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Third Quarter 2014 Record Results Reported by Amphenol Corporation

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Amphenol Corporation (NYSE:APH) reported today third quarter 2014 diluted earnings per share excluding one-time items of $0.58 compared to $0.49 for the comparable 2013 period. On an as reported basis, diluted earnings per share were $0.57 and $0.50 for the third quarter of 2014 and 2013, respectively. Such per share amount for the 2014 quarter includes a charge for acquisition-related transaction costs of $2.5 million ($.01 per share). The 2013 period included a net benefit of $.01 per share relating to a $3.6 million reduction in tax expense due primarily to the completion of prior year audits partially offset by a charge for acquisition-related transaction costs of $2.5 million. (All per share and share amounts included herein have been adjusted to reflect the Company’s 2-for-1 stock split effective October 9, 2014.) Sales for the third quarter of 2014 were a record $1.359 billion compared to $1.153 billion for the 2013 period. Currency translation had the effect of increasing sales by approximately $2 million in the third quarter of 2014 compared to the 2013 period.

For the nine months ended September 30, 2014, diluted earnings per share was $1.60 on an as reported basis and $1.62 excluding one-time items, compared to $1.44 on an as reported basis and $1.40 excluding one-time items for the comparable 2013 period. The 2014 period includes one-time items of $.02 per share, including the $.01 per share item noted above and a one-time charge of $2 million ($.01 per share) related to the amortization of the value associated with acquired backlog relating to an acquisition completed by the Company in the fourth quarter of 2013. The 2013 period includes one-time items totaling $.04 per share, including the $.01 per share net benefit in the third quarter described above and a one-time tax benefit of $11 million ($.03 per share) related to the January 2, 2013 reinstatement of certain federal income tax provisions with retroactive effect to 2012 which under U.S. GAAP was recorded as a one-time benefit in the first quarter of 2013 at the date of reinstatement.

Amphenol President and Chief Executive Officer, R. Adam Norwitt, stated, “We are pleased to report new records in the third quarter 2014, with sales and EPS of $1.359 billion and $0.58, both up a strong 18% over the prior year. The Company achieved double digit year-over-year growth in most of our end markets, including the automotive, commercial air, industrial, mobile networks and mobile devices markets. This growth was driven both organically and through the Company’s successful acquisition program. In addition, sales grew 3% sequentially. We continue to expand the Company’s growth opportunities through our ongoing strategy of market and geographic diversification, our strong commitment to developing enabling technologies for customers in all markets, as well as our successful acquisition program.”

“The Company’s unique entrepreneurial culture continues to drive strong operating leverage in the business, resulting in a 40 basis point sequential increase and a 20 basis point year-over-year increase in operating margins to 19.9% (excluding one-time items) in the third quarter 2014. This excellent performance is a direct result of our dynamic management team’s ability to drive margin expansion through outstanding operational execution and an unrelenting focus on all elements of cost. I am very proud of our organization as we continue to execute well.”

“The Company achieved strong operating cash flow in the quarter of $224 million. The Company continues to deploy its financial strength in a variety of ways to increase shareholder value, including the previously announced acquisition of the Casco Automotive Group for $449 million which closed at the end of the quarter, and the purchase, during the quarter, of 3.0 million shares of the Company’s stock pursuant to our stock repurchase plan.”

“In recent months there has been an increase in geopolitical and market uncertainties around the world. Considering these uncertainties as well as current currency exchange rates including relatively weaker overseas currencies, we expect fourth quarter 2014 sales in the range of $1.341 billion to $1.381 billion and diluted EPS in the range of $0.58 to $0.60 (excluding one-time items). For the year 2014, we expect to achieve sales in the range of $5.260 billion to $5.300 billion, an increase of 14% to 15% over 2013 and diluted EPS of $2.20 to $2.22 (excluding one-time items), an increase of 14% to 15% over 2013. This compares to prior full year 2014 guidance for sales and diluted EPS of $5.210 billion to $5.270 billion and $2.17 to $2.20 (excluding one-time items), respectively. Notwithstanding the many uncertainties around the world, we believe we can perform well in the dynamic electronics marketplace due to our leading technology, increasing positions with our customers in diverse markets, worldwide presence, lean cost structure, and agile, experienced and entrepreneurial management team.”

“The electronics revolution continues to accelerate, with new applications and higher performance requirements driving increased demand for our high technology products across all of our end markets. This creates a significant, long-term growth opportunity for Amphenol. Our ongoing actions to enhance our competitive advantages and build sustained financial strength, as well as our initiatives to broaden and diversify our high technology product offering, have created a solid base for future performance. I am confident in the ability of our outstanding management team to dynamically adjust to the constantly changing market environment, to continue to generate strong profitability and to further capitalize on the many opportunities to expand our market position.”

The Company will host a conference call to discuss its third quarter results at 1:00 PM (EDT) October 22, 2014. The toll free dial-in number to participate in this call is 888-395-9624; International dial-in number is 517-623-4547; Passcode: REARDON. There will be a replay available until 10:59 P.M. (EST) on Saturday, November 22, 2014. The replay numbers are toll free 888-395-9153; International toll number is 203-369-0496; Passcode: 7183.

A live broadcast as well as a replay will also be available on the Internet at http://www.amphenol.com/investors/webcasts.php.

Amphenol Corporation is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. Amphenol has a diversified presence as a leader in high growth areas of the interconnect market including: Automotive, Broadband Communications, Commercial Aerospace, Industrial, Information Technology and Data Communications, Military, Mobile Devices and Mobile Networks.

Statements in this press release which are other than historical facts are intended to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. While the Company believes such statements are reasonable, the actual results and effects could differ materially from those currently anticipated. Please refer to Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2013, for some factors that could cause the actual results to differ from estimates. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise.

AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 (1) 2014 2013 (1)
Net sales $ 1,358,742 $ 1,153,062 $ 3,918,988 $ 3,368,934
Cost of sales 927,087 789,214 2,681,710 2,307,406
Gross profit 431,655 363,848 1,237,278 1,061,528
Acquisition-related expenses 2,547 2,537 4,567 2,537
Selling, general and administrative expense 161,287 136,828 476,945 403,538
Operating income 267,821 224,483 755,766 655,453
Interest expense (21,089 ) (16,048 ) (60,241 ) (47,126 )
Other income, net 4,746 3,625 13,104 9,443
Income before income taxes 251,478 212,060 708,629 617,770
Provision for income taxes (67,318 ) (50,671 ) (188,250 ) (147,900 )
Net income 184,160 161,389 520,379 469,870
Less: Net income attributable to noncontrolling interests (1,953 ) (591 ) (4,757 ) (2,077 )
Net income attributable to Amphenol Corporation $ 182,207 $ 160,798 $ 515,622 $ 467,793
Net income per common share – Basic $ 0.58 $ 0.51 $ 1.64 $ 1.47
Weighted average common shares outstanding – Basic 313,284,242 317,331,040 314,183,699 318,731,280
Net income per common share – Diluted (2)(3) $ 0.57 $ 0.50 $ 1.60 $ 1.44
Weighted average common shares outstanding – Diluted 320,636,405 323,585,572 321,518,036 324,954,068
Dividends declared per common share $ 0.125 $ 0.100 $ 0.325 $ 0.205
Note 1 Prior period results have been restated to reflect a two-for-one stock split which was effective in October 2014.
Note 2 Earnings per share in the three months ended September 30, 2014 included acquisition-related expenses of $2.5 million ($2.5 million after-tax) relating to 2014 acquisitions. Earnings per share in the nine months ended September 30, 2014 also included the amortization of the value associated with acquired backlog relating to an acquisition completed by the Company in the fourth quarter of 2013 of $2.0 million ($1.3 million after-tax). Excluding these effects, diluted earnings per share was $0.58 for the three months ended September 30, 2014 and $1.62 for the nine months ended September 30, 2014.
Note 3

Earnings per share in the three months and nine months ended September 30, 2013 included acquisition-related expenses of $2.5 million ($2.1 million after-tax) relating to 2013 acquisitions and a $3.6 million income tax benefit due primarily to the favorable completion of prior year audits. Earnings per share in the nine months ended September 30, 2013 also included an income tax benefit of $11.3 million related to the January 2, 2013 reinstatement of certain federal income tax provisions with retroactive effect to 2012. Under U.S. GAAP, the related benefit of $11.3 million relating to the 2012 tax year was recorded as a benefit in the first quarter of 2013 at the date of reinstatement. Excluding these effects, diluted earnings per share was $0.49 for the three months ended September 30, 2013 and $1.40 for the nine months ended September 30, 2013.

AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
September 30, December 31,
2014 2013 (1)
ASSETS
Current Assets:
Cash and cash equivalents $ 872,999 $ 886,838
Short-term investments 371,618 305,324
Total cash, cash equivalents and short-term investments 1,244,617 1,192,162
Accounts receivable, less allowance
for doubtful accounts of $16,567
and $12,010, respectively 1,092,424 1,001,012
Inventories 848,072 792,644
Other current assets 187,459 171,749
Total current assets 3,372,572 3,157,567
Land and depreciable assets, less
accumulated depreciation of
$850,748 and $803,954, respectively 585,353 532,425
Goodwill and other long term assets 2,870,844 2,478,036
$ 6,828,769 $ 6,168,028
LIABILITIES & EQUITY
Current Liabilities:
Accounts payable $ 599,754 $ 549,942
Accrued salaries, wages and employee benefits 109,953 104,859
Accrued income taxes 88,451 96,388
Other accrued expenses 156,436 157,252
Short-term debt 600,803 701,437
Total current liabilities 1,555,397 1,609,878
Long-term debt 2,023,178 1,431,437
Accrued pension and post employment
benefit obligations 175,589 180,021
Other long-term liabilities 76,945 66,620
Equity:
Common stock 312 316
Additional paid-in capital 635,661 489,768
Retained earnings 2,437,281 2,424,376
Accumulated other comprehensive loss (97,094 ) (54,951 )
Total shareholders’ equity attributable to Amphenol Corporation 2,976,160 2,859,509
Noncontrolling interests 21,500 20,563
Total equity 2,997,660 2,880,072
$ 6,828,769 $ 6,168,028
Note 1 Prior period results have been restated to reflect a two-for-one stock split which was effective in October 2014.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in thousands)
Nine months ended
September 30,
2014 2013
Cash flow from operating activities:
Net income $ 520,379 $ 469,870
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization 117,977 101,531
Stock-based compensation expense 29,382 26,584
Excess tax benefits from stock-based compensation payment arrangements (29,569 ) (18,853 )
Net change in components of working capital (24,276 ) (24,249 )
Net change in other long-term assets and liabilities (6,458 ) 2,841
Net cash provided by operating activities 607,435 557,724
Cash flow from investing activities:
Additions to property, plant and equipment (162,657 ) (105,740 )
Proceeds from disposals of fixed assets 2,222 2,084
Purchases of short-term investments (478,846 ) (538,152 )
Sales and maturities of short-term investments 410,372 395,590
Acquisitions, net of cash acquired (468,009 ) (44,036 )
Net cash used in investing activities (696,918 ) (290,254 )
Cash flow from financing activities:
Proceeds from issuance of senior notes 1,498,133
Borrowings under credit facilities 563,500 490,800
Repayments under credit facilities (1,570,695 ) (327,043 )
Payment of fees and expenses related to debt financing (10,738 ) (2,710 )
Proceeds from exercise of stock options 88,782 79,587
Excess tax benefits from stock-based compensation payment arrangements 29,569 18,853
Payments to shareholders of noncontrolling interests (3,620 ) (4,371 )
Purchase and retirement of treasury stock (400,801 ) (296,975 )
Dividend payments (101,924 ) (33,472 )
Net cash provided by (used in) financing activities 92,206 (75,331 )
Effect of exchange rate changes on cash and cash equivalents (16,562 ) 6,377
Net change in cash and cash
equivalents (13,839 ) 198,516
Cash and cash equivalents
balance, beginning of period 886,838 690,850
Cash and cash equivalents
balance, end of period $ 872,999 $ 889,366
AMPHENOL CORPORATION
SEGMENT INFORMATION
(dollars in thousands)
(Unaudited)
Three months ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Trade Sales:
Interconnect Products $ 1,268,639 $ 1,063,179 $ 3,650,075 $ 3,104,856
Cable Products 90,103 89,883 268,913 264,078
Consolidated $ 1,358,742 $ 1,153,062 $ 3,918,988 $ 3,368,934
Operating income:
Interconnect Products $ 279,795 $ 233,435 $ 786,820 $ 676,818
Cable Products 11,290 12,389 33,562 36,432
Stock-based compensation expense (10,133 ) (9,413 ) (29,382 ) (26,584 )
Other operating expenses (10,584 ) (9,391 ) (30,667 ) (28,676 )
Operating income $ 270,368 $ 227,020 $ 760,333 $ 657,990
Acquisition-related expenses (2,547 ) (2,537 ) (4,567 ) (2,537 )
Consolidated $ 267,821 $ 224,483 $ 755,766 $ 655,453
ROS%:
Interconnect Products 22.1 % 22.0 % 21.6 % 21.8 %
Cable Products 12.5 % 13.8 % 12.5 % 13.8 %
Stock-based compensation expense -0.7 % -0.8 % -0.7 % -0.8 %
Other operating expenses -0.8 % -0.8 % -0.8 % -0.9 %
ROS, excluding one-time items 19.9 % 19.7 % 19.4 % 19.5 %
Acquisition-related expenses -0.2 % -0.2 % -0.1 % 0.0 %
Consolidated 19.7 % 19.5 % 19.3 % 19.5 %

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