Amphenol Corp. (NYSE:APH)

Inventory Turnover

The inventory turnover ratio displays a general downward trend from the first observed value of 4.28 to a low of 3.61 in December 2021, suggesting a slower inventory movement. However, from that point onward through March 2024, there is a modest recovery with the ratio rising back above 4.00, indicating improved efficiency in inventory management.

Receivables Turnover

Receivables turnover exhibits fluctuations over the period, initially improving from 4.74 to 5.28 in mid-2020, then declining toward 4.41 in early 2021. Subsequently, it demonstrates a steady upward trend, reaching a peak of 5.24 in mid-2023, before slightly decreasing but remaining above 4.79 at the end of the period. This pattern reflects variable effectiveness in collecting receivables, with overall improvement in recent quarters.

Payables Turnover

The payables turnover ratio shows variability, starting at 6.47 and peaking at 7.64 in the third quarter of 2023. Notably, there is a decline during 2019-2020, reaching a trough around 5.30-5.34, followed by a rising trend in following years. Higher turnover ratios toward the latter part indicate quicker payments to suppliers.

Working Capital Turnover

A general decrease in working capital turnover is observed from about 3.96 to approximately 2.43 in mid-2020, consistent with the challenging market environment during that period. Post mid-2020, there is a recovery trend with turnover ratios incrementally increasing to 3.55 by the first quarter of 2024, signaling enhanced efficiency in using working capital to generate sales.

Average Inventory Processing Period

The average inventory processing period lengthens from 85 days at the beginning to a peak of 101 days in late 2020, signaling slower inventory movement. Subsequently, the period shortens gradually to around 89-93 days in recent quarters, indicating improvements in inventory management and turnover speed.

Average Receivable Collection Period

This period varies moderately over time; it shortens from 77 days initially to 69 days mid-2019, lengthens to a peak of 83 days in early 2020, and then undergoes oscillations around 70-80 days. Recently, the collection period has stabilized near the lower end of this range (around 71 days), reflecting steady receivable management.

Operating Cycle

The operating cycle shows an expanding trend from 162 days to a maximum of 179 days in the fourth quarter of 2020, followed by a gradual reduction to approximately 156 days by mid-2023. This indicates that the total time to convert inventory and receivables into cash initially lengthened but improved in recent periods.

Average Payables Payment Period

The payables payment period increases from 56 days initially to 69 days during the first quarter of 2020, then declines steadily to a low of 48 days by mid-2023, before slightly rising again. The shortening of payables period near mid-2023 suggests faster payments to suppliers after a phase of extended payment terms.

Cash Conversion Cycle

The cash conversion cycle remains relatively stable throughout the period, fluctuating narrowly between 102 and 112 days. The cycle peaks around late 2020 to early 2021, then gradually lowers to roughly 108 days by early 2024, indicating consistent overall working capital efficiency with minor variations.

The analysis of the quarterly financial data reveals the following trends and patterns:

Cost of Sales

The cost of sales fluctuates over the observed periods with a general increasing trend from 1,330,700 thousand USD in March 2019 to a peak of 2,227,100 thousand USD in December 2023. Starting with a decline in early 2020, it subsequently shows consistent growth through late 2021 and 2022, before a mild reduction in the first quarter of 2024. This pattern suggests variability possibly linked to operational scale and market demand fluctuations.

Inventories

Inventories show a steady rise from 1,224,400 thousand USD in March 2019 to 2,167,100 thousand USD in December 2023, with minor declines toward early 2021 and mid-2023. The accumulation of inventory levels indicates a buildup of stock possibly in response to anticipated demand or supply chain strategies. The inventory levels generally move upward, reflecting increasing investment in inventory assets over the period.

Inventory Turnover Ratio

The inventory turnover ratio, available from March 2020 onwards, exhibits a gradual decline from approximately 4.28 to around 3.61 by December 2021, indicating a slower turnover rate. Thereafter, the ratio stabilizes and fluctuates slightly around the 4.0 mark through to March 2024. The initial decrease in turnover efficiency might suggest challenges in inventory management or sales, whereas the later stabilization signals improved or steady operational efficiency.

In summary, the cost of sales and inventories have generally increased over the observed quarters, reflecting growth and expansion efforts, while the inventory turnover ratio initially declined but later stabilized, implying adjustments in inventory and sales management processes.

Net Sales

Net sales exhibited a consistent upward trajectory from March 2019 through December 2021, increasing from approximately $1.96 billion to $3.03 billion. This growth reflects a strong expansion over the period. There was a slight contraction in early 2022, with net sales dipping to $2.95 billion in March 2022, before resuming growth through the rest of 2022 and into 2023. The peak was reached in December 2023 at around $3.33 billion. However, the first quarter of 2024 showed a modest decline to approximately $3.26 billion, signaling a potential stabilization or slight decrease after the prior growth phase.

Accounts Receivable, Net

The accounts receivable balance followed a similar general upward trend, rising from $1.66 billion in March 2019 to a high of $2.64 billion in September 2022. Afterward, there was a period of relative stability with minor fluctuations, ending at roughly $2.50 billion in March 2024. This pattern suggests an expansion in credit sales or possibly longer collection periods in some quarters, aligned with the growth in net sales.

Receivables Turnover Ratio

The receivables turnover ratio, which indicates how efficiently receivables are collected, started at 4.74 in December 2019 and experienced some volatility over the period. It climbed to a peak of 5.24 by March 2023, reflecting improved collection efficiency during this time. Subsequently, the ratio fluctuated between 4.79 and 5.13, ending at 5.13 in March 2024. This variation implies sustained, though somewhat variable, efficiency in receivables management despite changes in sales and receivables balances.

Overall Insights

The data shows robust sales growth with a peak towards the end of 2023, accompanied by rising accounts receivable balances, consistent with increased sales volume. Receivables turnover improved over the long term, indicating efforts to maintain or improve collection efficiency. Recent slight declines in sales and receivables along with stable turnover ratios may suggest the company is experiencing some moderation in growth or a shift in credit policy and collection practices.

Cost of Sales

The cost of sales exhibits a generally increasing trend over the observed periods from March 2019 through March 2024. Initial values fluctuate moderately, starting at approximately 1,330,700 thousand US dollars in early 2019, peaking around the end of 2020 at 1,660,400 thousand. After this peak, the cost continues to rise through the end of 2021 and into 2022, reaching levels above 2,200,000 thousand in late 2022 and early 2023. Some declines are noted in specific quarters such as the first quarter of 2023 and again towards the first quarter of 2024, yet costs remain elevated relative to the earlier years.

Accounts Payable

Accounts payable also shows an upward movement between 2019 and 2022, increasing from roughly 797,100 thousand US dollars to a peak exceeding 1,393,600 thousand in mid-2022. A downward correction occurs afterward, reducing payables to approximately 1,182,100 thousand by mid-2023. Towards the end of 2023 and into early 2024, accounts payable again rises, ending near 1,264,700 thousand. This pattern suggests operational scaling alongside periods of payment consolidation and adjustment.

Payables Turnover Ratio

The payables turnover ratio, indicating the frequency of payment to suppliers, reveals variability across the quarters for which data is available starting in March 2020. The ratio trends downward through the end of 2020, falling from about 6.47 to 5.30, suggesting slower payments to suppliers or extended credit terms during that period. Subsequently, this ratio increases through 2021 and 2022, with some fluctuations, reflecting a more rapid payment cycle or reduced credit extension. The turnover ratio peaks at 7.64 in the third quarter of 2023, signifying the highest payment velocity in the observation window. A moderate decline follows, ending near 6.81 by March 2024, indicating a slight slowing in payment speed but maintaining relatively high turnover compared to earlier periods.

Overall Observations

The data depicts an expanding cost base with associated increases in accounts payable, which is typical in growth scenarios or inflationary environments. The payables turnover ratio's variability provides insights into changes in payment behavior, possibly reflecting strategic adjustments in supplier terms or cash flow management. The peaks in payables and cost of sales align with periods of increased operational activity, while the ratio's behavior suggests active management of payables to balance liquidity and supplier relations.

Working Capital

The working capital experienced fluctuations across the observed periods. Initially, there was a decline from approximately 2,478,300 thousand USD in March 2019 to a low near 2,078,500 thousand USD by December 2019. Subsequently, a notable increase occurred in 2020, with working capital peaking at around 3,187,000 thousand USD by December 2020. Throughout 2021 and the first half of 2022, the figure remained elevated, reaching up to approximately 4,034,800 thousand USD in September 2021, before stabilizing around the 3.7 to 3.8 million USD range. Thereafter, a mild downward trend emerged toward early 2024, with working capital reducing to about 3,618,600 thousand USD by March 2024.

Net Sales

Net sales demonstrated notable variability but showed an overall upward trajectory across the reported timeframe. Starting near 1,958,500 thousand USD in March 2019, sales dipped to approximately 1,862,000 thousand USD by March 2020, reflecting an interim decline. This was followed by a recovery and consistent growth, peaking at about 3,239,100 thousand USD in December 2022. Despite a slight pullback in early 2023 to figures around 2,974,000 thousand USD, net sales remained relatively strong, averaging above 3,000,000 thousand USD through 2023 and early 2024, reaching approximately 3,256,300 thousand USD by March 2024.

Working Capital Turnover

The working capital turnover ratio data, beginning from March 2020, highlights some variability within the range of approximately 2.4 to 3.5 times. The ratio declined from 3.96 in March 2020 to about 2.43 in June 2020, indicating a reduced efficiency in generating sales from working capital at that point. Thereafter, the turnover stabilized and progressively improved, moving within a moderate range between 2.5 and 3.55 times. The highest turnover ratios appeared in the latter reported quarters, suggesting enhanced operational efficiency in converting working capital into sales, with ratios approaching or surpassing 3.4 times by early 2024.

Overall Trends and Insights

The data exhibits a recovery and growth phase in both working capital and net sales following a downtrend around early 2020. The increase in working capital suggests enhanced liquidity or investment in operational assets, while rising net sales imply successful revenue expansion. The working capital turnover ratio's initial dip followed by gradual improvement further implies initial challenges adapting working capital to sales during the early pandemic periods, followed by increased operational efficiency. The moderate decline in working capital from mid-2023 onward, alongside sustained net sales, could signify more efficient capital utilization or adjustments to working capital strategy.

Inventory Turnover Ratio

The inventory turnover ratio shows a generally declining trend from March 31, 2020, to December 31, 2021, decreasing from 4.28 to 3.61. This indicates a slower rate at which inventory was sold or used during this period. However, post-December 2021, the ratio demonstrates signs of recovery and relative stability, fluctuating around an average of approximately 4.0, ending at 4.00 as of March 31, 2024.

Average Inventory Processing Period

The average inventory processing period, measured in days, moves inversely to the inventory turnover ratio. It increased steadily from 85 days in March 2020, peaking at 101 days by December 2020, suggesting longer holding periods for inventory and potentially slower sales or usage. From early 2021 onward, there is a noticeable decrease, with the period stabilizing between 85 to 93 days through the latest quarters. As of March 31, 2024, the processing period stands at 91 days, indicating a normalization in inventory management efficiency following prior fluctuations.

Overall Observations

The data indicates a period of inventory management challenges during 2020, with reduced turnover and increased inventory holding time, possibly reflecting broader market disruptions. Subsequent quarters show improvements and stabilization in these metrics, pointing to enhanced inventory control and sales performance. Nonetheless, the current levels suggest a cautious approach with moderate turnover rates and processing periods remaining somewhat elevated compared to early 2020 figures.

The receivables turnover ratio displays variability across the reported periods, reflecting fluctuations in the efficiency of the company's collection of accounts receivable. Initially, the ratio starts at 4.74 and rises to a peak of 5.28 in June 2020, indicating a relatively faster turnover of receivables during that quarter. Subsequently, the ratio declines to around 4.41 in March 2021 and maintains a range between approximately 4.4 and 4.8 for several quarters. A notable increase appears in the first quarter of 2023, reaching 5.24, followed by a minor decline, and then another rise to 5.13 by the first quarter of 2024, suggesting improved receivables management toward the end of the timeline.

The average receivable collection period, expressed in days, exhibits an inverse relationship with the receivables turnover ratio, as expected. Starting from 77 days in March 2020, it decreases to a low of 69 days in June 2020. Afterward, a gradual increase is observed, peaking around 83 days in March 2021. The period then fluctuates mostly between 70 and 82 days, with a discernible decline to 70 days in the first quarter of 2023, paralleling the increase in turnover ratio. Since then, the collection period has slightly varied, closing at 71 days in March 2024.

Overall, the trends suggest periods of enhanced efficiency in receivables collection, particularly around mid-2020 and early 2023, with associated reductions in the average collection period. However, there are intermittent increases in the collection period and decreases in turnover ratio, indicating variability in working capital management. The data towards the end of the timeline reflects an improvement in turnover efficiency along with a reduction in days outstanding, signaling potentially more effective credit and collections practices.

Inventory Processing Period

The average inventory processing period exhibited a generally increasing trend from March 2020 through December 2021, rising from 85 days to a peak of 101 days. Following this peak, a gradual decline is observed, with the period decreasing to 90 days by March 2022 and fluctuating moderately around the low 90s thereafter, ending near 91 days in March 2024. This indicates a period of slower inventory turnover around 2021 followed by a partial recovery toward more efficient inventory management.

Receivable Collection Period

The average receivable collection period showed variability over the timeframe studied. Initially, it decreased from 77 days in March 2020 to 69 days in June 2020, suggesting an improvement in collection efficiency. Thereafter, it rose again, peaking near 83 days in March 2021, indicating somewhat slower collection cycles. From mid-2021 onward, the period stabilized in the high 70s to low 80s range, with a slight downward movement toward 71 days by March 2024, suggesting a modest but consistent improvement in accounts receivable management.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivables collection, mirrored the trends observed in its components. It increased from 162 days in March 2020 to a peak of 179 days in December 2021, reflecting overall longer cash conversion times. Following this peak, the cycle shortened gradually, reaching 162 days by March 2024. This pattern suggests that while the company experienced lengthening operating cycles through 2021, subsequent efforts or circumstances favored improved operational efficiency and faster cash conversion in recent quarters.

Summary

The financial data reveals that the company faced increasing durations in inventory processing, receivable collection, and overall operating cycle from early 2020 through late 2021. After those increases, a trend toward stabilization and moderate improvement in these metrics is observed, particularly in 2023 and early 2024. These changes may reflect adjustments in operational processes, supply chain dynamics, or credit management practices aimed at enhancing working capital efficiency.

Payables Turnover Ratio

The payables turnover ratio shows a fluctuating but generally upward trend over the observed quarters. Initially, values start around 6.47 in the first reported quarter of 2020 and decline gradually to a low of 5.3 in December 2020. Subsequently, the ratio recovers and trends upwards, reaching a peak of 7.64 in September 2023 before declining slightly towards 6.81 in December 2023 and 6.27 in the latest quarter, March 2024. This indicates a variation in the frequency of payables payment, with some periods of slower payments followed by more accelerated payment practices in recent quarters.

Average Payables Payment Period

The average payables payment period, expressed in number of days, exhibits an inverse pattern relative to the payables turnover ratio. The period begins at 56 days in March 2020 and tends to increase through late 2020, peaking at 69 days in March 2021, reflecting longer payment cycles during that phase. After this peak, the payment period generally declines, falling to a low of 48 days in June 2023, before slightly rising again towards 54-58 days by the end of 2023 and early 2024. Overall, this variation suggests changing payment policies or cash management strategies, with periods of extended payment durations balanced by intervals of more rapid settlement of obligations.

Correlation and Insights

There is a noticeable inverse correlation between payables turnover and average payables payment period. When the turnover ratio decreases, the payment period tends to increase, indicating slower payments to suppliers, and vice versa. The recent trend shows a relatively higher turnover combined with shorter payment periods, suggesting an improvement in payment efficiency or a strategic shift towards faster settlement of payables. These shifts can have implications for working capital management and supplier relationships. The fluctuations over the timeframe reflect adjustments in operational or financial conditions, possibly influenced by external economic factors.

Inventory Processing Period

The average inventory processing period shows a generally stable trend with minor fluctuations. Starting from 85 days in early 2020, it increased gradually to a peak of 101 days by the end of 2021. After this peak, the period declined slightly and stabilized around the low 90s days through 2022 and early 2023. The latter quarters of 2023 and early 2024 show a slight upward variation, ending close to 91 days. This indicates a moderate lengthening in the time inventory is held before being processed, with some improvement after the peak observed in late 2021.

Receivable Collection Period

The average receivable collection period exhibited a declining trend during the first half of 2020, dropping from 77 days to 69 days, suggesting enhanced efficiency in collecting receivables. However, it subsequently increased again to around 82 days by the end of 2020 and remained relatively stable in the high 70s to low 80s range throughout 2021 and 2022. In 2023 and early 2024, the period showed a slight improvement, decreasing toward the low 70s by the first quarter of 2024. This pattern highlights some variability in collection efficiency but an overall modest improvement recently.

Payables Payment Period

The average payables payment period generally trended downward from 56 days in early 2020 to a lower point near 50 days in mid-2023, indicating a faster payment to suppliers. There was a noticeable spike to 68-69 days at the end of 2020, possibly reflecting extended payment terms during that period, but the payment period mostly declined thereafter with some fluctuations. The end of 2023 showed a slight increase to about 58 days before settling back near 54 days. This trend suggests an effort to manage payables more efficiently by reducing payment times.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable over the observed period, fluctuating between approximately 102 to 112 days. It reached early peaks near 112 days at the end of 2021 and again in late 2023 but mostly hovered around 108 to 110 days at other times. The overall pattern indicates a consistent cycle length with minor variance, reflecting steady management of the combined periods of inventory processing, receivable collection, and payables payment.