Amphenol Corp. Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Amphenol Corporation (NYSE:APH) reported its results for the third quarter. Amphenol designs and produces electronic and fiber optic connectors, interconnect systems, and coaxial and flat-ribbon cable.

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Amphenol Earnings Cheat Sheet for the Third Quarter

Results: Net income for the diversified electronics company fell to $134.6 million (79 cents per share) vs. $137.3 million (78 cents per share) a year earlier. This is a decline of 1.9% from the year earlier quarter.

Revenue: Rose 8.9% to $1.03 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: APH reported adjusted net income of 81 cents per share. By that measure, the company beat the mean estimate of 78 cents per share. It beat the average revenue estimate of $1.01 billion.

Quoting Management: Amphenol President and Chief Executive Officer R. Adam Norwitt stated “The third quarter results established new records of performance for Amphenol with sales of $1.033 billion and EPS of $.81 (excluding one-time items). Sales growth of 9% over last year was driven primarily by strength in our Mobile Devices and Automotive markets. Demand in the Mobile Devices market was particularly strong, and we believe included some pulling forward by customers of deliveries previously planned for the fourth quarter.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 13.9% from the year earlier, while the figure increased 30.1% in the first quarter, 49.6% in the fourth quarter of the last fiscal year and 69.6% in the third quarter of the last fiscal year.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the second quarter, by one cent in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Gross margin shrank 1.3 percentage points to 31.3%. The contraction appeared to be driven by increased costs, which rose 11% from the year earlier quarter while revenue rose 8.9%.

Revenue has risen the past four quarters. Revenue increased 15% to $1.02 billion in the second quarter. The figure rose 22% in the first quarter from the year earlier and climbed 25.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 78 cents per share, down from 82 cents ninety days ago. At $3.07 per share, the average estimate for the fiscal year has fallen from $3.09 ninety days ago.

Competitors to Watch: Molex Incorporated (NASDAQ:MOLX), RF Industries, Ltd. (NASDAQ:RFIL), TE Connectivity Ltd. (NYSE:TEL), Thomas & Betts Corporation (NYSE:TNB), Methode Electronics Inc. (NYSE:MEI), Optical Cable Corporation (NASDAQ:OCCF), Spectrum Control, Inc. (NASDAQ:SPEC), CommScope, Inc. (NYSE:CTV), AVX Corporation (NYSE:AVX), and Belden Inc. (NYSE:BDC).

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(Source: Xignite Financials)