R. Adam Norwitt
President and Chief Executive Officer at Amphenol
Well, Craig, thank you very much, and allow me to extend my welcome to all of you on the phone here today, and I hope you all -- you're all enjoying a lovely spring so far. As Craig mentioned, I'm going to highlight some of our achievements here in the first quarter. I'll then discuss our trends and progress across our served markets and then make some comments on our outlook for the second quarter, and then, of course, we'll have time for some questions at the end.
With respect to the first quarter, our results were stronger than expected, exceeding the high end of guidance in sales and adjusted diluted earnings per share. Our sales grew from prior year by 1% in U.S. dollars and 3% in local currency, reaching $2.974 billion. On an organic basis, our sales increased by 1%, with growth in commercial air, broadband, military, automotive and industrial markets, largely offset by declines in the IT datacom, mobile networks and mobile devices markets. The company booked just under $2.9 billion in orders in the quarter, representing a book-to-bill of 0.97 to 1.
Our operating margins -- adjusted operating margins in the quarter reached 20.1% and that was a 10 basis point increase from last year's levels. As Craig just mentioned, we achieved still very robust level of profitability despite the ongoing cost challenges around the world, as well as declining volumes in many of our communications markets, and this is just an excellent reflection of the strength of our company's execution in these very dynamic times.
Adjusted diluted EPS grew 3% from prior year to $0.69, and we generated strong operating cash flow of $532 million and $436 million, respectively, in the quarter, all clear demonstrations of the high quality of Amphenol's earnings.
I'm just extremely proud of our global team of Amphenolians around the world. The company's results this quarter once again reflect the discipline and agility of our uniquely entrepreneurial organization, as we continue to perform well in a very dynamic and challenging environment.
Now, turning to our progress across our various served markets, I would just comment that we remain very pleased that our end market exposure is still highly diversified, balanced, and broad. This diversification continues to create great value for Amphenol, because it enables us to participate across all areas of the worldwide electronics industry, while not being disproportionately exposed to the risks associated with any given market or application.
So, with that said, the military market represented 11% of our sales in the quarter, and sales in this market grew from prior year by a strong 15% in U.S. dollars and 16% organically, and this was really driven by broad-based growth across most segments within the defense market. Sequentially, our sales increased by 2%, which was in line with our expectations coming into the first quarter, and as we look into the second quarter, we expect sales to increase modestly from these first quarter levels.
We remain very encouraged by the strength of the company's position in the defense market, where we continue to offer the industry's broadest range of high-technology interconnect products. As the geopolitical environment has become certainly more dynamic, nations around the world are expanding their investments in next-generation defense technologies, thereby increasing the long-term demand potential. We look forward to supporting this increased demand with our wide array of interconnect and sensor products, together with our expanded capacity resulting from the investments that we've made in recent years.
The commercial aerospace market represented 4% of our sales in the quarter, and sales increased by a strong 42% from prior year and 44% organically, as we benefited from the continued recovery in global aircraft production, and while aircraft production may not yet be back to the levels that it was before the pandemic, we are very pleased that after several very challenging years in this market, our team has driven our sales essentially back to pre-crisis level, a really great achievement.
Sequentially, our sales grew by a much better than expected 15% from the fourth quarter, and as we look into the second quarter, we expect sales to remain at these first quarter levels.
I'm just so grateful to our team, who works in the commercial air market. With the ongoing recovery in travel and thus demand for jet liners, our efforts to strengthen our breadth of high-technology interconnect products, while diversifying our market position into next-generation aircraft, are paying real dividends, and we look forward to realizing the benefits of these initiatives here in 2023 and beyond.
The industrial market represented 28% of our quarter -- of our sales in the quarter, and our sales in this market grew from prior year by 11% in U.S. dollars, 14% in local currency, and 5% organically. This growth was driven in particular by sales into traditional and alternative energy generation, heavy equipment, rail mass transit, factory automation, and medical applications, together with contributions from our acquisition program.
On a sequential basis, sales were up 2% from the fourth quarter, which was a bit better than our expectations, and as we look into the second quarter, we expect sales in the industrial market to remain at similar levels as we saw here in the first quarter.
Our outstanding global team working across the industrial market continues to find new opportunities for growth across the many distinct segments of this exciting and truly diverse market. I remain confident that our long-term strategy to expand our high-technology interconnect, antenna and sensor offering, both organically and through complementary acquisitions, has positioned us to capitalize on the many revolutions that are happening around the industrial electronics market. We look forward to realizing the benefits of this strategy for many years to come.
The automotive market represented 22% of our sales in the quarter, and sales in the first quarter grew 9% in U.S. dollars and 14% organically, with our growth supported once again by strength of our sales into electrified vehicle applications, together with other products sold into a wide array of new electronic systems in cars. While sales in Asia were slightly down from prior year, we realized strong growth in North America and Europe in the automotive market.
Sequentially, our sales declined by 5% from the fourth quarter, which was a bit better than our expectations coming into the quarter, and that's just reflected strong execution by our team in reacting to opportunities with customer demand. For the second quarter, we expect a modest sequential increase in sales from these levels.
And I just have to say that I remain truly impressed by our team working in the automotive market. They continue to grow our global position by remaining focused on driving new design wins with customers who are implementing a wide array of new technologies into their vehicles. In particular, our long-term efforts of expanding our now comprehensive range of next-generation interconnect products that are incorporated into electrified vehicles has enabled us to expand our position with a wide range of customers, all of whom are pursuing carbon-neutral driving solutions, and that creates further potential for the business.
The mobile devices market represented 9% of our sales in the quarter, and sales declined by 15% from prior year as growth in smartphones was more than offset by declining sales into laptops, tablets, and wearables. Sequentially, our sales declined by a slightly better than expected 31% from the fourth quarter, and as we look into the second quarter, we do expect a further mid-teens sales decline from these first quarter levels.
There is no question that the mobile devices market remains one of our most volatile. Nevertheless, our outstanding and agile team has adjusted their resources in real time with the changing levels of demand and stand poised, as always, to capture any opportunities for incremental sales that may arise in 2023 and beyond. Our leading array of antennas, interconnect products, and precision mechanisms continues to enable a broad range of next-generation mobile devices, which positions us well for the long term.
The mobile networks market represented 4% of our sales in the quarter. Sales declined from prior year by 19% in U.S. dollars and 17% organically, as operators and equipment manufacturers reduced their demand after several quarters of stronger consumption. Sequentially, our sales in the first quarter were down by 11% from the fourth quarter, which was a bit more than we had expected coming into the quarter, and now, as we look into the second quarter, we do expect a further low-double digit sequential decline in sales as operators further moderate their spending.
Our team continues to work aggressively to realize the benefits of our efforts to expand our position in next-generation 5G equipment, as well as the networks being constructed around the world, and while there is currently seemingly a pause in the investment cycle, when customers once again drive renewed construction of these advanced systems, we look forward to benefiting from the increased potential that comes from our unique position with both equipment manufacturers and mobile service providers.
The information technology and data communications market represented 17% of sales in the quarter, and sales did decline by 21% in U.S. dollars and organically, as both service providers and the equipment manufacturers moderated their demand in light of still significant levels of inventory across the market.
On a sequential basis, sales declined 17% from the fourth quarter, which was a touch better than our expectation of 20% down coming into the quarter, and as we look towards the second quarter, we expect sales to remain roughly at these first quarter levels.
Regardless of this current correction in demand, largely due to inventory, we remain encouraged by the company's outstanding position in the global IT datacom market. Our team has just done an outstanding job developing leading high-speed, power, and fiber optic interconnect products that are enabling our OEM and web service provider customers to continue to drive their equipment and networks to higher levels of performance.
With exciting new applications, including in particular alternative intelligence or AI, together with the continued growth in overall data traffic, we're confident that we'll be able to realize the benefits of our leading position in this important market for many years to come.
And finally, the broadband communications market represented 5% of our sales in the quarter. Sales grew by a very strong 17% from prior year and 18% organically, as we experienced a significant increase in demand from cable operators for a wide range of our products. This growth was driven by increased network build-outs, as well as our customers preparing for new government-supported spending on expanded broadband coverage, particularly here in North America.
On a sequential basis, sales declined by 15%, slightly worse than our expectations coming into the quarter. As we look into the second quarter, we anticipate a mid-single digit sequential moderation of sales from these first quarter levels, as broadband operators temper their procurement levels. Nevertheless, we remain encouraged by the company's strong and expanded position in the broadband market, and we look forward to continuing to support our service provider customers around the world, all of whom are working to increase their network coverage and bandwidth to support the proliferation of high-speed data applications to homes and businesses.
Now, turning to our outlook, the current economic environment remains, for sure, dynamic and highly uncertain. In addition, we do expect reduced demand to continue in the second quarter across the communications related markets. Assuming market conditions do not meaningfully worsen and also assuming constant exchange rates, for the second quarter, we expect sales in the range of $2.890 billion to $2.950 billion and adjusted diluted earnings per share in the range of $0.66 to $0.68. This would represent a year-over-year sales decline of 6% to 8% and adjusted diluted EPS decline of 9% to 12%, again, compared to the second quarter of prior year.
Nevertheless, I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current environment and to continue to grow our market position, while driving sustainable and strong profitability over the long term. Finally, I would be remiss if I didn't take this opportunity to offer my true gratitude to our entire global team around the world for their outstanding efforts here in the first quarter.
And operator, with that, we'd be very happy to take any question.
