JRo’s Notes: Amphenol Q4:2025 Earnings

Key quotes from the call…

(note: bold and highlights are my own)

“We are very encouraged by our orders in the quarter, which were a record $8.431 billion, up a strong 68% compared to the fourth quarter of 2024 and up 38% sequentially, resulting in a very strong book-to-bill ratio of 1.31:1. This impressive book-to-bill in the quarter was primarily driven by robust bookings in the IT datacom market related to AI applications. We have seen customers open their order window a bit in certain cases, which helped to drive these strong bookings. For the full year, orders were $25.4 billion, up 51% compared to 2024, resulting in a book-to-bill ratio of 1.1:1.”

“We booked a record $8.4 billion of orders in the fourth quarter, which represented a very strong book-to-bill of 1.31:1. These orders grew by 68% from prior year and were up 38% sequentially. And while orders were strong across the board, there’s no doubt that these robust orders were driven primarily by data center demand related in particular to artificial intelligence investments being planned by a number of our large customers.”

“Just here in January, we were excited to have closed on the acquisition of the CCS business from CommScope, a bit earlier than we had anticipated. This business, which will be known going forward as CommScope and Amphenol company, represents a significant expansion of our interconnect capabilities across 3 of our important end markets. As we discussed last year, CommScope had significant fiber optic interconnect capabilities for the IT datacom and communications networks markets as well as a diverse range of industrial interconnect products for the building connectivity market, which will be included in our Industrial segment…As previously disclosed, we expect CommScope to generate full year 2026 sales of $4.1 billion and to add $0.15 to Amphenol’s 2026 adjusted earnings per share.”

“As we welcome the outstanding CommScope and Trexon teams to the Amphenol family, we remain confident that our acquisition program will continue to create great value for the company. Our ability to identify and execute upon acquisitions and then to successfully bring these companies into Amphenol remains a core competitive advantage. And there’s no doubt that as our organization has evolved and scaled, so too has our ability to effectively manage a greater number of acquisitions of all sizes.”

“Now turning to the full year 2025. Simply put, 2025 was a uniquely successful year for Amphenol. We expanded our position in the overall market, growing our sales by 52% in U.S. dollars, 51% in local currency and 38% organically, reaching a new sales record of $23 billion or $23.1 billion. As we cross $23 billion in sales in 2025, we’re very proud to have more than doubled Amphenol’s revenues in the past 4 years, a great reflection of our organization’s ability to navigate market dynamics while capitalizing on the broad array of opportunities arising across the electronics industry. Our full year 2025 adjusted operating margin reached a record 26.2%, and that was a robust increase of 450 basis points from prior year. And this strong level of profitability enabled us to achieve record adjusted diluted EPS of $3.34, an increase of 77% from the 2024 levels. As Craig mentioned, we generated record operating cash flow of $5.4 billion and free cash flow of $4.4 billion, clear confirmations of the company’s superior execution and disciplined balance sheet management.”

“Very proud that our acquisition program again created great value this year. We completed 5 acquisitions in 2025, including ANDREW, our largest acquisition at the time, together with the acquisitions of Trexon, Narda-MITEQ, LifeSync and Rochester Sensors. Collectively, these acquisitions have added to Amphenol annualized sales of nearly $2 billion. In addition, as I just mentioned and as we announced earlier this month, we also closed on our largest ever acquisition now, which is the CommScope acquisition. What is in common across all these acquisitions is that they enhance our position across a broad array of end markets and deep enabling technologies, all while bringing outstanding and talented individuals into the Amphenol family.”

“Our agile entrepreneurial organization has created a new position of strength for the company from which we can continue to drive superior long-term performance. Now turning to our served markets. Once again, I’m very pleased that the company’s end market exposure remains diversified, balanced and broad. And there’s no doubt that, that presence that we have across all these end markets creates great value for the company as we’re allowed to participate across all areas of the global electronics industry wherever there may be new revolutions arising, all while not being disproportionately exposed to the volatility of any given application or market.”

“Turning first to the defense market. That market represented 10% of our sales in the fourth quarter and 9% of our sales for the full year 2025. Sales in the fourth quarter grew strongly from prior year, increasing by 44% in U.S. dollars and 43% in local currencies. On an organic basis, sales increased by 29% with broad-based growth across virtually all defense applications, including, in particular, radar, space, communications, avionics and unmanned aerial vehicles. Sequentially, sales increased by 16%, well ahead of our expectations for mid-single-digit growth. For the full year 2025, our sales grew by 30% in U.S. dollars and local currency and by 21% organically, reflecting our superior operational execution as well as growth across all segments of the defense market. In addition, we’re very pleased that our growth in 2025 was really broad-based geographically, reflecting our leading position across the many countries who are increasing their defense spending. Looking ahead, we expect sales in the first quarter to increase slightly, largely driven by the benefit of the Trexon acquisition. And we remain 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 products. Amidst the current dynamic geopolitical environment, countries around the world are further expanding their investments into both current and next-generation defense technologies. With our existing offerings as well as the exciting and complementary capabilities from Trexon, we are positioned better than ever to capitalize on this long-term demand trend.”

“The commercial air market represented 5% of our sales in the quarter and for the full year 2025. In the fourth quarter, our sales grew by 21% in U.S. dollars and 20% in local currencies. On an organic basis, sales increased by 19% from prior year, driven by broad-based strength with virtually all commercial aircraft manufacturers. Sequentially, our sales grew by 10% from the third quarter, well above our expectations coming in 90 days ago. For the full year 2025, sales in the commercial air market increased by 39% in U.S. dollars and 38% in local currency as we benefited from accelerating demand across aircraft platforms as well as from acquisitions. Organically, our sales increased by 13% from prior year, reflecting our robust design-in positions on a broad array of jetliners.”

“The industrial market represented 18% of our sales in the quarter and 19% of our sales for the full year 2025. Our sales grew by 20% in U.S. dollars and 18% in local currencies from prior year. And on an organic basis, we were pleased that sales grew by 10%, driven by relatively broad-based growth across the industrial end markets, in particular, medical, alternative energy, e-mobility, heavy equipment and industrial instrumentation applications. We also grew again in all of our major geographic regions. On a sequential basis, sales grew by 2%, better than our expectations. For the full year 2025, sales grew by 21% in U.S. dollars and 20% in local currency as we benefited from relatively broad-based growth as well as from acquisitions. Organically, sales grew by a strong 10% from prior year. Looking into the first quarter, we expect our sales to increase approximately 20% from these fourth quarter levels, driven by the addition of CommScope’s building connectivity business. We remain encouraged by the company’s strength across the many diversified segments of this important market. Over the long term, I’m confident in our strategy to expand our high-technology interconnect antenna and sensor offering, both organically and through complementary acquisitions. This strategy has enabled Amphenol to capitalize on the many electronic revolutions that continue to occur across the diversified industrial market and thereby create further opportunities for outstanding team working in this important market.”

“The automotive market represented 14% of our sales in the fourth quarter and 15% of our sales for the full year. Sales in the fourth quarter grew by 12% in U.S. dollars and 9% in local currencies and organic, and that was driven by relatively broad-based growth across automotive applications. In addition, we are pleased that once again, we realized growth in all 3 regions. Sequentially, our automotive sales were flat, but this was better than our expectations coming into the quarter. For the full year 2025, our sales increased by 8% in U.S. dollars and 7% in local currencies and organic, with growth in all 3 regions.”

“The communications networks market represented 9% of our sales in the fourth quarter and 10% of our sales for the full year 2025. Sales in this market grew from prior year by 120% in U.S. dollars and 119% in local currency as we benefited from the ANDREW acquisition completed earlier last year. Organically, our sales were flat from prior year. On a sequential basis, sales declined as expected by 13% from the third quarter. And for the full year 2025, our sales to communications networks increased by 134% in U.S. dollars in local currency and by 13% organically as we benefited from the addition of ANDREW as well as growth in our products sold into the mobile network operators and wireless equipment manufacturers. As we look towards the first quarter, we do expect a significant nearly 50% increase in sales as we benefit from the addition of the CommScope business, which more than offsets the typical seasonal sales declines that we would see here. With our expanded range of technology offerings following the acquisitions of both CommScope and ANDREW, we are well positioned with service provider and OEM customers across the global communications networks market. Our deep and broad range of products, coupled with an expansive manufacturing footprint have positioned us to support these customers wherever they may be.”

“The mobile devices market represented 6% of our sales in the quarter and also for the full year. And in the fourth quarter, our sales moderated by 4% in U.S. dollar, local currency and organic as growth in tablets, wearables and accessories was more than offset by some moderation in sales related to smartphones. On a sequential basis, our sales increased by 6%, which was a bit better than our expectations coming into the quarter. And for the full year 2025, sales in the mobile devices market increased by 5% in U.S. dollar and organic, and that was really driven by growth across virtually all mobile device applications.”

“Finally, the IT datacom market represented 38% of our sales in the fourth quarter and 36% of our sales for the full year. Sales in the fourth quarter grew by a very strong 110% in U.S. dollar and organic, driven by continued strong demand for our products used in AI applications, together with ongoing growth in our base IT datacom business. On a sequential basis, our sales increased by 8% from the third quarter, which was substantially better than our expectations 90 days ago. This sequential increase was essentially driven by growth in AI-related applications. For the full year 2025, our sales in the IT datacom market grew by a very strong 124% in U.S. dollars and organic as we benefited from strong demand for AI-related applications as well as accelerated growth in our non-AI IT datacom business. As we look ahead, we expect a low double-digit sequential sales increase in the first quarter, driven by the addition of CommScope. And on an organic basis, we’re very pleased to anticipate that we will remain at these very elevated levels in the fourth quarter. We are more encouraged than ever by the company’s position in the global IT datacom market. I just can’t emphasize enough what an outstanding job our team has done, not only in securing future business on these next-generation IT systems with a really broad array of customers, but in executing upon that demand here in 2025. There’s no doubt that the revolution in AI continues to create a unique opportunity for Amphenol, given our leading high-speed and power interconnect products. With now the addition of CommScope, we have the broadest range of high-speed power and fiber optic interconnect products, all of which are critical components in these next-generation systems. This creates a continued long-term growth opportunity for Amphenol.”

“I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges present in the current environment while continuing to grow Amphenol’s market position, all while driving sustainable and strong profitability over the long term.”

“But there was certainly the IT datacom market and specifically related to AI investments was a primary driver of this 1.3:1 book-to-bill and record orders for the company to achieve orders of more than $8 billion in the quarter was certainly a milestone for all of us. Look, I think that, as I mentioned, and I think Craig alluded to, that we have seen customers open up their order window for — in particular, related to significant plans that they have of investments related to AI. This is not because of kind of getting in line, so to speak. I mean I think our team has done a fabulous job of ramping up. I mean, as evidenced by the extraordinary growth that we achieved last year, 124% year-over-year growth for the full year in IT datacom. There’s no doubt that our team has done an amazing job of ramping up to our customers’ needs. But at the same time, and we’ve talked about this in the past, because of the technology involved in a lot of these next-generation products, really pushing the limits of these systems and pushing the limits of the products, these products do require, in certain cases, more automation, which fortunately, we do the vast majority of that in-house, which has been an amazing competitive advantage for Amphenol through this time period. And so we’ve worked with customers because of these sometimes outsized investment requirements and their outsized plans that they provide to us to somehow share the risk of those investments. And we do that in a variety of ways. Those ways can include customers actually sharing some of the spending, contributing to the spending and otherwise, giving us commitments that are solid commitments that give us the comfort to make those investments and drive the ramp-ups that ultimately meet those customers’ demands. And so I think it’s more not — and you used the word minimum order. I wouldn’t call it minimum order, but rather it’s giving us the comfort through their own commitments to Amphenol that we should then make the commitments in capital and using Amphenol’s hard-earned cash and the time of our teams to make those investments. And I think it’s a great sign. It’s a sign, number one, of our customers’ intentions and their plans, which are very robust. It’s a sign number two of our customers’ commitment and confidence in the Amphenol organization. And so no doubt about it. I think it’s a positive, and we look forward to continuing to drive great success in that market in the future.”

“We just celebrated the 20th anniversary of another foundational acquisition for Amphenol, which was the acquisition of the Teradyne Connection Systems business 20 years ago, which really catapulted Amphenol into a leadership position in high-speed copper interconnect products. I will tell you that at that time, high speed meant 5 gigabits, maybe 10 on the outside. And over those 20 years, we’ve continued to double down on the excellent capabilities that TCS brought us, the people, most of whom are still with our team today, there to celebrate that same 20th anniversary. And that has put us in a real leadership position as our customers drive their systems to higher and higher speeds. Now we have always been a player in fiber optics. I mean, going all the way back to the early foundations of what a fiber optic connector was half a century ago or more. But there’s no question that with CCS, just like at the time with TCS 20 years ago, CCS vaults us into a position of breadth and depth in the technology around fiber optic interconnect that is a real expansion of our capabilities. And so when we go to customers and we talk about data center applications or when we go to communications networks customers and talk about their next-generation network planning, we can now have that conversation across the entirety of the interconnect spectrum. As they think about the various trade-offs that a customer goes through every time they think about their specific system architecture, do they want to use a high-speed copper interconnect here? What’s the power situation? How do they bring power into their system, into the rack, into a data center, into a network? And then how do they use fiber optics, which have, of course, fabulous traits, in particular, around high-bandwidth, long-distance communications. And customers are making these trade-offs every day. And now with the CCS acquisition, what I’m so excited about is the unique position it puts Amphenol in as a company to be able to go in and talk to that entire spectrum of interconnect. Our customers just want to get a signal from a place to a place. And it’s up to us to work with them to figure out the best way to do that, whether they’re getting a signal from a GPU to a GPU or from a central office to a home somewhere or anything in between. And I think now we were able to come to them with a total solution of leading interconnect products that ultimately allow us to be — have a seat at the table as a partner with those customers for many, many years and many generations to come.”

“In terms of the integration, I mean, that word integration is not a word in the Amphenol lexicon. There are two words we don’t use, integration and synergy. And — but what we do talk about is letting them evolve into the Amphenol family, letting them be who they were because it’s a fabulous organization. I mean the leadership of the company is still the same leadership. The people are still the same people. We’re not parachuting people in. We’re not merging and morphing things into one or another, synergizing and restructuring. We’re actually working with the team on day 1 to say what are the opportunities that now that you’re part of Amphenol, you could hope to achieve that you maybe couldn’t have done as part of your former company… And I can tell you, they’re so excited to be part of Amphenol. And we broadcast a welcome around the world and just a kind of almost a universal excitement to be part of this company called Amphenol to become Amphenolians, as they all now know that word. And so the first steps is meet the people, get excited, find opportunities to go accelerate the business, and that’s all well underway today.”

“I want to emphasize one thing, which is just the breadth of that business. We have an enormous position with a lot of different customers up and down the stack of AI from the folks who are making the investments, the big web-scale folks and otherwise, including like the cloud, the neo cloud, whatever you guys all call these folks, the equipment manufacturers all the way down to, of course, the significant companies who are designing the chips and the architecture around those chips. I mean I will say that as we come out of 2025, that breadth is reflected in the fact that we didn’t have any 10% customers in 2025. We have significant customers, but we have also a lot of breadth around that business. And so as our customers think about the forward potential of AI, I mean, I think there’s a few factors. Number one is their investment plans are all going up. There’s no doubt that there continues to be a very robust plan of continuing to drive accelerated computing at a very strong level. And there’s upgrades of the technology embedded in those data centers, which requires a higher technology, more complex, higher content degree of interconnect. We’re also very excited that not only are we participating as we have traditionally bringing the power in, power to the racks and the like, the data communication within racks, within adjacent racks, but also now with CommScope participating in the broader fiber optic opportunity associated with those data centers. And there’s no doubt that, that also creates a strong opportunity for the company going forward.”

“I would also just point out, at the time we acquired and we announced the acquisition then of CCS, we talked about acquiring a company of roughly $3.6 billion in sales at a 26% EBITDA margin, and that implied a price of just over 11x that we paid for it. By the time we closed, we’re now talking about a business of more than $4 billion in annualized sales. That is a great momentum, strong orders, positive books-to-bill and all of that. And obviously implies as well that on — at least on a current year basis here in 2026, we — this is a great deal for Amphenol and really the high single digits in terms of an EBITDA multiple.”

“It’s a different thing for CCS to be a part of a company that for very obvious reasons, was somewhat balance sheet constrained. And now they’re part of Amphenol, where we’re more than willing to help them stimulate the virtuous cycle that so many of our companies are on by making prudent investments that allow great returns and allow them to capitalize upon the opportunities in the marketplace. And so it’s not that we’re just going to give them all blank checks here. But you can imagine that it’s a different environment for CCS in terms of their ability to grow into the opportunities as part of Amphenol than maybe it would have been in the past.”

“And I mentioned in my prepared remarks that we’re especially encouraged in — if you take automotive and industrial as two pretty broad global markets that we saw growth organically in both of those markets across all of the territories that they operate in. And I would highlight there, in particular, Europe. I mean the world has been so down on Europe for so long. And I think we’ve started to see in our company, especially in the second half of the year, that our teams in Europe who have held their heads high through this whole kind of malaise, if you will, and have continued to pursue opportunities to gain market share to enable our customers who are doing really amazing things, driving now robust organic growth in Europe, in automotive and in industrial for the full year.”

“What’s it going to mean that we’re going to have this ubiquitous accelerated compute capability all the way to the edge of technology. And when you walk around CES, you see it. Now look, I don’t know what is that all going to mean. I personally am not going to be front of the line to buy like an AI-enabled toilet. But will one day as a former fan of Star Wars as we come to the almost 50-year anniversary, will we each have our own C-3PO that will have great AI capabilities? Who knows? I mean these kind of things are possible. And I think the places like in automotive with autonomous driving, in industrial, where you see so many different things happening on the edge where things get smart, robotics and the like, and mobile devices, those 3 markets that you mentioned, I think each of those stand to have a fundamental step function in their capabilities and their potential because of what’s happening today in the build-out of this AI network. And I think long term, that’s something that I’m really excited about. And I think back on the other revolutions like the microprocessor, the Internet, the mobile Internet and the like. And each of those had later on a carry-on benefit to those markets, automotive, industrial, mobile devices and the like. And I’d be surprised if we don’t see something like that in many years to come.”

“Look, the — this is not an easy thing to do to grow a company by 38% organically. Let alone those operations within the company who have grown by so much more than that. I mean you can imagine we’ve got folks who have more than doubled the size of their individual operations. But what sets us apart and what has always been the core of why we are able to do hard things is that unique operating culture of Amphenol. The fact that we rely on what is now 145 or so general managers, 16 operating groups. The CommScope, we talked earlier about the “integration.” Well, there’s not an integration. The CommScope team is — the person who ran it is now a Group General Manager of Amphenol, and he’s running his team as he ran it before. So the management challenges, and you list a couple of things, supply chain, the cost of metals, which are extraordinary, the geopolitics, whatever, shipping, I mean, there’s so many things. And I think we don’t fixate on one or another of those things. What I fixate on is making sure that if you’re a general manager in Amphenol, you’ve got all the authority to deal with whatever comes your way. And that empowerment and enablement of people to go figure it out. And yes, if they need some help, we’re here. We’ve got this amazing organization, driving collaboration, communication across the company. But at the end of the day, the buck stops on 145 desks. And if that means doubling the size of your business, figuring out how to set up factories in 4 different countries, doing things with technology that have never been done before, ramping up automation machines that we’ve never built before, but now can build extraordinarily, probably one of the world’s best automation companies that exist, they make it happen. They make it happen. And so I think when I think about growing the company as we have, doubling the size of Amphenol really in the last 4 years, for me, the biggest singular focus is how do we do that while still preserving that entrepreneurial culture. And I’m so proud that we’ve done it. If you think about a big change in the company 4 years ago, which I’m not going to say is the thing that created that doubling, but it certainly enabled it. It was when we moved to 3 divisions with 3 division presidents, when we expanded the number of operating groups in the company, all with the goal of securing, strengthening and scaling that unique entrepreneurial culture of Amphenol. And I don’t think it’s a coincidence that we took that step 4 years ago. And now here we are 4 years hence, celebrating doubling the size of Amphenol. And so I do believe that the management challenges, which are countless on every day, thousands of challenges that our people face, they’re equipped to deal with them no matter what they are. And that gives me not only a confidence for the future, but enthusiasm for the future because whatever comes along, we know for sure the world is not predictable. But what I can predict is that Amphenolians will be there and will make it happen regardless.”

“As we progress throughout the year, we’re not guiding in ’26, but certainly, we expect normal kind of operating margins. We expect that kind of 30% kind of targeted conversion margins that we target on incremental sales as we grow. And with CCS, again, we target that getting up to over time up to the company average. And certainly, that will be an adder over time to our operating margin potential.”

“From a capital perspective, and as we talked about in 2025, we were certainly spending at a bit higher level. But honestly, with the growth we have seen, we kind of ended the year [2025] just a bit over 4%, which is 3% to 4%, we say is our historic range [for CapEx as a percentage of sales]. We ended the year just a bit over that 4%. And I would say, as we go into ’26, and we continue to see certainly opportunities for growth. And certainly, we’ve had these strong orders here we talked about in the fourth quarter. We expect that capital spending to still be certainly at that upper end of that 4% range. And certainly, we have quarters that certainly exceed that 4% for capital spending into ’26. So I think that the fact that we’re still spending kind of in our historic range and roughly there is really just a testament to the — just the discipline of the organization, the ability to spend wisely and really support the growth, the significant growth that we’re seeing still with pretty reasonable spending, I think. So — and I think I would expect more of the same in ’26. And as we continue to grow, I think that 3% to 4% range will continue to be that. And I think as we — these growth rates are a little higher, I would say that we’ll be probably towards the upper end of that 4% range…”

“I think I talked about the fact that we have seen customers extend their order window. Craig mentioned that as well. And in addition, as we continue to ramp up for our customers, new programs, particularly related to AI, there is that kind of confidence that we like to get before making investments, that our customers can give us in a variety of ways, including through orders. I’m not going to guide to what our orders are going to be in a given quarter. I mean you can imagine our sales folks are out there trying to pursue every order possible. But these are really outstanding orders, and they will carry through longer than just here in the first quarter.”

“I think as the leader in defense interconnect, I wouldn’t tell you that we take that for granted. But do we have dibs on this market? We got dibs on this market. I mean — and we have that because of a broad array of technologies and deep investments that we have made. I mean the one thing that I think sets us apart, in particular, related here to — we’ll talk about U.S. and then we’ll talk global, is that we have continued to double down, number one, on technology innovation; and number two, on scaling our capacity to enable the defense industry to continue to meet the levels that they need to. And so whether that means today’s budget or higher budgets in the future, I can tell you that the breadth of our offering, coupled with the depth of our capacity and capability is something that puts us in a really strong position across really all programs. And you mentioned a few programs. Our folks are deep into every program that is involved.”

“Our approach as a company has always been not to be a sort of U.S. flag in the front of our factory kind of an operation when we operate around the world. We operate 350 factories across more than 40 countries around the world, and we don’t have expats period. We operate our company as a local company. So when we’re in France, we’re a local French company. When we’re in the U.K., we’re a local U.K. company, in Denmark, in Germany, in Italy or wherever that may be. And that focus on being a local provider in the defense market. And our defense position in Europe is very, very strong. We’ve had really outperformance in Europe here for a number of years in terms of the strength of our business. I’m never going to say that you’re insulated from anything. But the way that we’ve structured our company, the culture around our company, how we interact with our customers is as a local partner in those places. And we do that in all of our businesses. That’s just how we run the company. But I will tell you that in a geopolitically interesting world that we are in today, the way that we’ve always operated is a pretty good way to operate in today’s world. And I think that will, in many ways, protect us from any politics that could inject themselves into this world. Our customers at the end of the day, want the best product, and they want it at the time that they need it.”

“There’s more of everything. And so as folks make changes, they go to different voltages, they go to different speeds of transmission, they go to more nodes, they go to more tokens, they go to more density, whatever it is. The ultimate, what comes out of that is more complexity. And so for us, whether it’s one type or another, I talked earlier about the fact that we today, especially with the CommScope acquisition, have the broadest offering in the industry and the broadest ability to enable our customers really as they face these really challenging technological trade-offs. And so I think we’re in a really great position to be able to do that and even stronger than we were before pre the CommScope acquisition. And whether it’s different voltages or different speeds or different densities or all the various things that our customers are looking at, I think we’re going to have a great seat at the table working with them to enable these exciting next-generation systems.”