Amphenol Q4 Profit Declines; Guides Q1 - Update

Monday, Jan 25, 2010

Fiber optic connectors and interconnect systems maker Amphenol Corp. has reported a lower profit for the fourth quarter, as higher expenses offset a marginal increase in sales. Nevertheless, both earnings and revenues for the quarter came in ahead of analysts' expectations. Looking ahead, the company also provided its forecast for the first quarter, expected to come in ahead of current Street estimates.

The Wallingford, Connecticut-based electronic and fiber optic connector, cable and interconnect systems maker said its fourth-quarter net income attributable to Amphenol decreased to $87.64 million or $0.50 per share from $98.73 million or $0.56 per share a year ago.

Results for the fourth quarter 2009 included a one-time charge of $0.02 per share related to the termination of certain interest rate swap agreements as part of the refinancing associated with the company's $600 million senior note issuance in November. Fourth quarter 2008 results included the benefit of $0.03 per share related to the cumulative reduction in the company's effective tax rate from 29% to 28%.

Excluding items, adjusted earnings for the fourth quarter decreased to $0.52 per share from $0.53 per share in the fourth quarter of 2008.

On average, 12 analysts polled by Thomson Reuters estimated earnings of $0.49 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Revenues for the fourth quarter rose to $758.3 million from $755.3 million in the year-ago quarter. Currency translation increased sales by 2% or $17.7 million during the fourth quarter of 2009. Analysts expected the company to report revenues of $736.38 million for the quarter.

In the preceding third quarter, Amphenol reported a net income of $80.92 million or $0.47 per share, compared to $112.96 million or $0.63 per share in the prior-year quarter. Third-quarter sales declined 17% to $716.57 million from $863.66 million in the year-ago quarter.

In the quarter under review, segment wise, revenue from interconnect products increased to $695.13 million from $692.66 million in the fourth quarter whereas revenue from cable products edged up to $63.17 million from $62.63 million.

Gross profit for the fourth quarter was $241.63 million, compared to $240.41 million in the comparable quarter of 2008. Amphenol's operating income for the fourth quarter declined to $138.46 million from $142.40 million, as selling, general, and administrative expense climbed to $103.17 million from $98.01 million.

Consolidated return on sales for the fourth quarter slipped to 18.3 % from 18.9 % in the similar quarter of 2008. Return on sales for interconnect products decreased to 20.6 % from 21.4 % in the fourth quarter of 2008. However, return on sales for cable products improved to 15.5 % from 11.2 % in the corresponding quarter last year.

For full year 2009, net income attributable to Amphenol Corporation declined to $317.83 million or $1.83 per share from $419.15 million or $2.34 per share in 2008. On a non-GAAP basis, earnings per share dipped to $1.85 from $2.34 in 2008. Revenue for the period decreased to $2.82 billion from $3.24 billion in the year-earlier period. Currency translation had the effect of decreasing sales by $38.2 million for the full year 2009 period when compared to 2008.

Analysts expected earnings of $1.81 per share for the year, on revenues of $2.80 billion.

As of December 31, 2009, the company had cash and cash equivalents of $384.61 million, compared to $214.99 million on December 31, 2008.

Looking forward, Adam Norwitt, chief executive officer of Amphenol said, "While overall economic conditions remain less than certain, we believe we have seen both an improvement in demand levels as well as a stabilization of demand patterns in most markets. As such, in 2010, we expect to see a return to more traditional seasonality."

For the first quarter, the company said it expects to report earnings in the range of $0.49 to $0.51 per share, which compares to the current Street consensus estimate of $0.48 per share.

The company said it anticipates revenues based on constant currency exchange rates to be in the range of $735 million to $750 million for the first quarter.

Analysts, on a consensus, currently expect Amphenol to report earnings of $0.48 per share on revenues of $724.30 million for the first quarter.

APH is currently trading at $44, down $0.10 or 0.23%, on a volume of 1.54 million shares on the New York Stock Exchange.

Source: Trading Markets