really proud of the Amphenol organization, who drove excellent performance once again here in the second quarter of 2026. Our results were stronger than expected, exceeding the high end of guidance in sales and adjusted diluted earnings per share.

As Craig mentioned, our sales grew from prior year by a very strong 55% in U.S. dollars and 54% in local currencies, reaching a new record for the company of $8.8 billion. On an organic basis, our sales also increased by a strong 30%, with all but one of our end markets experiencing robust organic growth. The company booked a record $10.7 billion in orders in the second quarter, representing a book-to-bill of 1.23:1. Orders grew by a very strong 94% from prior year and were up 14% sequentially. With the significant acquisition of CommScope, I'd also just point out that our orders also grew organically by 63% from prior year. We're also very pleased to have delivered record adjusted operating margins of 29.8% in the quarter, which was an increase of 420 basis points from prior year and 250 basis points sequentially.

Excluding the benefit of net tariff refunds, our operating margins still reached nearly 29%. This strong profitability is a direct result of the outstanding execution of the Amphenol team around the world, all of whom continue to manage well in a challenging environment. Adjusted diluted EPS grew 67% from prior year, reaching a new record of $1.35. Finally, the company generated strong operating and free cash flow of $1.6 billion and $1.2 billion respectively, both clear reflections of the quality of the company's earnings. I just can't overstate my pride in the Amphenol team. Our results this quarter once again reaffirmed the value of the drive, discipline, and agility of our entrepreneurial organization as we continue to perform well amidst a very dynamic environment. We're very excited that we completed two acquisitions during the second quarter, El.Com Srl and Wilder Technologies.

El.Com Srl is based in Leno, Italy, and has annual sales of approximately $150 million. It's a leading manufacturer of complex interconnect solutions and high-voltage cable assemblies for the industrial defense and commercial aerospace market. Wilder Technologies is based in Washington State here in the U.S. and has relatively modest annual sales of approximately $15 million. Both Wilder is a key supplier to Amphenol for high-performance test and measurement solutions for our high-speed interconnect applications for the IT datacom market, and really helps us to strengthen our extraordinary capabilities in high-speed products. I'd also like to take this opportunity to congratulate the CommScope team on their outstanding performance so far. I'm truly proud of what this team has achieved after now being part of the Amphenol family for two full quarters.

Indeed, we now expect CommScope to deliver $4.6 billion of sales and $0.30 of accretion for the full-year of 2026, and this represents a significant upgrade from our previous expectations of $4.1 billion and $0.15. I remain very confident that our acquisition program will continue to create great value for Amphenol. Our ability to identify and execute upon acquisitions and successfully bring these new companies into our family remains a core competitive advantage for the company. Now turning to our served markets, I would just comment that we're very proud of Amphenol's broad and balanced end market exposure. Our diversification continues to create great value for the company, enabling us to participate across all areas of the global electronics industry, each of which creates significant future opportunities for expansion.

We remain committed to continuing to broaden our portfolio across markets, geographies, customers, applications, and products as we build on the company's momentum to further strengthen the company's position long into the future. Turning first to the defense market, this market represented 8% of our sales in the quarter. Sales grew from prior year by a robust 37% in U.S. dollars and 24% organically. This was really driven by broad-based growth across nearly all areas of the defense market. Sequentially, our sales increased by 7%, which was in line with our expectations coming into the quarter. As we look into the third quarter, we expect sales to increase in the low double-digit range from these second quarter levels. We remain very encouraged by the company's leading position in the defense interconnect market, where we continue to offer the industry's widest range of high-technology interconnect solutions.

Amidst the current dynamic geopolitical environment, there's no doubt that countries around the world are increasing their investments into both current and next-generation defense technologies. With our expanded product offerings, as well as the significant capacity expansions that we continue to make, we're positioned better than ever to capitalize on this long-term demand trend. The commercial air market represented 4% of our sales in the quarter. Sales increased by 22% in U.S. dollars and 21% organically from prior year, a very strong performance, as we benefited from increased aircraft production volumes coupled with our company's continued progress in expanding content on next-generation commercial aircraft. Sequentially, our sales grew by 6% from the first quarter, which was actually significantly stronger than our expectations coming into the quarter for a slight moderation. Looking towards the third quarter, we expect sales to be up modestly from these second quarter levels.

I'm truly proud of our team working in the commercial air market. With the ongoing growth and demand for next-generation aircraft, our efforts to expand our product offering, both organically as well as through our acquisition program, continues to pay real dividends. We look forward to further capitalizing on our expanded range of product solutions for the commercial air market long into the future. The industrial market represented 20% of our sales in the quarter. Sales in this market grew 56% in U.S. dollars and 18% organically, as we saw continued strong demand across the diversified industrial market, and as we benefited once again from the addition of CommScope's building connectivity business. On an organic basis, virtually all of our industrial segments grew in the quarter. We also saw double-digit growth in all three geographies.

On a sequential basis, sales grew by a much better than expected 13% from the first quarter. As we look into the third quarter, we do expect sales to be roughly at the same elevated levels as we saw here in the second quarter. We're very excited by the company's renewed strength across the many diversified segments of this important industrial market. With the acquisition of El.Com Srl, we have further added to our value-add interconnect capabilities for European industrial customers. Over the long term, I'm confident in our strategy to expand our high-technology interconnect, antenna, and sensor offerings, both organically and through complementary acquisitions. This strategy has enabled the company to capitalize on the many electronic revolutions that continue to occur across the diversified industrial market, thereby creating further opportunities for our outstanding team. The automotive market represented 10% of our sales in the quarter.

Sales in automotive grew 9% in U.S. dollars and 6% organically, as we experienced growth in all regions, and as we saw a pickup in demand for vehicles with electrified drivetrains. Sequentially, our sales grew by 9% from the first quarter, which was much better than our expectations coming into Q2. For the third quarter, we expect sales to remain at these second quarter levels, and we would typically see some summer seasonality. I remain very proud of our team working in the global automotive market. While there are clearly areas of demand uncertainty around this industry, our team continues to remain laser-focused on driving new design wins with customers who are increasing the content of new electronics being integrated into their next-generation vehicles. We look forward to benefiting from our strengthened position in the automotive market for many years to come.

The communications networks market represent 11% of our sales in the quarter. Sales grew from prior year by 55% in U.S. dollars, driven primarily by the addition of CommScope. On an organic basis, sales actually moderated by 6% from prior year due to demand moderations from both communications network operators and wireless equipment manufacturers. I would just note that CommScope actually grew on a year-over-year basis in communications networks from prior year. Sequentially, our sales in the second quarter grew by 5% from the first quarter, which was a bit better than our expectations coming into the quarter. Looking to the third quarter, we do anticipate that sales will decline in the mid-teens from these second quarter levels.

With our expanded range of technology offerings following the acquisitions of both CommScope and ANDREW, we are better positioned than ever with both service provider and OEM customers across the communications networks market. Our deep and broad range of products, coupled with our global manufacturing footprint, have positioned us well to support communications network customers around the world. As the accelerating volume of data traffic drives long-term demand for expanded and upgraded networks, we look forward to enabling these systems for many years to come. The mobile devices market represented 4% of our sales in the quarter. Our sales grew by 17% in U.S. dollars and a strong 14% organically, with growth really in smartphones, laptops, as well as wearable devices. Sequentially, our sales increased by 19%, which was much better than our expectations coming into the quarter.

We had actually expected sales to decline in this quarter on a sequential basis. As we look into the third quarter, we anticipate sales to increase roughly in the 20% range compared to the second quarter as we participate in the beginnings of a variety of new program launches for our customers. I'm very proud of our team working in the always dynamic mobile devices market, as their agility and reactivity have once again enabled us to significantly outperform our expectations in the quarter. I'm confident that with our leading array of antennas, interconnect products, as well as advanced mechanisms, including hinges, that are designed in across a broad range of next-generation mobile devices, we're positioned well for the long term.

The IT datacom market represented 43% of our sales in the quarter. We once again had a very strong quarter in IT datacom, growing 89% in U.S. dollars and 63% organically. This was driven by continued acceleration in demand for our products used in artificial intelligence applications, together with robust growth in our base IT datacom business. On a sequential basis, sales increased by 22% from the first quarter, which was substantially better than our expectation. Virtually all of this growth was driven by sales of AI-related products. Looking into the third quarter, we expect a further sequential sales increase in the mid-teens from these second quarter levels as investments in AI data centers continue to accelerate. Enterprise and cloud customers expand their demand for traditional IT datacom equipment.

We're more encouraged than ever by the company's position in the global IT datacom market. Our team has done an outstanding job of both securing future business on next-generation IT systems with a broad array of customers, also on executing on these exciting new programs. In addition, I would just comment that the team at CommScope continues to make great progress in further penetrating the IT datacom market with their advanced optical interconnect solutions. We now expect that the IT datacom market will represent just a bit less than half of CommScope's total sales for the full-year. That compares to about a third of their sales in 2025. The revolution in AI has no doubt created a unique opportunity for Amphenol, given our leading high-speed, fiber optic, and power interconnect solutions.

All of these high-technology products are critical components in our customers' current and next-generation systems. This creates a continued long-term growth opportunity for the company. Now, turning to our outlook, of course, assuming current market conditions as well as constant currency exchange rates. For the third quarter, we now expect sales in the range of $9.3 billion-$9.4 billion. Adjusted diluted EPS in the range of $1.40-$1.42. This would represent sales growth of 50%-52%. Adjusted diluted EPS growth of 51%-53%, compared to the third quarter of prior year. I would just note that our guidance does not reflect any additional net tariff recoveries, which we expect to be immaterial going forward.

I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current environment and to continue to expand Amphenol's market position while driving sustainable and strong profitability over the long term. Finally, I'd like to take this opportunity to thank our entire global team for what is no doubt just outstanding efforts here in the second quarter. With that, operator, we'd be very happy to take any questions.

Thank you, Mr. Norwitt. The question and answer period will now begin. Please limit to one question per caller. To ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star one again. When preparing to ask your question, please ensure your device is unmuted locally. We have a question from Steve Volkmann from Jefferies. Please go ahead.

Hi. Good afternoon. Thank you for taking the question. Maybe I'll just start with CommScope, obviously, some nice upside there. I think the guidance raise you said, was all basically, IT datacom. I'm just wondering if we can sort of drill into that a little bit more. What types of projects are they participating in? Is it more optical? Is there anything happening in building or broadband to call out?

Yeah. Thanks very much, Steve. I didn't say necessarily that all of the increase is IT datacom, I can say that IT datacom is certainly driving the strength for them. They're growing really across the board in their business. We're seeing growth, as I mentioned, also in communications networks. We are seeing as well meaningful growth with them in their industrial market or what we refer to as the building connectivity market. There's no doubt that they're making great progress in the IT datacom market, and in particular, making great progress in applications related to AI. In fact, if you look at their IT datacom business on a year-over-year basis, it's essentially doubled on a year-over-year basis, which is really, really impressive.

All of what they do in IT datacom is, in fact, optics, advanced, complex optical interconnect solutions for customers doing a broad array of things. We're seeing great growth there and great progress with what they do. I will just say as well that now that CommScope is part of the Amphenol organization. They're already taking good advantage of being part of Amphenol and the relationships that we have, which are obviously very longstanding relationships up and down through the stack of the companies that are both building out data centers, equipping those data centers with next generation systems, architecting the chips, and doing everything in between. There's no question that being part of Amphenol has been a great thing for CommScope as it relates to their position in IT datacom specifically.

We have a question from Joseph Cardoso from JPMorgan. Please go ahead.

Hi. Thanks for the question here. Maybe just another follow-up on the CommScope raising guidance here. You're raising the revenue from $4.1 billion-$4.6 billion, but the EPS outlook is more than doubling. Maybe can you just walk through what you're seeing in terms of the margin profile of the CommScope acquisition, particularly contextualizing where the upside is coming from and essentially why you're seeing the better flow through there? Is it all operating leverage or is the gross margin profile of the business tracking better than what you had expected at least a couple of quarters ago when you had completed the acquisition? Thank you.

Yeah, thanks so much. Yeah, no, we're really happy with the kind of profitability progress with the CommScope acquisition and the folks. The team's really done a great job of embracing the Amphenol culture, working with some of the other businesses. I wouldn't say it's just gross margin. I would say, listen, they're certainly growing at a pretty good pace right now, and so I think that they achieved just a bit over $1.2 billion here in the second quarter in sales. They've done a really good job of leveraging that growth. I wouldn't say just on gross margin, but also in the SG&A and operational expenses. I think they really just increased their profitability. They're essentially in the second quarter operating over 20%, including the amortization that we have embedded in those numbers now from the acquisition.

They've done a great job in the factory, with their vendors, with controlling costs on SG&A, across the board. I wouldn't say it really has come from pricing. To an extent, it really has more come from really just operational execution both in the factory as well and the operating expenses.

Look, I would just add one thing to that, which is we knew when we met these folks early on that this was an amazing team of people. From the leadership all the way down through the organization. I still remember our very first kind of quote-unquote, "management meeting," and there were some 30 people that we got to interact with at the time, and each of them just passionate. In many ways, they were a team of people whose capabilities and potential was maybe not necessarily being tapped into, given just the overall environment that surrounded CommScope in the past. No fault of CommScope, it's a great company, but we don't need to talk about the different environments that they came into as soon as they came to be part of Amphenol. That's a team of people who are fighters.

They have not been without challenges. They see every day in the market there's lots of challenges that they have to manage through. At the same time, the aggressiveness with which they pursue opportunities, the aggressiveness with which they pursue being part of Amphenol. Actually, the collaboration that they've embraced, being part of a broader organization of people who do interconnect for a living. That's what we've been doing for the entire history of this company. 94 years. We're an interconnect company. Being part of that and being a real leading light in that has, I think, been an energizing thing for the CommScope organization, and that is clearly manifest in their numbers that we see today. We think that we're just getting started with CommScope.

We have a question from Amit Daryanani from Evercore. Please go ahead.

Thanks a lot and congrats on some impressive numbers here. Adam, I think investors often sort of frame the AI connectivity opportunity as a copper versus fiber debate or a copper or fiber debate sometimes. From your side, is that sort of the right way to think about the market? Is that what customers are telling you? I'd love to just kind of understand what are you seeing from a growth basis across both copper and fiber and any qualitative or quantitative frameworks you could provide in terms of how big the fiber business is within the $10.5 billion-$11 billion AI revenue run rate you have right now would be really helpful. Thank you.

Thanks very much, Amit. We've had this discussion in the past, and what I can tell you is this: as we talk to our customers and we talk to them about what's going on today, what they expect next year, what they expect the years thereafter, the one consistent thing we hear from our customers is they need more of everything. They need more of everything. More high-speed copper, more fiber optic solutions, and more power solutions. There's no doubt about it that we see that reflected actually in the growth rates that we're experiencing today. If you look at our IT datacom overall growth organically growing 63% in the quarter. The AI is growing faster than that. I mentioned that CommScope nearly doubled their AI business on a year-over-year basis. We expect the IT datacom market to be just under half of CommScope's total.

Everything that CommScope does in IT datacom is really around AI and around optics. You can put a little framework around their business. We also have, as everybody knows already, a fiber optics business of significance before, both a passive optical interconnect business as well as an active optics business. To the decimal point numbers behind it, I can tell you that today we have a very strong high-speed copper business. We have a very strong and significantly scaled, one of the world leaders in optics in AI, and we also have a leadership position in power interconnect for AI as well. Each of those are really significant pieces of that entire puzzle.

We have a question from Luke Junk from Baird. Please go ahead.

Good afternoon. Thanks for taking the question. Adam, that's actually a great segue. I was hoping you could spend a little more time talking about your power portfolio. Clearly, that's an area of increased innovation within IT datacom. You mentioned that you're a global leader, maybe more context there, and just how you see that innovation opportunity set, both traditionally in the white space on the rack and what seems like some real opportunities looking out into the future in the gray space in the medium term as well. Thank you.

Thanks very much, Luke. Look, when I talk about power interconnect, this is part of the legacy of Amphenol. We've been involved in making power interconnect products for the vast majority of the history of this company, and it goes back to our legacy in the defense industry and industrial products, where we developed leading interconnect technologies, leading contact technologies to drive safe and efficient transfer of power in all environments. We've expanded that over the years to board-level power, to bus bars, to complex power cable assemblies, and the like, that go in a variety of places, all the way from deep in the rack, connecting directly to the chip, all the way to where it comes into the data center from the switchgear and beyond.

Today, we see a lot of advances in power technology, movements to higher voltages, implementation of things like liquid cooling, embedding of sensors into connectors so that you can create smarter power connectors and the like. There's just a lot going on there. At the end of the day, I like to think in very simplistic terms, in part because I studied international politics, not engineering as an undergrad. What AI is conversion of electrons into tokens. Everywhere along that phase, if you can make the conversion of electrons into tokens more efficient, then you're creating value for your customers. You're creating value for your direct customers, you're creating value for your end customers.

On the electron side of that, our power interconnect, having some of the safest, most efficient technologies, is creating true value by allowing our customers to use a few less electrons as they generate a few more tokens. When you get then to the other side of high speed, well, how do you get those tokens out as quickly as possible to create the models? You're doing that with both high-speed copper as well as optics interconnect, and we do that as well. Everywhere along that equation of that electrons token conversion, Amphenol is a partner for our customers.

We have a question from William Stein from Truist Securities. Please go ahead.

Great. Thanks for taking my question and congrats on another fantastic quarter. Adam, there's been a lot of discussion among some of the key infrastructure suppliers to the AI market, debates about their approach to backplane design, and I believe Amphenol is very heavily involved in one in particular. I'm sure you're in many or maybe all of them, but there's one where there is a cableized sort of spine backplane, and a discussion that seems to have gone back and forth as to whether this may convert to a printed circuit board. I think there had been an assumption that this would be a potential challenge to the growth in your business. I wondered if perhaps the connectors used in such evolved architectures might be even more complex and more content and margin rich.

I'm wondering if you can help sort of frame this for us. If we see in the supply chain that this conversion to PCB is happening, should we think this is a challenge or a benefit or neither for your business?

Thank you very much, Will, appreciate your comments and the question. At the end of the day, there's lots of nuances of designs that are happening across the board, the one constant is that there's more content. For us, our goal here is not to put all of our eggs in one basket of one type of architecture or another. It's to have the breadth of technologies available for our customers such that we can handle and help them handle the multitude of increasing content. Whether one or another decides to go to a backplane versus a cable versus a printed circuit board, this is really not the core question. The core question is: Is there more overall content of interconnect?

With the breadth of our position, by the way, a company who makes cable, who makes printed circuit boards, who makes printed circuit board assemblies, cable assemblies, we're just trying to enable our customers in whichever way they go. What our customers are trying to do is really, really hard things. Us being at the table with them to do those really, really hard things with the leading engineers in the industry who understand all these moving parts, that's where we create value. Whichever one individual program or web service provider makes some decision or another, they're all moving in the direction of more content, not less. That creates a great opportunity for Amphenol.

We have a question from Joe Giordano with TD Cowen. Please go ahead.

Guys. Thank you. Adam, there's been a lot of talk about, in the future, what's the right type of models that we need, whether it's frontier models versus open source models and where they're housed, whether it's here versus China. We've talked a lot about the breadth of your portfolio, you can play everywhere, what are the implications of how that mix ultimately plays out globally?

Look, we work with customers around the world. We work with customers who make GPU architectures, who make ASIC architectures, who make XPU architectures, you name it. Because no matter what architecture you're choosing, at the end of the day, to create an AI that really creates value for the end customer, you have to compare everything to everything else. We see that what that means is you need interconnect to do that. Whether it's on training or actually on inference, and to be honest, inference seems to grow at an even faster pace, also requires an intensity of interconnect products that really is unprecedented. We continue to enable customers in all ways. We are not model-dependent, we're not frontier training versus inference dependent. We're not geographically dependent.

I guess the only thing we are dependent on is that people continue to invest in this thing, and it continues to have increases in content. We see that for a long time to go.

We have a question from Asiya Merchant with Citigroup. Please go ahead.

Great. Thanks for taking my questions, and great set of results here. It's very impressive, the CCS margins that you're able to drive here. I think there were just some concerns about fiber supply and if that could potentially negatively impact the CommScope acquisition, doesn't seem to be the case. Adam and Craig, could you just talk a little bit about how you feel about the supply coming here just given the growth that investors are expecting broadly just for the optical side of the portfolio as well. Thank you.

Well, thank you, Asiya. Look, I think the results speak for themselves here. Yes, of course, there's a lot of demand for lots of things, including demand for fiber optics. The CCS team has done a fabulous job of managing their supply chain, expanding their supply chain, and making sure that they have ready source of availability for all the materials that they need in order to support their customers. I think that that's reflected in their results. That's reflected in the strong growth that they have in IT datacom, and it's reflected in our positive outlook for the company for the full-year. I just can't reiterate enough how impressed I am by this team. This is not an organization that came from, quote, an entrepreneurial culture, but they have embraced that entrepreneurial culture at Amphenol on day one.

To the extent that they run into an impediment, they go out, they hammer it down, they make it happen, and they drive success. That's what they've been doing, regardless of what impediment there may be. That includes on the supply of fiber.

We have a question from Wamsi Mohan with Bank of America. Please go ahead.

Yes, thank you. Your CapEx is up 20% year-on-year. This quarter, obviously, is very strong growth that you're delivering and guiding to. As you think about what's the right level that investors should think about from a CapEx perspective on an ongoing basis, and are you specifically targeting incremental CapEx for CommScope, or is the forecast based on any incremental line adds for CommScope, or is it just based on the capacity that you currently have in those now?

Thanks, Wamsi. I would think about CapEx, not specific. CommScope's CapEx isn't necessarily much different as a percentage of sales basis as the overall company. Actually, maybe even modestly lower on a percentage of sales basis. In the quarter, we were around just at the high end of our 3%-4% range. I would expect us to be running at the higher end of that as we're growing at the significant paces that we're growing at right now. I think as we look into the latter half of this year, I would expect us to continue to be even modestly higher than that range. We're continuing to grow pretty significantly. The capacity we're putting in place, I think, is prudent. As you know, our general managers are making these decisions based on the specific programs they're on.

We look at it from that perspective, I think that's what you're seeing the output of that in terms of driving some of these results. From an overall capital perspective, I would continue to view it at the high end of that range and maybe slightly over that in the second half, but certainly not so far outside of our normal range.

We have a question from Guy Hardwick from Barclays. Please go ahead.

Hi. Good afternoon. Adam, CommScope's generally known, correct me if I'm wrong, as a scale-out and scale-across company in data center. Are there signs of them entering the scale-up market as well?

Yeah. Well, thanks very much, Guy. Look, I think they're known as a scale-out, scale-across because that's where optics has been present so far. There's no question that to the extent, and I would say to the extent, because this still remains to be seen what the architectures of the future will be like. Clearly, there'll be hybrid architectures. To that extent, I can tell you that CommScope, especially given Amphenol's unique relationships across the ecosystem of AI, has a great seat at the table to the extent that customers are thinking about integrating some degree of optics within their scale-up architectures. Being part of Amphenol has been a great thing for them, and they are certainly part of that discussion in a very significant way.

We have a question from Andrew Buscaglia with BNP Paribas. Please go ahead.

I just wanted to check on risk of bottlenecks here. One question I often get, just given the importance of fiber, is your ability to secure enough raw fiber to meet demand. If you could comment on that, and then secondly, just any internal or external things you're evaluating in terms of bottlenecks, just given we've had a thermal equipment tiered report this morning which cited some of these issues, and just want to make sure we're keeping an eye on that, if you could comment there.

Yeah. Thanks very much, Andrew. I think I mentioned earlier that there's no doubt about it that given the performance of CommScope, they have managed to secure all that they need, including fiber, to deliver these outstanding results. In terms of other bottlenecks, look, we have 150 operations around Amphenol, each of them run by a general manager, empowered with the authority to do what it takes to run their business, and we then hold those general managers accountable. What they deal with on a day-to-day basis, it's an enormous list of challenges and opportunities that they face every day. Do we see anything broadly in terms of bottlenecks that are constraining our ability to satisfy our customers or deliver results? We don't. Else we wouldn't have produced 30% organic growth in the quarter or grown 13% sequentially on an organic basis. It doesn't mean there aren't challenges.

It just means that we've got 150 entrepreneurs who are embodying the unique culture of Amphenol out there managing these issues day in and day out, and also planning for that. Making investments internally when we think that in the future there may be an opportunity. Creating a multiplicity of sources for those things that maybe the vendors couldn't keep up with this. We have grown the company in a two-year period by double in its total size. Roughly a third of that has come through acquisitions, the additions of these great companies. 2/3 of that's been organic growth over a two-year period. That means that we need that same amount of increase in capabilities and capacities from the thousands of companies that we work with as vendors. We don't manage that at headquarters. There's no central procurement organization.

In our small little rundown headquarters building off the highway here in Wallingford, Connecticut, there's not a single person in our team who is in charge of "procurement" or sourcing or anything like that. Every general manager has their team, and they work day in and day out, hand in hand with their sales team, their engineering team, their operations team, their quality team, as a true entrepreneurial organization. What they do is they just mow down the impediments that may be there for them to achieve what they want to achieve.

Sorry for the long detour onto the culture here. At the end of the day, we don't see any significant bottlenecks, anything that has any meaningful impact on our ability to deliver the strong results that we delivered this quarter, or the results that are embedded and implied by the guidance that we gave for the third quarter and beyond.

We have a question from Mark Delaney from Goldman Sachs. Please go ahead.

Good afternoon. Thank you very much for taking my question. Adam, you said that hinges as a driver of the mobile devices business and some of the growth you expect for this quarter. I'm hoping you can give more color on how impactful that product line may be going forward.

Thanks very much, Mark. Nice to get a question on mobile devices. I feel really proud of our team working in mobile devices, growing 14% organically in the quarter. We've talked for a long time about the fact that our product offering in mobile devices, running from antennas, interconnect products, and mechanisms, including, in particular, hinges. We've been a hinge manufacturer for, gosh, more than two decades now. That's something where our team is just a phenomenal capability. Actually, Craig and I were visiting some of our factories just a couple of weeks ago, just to see the amazing vertical integration of what our team does and the unique array of products that they're working on. So we continue to work on a range of products.

You can imagine, I'm not going to comment on any specific customer programs, but we remain a leader in the industry in creating advanced mechanisms for unique architectures that are coming. I would just tell you that what we see in the mobile devices market is just the continued blossoming of the multitude of different things that are out there. Whether it's wearables that humans have. I just got a dog, and she now has a wearable on her, so I can see. I can pull up my phone and tell you where she is right now, which is pretty darn cool. Her name is Luna. She's very cute. That's something that I never would've dreamed of, that I could just see in real time where my dog is. There's so many different things that you can do with mobile devices.

Whether you put them in your ear, on your wrist, around your neck, whether you fold them or you hold them, or they're big, or they're little, they all require advanced technologies for antennas interconnect, and also now increasingly, the mechanisms. Our team's done a great job building that capability up, and we're confident that that's going to create value for us long into the future.

We have a question from Joe Spak from UBS. Please go ahead.

Hey, everyone. Adam, I know it's not a large part of your business, but I believe you do inverters on the defense side, and you do some DC-DC converters on the auto side. I'm just wondering about your interest in power electronics more broadly, either organically or inorganically, especially in light of this ruling that foreign power inverters might not be allowed in the U.S. for great applications and other applications. I'm just curious about if you think that at all plays into some of your core competencies.

Yeah. Thanks very much, Joe. Look, to the extent that we do anything there, it's pretty modest. I wouldn't highlight anything that we do at all in that world. Look, power in the broadest sense, power interconnect, how you get a signal from place to place is certainly a very, very important part of our business. Are we going to get into kind of active power management and inverters and things like that? It's not something so far that we have done or that we have done in any meaningful way. Look, we're always looking at the kind of adjacencies of the future so much as they continue to be true to our strategy of being an interconnect company. That's very important for us.

Like we got into sensors 14 years ago nearly, as a way to interconnect physical phenomenon to the electronic systems where we already participate very strongly. Look, power is very important. There's a lot going on in power. Our products are certainly an enabler of that revolution.

We have a final question from Scott Graham from Seaport Research. Please go ahead.

Hey, good afternoon. Thanks for taking my question. Congratulations on the quarter. I was just wondering if in the past, Adam, you've been willing to call out specific industrial markets, where you saw better success in sales. I was wondering if you can do the same for us today.

Yeah. Thanks very much, Scott. It'd be my pleasure, actually. We're really proud of our industrial market, and the folks working around industrial. Sorry, a long time ago, there were a couple of rough years in industrial. Now, we've strung together, I don't know, two and a half straight years of really strong organic growth, and we see that accelerating here in the quarter, growing 18% organically. We see this growth really across the board. There's some areas where you say, okay, instrumentation growing very strongly. Not surprising given factories and the build-out of semiconductors and the like. Factory automation growing very strongly. At the same time, we see great growth in anything around electrification, battery storage. We see strong growth in heavy equipment, alternative energy, and in the areas like safety, for example, as well.

Honestly, I go down the list of all of the end markets or subsegments in the industrial market, I'm hard-pressed to find one that's not really performing right now. With the addition of CommScope, as I mentioned earlier, opening up this whole new world for us, which is called construction and building connectivity, together with the distribution channel, which is so critical for that to service the tens of thousands of different customers that participate in the construction industry around the world. CommScope sells their products through distribution into, I don't know, 150, 180 different countries around the world. Now that we have those strategic relationships with those distributors, we also look forward to taking advantage of it with other Amphenol products, both interconnect and sensor products, that can find a great home in that space. The industrial market is just a wonderful place for Amphenol.

20% of sales with great growth opportunities. We see a lot of revolutions happening really across all of these really interesting segments of the industrial market.

We currently have no further questions, I will hand back to Mr. Norwitt for closing remarks.

Well, thank you very much, everybody, for taking your time here on what's a sort of stormy summer day here in Connecticut. I hope all of you have a great summer. I hope you get a chance to take a little bit of time away, and we look forward to seeing you all back here in 90 days in the fall. Thanks so much, and have a great rest of your summer. Take care. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect your lines.

Amphenol (APH) Q2 2026 Earnings Call Transcript

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