Amphenol Corp. (NYSE:APH)

The financial performance over the examined period reveals several noteworthy trends in key metrics related to profitability and capital efficiency.

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a generally positive trend, increasing from approximately 1.28 billion in 2019 to a peak of about 2.04 billion in 2022, followed by a slight decline to roughly 2.01 billion in 2023. This growth over the years indicates an improvement in operating profitability, although the decrease in the final year suggests some challenges or increased expenses affecting net operating earnings.

Cost of Capital

The cost of capital exhibits a gradual upward trajectory, rising from 16.31% in 2019 to 17.08% in 2023. This incremental increase implies a higher hurdle rate for projects and investments, reflecting possibly rising risk perceptions or increased market interest rates during this span.

Invested Capital

Invested capital shows consistent growth across the years, expanding from approximately 9.03 billion in 2019 to around 13.75 billion in 2023. This increase suggests continual investment and asset accumulation, which may be directed toward capacity expansion, acquisitions, or other capital-intensive projects.

Economic Profit

Despite improvements in NOPAT and growth in invested capital, economic profit remains negative throughout the analyzed timeframe. The losses have fluctuated, starting at about -195 million in 2019, worsening to a low of around -343 million in 2021, improving substantially in 2022 to nearly -103 million, but then deteriorating again to approximately -338 million in 2023. The consistently negative economic profit indicates that the returns on invested capital have not been sufficient to cover the cost of capital, suggesting challenges in value creation or capital efficiency.

Overall, the data reflects a company with growing operating profits and increasing capital investment but facing headwinds due to rising capital costs and persistent negative economic profit. This combination highlights the need for enhanced operational efficiency or more lucrative investment decisions to achieve sustainable value creation.

The financial data reveals a generally positive trend in profitability over the five-year period from 2019 to 2023, with some fluctuations in specific measures.

Net Income Attributable to Amphenol Corporation

This metric shows a consistent increase from 2019 to 2023, starting at 1,155,000 thousand US dollars in 2019 and rising to 1,928,000 thousand US dollars in 2023. The most significant jump occurred between 2020 and 2021, where net income increased by approximately 32.2%, from 1,203,400 to 1,590,800 thousand US dollars. Growth continued through 2022, reaching 1,902,300 thousand US dollars, before showing a more modest increase of about 1.3% into 2023.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a similar upward trend, rising from 1,277,245 thousand US dollars in 2019 to a peak of 2,040,201 thousand US dollars in 2022. This represents an overall increase of nearly 60%. There is a steady year-over-year improvement, with the largest increase again visible from 2021 to 2022. However, in 2023, there is a slight decline of approximately 1.5%, decreasing to 2,010,042 thousand US dollars. Despite this small reduction, the 2023 figure remains significantly higher than in the early years.

Overall, the data indicates strong growth in profitability, with both net income and NOPAT more than doubling during the examined timeframe. The minor dip in NOPAT in 2023 suggests a potential plateau or emerging challenges affecting operating profit, though net income continues to rise slightly. This pattern suggests effective operational performance and profitability growth over the longer term, with a need to monitor recent subtle downturns in operating profit closely.

The provision for income taxes and cash operating taxes for the analyzed periods reveal notable trends in tax-related expenses.

Provision for income taxes

There was a decrease from 331,900 thousand USD in 2019 to 313,300 thousand USD in 2020, indicating a reduction in estimated tax liabilities. In 2021, this figure sharply increased to 409,100 thousand USD, followed by a further rise to 550,600 thousand USD in 2022. However, in 2023, a slight decline to 509,300 thousand USD was observed, suggesting some relief in tax provisions compared to the previous year but still significantly higher than pre-pandemic levels.

Cash operating taxes

Cash operating taxes also decreased from 342,736 thousand USD in 2019 to 307,985 thousand USD in 2020, mirroring the provision trend and likely reflecting the impact of external economic factors. Beginning in 2021, cash taxes increased substantially to 464,115 thousand USD and continued to increase through 2022 and 2023, reaching 583,929 thousand USD and 599,691 thousand USD respectively. This steady increase indicates an upward pressure on actual tax payments despite the slight reduction in provisions in 2023.

Overall, the data shows a downward shift in both tax provisions and cash taxes during 2020, possibly due to extraordinary circumstances affecting taxable income. However, from 2021 onwards, both measures display a pronounced upward trend, highlighting a recovery or growth phase characterized by higher taxable earnings and increased cash tax outflows. The divergence in 2023, where cash taxes slightly rise while provisions fall, may suggest adjustments in expected future tax liabilities or timing differences in tax payments.

Total reported debt & leases

The total reported debt and leases exhibited an overall upward trend from 2019 through 2021, increasing from approximately $3.81 billion to $5.05 billion. This was followed by a decline in the subsequent two years, lowering the figure to about $4.64 billion by 2023. The initial rise may indicate increased leverage or financing activities, while the subsequent decrease suggests debt reduction or repayment strategies.

Stockholders’ equity attributable to Amphenol Corporation

Stockholders' equity showed consistent growth throughout the examined period, rising from roughly $4.53 billion in 2019 to $8.35 billion in 2023. This steady increase points to strengthening financial stability, possibly driven by retained earnings, profitable operations, or issuance of equity, thereby enhancing the company's net worth.

Invested capital

Invested capital demonstrated a continuous increase over the five years, expanding from approximately $9.03 billion to $13.75 billion. The upward trend reflects ongoing investments in assets, acquisitions, or capital expenditures supporting the company’s growth and operational capacity. The growth rate in invested capital generally outpaced that of debt, indicating a rising equity contribution.

Economic Profit

The economic profit showed a consistent negative trend throughout the periods analyzed. Starting at approximately -195 million in 2019, it further declined to around -303 million in 2020 and -343 million in 2021. There was a notable improvement in 2022, where the loss decreased significantly to about -103 million. However, this positive trend reversed in 2023, with economic profit deteriorating again to about -338 million. This indicates ongoing challenges in generating returns above the cost of capital over the years, with a brief period of relative improvement in 2022.

Invested Capital

Invested capital demonstrated a steady increase each year, rising from approximately 9 billion in 2019 to around 13.75 billion in 2023. This upward trajectory suggests ongoing investments in assets or business expansion, reflecting the company's commitment to growth despite the negative economic profit figures.

Economic Spread Ratio

The economic spread ratio remained negative throughout the period, indicating that returns were consistently below the cost of capital. It started at -2.16% in 2019 and worsened to -3.02% in 2020, followed by a slight improvement to -2.85% in 2021. In 2022, the ratio improved significantly to -0.81%, signaling better operational efficiency or cost management during that year. However, this improvement was not sustained, as the ratio declined again to -2.46% in 2023. This pattern aligns with the observed trend in economic profit.

Net Sales

Over the five-year period, net sales exhibited a consistent upward trend from 8,225,400 thousand US dollars in 2019 to a peak of 12,623,000 thousand US dollars in 2022. However, in 2023, net sales slightly decreased to 12,554,700 thousand US dollars, indicating a marginal contraction after several years of growth.

Economic Profit

The economic profit figures were negative throughout the period, signaling that the company did not generate value above its cost of capital. The losses initially deepened from -195,231 thousand US dollars in 2019 to -343,155 thousand US dollars in 2021. A significant recovery occurred in 2022, with a reduced loss to -103,138 thousand US dollars. Nevertheless, in 2023, economic profit deteriorated again to -338,454 thousand US dollars, approaching the prior peak loss levels observed in 2021.

Economic Profit Margin

The economic profit margin followed a pattern consistent with the absolute economic profit. It was negative in all years, ranging from -0.82% to -3.52%. The margin worsened from -2.37% in 2019 to -3.52% in 2020 before improving slightly to -3.16% in 2021. The best margin was observed in 2022 at -0.82%, reflecting the reduced economic loss. However, in 2023, the margin again declined to -2.7%, consistent with the significant decrease in economic profit.

Overall Analysis

While net sales showed strong growth over the reviewed period, economic profit and the related margin remained negative, indicating challenges in achieving returns above capital costs. The notable improvement in 2022 suggests a temporary gain in operational efficiency or cost structure, yet this was not sustained in 2023. The resurgence of economic losses in the latest year points to persistent issues affecting profitability despite revenue growth.