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Amphenol (APH) Q3 Earnings Beat Estimates, Revenues Down Y/Y

Zacks Equity Research

Amphenol APH reported third-quarter 2019 adjusted earnings of 95 cents per share that beat the Zacks Consensus Estimate by eight cents but declined 4% from the year-ago quarter’s figure.

Net sales decreased 1.3% year over year to $2.10 billion, which was slightly better than the consensus mark of $1.99 billion. Unfavorable foreign exchange impacted sales by $24 million.

Quarter Details

The year-over-year decrease in revenues was primarily due to weakness in industrial, automotive and communications end markets.

Interconnect Products and Assemblies (95.2% of net sales) sales decreased 0.9% from the year-ago quarter to $2 billion. Moreover, Cable Products and Solutions sales were $99.8 million, down 9% year over year.

Gross margin contracted 80 basis points (bps) on a year-over-year basis to 31.5%.

Amphenol Corporation Price, Consensus and EPS Surprise

 

Amphenol Corporation Price, Consensus and EPS Surprise

Amphenol Corporation price-consensus-eps-surprise-chart | Amphenol Corporation Quote

Selling, general and administrative expenses (SG&A) as a percentage of revenues increased 40 bps to 11.8%.

Consolidated operating margin contracted 120 bps on a year-over-year basis to 19.7%.

Segment-wise, Interconnect Products and Assemblies operating margin shrank 100 bps to 21.7%, while Cable Products and Solutions operating margin contracted 290 bps to 10.2%.

Acquisitions

During the quarter, Amphenol bought China-based XGiga Communication Technology and U.K.-based Cablescan.

XGiga designs and manufactures active fiber optic interconnect components used primarily in communications infrastructure markets.

Cablescan designs and manufactures high-technology interconnect assemblies for military and commercial aerospace markets.

Balance Sheet and Cash Flow

As of Sep 30, 2019, Amphenol had cash and cash equivalents worth $986.7 million, lower than $997 million as of Jun 30, 2019.

Cash flow from operations was $412 million compared with $322 million in the previous quarter.

During the quarter, the company repurchased 1.7 million shares for $150 million.

Guidance

For the fourth quarter of 2019, Amphenol projects sales between $1.960 billion and $2 billion.

Adjusted earnings are expected between 89 cents and 91 cents per share.

For 2019, Amphenol expects sales between $8.035 billion and $8.075 billion, up from the previous guidance of $7.920-$8 billion. The latest guidance indicates a year-over-year sales decline of 2%.

Moreover, the company now expects adjusted earnings of $3.65-$3.67 per share, up from the previous guidance of $3.56-$3.60. The latest guidance indicates a decrease of 3% year over year.

Zacks Rank & Stocks to Consider

Currently, Amphenol has a Zacks Rank #3 (Hold).

Akamai Technologies AKAM, Alteryx AYX and Cirrus Logic CRUS are some better-ranked stocks in the broader computer and technology sector. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Akamai, Cirrus Logic and Alteryx are set to report quarterly results on Oct 28, 30 and 31, respectively.

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