Amphenol Beats Expectation

Amphenol Corporation (APH - Analyst Report) posted a net income of $0.79 per share in the third quarter of 2011, compared to $0.85 in the second quarter of 2011 and $0.78 in the year-ago quarter.

Excluding one-time items, net income came in at $0.81 per share, beating the Zacks Consensus Estimate of $0.78. Amphenol incurred a $0.05 per share one-time charge related to the flood damage at the company’s New York facility and was favorably impacted by a $0.03 per share impact of international tax positions.

Last month, Amphenol incurred damage at its Sidney, New York manufacturing facility due to severe and sudden flooding in New York State during the period September 7 through September 9, 2011. Amphenol recorded a charge of $13 million or $0.05 per share for property-related damage, as well as cleanup and repair efforts, net of expected insurance recoveries.

Amphenol expects to record an additional charge of approximately $7 million or $0.03 per share as one-time expenses for the remaining cleanup and repair efforts. In addition, the Sidney facility had limited manufacturing and sales activity in September and is ramping up to full production levels during October. This has reduced sales by approximately $11 million in the third quarter and is also expected to reduce sales by approximately $7 million in the fourth quarter.

Based in Connecticut, Amphenol designs, manufactures and markets electronic and fiber optic connectors, cable and interconnect systems.

Sales came in at $1,033.0 million, up 9.0% year over year and 1.5% sequentially. The result beat management’s guidance range of $1.0 billion to $1.015 billion. The favorable movement in foreign currency exchange rates positively impacted sales by approximately $23 million in the third quarter of 2011, compared with the year-earlier quarter.

Product-wise, Interconnect products generated sales of $957.2 million, up 8.6% year over year. Cable products generated sales of $75.6 million, up 12.6% year over year.

The year-over-year revenue growth was driven primarily by strength in Mobile Devices and Automotive markets. Demand in the Mobile Devices market was particularly strong.

Gross margin came in at 31.3%, down from 32.0% in the previous quarter. Operating margin declined to 18.0% from 21.1% in the previous quarter.

Amphenol ended the quarter with cash and cash equivalents of $690.2 million, down from $611.2 million at the end of the previous quarter. Debt at the end of the quarter increased to $1,265.0 million, up from $1,157.6 million at the end of the previous quarter.

Guidance

Management stated that global markets have been impacted by a higher level of uncertainty surrounding fiscal and budgetary issues in most developed economies. As a result, Amphenol continues to see increased levels of caution from many of its customers, which have impacted demand in most markets. Additionally, strength in the Mobile Devices market is not expected to continue in the fourth quarter.

Consequently, Amphenol projects sales between $920 million and $940 million.  Earnings per share (excluding one time items) are forecasted between $0.69 and $0.70.

For fiscal 2011, management now projects revenues between $3.912 billion and $3.932 billion, compared to the previous range of $3.975 billion to $4.005 billion.  EPS is expected between $3.01 and $3.03, compared to the previous estimate of $3.07 – $3.11.

Read the full analyst report on APH