Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(amounts in millions, except share and per share data, unless otherwise noted)
The following discussion and analysis of the financial condition and results of operations for the years ended December 31, 2025, 2024 and 2023 has been derived from and should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”). The Consolidated Financial Statements have been prepared in U.S. dollars, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). The following discussion and analysis also includes references to certain non-GAAP financial measures, which are defined in the “Non-GAAP Financial Measures” section below, including “Constant Currency Net Sales Growth” and “Organic Net Sales Growth”. For purposes of the following discussion, the terms “constant currencies” and “organically” have the same meaning, respectively, as these aforementioned non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” within this Item 7 for more information, including our reasons for including non-GAAP financial measures and material limitations with respect to the usefulness of the measures.
In addition to historical information, the following discussion and analysis also contains certain forward-looking statements that are subject to risks and uncertainties, including but not limited to the risk factors described in Part I, Item 1A. Risk Factors herein, as well as the risks and uncertainties that exist with the use of forward-looking statements as described in the “Cautionary Note Regarding Forward-Looking Statements” section included herein at the beginning of this Annual Report on Form 10-K (“Annual Report”).
Overview
General
Amphenol is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products and coaxial, high-speed, fiber optic and specialty cable. In 2025, approximately 65% of the Company’s sales were outside the United States. The primary end markets for our products are:
information technology and communication devices and systems for the converging technologies of voice, video and data communications;
a broad range of industrial applications and traditional, hybrid and electric automotive applications; and
defense and commercial aerospace applications.
The Company’s products are used in a wide variety of applications by a broad array of customers around the world. The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time. For many years, customers have generally been consolidating their lists of qualified suppliers to companies that have the ability to meet certain technical, quality, delivery and other standards while maintaining geographic flexibility and competitive prices. The Company has focused its global resources to position itself to compete effectively in this environment. The Company believes that its global presence is an important competitive advantage, as it allows the Company to provide quality products on a timely and worldwide basis to its multinational customers, while at the same time offering a level of resiliency and diversification against local risks and challenges that may emerge in any single geography.
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Reportable Business Segments
The Company aligns its businesses into the following three reportable business segments:
● Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other interconnect products; coaxial, fiber optic, power and high-speed cable; antennas; and other products for use in the information technology and data communications, mobile devices, industrial, communications networks, automotive, commercial aerospace and defense end markets.
● Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, specialty cable, printed circuits and printed circuit assemblies and other products for use in the industrial, defense, commercial aerospace, automotive, communications networks and information technology and data communications end markets.
● Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems used in the automotive, industrial, information technology and data communications, communications networks, defense and commercial aerospace end markets.
This alignment reinforces the Company’s entrepreneurial culture and enables clear accountability of each of our business unit general managers, while enhancing the scalability of Amphenol’s business for the future. F or further details related to the Company’s reportable business segments, refer to Note 13 of the Notes to Consolidated Financial Statements herein.
Strategy
The Company’s strategy is to provide our customers with comprehensive design capabilities, a broad selection of products and a high level of quality and service on a worldwide basis, while maintaining continuing programs of productivity improvement and cost control. The Company focuses its research and development efforts through close collaboration with its customers to develop highly engineered products that meet customer needs and have the potential for broad market applications and significant sales within a one- to three-year period. The Company is also focused on controlling costs. The Company does this by investing in modern manufacturing technologies, controlling purchasing processes and expanding into lower cost areas.
The Company’s strategic objective is to further enhance its position in its served markets by pursuing the following success factors:
Pursue broad market diversification;
Develop high-technology performance-enhancing solutions;
Expand global presence;
Control costs;
Pursue strategic acquisitions and investments; and
Foster collaborative, entrepreneurial management.
Pillar Two Framework
The Organization for Economic Co-operation and Development (OECD)/G20 Inclusive Framework, known as Pillar Two, provides guidance for a global minimum tax. This guidance lays out a common approach for adopting the global minimum tax and enacting local legislation codifying the provisions that all 142 countries in the Inclusive Framework agreed to by consensus. The European Union (“EU”) member states have agreed to adopt these rules in two stages. The first component became effective on January 1, 2024, and the second component became effective on January 1, 2025. Non-EU countries have enacted or are expected to enact legislation on a similar timeline. Certain countries in which we operate have already enacted legislation to adopt the Pillar Two framework, while other countries are expected to also implement similar legislation with varying effective dates in the future. When and how this framework is adopted or enacted by the various countries in which we do business will increase tax complexity and may increase uncertainty and adversely affect our provision for income taxes in the U.S. and non-U.S. jurisdictions. The Company reviewed the currently enacted legislation. The implementation did not have a material impact on the
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Company’s consolidated financial statements during the year ended December 31, 2025, and it is not currently expected to have a material impact on the Company’s operations, financial condition or cash flows in the future. However, the Company will continue to evaluate the potential impact of Pillar Two on the Company and its results as additional countries adopt legislation and issue individual guidance on their enacted legislation.
Results of Operations
2025 Compared to 2024
Net sales were $23,094.7 for the year ended December 31, 2025 compared to $15,222.7 for the year ended December 31, 2024, representing an increase of 52% in U.S. dollars, 51% in constant currencies and 38% organically (excluding both currency and acquisition impacts; unless otherwise indicated, organic net sales growth is primarily driven by higher sales volumes), compared to the prior year. The increase in net sales in 2025 was driven by robust organic growth in the Communications Solutions segment and strong organic growth in the Harsh Environment Solutions segment and Interconnect and Sensor Systems segment, along with contributions from the Company’s acquisition program, all as described below. From an end market standpoint, the increase in net sales was driven by robust organic growth in the information technology and data communications (“IT datacom”) market, strong organic growth in the defense, industrial, communications networks and commercial aerospace markets and moderate organic growth in the automotive and mobile devices markets, along with contributions from the Company’s acquisition program. Net sales to the IT datacom market increased approximately $4,593.7, as we experienced robust growth across a broad array of applications, in particular the continued acceleration in and strong demand for products used in next-generation AI-related applications, along with growth in networking equipment, servers, cloud storage and peripherals. Net sales to the communications networks market increased approximately $1,374.3, driven primarily by contributions from acquisitions, in particular the acquisition of Andrew (as defined and discussed below within this Item 7 and in Note 11 of the accompanying Notes to Consolidated Financial Statements herein), along with organic growth in demand from mobile network operators and wireless equipment manufacturers. Net sales to the industrial market increased approximately $770.0, primarily driven by contributions from acquisitions, along with growth in medical applications, instrumentation, alternative energy and other industrial equipment. Net sales to the defense market increased approximately $499.2, driven by broad-based across virtually all defense applications, particularly related to communications, ground vehicles, space, missiles and naval, as well as contributions from acquisitions. Net sales to the commercial aerospace market increased approximately $322.2, primarily due to contributions from acquisitions, in particular the CIT acquisition, along with broad-based in demand from nearly all commercial aircraft manufacturers across a broad range of platforms. Net sales to the automotive market increased approximately $248.3, reflecting in demand from both electric and hybrid drive train platforms, antenna and related assemblies, and infotainment communications. Net sales to the mobile devices market increased approximately $64.3, driven by growth in sales in handsets, wearable devices, laptops and tablets.
Net sales in the Communications Solutions segment (approximately 52% of net sales) increased 91% in both U.S. dollars and constant currencies, as well as 71% organically, in 2025, compared to 2024. The sales growth in 2025 was primarily driven by robust organic growth in the IT datacom market, with particular strength in AI-related applications, as well as strong organic growth in the automotive, communications networks and industrial markets and moderate organic growth in the mobile devices market, along with contributions from acquisitions.
Net sales in the Harsh Environment Solutions segment (approximately 26% of net sales) increased 33% in U.S. dollars, 32% in constant currencies and 17% organically, in 2025, compared to 2024. The sales growth in 2025 was primarily driven by strong organic growth in the defense, industrial, commercial aerospace and IT datacom markets, along with contributions from acquisitions.
Net sales in the Interconnect and Sensor Systems segment (approximately 22% of net sales) increased 15% in U.S. dollars, 14% in constant currencies and 13% organically, in 2025, compared to 2024. The sales growth in 2025 was primarily driven by robust organic growth in the IT datacom market, with particular strength in AI-related applications and moderate organic growth in the automotive market.
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The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S. GAAP financial measures, by segment, geography and consolidated, for the year ended December 31, 2025 compared to the year ended December 31, 2024:
Percentage Growth (relative to prior year) (1)
Net sales
Foreign
Constant
Organic
growth in
currency
Currency Net
Acquisition
Net Sales
U.S. Dollars (2)
impact (3)
Sales Growth (4)
impact (5)
Growth (4)
Net sales by:
(GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
Segment:
Communications Solutions
Harsh Environment Solutions
Interconnect and Sensor Systems
Consolidated
Geography (6) :
United States
Foreign
Consolidated
Percentages in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding.
Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 13 of the Notes to Consolidated Financial Statements. While the term “net sales growth in U.S. dollars” is not considered a U.S. GAAP financial measure, for purposes of this table, we derive the reported (GAAP) measure based on GAAP results, which serves as the basis for the reconciliation to its comparable non-GAAP financial measures.
Foreign currency translation impact, a non-GAAP measure, represents the percentage impact on net sales resulting from foreign currency exchange rate changes in the current reporting year compared to the prior reporting year. Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year net sales, taken as a percentage of the prior year’s net sales.
Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.
Acquisition impact, a non-GAAP measure, represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year and/or prior comparable year presented. Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis. Acquisition impact is calculated as a percentage of the respective prior year period(s) net sales.
Net sales by geographic area are based on the customer location to which the product is shipped.
The increase in foreign net sales in 2025 compared to 2024 was primarily driven by robust sales growth in Asia. The comparatively weaker U.S. dollar in 2025 had the effect of increasing sales by approximately $84.6, compared to 2024.
The following table sets forth the components of net income attributable to Amphenol Corporation as a percentage of net sales for the years indicated.
Year Ended December 31,
Net sales
Operating expenses (1)
Acquisition-related expenses
Operating income
Interest expense
Gain on bargain purchase acquisition
Other income (expense), net
Income before income taxes
Provision for income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to Amphenol Corporation
The aggregated amount is comprised of cost of sales and selling, general and administrative expenses.
Note: Percentages in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding.
Operating expenses were $17,122.7, or 74.1% of net sales, for 2025, compared to $11,938.4, or 78.4% of net sales, for 2024. Operating income was $5,868.6, or 25.4% of net sales, in 2025, compared to $3,156.9, or 20.7% of net sales, in 2024. The decrease in Operating expenses as a percentage of net sales and increase in Operating income as a percentage of net sales in 2025 were primarily driven by strong performance and disciplined cost control, which generated strong operating leverage on the significant growth experienced during the period, partially offset by the effect
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of acquisitions, which currently have higher Operating expenses as a percentage of net sales compared to the Company average. Operating income in 2025 included acquisition-related expenses of $181.2, comprised primarily of (i) the non-cash amortization related to the value associated with acquired backlog resulting from the Andrew and Trexon acquisitions and external transaction costs associated with acquisitions (such acquisition-related expenses aggregating $103.4 are presented separately in the Consolidated Statements of Income) and (ii) the non-cash amortization of acquisition-related inventory step-up costs of $77.8 associated with the Andrew acquisition (such costs are recorded in Cost of sales in the Consolidated Statements of Income). Operating income in 2024 included acquisition-related expenses of $145.6, comprised primarily of (i) external transaction costs associated with acquisitions and the non-cash amortization related to the value associated with acquired backlog resulting from the CIT acquisition (such acquisition-related expenses aggregating $127.4 are presented separately in the Consolidated Statements of Income) and (ii) the non-cash amortization of acquisition-related inventory step-up costs of $18.2 associated with the CIT acquisition (such costs are recorded in Cost of sales in the Consolidated Statements of Income). The acquisition-related expenses in 2025 and 2024 had the effect of decreasing net income by $148.8, or $0.12 per share, and $119.3, or $0.09 per share, respectively. Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, each as defined below in the “Non-GAAP Financial Measures” section within this Item 7, were $6,049.8 and 26.2% of net sales, respectively, in 2025, and $3,302.5 and 21.7% of net sales, respectively, in 2024. The increase in Adjusted Operating Income and Adjusted Operating Margin in 2025 relative to 2024 was primarily driven by operating performance on the higher sales volumes, partially offset by the impact on operating margin related to acquisitions completed within the prior 12 months that are currently operating below the average operating margin of the Company.
Operating income for the Communications Solutions segment in 2025 was $3,746.6, or 31.1% of net sales, compared to $1,569.6, or 24.8% of net sales in 2024. The increase in operating margin for the Communications Solutions segment for 2025 compared to 2024 was primarily driven by strong operating performance on the significantly higher sales volumes, slightly offset by the negative impact on operating margin related to acquisitions completed within the prior 12 months that are currently operating below the average operating margin of the Company.
Operating income for the Harsh Environment Solutions segment in 2025 was $1,541.4, or 26.2% of net sales, compared to $1,093.2, or 24.7% of net sales in 2024. The increase in operating margin for the Harsh Environment Solutions segment for 2025 compared to 2024 was primarily driven by strong operating performance on the higher organic sales volumes, slightly offset by the negative impact on operating margin related to acquisitions completed within the prior 12 months that are currently operating below the average operating margin of the Company.
Operating income for the Interconnect and Sensor Systems segment in 2025 was $1,005.1, or 19.5% of net sales, compared to $825.9, or 18.4% of net sales in 2024. The increase in operating margin for the Interconnect and Sensor Systems segment for 2025 compared to 2024 was primarily driven by strong operating performance on the higher sales volumes.
Interest expense was $367.8 in 2025 compared to $217.0 in 2024. The increase in interest expense was primarily driven by higher average borrowing levels, resulting from the issuances of new senior notes during 2025 to fund all or part of acquisitions, including the CommScope acquisition (as defined and discussed below within this Item 7 and in Note 15 of the accompanying Notes to Consolidated Financial Statements herein), which closed on January 9, 2026. Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.
Other income (expense), net was $99.9 in 2025 compared to $72.0 in 2024. The increase was primarily driven by interest income earned on cash and cash equivalents on hand, resulting from increased levels of cash on hand, partially driven by the issuance of the November Senior Notes (defined below) in the fourth quarter of 2025 in anticipation of the CommScope acquisition, along with increased interest rates.
Provision for income taxes was at an effective rate of 23.1% in 2025 and 18.9% in 2024. Provision for income taxes in 2025 included (i) excess tax benefits of $246.6 from stock option exercises, (ii) a discrete tax item of $100.0 related to a charge recorded for notices received by certain subsidiaries in China from relevant tax authorities challenging certain of the Company’s tax positions taken over up to an eight-year period, and (iii) the tax effects of the aforementioned acquisition-related expenses during the year. Provision for income taxes in 2024 included (i) excess tax benefits of $142.6 from stock option exercises, (ii) a discrete tax benefit related to the settlement of tax audits and associated lapses of statutes of limitation, along with a difference in a non-U.S. tax filing position, and (iii) the tax effects of the aforementioned acquisition-related expenses during the year. These items incurred in 2025 and 2024 had the aggregate
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effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below. Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 25.5% for 2025 and 24.0% for 2024, as reconciled in the table below to the comparable effective tax rate based on GAAP results. For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s effective tax rate for these years, refer to Note 6 of the Notes to Consolidated Financial Statements.
Net income attributable to Amphenol Corporation and Net income attributable to Amphenol Corporation per common share - Diluted (“Diluted EPS”) were $4,270.3 and $3.34, respectively, for 2025, compared to $2,424.0 and $1.92, respectively, for 2024. Excluding the effect of the items listed in the table below, Adjusted Net Income attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $4,272.5 and $3.34, respectively, for 2025, compared to $2,382.1 and $1.89, respectively, for 2024.
The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2025 and 2024:
Net Income
Net Income
attributable
Effective
attributable
Effective
Operating
Operating
to Amphenol
Tax
Diluted
Operating
Operating
to Amphenol
Tax
Diluted
Income
Margin (1)
Corporation
Rate (1)
EPS
Income
Margin (1)
Corporation
Rate (1)
EPS
Reported (GAAP)
Amortization of acquisition-related inventory step-up costs
Acquisition-related expenses
Excess tax benefits related to stock-based compensation
Discrete tax items
Adjusted (non-GAAP) (2)
While the terms “operating margin” and “effective tax rate” are not considered U.S. GAAP financial measures, for purposes of this table, we derive the reported (GAAP) measures based on GAAP results, which serve as the basis for the reconciliation to their comparable non-GAAP financial measures.
All percentages and per share amounts in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding.
2024 Compared to 2023
Net sales were $15,222.7 for the year ended December 31, 2024 compared to $12,554.7 for the year ended December 31, 2023, representing an increase of 21% in both U.S. dollars and constant currencies, as well as 13% organically (excluding both currency and acquisition impacts; unless otherwise indicated, organic net sales growth is primarily driven by higher sales volumes), compared to the prior year. The increase in net sales in 2024 was driven by strong organic growth in the Communications Solutions segment and moderate organic growth in the Interconnect and Sensor Systems segment and Harsh Environment Solutions segment, along with contributions from the Company’s acquisition program, all as described below. From an end market standpoint, the increase in net sales was driven by strong organic growth in the IT datacom, mobile devices, commercial aerospace and defense markets and moderate organic growth in the automotive market, along with contributions from the Company’s acquisition program, partially offset by organic declines in the industrial and communications networks markets. Net sales to the IT datacom market increased approximately $1,334.2, as we experienced strong growth across a broad array of applications, in particular the continued acceleration in and strong demand for products used in next-generation AI-related applications, along with growth in servers, networking equipment, cloud storage, and consumer electronics. Net sales to the industrial market increased approximately $452.1, primarily driven by contributions from acquisitions, along with growth in mass transit, battery and electric heavy vehicles, alternative energy, instrumentation and medical applications, which were partially offset by moderations in factory and building automation, transportation, oil and gas, marine and heavy equipment applications. Net sales to the commercial aerospace market increased approximately $382.9, primarily due to
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contributions from acquisitions, in particular the CIT acquisition, along with broad-based strength in demand from nearly all commercial aircraft manufacturers across a broad range of platforms. Net sales to the defense market increased approximately $214.0, driven by broad-based strength across nearly all defense applications, particularly space-related, avionics, communications, airframe, and ground vehicle applications, as well as contributions from acquisitions. Net sales to the automotive market increased approximately $168.3, reflecting strength in demand from power management, infotainment communications, safety and security systems and antenna and related assemblies, along with contributions from acquisitions, partially offset by moderations in electric and hybrid drive train platforms. Net sales to the mobile devices market increased approximately $131.5, driven by growth in sales in most mobile device applications, including smartphones, laptops, and wearable and hearable devices, partially offset by a moderation in tablets. Net sales to the communications networks market decreased approximately $15.0, driven by moderations in demand from service operators.
Net sales in the Communications Solutions segment (approximately 42% of net sales) increased 29% in both U.S. dollars and constant currencies, as well as 27% organically, in 2024, compared to 2023. The sales growth in 2024 was primarily driven by strong organic growth in the IT datacom, automotive, mobile devices and industrial markets, along with modest contributions from the Company’s acquisition program, partially offset by an organic decline in the communications networks market.
Net sales in the Harsh Environment Solutions segment (approximately 29% of net sales) increased 25% in both U.S. dollars and constant currencies, as well as 4% organically, in 2024, compared to 2023. The sales growth in 2024 was primarily driven by contributions from the Company’s acquisition program, in particular the CIT acquisition, along with strong organic growth in the defense, commercial aerospace and IT datacom markets, partially offset by organic declines in the automotive and industrial markets.
Net sales in the Interconnect and Sensor Systems segment (approximately 29% of net sales) increased 9% in both U.S. dollars and constant currencies, as well as 4% organically, in 2024, compared to 2023. The sales growth in 2024 was primarily driven by contributions from the Company’s acquisition program, along with strong organic growth in the IT datacom market and moderate growth in the automotive market, partially offset by organic declines in the industrial and defense markets.
The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S. GAAP financial measures, by segment, geography and consolidated, for the year ended December 31, 2024 compared to the year ended December 31, 2023:
Percentage Growth (relative to prior year) (1)
Net sales
Foreign
Constant
Organic
growth in
currency
Currency Net
Acquisition
Net Sales
U.S. Dollars (2)
impact (3)
Sales Growth (4)
impact (5)
Growth (4)
Net sales by:
(GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
Segment:
Communications Solutions
Harsh Environment Solutions
Interconnect and Sensor Systems
Consolidated
Geography (6) :
United States
Foreign
Consolidated
Percentages in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding.
Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 13 of the Notes to Consolidated Financial Statements. While the term “net sales growth in U.S. dollars” is not considered a U.S. GAAP financial measure, for purposes of this table, we derive the reported (GAAP) measure based on GAAP results, which serves as the basis for the reconciliation to its comparable non-GAAP financial measures.
Foreign currency translation impact, a non-GAAP measure, represents the percentage impact on net sales resulting from foreign currency exchange rate changes in the current reporting year compared to the prior reporting year. Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year net sales, taken as a percentage of the prior year’s net sales.
Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.
Acquisition impact, a non-GAAP measure, represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year and/or prior comparable year presented. Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis. Acquisition impact is calculated as a percentage of the respective prior year period(s) net sales.
Net sales by geographic area are based on the customer location to which the product is shipped.
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The increase in foreign net sales in 2024 compared to 2023 was primarily driven by robust sales growth in Asia. The comparatively stronger U.S. dollar in 2024 had the effect of decreasing sales by approximately $39.6, compared to 2023.
Operating expenses were $11,938.4, or 78.4% of net sales, for 2024, compared to $9,960.5, or 79.3% of net sales, for 2023. Operating income was $3,156.9, or 20.7% of net sales, in 2024, compared to $2,559.6, or 20.4% of net sales, in 2023. The decrease in Operating expenses as a percentage of net sales and increase in Operating income as a percentage of net sales in 2024 were primarily driven by strong performance and disciplined cost control, which generated strong operating leverage on the significant growth experienced, partially offset by the effect of acquisitions, which currently have higher Operating expenses as a percentage of net sales compared to the Company average. Operating income in 2024 included acquisition-related expenses of $145.6, comprised primarily of (i) external transaction costs associated with acquisitions and the non-cash amortization related to the value associated with acquired backlog resulting from the CIT acquisition (such acquisition-related expenses aggregating $127.4 are presented separately in the Consolidated Statements of Income) and (ii) the non-cash amortization of acquisition-related inventory step-up costs of $18.2 associated with the CIT acquisition (such costs are recorded in Cost of sales in the Consolidated Statements of Income). Operating income in 2023 included acquisition-related expenses of $34.6, comprised primarily of external transaction costs, as well as the non-cash amortization related to the value associated with acquired backlog resulting from three of the acquisitions that closed in 2023. Acquisition-related expenses in 2023 are presented separately in the Consolidated Statements of Income. The acquisition-related expenses in 2024 and 2023 had the effect of decreasing net income by $119.3, or $0.09 per share, and $30.2, or $0.02 per share, respectively. Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, each as defined below in the “Non-GAAP Financial Measures” section within this Item 7, were $3,302.5 and 21.7% of net sales, respectively, in 2024, and $2,594.2 and 20.7% of net sales, respectively, in 2023. The increase in Adjusted Operating Income and Adjusted Operating Margin in 2024 relative to 2023 was primarily driven by operating performance on the higher sales volumes, partially offset by the impact on operating margin related to acquisitions completed within the prior 12 months that are currently operating below the average operating margin of the Company.
Operating income for the Communications Solutions segment in 2024 was $1,569.6, or 24.8% of net sales, compared to $1,063.5, or 21.6% of net sales in 2023. The increase in operating margin for the Communications Solutions segment for 2024 compared to 2023 was primarily driven by strong operating performance on the higher sales volumes.
Operating income for the Harsh Environment Solutions segment in 2024 was $1,093.2, or 24.7% of net sales, compared to $943.9, or 26.7% of net sales in 2023. The decrease in operating margin for the Harsh Environment Solutions segment for 2024 compared to 2023 was primarily driven by the negative impact on operating margin related to acquisitions completed within the prior 12 months, particularly the CIT acquisition, that are currently operating below the average operating margin of the Company.
Operating income for the Interconnect and Sensor Systems segment in 2024 was $825.9, or 18.4% of net sales, compared to $753.7, or 18.3% of net sales in 2023. The modest increase in operating margin for the Interconnect and Sensor Systems segment for 2024 compared to 2023 was primarily driven by strong operating performance on the higher sales volumes, partially offset by the negative impact on operating margin related to acquisitions completed within the prior 12 months that are currently operating below the average operating margin of the Company.
Interest expense was $217.0 in 2024 compared to $139.5 in 2023. The increase in interest expense was primarily driven by higher average borrowing levels, resulting from the issuances of new senior notes during 2024. Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.
Other income (expense), net was $72.0 in 2024 compared to $29.3 in 2023. The increase was primarily driven by interest income earned on cash and cash equivalents on hand, resulting from increased levels of cash on hand partially driven by the issuance of the new October Senior Notes (defined below) in the fourth quarter of 2024 in anticipation of the Andrew acquisition, which closed on January 31, 2025, along with increased interest rates.
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Provision for income taxes was at an effective rate of 18.9% in 2024 and 20.7% in 2023. Provision for income taxes in 2024 included (i) excess tax benefits of $142.6 from stock option exercises, (ii) a discrete tax benefit related to the settlement of tax audits and associated lapses of statutes of limitation, along with a difference in a non-U.S. tax filing position, and (iii) the tax effects related to the aforementioned acquisition-related expenses during the year. Provision for income taxes in 2023 included (i) excess tax benefits of $82.4 from stock option exercises, (ii) the effect of the gain from the bargain purchase acquisition that closed in the second quarter of 2023, and (iii) the tax effects related to acquisition-related expenses during the year. These items incurred in 2024 and 2023 had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below. Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 24.0% for both 2024 and 2023, as reconciled in the table below to the comparable tax rate based on GAAP results. For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s tax rate for these years, refer to Note 6 of the Notes to Consolidated Financial Statements.
Net income attributable to Amphenol Corporation and Diluted EPS were $2,424.0 and $1.92, respectively, for 2024, compared to $1,928.0 and $1.55, respectively, for 2023. Excluding the effect of the items listed in the table below, Adjusted Net Income attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $2,382.1 and $1.89, respectively, for 2024, compared to $1,870.4 and $1.51, respectively, for 2023.
The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2024 and 2023:
Net Income
Net Income
attributable
Effective
attributable
Effective
Operating
Operating
to Amphenol
Tax
Diluted
Operating
Operating
to Amphenol
Tax
Diluted
Income
Margin (1)
Corporation
Rate (1)
EPS
Income
Margin (1)
Corporation
Rate (1)
EPS
Reported (GAAP)
Amortization of acquisition-related inventory step-up costs
Acquisition-related expenses
Gain on bargain purchase acquisition
Excess tax benefits related to stock-based compensation
Discrete tax items
Adjusted (non-GAAP) (2)
While the terms “operating margin” and “effective tax rate” are not considered U.S. GAAP financial measures, for purposes of this table, we derive the reported (GAAP) measures based on GAAP results, which serve as the basis for the reconciliation to their comparable non-GAAP financial measures.
All percentages and per share amounts in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding.
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Liquidity and Capital Resources
Liquidity and Cash Requirements
At December 31, 2025 and 2024, the Company had cash, cash equivalents and short-term investments of $11,434.2 and $3,335.4, respectively. As of December 31, 2025, more than half of the Company’s cash, cash equivalents and short-term investments on hand was located in the United States, primarily as a result of the proceeds from the issuance of the November Senior Notes in 2025. As of December 31, 2024, more than half of the Company’s cash, cash equivalents and short-term investments on hand was located in the United States, primarily as a result of the proceeds from the issuance of the October Senior Notes in 2024. As of January 9, 2026, the Company used approximately $7,400 of its cash on hand to fund the CommScope acquisition, as discussed elsewhere within this Item 7 and in Note 15 of the accompanying Notes to Consolidated Financial Statements herein. The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash, cash equivalents and short-term investments on hand, as well as availability under the Commercial Paper Programs , the Revolving Credit Facility and, as of December 31, 2025 but not as of the date of this Annual Report, the Delayed Draw Term Loans (all as defined below). The Company believes that these sources of liquidity, along with a ccess to capital markets (which the Company accessed in 2025 and 2024 for various debt issuances), provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations. The Company’s debt instruments are defined and discussed in more detail below within this Item 7.
Cash Requirements from Known Contractual and Other Obligations
The Company’s primary ongoing cash requirements will be for operating and working capital needs, capital expenditures, product development activities, repurchases of our Common Stock, dividends, debt service, taxes due upon the repatriation of foreign earnings (which will be payable upon the repatriation of such earnings) , funding of pension obligations, funding of acquisitions, and other contractual obligations and commitments (refer to the table below for the Company’s material cash requirements from known contractual and other obligations). The Company has funded all of its recent acquisitions entirely with a combination of cash on hand and net proceeds from its debt instruments, including the Andrew and Trexon acquisitions in 2025 and the CommScope acquisition in 2026, and may fund future acquisitions all or in part with cash. Capital expenditures have historically been in the range of 3% to 4% of net sales. The Company’s debt service requirements primarily consist of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and Delayed Draw Term Loans (all as defined below). As of December 31, 2025 and 2024, the Company had no borrowings outstanding under the Revolving Credit Facility, Commercial Paper Programs and Delayed Draw Term Loans. However , the Company borrowed $1,534.1 under each of the Delayed Draw Term Loans in January 2026 to fund a portion of the consideration for the CommScope acquisition. In addition, the Company borrowed under the U.S. Commercial Paper Program during 2025 from time to time, the proceeds of which were used for general corporate purposes, including, but not limited to, partially funding the Andrew acquisition, as discussed later within this Item 7. The Company may make additional borrowings under the Revolving Credit Facility and Commercial Paper Programs from time to time in the future.
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The following table summarizes the Company’s material short- and long-term cash requirements from known obligations pursuant to certain contracts and commitments as of December 31, 2025, as well as an estimate of the timing in which such obligations and payments are expected to be satisfied.
Payment Due By Period
Contractual Obligations
Less than
More than
(dollars in millions)
Total
1 year
years
years
5 years
Debt (1)
Interest related to senior notes (2)
Operating leases (3)
Purchase obligations (4)
Accrued pension and postretirement benefit obligations (5)
Total (6)
The Company has excluded expected interest payments on the Revolving Credit Facility, Commercial Paper Program and Euro Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels during each of the years presented. The actual interest payments made related to the Company’s Revolving Credit Facility and Commercial Paper Programs in 2025, were approximately $33.7. Expected debt levels, and therefore expected interest payments, are difficult to predict, as they are significantly impacted by items such as future acquisitions, repurchases of Common Stock and dividend payments, as well as payments or additional borrowings that reduce or increase the underlying revolver balance. The table above also excludes borrowings of $1,534.1 under each Delayed Draw Term Loan that occurred subsequent to December 31, 2025 and related interest.
Interest related to the Floating Rate Senior Notes (as defined below) is included in the table above at the effective rate as of December 31, 2025.
The Company’s operating lease payments included in this table reflect the future minimum undiscounted fixed lease payments, which serve as the basis for calculating the Company’s operating lease liabilities as of December 31, 2025. The table above excludes any variable lease payments not included in the measurement of the Company’s right-of-use assets and operating lease liabilities, due to their uncertainty. Finance leases are not material to the Company individually or in the aggregate and as such have been excluded from the table above.
Purchase obligations relate primarily to open purchase orders for goods and services, including but not limited to, raw materials and components to be used in production.
This table includes estimated benefit payments expected to be made under the Company’s unfunded pension and postretirement benefit plans, as well as the anticipated minimum required contributions under the Company’s funded pension plans, the most significant of which covers certain of its U.S. employees. Over the past several years, there has been no minimum requirement for Company contributions to our defined benefit pension plans in the United States (“U.S. Pension Plans”) due to prior contributions made in excess of minimum requirements, and as a result, there was no anticipated minimum required contribution included in the table above related to the U.S. Pension Plans for 2026. The Company did not make any voluntary contributions to its U.S. Pension Plans in 2025 and 2024. It is not possible to reasonably estimate expected required contributions in the above table after 2026, since several assumptions are required to calculate minimum required contributions, such as the discount rate and expected returns on pension assets.
As of December 31, 2025, the Company has recorded net liabilities of approximately $311.7 related to unrecognized tax benefits. These liabilities have been excluded from the above table due to the high degree of uncertainty regarding the timing of potential future cash flows. It is difficult to make a reasonably reliable estimate of the amount and period in which all of these liabilities might be paid.
Repatriation of Foreign Earnings and Related Income Taxes
The Company has previously indicated an intention to repatriate most of its pre-2025 accumulated earnings and has accrued the foreign and U.S. state and local taxes, if applicable, on those earnings, as appropriate. The associated tax payments are due as the repatriations are made. The Company intends to indefinitely reinvest the remaining pre-2025 foreign earnings. As of December 31, 2025, the Company has accrued the foreign and U.S. state and local taxes associated with the foreign earnings that it intends to repatriate. The Company intends to evaluate future earnings for repatriation, and will accrue for those distributions where appropriate, and to indefinitely reinvest all other foreign earnings. In addition, the Company paid the balance of the Transition Tax (as defined in Note 6 to the accompanying
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Notes to Consolidated Financial Statements), net of applicable tax credits and deductions, during the second quarter of 2025, as permitted under the Tax Cuts and Jobs Act (the “Tax Act”).
On July 4, 2025, the United States federal government enacted the tax and spending bill H.R. 1. This legislation contains changes to previously enacted provisions of the Internal Revenue Code and provides for extensions of certain expiring tax provisions included in the Tax Act. Certain corporate tax provisions in H.R. 1 were enacted with retroactive effect to January 1, 2025. H.R. 1 did not have a material impact on our effective tax rate in 2025. The Company continues to evaluate the corporate tax provisions contained within H.R. 1, and the future impact of H.R. 1 depends on several factors, including interpretive regulatory guidance, which has not yet been released.
The following table summarizes the Company’s cash flows from operating, investing and financing activities for the years ended December 31, 2025, 2024, and 2023, as reflected in the Consolidated Statements of Cash Flow:
Year Ended December 31,
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Operating Activities
The ability to generate cash from operating activities is one of the Company’s fundamental financial strengths. Net cash provided by operating activities (“Operating Cash Flow”) was $5,374.7 in 2025, compared to $2,814.7 in 2024 and $2,528.7 in 2023. The increase in Operating Cash Flow in 2025 compared to 2024 is primarily due to the increase in net income and by a lower usage of cash related to the change in working capital, as discussed below. The increase in Operating Cash Flow in 2024 compared to 2023 is primarily due to the increase in net income, partially offset by a higher usage of cash related to the change in working capital, as discussed below.
In 2025, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $32.3, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts receivable of $964.4, inventories of $487.4 and prepaid expenses and other current assets of $150.7, partially offset by increases in accounts payable of $554.1 and accrued liabilities, including income taxes, of $1,016.1. In 2024, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $210.5, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts receivable of $586.8, inventories of $200.1 and prepaid expenses and other current assets of $106.8, partially offset by increases in accounts payable of $423.1 and accrued liabilities, including income taxes, of $260.1. In 2023, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow decreased $149.8, excluding the impact of acquisitions and foreign currency translation, primarily due to decreases in accounts receivable of $146.4 and inventories of $71.4, partially offset by a decrease in accounts payable of $34.6 and an increase in prepaid expenses and other current assets of $34.1.
The following describes the significant changes in the amounts as presented on the accompanying Consolidated Balance Sheets at December 31, 2025 compared to December 31, 2024. Accounts receivable increased $1,429.2 to $4,717.1, primarily driven by higher sales in the fourth quarter of 2025 relative to the fourth quarter of 2024, along with the impact of the five acquisitions (the “2025 Acquisitions”) that closed during 2025, and the effect of translation from exchange rate changes (“Translation”) at December 31, 2025 compared to December 31, 2024. Days sales outstanding at December 31, 2025 and 2024 were 66 days and 68 days, respectively. Inventories increased $879.2 to $3,424.9, primarily driven by the impact of the 2025 Acquisitions, along with the impact of higher sales in 2025 relative to the prior year and Translation. Inventory days at December 31, 2025 and 2024 were 77 days and 80 days, respectively. Prepaid expenses and other current assets increased $174.0 to $691.0, primarily due to increases in various prepaid expenses and other current receivables, along with the impact of the 2025 Acquisitions. Property, plant and equipment, net, increased $593.8 to $2,305.6, primarily due to purchases of $1,040.3 and the impact of the 2025 Acquisitions and Translation, partially offset by depreciation of $640.1. Goodwill increased $2,339.2 to $10,575.4, primarily driven by goodwill recognized from the 2025 Acquisitions, in particular the Andrew and Trexon acquisitions, and Translation.
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Other intangible assets, net, increased $1,016.3 to $2,241.4, primarily due to the recognition of certain intangible assets related to the 2025 Acquisitions, in particular the Andrew and Trexon acquisitions, partially offset by amortization of $192.0 associated with the Company’s current intangible assets. Other long-term assets increased $266.2 to $847.3, primarily due to an increase in operating lease right-of-use assets resulting from both new and renewed lease agreements entered into during 2025 and acquired leases resulting from acquisitions. Accounts payable increased $842.5 to $2,661.9, primarily due to increased purchasing activity related to the higher sales levels in 2025, along with the impact of the 2025 Acquisitions and Translation. Payable days at December 31, 2025 and 2024 were 60 days and 58 days, respectively. Total accrued expenses, including accrued income taxes, increased $1,341.0 to $3,203.7, primarily as a result of increases in accrued salaries, wages and employee benefits, accrued income taxes, and various other accrued expenses, along with the impact of the 2025 Acquisitions. Accrued pension and postretirement benefit obligations increased $8.4 to $138.2, primarily due to the impact of lower discount rates used to calculate our projected benefit obligation and the funded status of our defined benefit pension plans. Other long-term liabilities, including deferred tax liabilities, increased $335.3 to $1,221.4, primarily as a result of an increase in long-term lease liabilities resulting from both new and renewed lease agreements entered into during 2025, along with acquired leases resulting from acquisitions.
In addition to Operating Cash Flow, the Company also considers Free Cash Flow, a non-GAAP financial measure defined in the “Non-GAAP Financial Measures” section below, as a key metric in measuring the Company’s ability to generate cash. The following table reconciles Free Cash Flow to its most directly comparable U.S. GAAP financial measure for the years ended December 31, 2025, 2024 and 2023. The increase in Free Cash Flow in 2025 compared to 2024 was driven by the increase in Operating Cash Flow, partially offset by the increased capital expenditures levels, as described above. Free Cash Flow decreased modestly in 2024 compared to 2023, as the increase in capital expenditures was largely offset by the increase in Operating Cash Flow, as described above.
Operating Cash Flow (GAAP)
Capital expenditures (GAAP)
Proceeds from disposals of property, plant and equipment (GAAP)
Free Cash Flow (non-GAAP)
Investing Activities
Cash flows from investing activities primarily consist of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment , net, purchases (sales and maturities) of short- and long-term investments, and acquisitions.
Net cash used in investing activities was $5,082.1 in 2025, compared to $2,648.6 in 2024 and $1,393.7 in 2023. In 2025, net cash used in investing activities was primarily driven by the use of $3,818.6 to fund acquisitions, capital expenditures (net of disposals) of $981.8 and net purchases of short-term investments of $281.7. In 2024, net cash used in investing activities was primarily driven by the use of $2,156.4 to fund acquisitions and capital expenditures (net of disposals) of $657.6, partially offset by net sales and maturities of short-term investments of $163.5. In 2023, net cash used in investing activities was primarily driven by the use of $970.4 to fund acquisitions, capital expenditures (net of disposals) of $368.8, and net purchases of short-term investments of $59.4. The elevated capital expenditures in 2025 were driven by investments, primarily in support of the robust growth in our IT datacom market. We currently expect this elevated level of capital spending to continue into 2026 to support the continued growth we are experiencing related to AI applications in our IT datacom market.
Financing Activities
Cash flows from financing activities primarily consist of cash flows associated with borrowings and repayments of the Company’s credit facilities and other long-term debt, repurchases of Common Stock, proceeds from stock option exercises, dividend payments, and distributions to and purchases of noncontrolling interests.
Net cash provided by financing activities was $7,423.2 in 2025 and $1,729.9 in 2024, compared to net cash used in financing activities of $1,012.4 in 2023. In 2025, net cash provided by financing activities was primarily driven by (i) net cash proceeds from borrowings of $8,921.7, primarily related to the issuances of the 2028 Senior Notes, the 2032 Euro Notes and the November Senior Notes (each as defined below), and (ii) cash proceeds of $553.0 from the exercise of stock options, partially offset by (a) redemption of the 2.050% Senior Notes of $400.0, (b) repurchases of the
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Company’s Common Stock of $665.2, (c) dividend payments of $802.2, (d) payments of $89.1 related to debt financing costs associated with the Delayed Draw Term Loans, as well as the issuances of the 2028 Senior Notes, the 2032 Euro Notes and the November Senior Notes, (e) settlement of the treasury locks of $88.0, and (f) distributions to and purchases of noncontrolling interests of $5.8. In 2024, net cash provided by financing activities was primarily driven by (i) net cash proceeds from borrowings of $2,991.3, primarily related to the issuances of the April Senior Notes and October Senior Notes, each as defined below, and (ii) cash proceeds of $447.4 from the exercise of stock options, partially offset by (a) repurchases of the Company’s Common Stock of $689.3, (b) dividend payments of $595.1, (c) debt repayments of $364.4, primarily related to the redemption of the 3.20% Senior Notes in the second quarter of 2024, (d) distributions to and purchases of noncontrolling interests of $33.0, and (e) payments of $28.4 related to debt financing costs associated with the Company’s amended and restated revolving credit facility in March 2024 as well as the issuances of the April Senior Notes and October Senior Notes. In 2023, net cash used in financing activities was primarily driven by (i) net repayments of $632.6 related to the Company’s commercial paper programs, primarily the U.S. Commercial Paper Program, (ii) repurchases of the Company’s Common Stock of $585.1, (iii) dividend payments of $500.6, (iv) distributions to and purchases of noncontrolling interests of $24.0, (v) other debt repayments of $15.7, (vi) payments of $2.3 related to debt financing costs associated with the Company’s $350.0 aggregate principal amount of unsecured 4.750% Senior Notes due March 30, 2026 (the “2026 Senior Notes”), and (vii) payment of $1.5 associated with the deferred purchase price related to an acquisition, partially offset by (a) cash proceeds of $394.5 from the exercise of stock options and (b) net cash proceeds from borrowings of $354.9, primarily related to the issuance of the 2026 Senior Notes.
The Company has significant flexibility to meet its financial commitments. The Company uses debt financing to lower the overall cost of capital and increase return on stockholders’ equity. The Company’s debt financing includes the use of the Commercial Paper Programs, the Revolving Credit Facility, and senior notes as part of its overall cash management strategy.
On March 21, 2024, the Company entered into a third amended and restated credit agreement, which amended and restated its $2,500.0 unsecured revolving credit facility, increasing the lenders’ aggregate unsecured revolving commitments under the facility by $500.0 to $3,000.0 (the “Revolving Credit Facility”). The Revolving Credit Facility matures in March 2029 and gives the Company and certain of its subsidiaries the ability to borrow, in various currencies, at a spread that varies, based on the Company’s debt rating, over certain currency-specific benchmark rates, which benchmark rates, in the case of U.S. dollar borrowings, are either the base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”). The Revolving Credit Facility was undrawn on the date it was amended and restated. The Company may utilize the Revolving Credit Facility for general corporate purposes. As of December 31, 2025 and 2024, there were no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants. On December 31, 2025, the Company was in compliance with the financial covenants under the Revolving Credit Facility.
On August 22, 2025, the Company entered into (i) a three-year, $2,000.0 unsecured delayed draw term loan credit agreement among the Company, certain subsidiaries of the Company, a syndicate of financial institutions, and JPMorgan Chase Bank, N.A., acting as the administrative agent (the “Three-Year Delayed Draw Term Loan”), which is scheduled to mature on the three-year anniversary of the funding date, and (ii) a 364-day, $2,000.0 unsecured delayed draw term loan credit agreement among the Company, certain subsidiaries of the Company, a syndicate of financial institutions and JPMorgan Chase Bank, N.A., acting as the administrative agent (the “364-Day Delayed Draw Term Loan” and, together with the Three-Year Delayed Draw Term Loan, the “Delayed Draw Term Loans”, and individually, a “Delayed Draw Term Loan”), which is scheduled to mature on the date that is 364 days after the funding date. Each Delayed Draw Term Loan may only be drawn in a single drawing over the life of the applicable facility. Each Delayed Draw Term Loan may be repaid at any time without premium or and, once repaid, cannot be reborrowed. Interest rates under each Draw Term Loan are based on a spread over either the base rate or the adjusted term SOFR, which spread varies based on the Company’s debt rating. On November 13, 2025, the aggregate commitment amount in respect of each of the Draw Term Loans was individually reduced to $1,534.1. As of December 31, 2025, the Company had not yet drawn upon either Draw Term Loan, and as such, there were no outstanding borrowings under either Draw Term Loan. On December 31, 2025, the Company was in compliance with the financial covenants under each Draw Term Loan. In January 2026, the Company drew the full $1,534.1 available under each of the Draw Term Loans to fund a portion of the consideration for the CommScope acquisition, which on January 9, 2026, as discussed further in Note 15 of the accompanying Notes to Consolidated Financial Statements.
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The Company has a commercial paper program (the “U.S. Commercial Paper Program”) pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes” or “U.S. Commercial Paper”) in one or more private placements in the United States. On March 21, 2024, in conjunction with the increase in the capacity of the Revolving Credit Facility, the Company increased the borrowings available under its U.S. Commercial Paper Program by $500.0. As of December 31, 2025, the maximum aggregate principal amount outstanding of USCP Notes at any time is $3,000.0. The Company utilizes borrowings under the U.S. Commercial Paper Program for general corporate purposes, which, in recent years, have included fully or partially funding acquisitions, as well as repaying certain outstanding senior notes. The Company borrowed under the U.S. Commercial Paper Program throughout much of 2025 and 2024, the proceeds of which were used for general corporate purposes, including, but not limited to, partially funding the Andrew and CIT acquisitions. Before December 31, 2025 and 2024, the Company repaid all of its USCP Notes then outstanding. As of December 31, 2025 and 2024, there were no USCP Notes outstanding.
The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S. Commercial Paper Program, the “Commercial Paper Programs”), pursuant to which the Euro Issuer may issue short-term unsecured commercial paper notes (the “ECP Notes” and, together with the USCP Notes, the “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States. The ECP Notes may be issued in Euros, Sterling, U.S. dollars or other currencies. The maximum aggregate principal amount outstanding of ECP Notes at any time is $2,000.0. The Company utilizes borrowings under the Euro Commercial Paper Program for general corporate purposes, which may include, for example, fully or partially funding acquisitions. The Company did not borrow under the Euro Commercial Paper Program during 2025 or 2024. As of December 31, 2025 and 2024, there were no ECP Notes outstanding.
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Amounts available under the Commercial Paper Programs may be borrowed, repaid and re-borrowed from time to time. In conjunction with the Revolving Credit Facility, as of December 31, 2025, the authorization from the Board limits the maximum aggregate principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $3,000.0. The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Revolving Credit Facility are available to repay Commercial Paper, if necessary. The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of Commercial Paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future.
As of December 31, 2025, the Company has outstanding senior notes (the “Senior Notes”) as follows:
Principal
Interest
Amount
Rate
Maturity
March 2026
April 2027
Compounded SOFR plus 0.53
November 2027
November 2027
June 2028
November 2028
April 2029
June 2029
February 2030
November 2030
September 2031
February 2033
April 2034
January 2035
February 2036
November 2054
November 2055
May 2026 (Euro Notes)
October 2028 (Euro Notes)
June 2032 (Euro Notes)
U.S. Senior Notes
On March 3, 2025, the Company used a combination of cash on hand and borrowings under the U.S. Commercial Paper Program to repay the $400.0 aggregate principal amount of unsecured 2.050% Senior Notes due March 1, 2025 upon maturity.
On June 12, 2025, the Company issued $750.0 aggregate principal amount of unsecured 4.375% Senior Notes due June 12, 2028 (the “2028 Senior Notes”). The Company used net proceeds from the 2028 Senior Notes to repay borrowings under the U.S. Commercial Paper Program and for general corporate purposes.
On November 10, 2025, the Company issued (i) $500.0 aggregate principal amount of unsecured Floating Rate Senior Notes due November 15, 2027 (the “Floating Rate Senior Notes”), (ii) $750.0 aggregate principal amount of unsecured 3.800% Senior Notes due November 15, 2027 (the “3.800% Senior Notes”), (iii) $750.0 aggregate principal amount of unsecured 3.900% Senior Notes due November 15, 2028 (the “3.900% Senior Notes”), (iv) $1,000.0 aggregate principal amount of unsecured 4.125% Senior Notes due November 15, 2030 (the “4.125% Senior Notes”), (v) $1,250.0 aggregate principal amount of unsecured 4.400% Senior Notes due February 15, 2033 (the “4.400% Senior Notes”), (vi) $1,600.0 aggregate principal amount of unsecured 4.625% Senior Notes due February 15, 2036 (the “4.625% Senior Notes”) and (vii) $1,650.0 aggregate principal amount of unsecured 5.300% Senior Notes due November 15, 2055 (the “5.300% Senior Notes” and, together with the Floating Rate Senior Notes, the 3.800% Senior Notes, the 3.900% Senior Notes, the 4.125% Senior Notes, the 4.400% Senior Notes, and the 4.625% Senior Notes, the “November Senior Notes”).
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On January 9, 2026, the Company used the net proceeds from the November Senior Notes, together with borrowings under the Delayed Draw Term Loans and cash on hand, to fund the cash consideration for the CommScope acquisition, along with fees and expenses related thereto. As a result of this increase in debt levels compared to 2025, the Company expects interest expense, net of interest income, to increase to approximately $800.0 in 2026.
On April 1, 2024, the Company used cash on hand to repay the $350.0 aggregate principal amount of unsecured 3.20% Senior Notes due April 1, 2024 upon maturity.
On April 5, 2024, the Company issued three series of unsecured senior notes (collectively, the “April Senior Notes”): (i) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2027 (the “Original 2027 Senior Notes”), (ii) $450.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2029 (the “2029 Senior Notes”) and (iii) $600.0 aggregate principal amount of unsecured 5.250% Senior Notes due April 5, 2034 (the “2034 Senior Notes”). The Company used net proceeds from the April Senior Notes, together with a combination of cash on hand and borrowings under the U.S. Commercial Paper Program, to fund the cash consideration for the CIT acquisition in May 2024, along with the fees and expenses related thereto.
On October 31, 2024, the Company issued three series of unsecured senior notes (collectively, the “October Senior Notes”): (i) $250.0 aggregate principal amount of unsecured 5.050% Senior Notes due April 5, 2027 (the “Additional 2027 Senior Notes”), which constituted a further issuance of the Company’s Original 2027 Senior Notes issued in April 2024, thus forming a single series with, and having the same terms (other than the issue date, issue price and the first interest payment date) as, the Original 2027 Senior Notes, and thus having a total aggregate principal amount of $700.0 of unsecured 5.050% Senior Notes due April 5, 2027 outstanding (the Original 2027 Senior Notes, together with the Additional 2027 Senior Notes collectively referred to as the “2027 Senior Notes”), (ii) $750.0 aggregate principal amount of unsecured 5.000% Senior Notes due January 15, 2035 (the “2035 Senior Notes”) and (iii) $500.0 aggregate principal amount of unsecured 5.375% Senior Notes due November 15, 2054 (the “2054 Senior Notes”). On January 31, 2025, the Company used the net proceeds from the October Senior Notes, together with borrowings under the U.S. Commercial Paper Program and cash on hand, to fund the cash consideration for the Andrew acquisition, along with the fees and expenses related thereto.
All of the Company’s outstanding senior notes in the United States (the “ U.S. Senior Notes”) are unsecured and rank equally in right of payment with all of the Company’s other senior unsecured and unsubordinated indebtedness, including the Company’s guarantee of the Euro Issuer’s obligations under the Existing Euro Notes. Interest on each series of U.S. Senior Notes is payable semiannually, except for the Floating Rate Senior Notes for which interest is payable quarterly. The Company may, at its option, redeem some or all of any series of U.S. Senior Notes at any time, subject to certain terms and conditions, except that the Company may not redeem the Floating Rate Senior Notes at its option prior to their maturity.
Euro Senior Notes
On June 16, 2025, the Company issued €600.0 (approximately $685.9 at date of issuance) aggregate principal amount of unsecured 3.125% Senior Notes due June 16, 2032 (the “2032 Euro Notes”). The 2032 Euro Notes are unsecured and rank equally in right of payment with all of the Company’s other senior unsecured and unsubordinated indebtedness, including the Company’s guarantee of the Euro Issuer’s obligations under the Existing Euro Notes. Interest on the 2032 Euro Notes is payable annually on June 16 of each year, commencing on June 16, 2026. The Company may, at its option, redeem some or all of the 2032 Euro Notes at any time, subject to certain terms and conditions. The Company used net proceeds from the 2032 Euro Notes to repay borrowings under the U.S. Commercial Paper Program and for general corporate purposes.
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The Euro Issuer has two outstanding unsecured senior notes issued in Europe (the “Existing Euro Notes”, together with the 2032 Euro Notes, the “Euro Notes” and, together with the U.S. Senior Notes, the “Senior Notes”). The Euro Issuer has €500.0 (approximately $545.4 at date of issuance) aggregate principal amount of unsecured 0.750% Senior Notes due May 4, 2026 (the “2026 Euro Notes”), the net proceeds of which were used to repay amounts outstanding under the then existing revolving credit facility. In addition, the Euro Issuer also has €500.0 (approximately $574.6 at date of issuance) aggregate principal amount of unsecured 2.000% Senior Notes due October 8, 2028 (the “2028 Euro Notes”), the net proceeds of which were used to repay a portion of the outstanding amounts under our Commercial Paper Programs, with the remainder of the net proceeds being used for general corporate purposes. The Existing Euro Notes are unsecured and rank equally in right of payment with all of the Euro Issuer’s senior unsecured and unsubordinated indebtedness and are fully and unconditionally guaranteed on a senior unsecured basis by the Company. Interest on each series of Existing Euro Notes is payable annually. The Company may, at its option, redeem some or all of either series of Existing Euro Notes at any time, subject to certain terms and conditions.
The Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements. On December 31, 2025, the Company was in compliance with all requirements under its Senior Notes. Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.
On April 23, 2024, the Board authorized a new stock repurchase program under which the Company may purchase up to $2,000.0 of its Common Stock during the three-year period ending on the close of business on April 28, 2027 (the “2024 Stock Repurchase Program”). The 2024 Stock Repurchase Program became effective on April 29, 2024. During the year ended December 31, 2025, the Company repurchased 7.4 million shares of its Common Stock for $665.2 under the 2024 Stock Repurchase Program. Of the total repurchases made in 2025 under the 2024 Stock Repurchase Program, 6.0 million shares, or $512.3, have been retired by the Company, with the remainder of the repurchased shares retained in Treasury stock at the time of repurchase. From January 1, 2026 to January 31, 2026, the Company repurchased 0.3 million additional shares of its Common Stock for $44.2, and, as of February 1, 2026, the Company has remaining authorization to purchase up to $826.9 of its Common Stock under the 2024 Stock Repurchase Program. The timing and amount of any future repurchases will depend on a number of factors, such as the levels of cash generation from operations, the volume of stock options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Common Stock.
In April 2021, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of its Common Stock during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”). During the year ended December 31, 2024, the Company repurchased 4.1 million shares of its Common Stock for $225.6 under the 2021 Stock Repurchase Program. All of the repurchased shares under the 2021 Stock Repurchase Program during 2024 have been retired by the Company. As a result of these repurchases, the Company completed all repurchases authorized under the 2021 Stock Repurchase Program, and, therefore, the 2021 Stock Repurchase Program has terminated.
Contingent upon declaration by the Board, the Company pays a quarterly dividend on shares of its Common Stock. On October 24, 2023, the Board approved an increase to the Company’s quarterly dividend rate from $0.105 per share to $0.11 per share, effective with dividends declared in the fourth quarter of 2023. On July 23, 2024, the Board approved an increase to the Company’s quarterly dividend rate from $0.11 per share to $0.165 per share, effective with dividends declared in the third quarter of 2024, and on October 21, 2025, the Board approved an additional increase to the Company’s quarterly dividend rate from $0.165 per share to $0.25 per share, effective with dividends declared in the fourth quarter of 2025, contingent upon declaration by the Board. The following table summarizes the declared quarterly dividends per share during each of the three years ended December 31, 2025, 2024 and 2023:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
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The following table summarizes the dividends declared and paid during the years ended December 31, 2025, 2024 and 2023:
Dividends declared
Dividends paid (including those declared in the prior year)
Pensions
The Company and certain of its subsidiaries in the United States have defined benefit pension plans (“U.S. Pension Plans”), which cover certain U.S. employees and which represent the majority of the plan assets and benefit obligations of the aggregate defined benefit plans of the Company. The U.S. Pension Plans’ benefits are generally based on years of service and compensation and are generally noncontributory. The majority of U.S. employees are not covered by the U.S. Pension Plans and are instead covered by various defined contribution plans. The Company also has an unfunded Supplemental Employee Retirement Plan (“SERP” and, together with the U.S. Pension Plans, “U.S. Plans”), which provides for the payment of the portion of annual pension that cannot be paid from the retirement plan as a result of regulatory limitations on average compensation for purposes of the benefit computation. Certain foreign subsidiaries also have defined benefit plans covering their employees (the “Foreign Plans” and, together with the U.S. Plans, the “Plans”). The total liability for accrued pension and postretirement benefit obligations associated with the Company’s pension and postretirement plans decreased in 2025 to $87.5 from $89.2 in 2024, primarily driven by the effect of lower discount rates in 2025 on our projected obligations along with actual returns on plan assets in 2025, partially offset by interest cost. There is no current requirement for cash contributions to any of the U.S. Plans, and the Company plans to evaluate annually, based on actuarial calculations and the investment performance of the Plans’ assets, the timing and amount of cash contributions in the future, if any.
Refer to Note 9 of the Notes to Consolidated Financial Statements for further discussion of the Company’s benefit plans and other postretirement benefit plans.
Acquisitions
During 2025, the Company completed five acquisitions (the “2025 Acquisitions”), including the acquisitions of Andrew and Trexon, for approximately $3,818.6, net of cash acquired. The Andrew acquisition has been included in the Communications Solutions segment, three acquisitions including Trexon have been included in the Harsh Environment Solutions segment, and one acquisition has been included in the Interconnect and Sensor Systems segment. The 2025 Acquisitions were each funded using cash on hand, proceeds from the October Senior Notes, borrowings under the U.S. Commercial Paper Program, or a combination thereof. The 2025 Acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.
During 2024, the Company completed two acquisitions (the “2024 Acquisitions”), including the acquisition of CIT, for approximately $2,156.4, net of cash acquired. Both acquisitions have been included in the Harsh Environment Solutions segment. The 2024 Acquisitions were each funded using cash on hand, proceeds from the April Senior Notes or borrowings under the U.S. Commercial Paper Program, or a combination thereof. The 2024 Acquisitions are not material, either individually or in the aggregate, to the Company’s financial results.
Acquisition-related Expenses
In 2025, the Company incurred $181.2 ($148.8 after-tax) of acquisition-related expenses, comprised primarily of (i) the non-cash amortization related to the value associated with acquired backlog resulting from the Andrew and Trexon acquisitions and external transaction costs related to acquisitions (such acquisition-related expenses aggregating $103.4 are presented separately in the Consolidated Statements of Income) and (ii) the non-cash amortization of acquisition-related inventory step-up costs of $77.8 associated with the Andrew acquisition (such costs are recorded in Cost of sales in the Consolidated Statements of Income).
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In 2024, the Company incurred $145.6 ($119.3 after-tax) of acquisition-related expenses, comprised primarily of (i) external transaction costs associated with acquisitions and the non-cash amortization related to the value associated with acquired backlog resulting from the CIT acquisition (such acquisition-related expenses aggregating $127.4 are presented separately in the Consolidated Statements of Income) and (ii) the non-cash amortization of acquisition-related inventory step-up costs of $18.2 associated with the CIT acquisition (such costs are recorded in Cost of sales in the Consolidated Statements of Income).
Acquisition of CommScope
On January 9, 2026, pursuant to a purchase agreement announced on August 4, 2025, the Company completed the acquisition of the Connectivity and Cable Solutions Business (which we now refer to collectively as “CommScope”) from Vistance Networks, Inc. (“Vistance”, formerly known as CommScope Holding Company, Inc.) for an aggregate purchase price of approximately $10,500.0 in cash, subject to customary post-closing adjustments. The Company funded the CommScope acquisition through a combination of net proceeds from the Delayed Draw Term Loans, the November Senior Notes and cash on hand, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements.
For further discussion of the Company’s acquisitions, refer to Note 11 and Note 15 of the Notes to Consolidated Financial Statements.
Environmental Matters
Certain operations of the Company are subject to environmental laws and regulations that govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations and that the costs of continuing compliance will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Inflation and Costs
The cost of the Company’s products is influenced by the cost of a wide variety of raw materials. The Company strives to offset the impact of increases in the cost of raw materials, labor and services through price increases, productivity improvements and cost saving programs. However, in certain markets, implementing price increases can be difficult, and there is no guarantee that the Company will be successful. From time to time, the Company has encountered, and in the future may encounter, difficulties in obtaining certain raw materials or components necessary for production at reasonable costs due to supply chain constraints and logistical challenges, which may include regulatory restrictions and the imposition of additional tariffs. These difficulties may also negatively impact the pricing of materials and components sourced or used by the Company. While the Company does not currently anticipate significant, broad-based difficulties in obtaining raw materials or components necessary for production, inflationary pressures and increased commodity prices may impact the cost and availability of certain raw materials and components used by the Company and result in supply for discrete raw materials or components. For a discussion of certain risks related to inflation and costs, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced, and may in the future experience, obtaining certain raw materials and components, and the cost of certain of the Company’s raw materials and components may increase ” in Part I, Item 1A. Risk Factors herein.
Foreign Currency Exchange Rates
The Company conducts business in many foreign currencies through its worldwide operations, and as a result, is subject to foreign exchange exposure due to changes in exchange rates of the various currencies, including possible currency devaluations. Changes in exchange rates can positively or negatively affect the Company’s sales, operating margins and equity. The Company attempts to mitigate currency risk in a number of ways, such as locating factories in the same country or region in which products are sold, hedging contracts, cost reduction and pricing actions or working capital management. However, there can be no assurance that any or all such actions taken by the Company will be fully effective in successfully managing currency risk, including in the event of a significant and sudden decline in the value of any of the foreign currencies of the Company’s worldwide operations. For further discussion of foreign exchange exposures, risks and uncertainties, refer to the risk factor titled “ The Company’s results can be positively or negatively affected by changes in foreign currency exchange rates ” in Part I, Item 1A. Risk Factors herein.
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Non-GAAP Financial Measures
In addition to assessing the Company’s financial condition, results of operations, liquidity and cash flows in accordance with U.S. GAAP, management utilizes certain non-GAAP financial measures, defined below, as part of its internal reviews for purposes of monitoring, evaluating and forecasting the Company’s financial performance, communicating operating results to the Board and assessing related employee compensation measures. Management believes that these non-GAAP financial measures may be helpful to investors in assessing the Company’s overall financial performance, trends and year-over-year comparative results, in addition to the reasons noted below. Non-GAAP financial measures related to operating income, operating margin, net income attributable to Amphenol Corporation, effective tax rate and diluted EPS exclude income and expenses that are not directly related to the Company’s operating performance during the years presented. Items excluded in the presentation of such non-GAAP financial measures in any period may consist of, without limitation, acquisition-related expenses, refinancing-related costs, gains associated with bargain purchase acquisitions, the excess tax benefits related to stock-based compensation and certain other discrete tax items including, but not limited to, (i) the impact of tax audits relating to prior periods and (ii) significant changes in tax law. Non-GAAP financial measures related to net sales exclude the impact of foreign currency exchange rates and acquisitions. The non-GAAP financial information contained herein is included for supplemental purposes only and should not be considered in isolation or as a substitute for or to the related U.S. GAAP financial measures. In addition, these non-GAAP financial measures are not necessarily the same or comparable to similar measures presented by other companies as such measures may be calculated differently or may exclude different items.
The non-GAAP financial measures defined below should be read in conjunction with the Company’s financial statements presented in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2025, 2024 and 2023 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 7:
● Adjusted Diluted EPS is defined as diluted earnings per share (as reported in accordance with U.S. GAAP), excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented. Adjusted Diluted EPS is calculated as Adjusted Net Income attributable to Amphenol Corporation, as defined below, divided by the weighted average outstanding diluted shares as reported in the Consolidated Statements of Income.
● Adjusted Effective Tax Rate is defined as Provision for income taxes, as reported in the Consolidated Statements of Income, expressed as a percentage of Income before income taxes, as reported in the Consolidated Statements of Income, each excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented.
● Adjusted Net Income attributable to Amphenol Corporation is defined as Net income attributable to Amphenol Corporation, as reported in the Consolidated Statements of Income, excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented.
● Adjusted Operating Income is defined as Operating income, as reported in the Consolidated Statements of Income, excluding income and expenses that are not directly related to the Company’s operating performance during the years presented.
● Adjusted Operating Margin is defined as Adjusted Operating Income (as defined above) expressed as a percentage of Net sales (as reported in the Consolidated Statements of Income).
● Constant Currency Net Sales Growth is defined as the year-over-year percentage change in net sales growth, excluding the impact of changes in foreign currency exchange rates. The Company’s results are subject to volatility related to foreign currency translation fluctuations. As such, management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Organic Net Sales Growth (as defined below) and Constant Currency Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends.
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● Free Cash Flow is defined as (i) Net cash provided by operating activities (“Operating Cash Flow” - as reported in accordance with U.S. GAAP) less (ii) capital expenditures (as reported in accordance with U.S. GAAP), net of proceeds from disposals of property, plant and equipment (as reported in accordance with U.S. GAAP), all of which are derived from the Consolidated Statements of Cash Flow. Free Cash Flow is an important liquidity measure for the Company, as we believe it is useful for management and investors to assess our ability to generate cash, as well as to assess how much cash can be used to reinvest in the growth of the Company or to return to stockholders through either stock repurchases or dividends.
● Organic Net Sales Growth is defined as the year-over-year percentage change in net sales growth resulting from operating volume and pricing changes and excludes the impact of (i) changes in foreign currency exchange rates (described above), which is outside the control of the Company, and (ii) acquisitions, both of which are taken as a percentage of the respective prior year period(s) net sales. The acquisition impact represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year(s) and/or prior comparable year(s) presented. Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis. Management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Constant Currency Net Sales Growth (as defined above) and Organic Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends.
Recent Accounting Pronouncements
Refer to Note 1 of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements, including those adopted by the Company.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience along with other assumptions that we believe are reasonable in formulating our bases for making judgements regarding the carrying amounts of assets and liabilities that are not readily apparent elsewhere. Estimates are adjusted as new information becomes available. Actual results could differ from those estimates. The Company believes that the following accounting policies and estimates are most critical since they require significant assumptions and judgments that inherently are subject to risks and uncertainties. The significant accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements.
Revenue Recognition
The Company’s primary source of revenues consist of product sales to either end customers and their appointed contract manufacturers (including original equipment manufacturers) or to distributors. Our revenues are derived from contracts with customers, which in most cases are customer purchase orders that may be governed by master sales agreements. For each contract, the promise to transfer the control of the products, each of which is individually distinct, is considered to be the identified performance obligation. As part of the consideration promised in each contract, the Company evaluates the customer’s credit risk. Our contracts do not have any significant financing components, as payment terms are generally due net 30 to 120 days after delivery. Although products are almost always sold at fixed prices, in determining the transaction price, we evaluate whether the price is subject to refund (due to returns) or adjustment (due to volume discounts, rebates, or price concessions) to determine the net consideration we expect to be entitled to. We allocate the transaction price to each distinct product based on its relative standalone selling price. Taxes assessed by governmental authorities and collected from the customer, including but not limited to sales and use taxes and value-added taxes, are not included in the transaction price.
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The vast majority of our sales are recognized at a point-in-time under the core principle of recognizing revenue when control transfers to the customer, which generally occurs when we ship or deliver the product from our manufacturing facility to our customers, when our customer accepts and has legal title of the goods, and where the Company has a present right to payment for such goods. Based on the respective contract terms, most of our contracts’ revenues are recognized either (i) upon shipment based on free on board (“FOB”) shipping point or (ii) when the product arrives at its destination. For the years ended December 31, 2025, 2024 and 2023, less than 5% of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination. For the contracts recognized over time, we typically record revenue using the input method, based on the materials and labor costs incurred to date relative to the contract’s total estimated costs. This method reasonably depicts when and as control of the goods transfers to the customer, since it measures our progress in producing the goods which is generally commensurate with this transfer of control. Since we typically invoice our customers at the same time that we our performance obligations, contract assets and contract liabilities related to our contracts with customers recorded in the Consolidated Balance Sheets were not material as of December 31, 2025 and 2024.
Standard product warranty coverage, which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, is typically offered, while extended or separately priced warranty coverage is typically not offered. The warranty claim is generally limited to a credit equal to the purchase price or a promise to repair or replace the product for a specified period of time at no additional charge. We estimate our warranty liability based on historical experience, product history, and current trends.
Income Taxes
Deferred income taxes are provided for revenue and expenses which are recognized in different periods for income tax and financial statement reporting purposes. The Company recognizes the effects of changes in tax laws and rates on deferred income taxes in the period in which legislation is enacted. Deferred income taxes are provided on undistributed earnings of foreign subsidiaries in the period in which the Company determines it no longer intends to permanently reinvest such earnings outside the United States. As of December 31, 2025, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,750 related to certain geographies, as it is the Company’s intention to permanently reinvest such earnings outside the United States. It is impracticable to calculate the amount of taxes that would be payable if these undistributed foreign earnings were to be repatriated. In addition, the Company remains indefinitely reinvested with respect to its financial statement basis in excess of tax basis of its investments in foreign subsidiaries. It is not practicable to determine the deferred tax liability with respect to such basis differences. Deferred tax assets are regularly assessed for recoverability based on both historical and anticipated earnings levels and a valuation allowance is recorded when it is more likely than not that these amounts will not be recovered.
The tax effects of an uncertain tax position taken or expected to be taken in income tax returns are recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company includes estimated interest and penalties related to unrecognized tax benefits in the provision for income taxes.
As a result of the Tax Act, the global intangible low-taxed income (“GILTI”) provision imposed a tax on certain earnings of foreign subsidiaries. The Company elected an accounting policy to account for GILTI as a period cost. The U.S. Treasury Department has issued final interpretive guidance relating to certain provisions of the Tax Act and proposed additional guidance related to the same provisions. The Company will account for the impact of additional guidance in the period in which any new guidance is released, if appropriate.
