Amphenol Beats by Three Cents

Amphenol Corporation (APH - Analyst Report) posted a net income of $0.69 per share in the fourth quarter of 2011, compared to $0.79 in the third quarter of 2011 and $0.74 in the year-ago quarter.

The reported number includes a one-time charge of $9 million ($5 million after tax) or $0.03 per diluted share related to the previously announced flood damage at the company’s New York facility. The company also incurred a $2 million or $0.01 per share charge for acquisition related transaction costs in connection with an acquisition made in November.

Excluding one-time items, net income came in at $0.73 per share, beating the Zacks Consensus Estimate of $0.70.

Amphenol incurred damage at its Sidney, New York manufacturing facility as a result of severe and sudden flooding in New York State in the second week of September. The company recorded a charge of $13 million or $0.05 per share in the third quarter for property-related damage, as well as cleanup and repair efforts, net of expected insurance recoveries. In the fourth quarter, Amphenol incurred an additional charge of approximately $9 million or $.03 per share for one-time charges related to remaining cleanup and repair efforts.

Meanwhile, this facility had limited manufacturing and sales activity in September and was ramping up to full production levels during October. Consequently, this limited production reduced sales by approximately $11 million in the third quarter and approximately $7 million in the fourth quarter.

In late November, Amphenol completed the acquisition of Germany based FEP, which manufactures high technology interconnect products for the automotive market with annual sales of approximately $120 million.

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

Sales came in at $949.0 million, down 0.2% year over year and down 8.1% sequentially. The result came in at the high end of management’s guidance range of $920 billion to $940 billion. The favorable movement in foreign currency exchange rates positively impacted sales by approximately $2 million in the fourth quarter of 2011, compared with the year-earlier quarter.

Management stated that the global markets have been impacted by a higher level of uncertainty related in part to the fiscal and budgetary issues in many developed economies. This has led to increased levels of caution from customers. In particular, sales were adversely impacted by communications related markets.

Strength in mobile devices, automotive, commercial aerospace and industrial markets continue to offset declines in the defense market and in the communication equipment markets including wireless infrastructure, IT and data com and broadband.  

Product-wise, Interconnect products generated sales of $887.6 million, down 0.4% year over year. Cable products generated sales of $61.0 million, up 3.8% year over year.

Gross margin came in at 31.0%, down from 32.6% in the previous quarter. Operating margin declined to 17.3% from 20.0% in the previous quarter.

During the quarter, Amphenol purchased 3 million shares. Amphenol ended the quarter with cash and cash equivalents of $515.1 million, down from $690.2 million at the end of the previous quarter. Debt at the end of the quarter increased to $1,376.8 million, down from $1,265.0 million at the end of the previous quarter.

Guidance

Management continues to expect caution from customers which will impact demand levels. Amphenol projects sales between $960 million and $970 million.  Earnings per share (excluding one-time items) are forecasted between $0.73 and $0.76.

For fiscal 2012, management projects revenues between $4.05 billion and $4.15 billion, up 3% – 6% year over year.  EPS is expected between $3.23 and $3.34. 

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