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Amphenol Beats Estimates

APH

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Amphenol Corporation (APH - Analyst Report), a leading producer of electronic systems, reported phenomenal fourth quarter 2012 results with record earnings and revenues. The company recorded earnings per share (excluding one-time items) of 94 cents in the reported quarter compared to 73 cents per share in the year-ago quarter. The fourth quarter 2012 earnings beat the Zacks Consensus Estimate by 4 cents. Including one-time items, earnings per share (EPS) were 86 cents in fourth quarter 2012 versus 69 cents  in the year-earlier quarter.

For full year 2012, EPS (excluding one-time items) stood at $3.47 versus $3.05 in the prior year. Reported EPS for 2012 (including one time items) stood at $3.39.

Sales came in for  $1,146.0 million in fourth quarter 2012 versus $948.7 million in the year-ago quarter and were well ahead of the Zacks Consensus Estimate of $1,108 million. For 2012, sales were $4,292.1 million compared to $3,939.8 million in 2011, driven by a robust performance across diversified markets and geographic frontiers despite a continued challenging macroeconomic environment. On a year-over-year basis, Amphenol witnessed growth in all markets with a spurt in mobile devices, wireless infrastructure, commercial aerospace and broadband markets.

Operating margin for the company improved to 19.3% in 2012 from 19.2% in the previous year.

Segment wise, Cable business represented 7% of total sales in fourth quarter 2012 and was up 40% year over year, primarily due to acquisitions. The Interconnect business, which accounted for 93% of sales, was up 19% year over year.

In terms of end markets, revenue segregation is mentioned below:

Information Technology and Data Communication Equipment: Sales from this end market accounted for 18% of the total sales in the reported quarter, up 9.0% year over year. Management is encouraged by the year-over-year growth in this segment with strength in products incorporated into latest generation servers.

Military: Sales from this end market accounted for 13% of total sales in fourth quarter 2012, up 5% year over year. The year-over-year increase in sales was driven by a new range of programs with high electronics content.

Commercial Aerospace: Aerospace market accounted for 5% of total sales in fourth quarter 2012, an increase of 23% year-over-year. The year-over-year increase was driven by an increase in demand from jetliner production and launch of new airplane platforms.

Handset/Mobile Devices: Sales from this segment increased 42% year-over-year and accounted for 24% of the total sales in fourth quarter 2012. Management expects new technologies of mobile phones and tablets to deliver strong performance in the coming quarters, thereby further diversifying the product range of the segment.  

Industrial:  Sales accounted for 13.0% of the total revenues in fourth quarter 2012, up 15.0% year-over-year. The year-over-year increase was driven by organic growth and acquisitions in energy markets.

Broadband Communications: Sales were up 36% on a year-over-year basis, accounting for 8% of the total in fourth quarter 2012.  The year-over-year increase was driven by an increase in sales of Cable and Interconnect products.

Automotive: Sales from this segment accounted for 10.0% of total sales in the quarter and jumped 19.0% year-over-year. The year-over-year increase was driven by vehicle volumes, coupled with growth related to new electronics applications.

Mobile Networks: Sales from this segment increased 24% year-over-year in the quarter and accounted for 10% of the total. Management is encouraged by the recent pick-up in demand of design-ins of high technology-components on a diverse range of new mobile computing platforms.
 
During the quarter, Amphenol purchased 2.5 million shares, thereby completing the purchase of stock under the 20 million share buyback program. As of Dec 30, 2012, cash and cash equivalents stood at $690.8 million, up from $515.1 million at previous year-end. Long term debt increased to $1,606.2 million, up from $1,376.8 million from the year-ago period.

Guidance

Assuming stable economic conditions and current currency exchange rates, Amphenol projects sales between $1.055 billion and $1.080 billion in first quarter 2013 and estimated  EPS (excluding one-time items) between 84 cents and 87 cents. For 2013, management projects revenues between $4.555 billion and $4.655 billion, up 6% – 8% from 2012. EPS for 2013 is  expected between $3.72 and $3.84, up 7% – 11% from 2012.

Amphenol currently has a Zacks Rank #2 (Buy) and a long-term Neutral recommendation. One of its competitors, Molex Incorporated carries a Zacks Rank #3 (Hold).

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