Amphenol (APH) Tops Q4 EPS by 7c, Revenues Beat; Offers 1Q19 & FY19 EPS/Revenue Guidance Below Consensus

Amphenol (NYSE: APH) reported Q4 EPS of $1.05, $0.07 better than the analyst estimate of $0.98. Revenue for the quarter came in at $2.23 billion versus the consensus estimate of $2.1 billion.

Amphenol President and Chief Executive Officer, R. Adam Norwitt, stated, “We are pleased to have achieved new records in sales, Adjusted Operating Margin and Adjusted Diluted EPS for the full year 2018. These record results were supported by a strong fourth quarter 2018, with sales well above the high end of our guidance due primarily to incremental strength in sales of products into the mobile devices market. Sales in the fourth quarter 2018 increased 14% from prior year, reflecting strong organic growth across most of the Company’s diversified end markets, including mobile devices, military, IT and datacom, mobile networks, commercial air and broadband. For the full year 2018, sales grew by a strong 17% in U.S. dollars, with superior organic growth in nearly every market we serve.”

“We are also very proud of the Company’s record levels of profitability in the fourth quarter and full year 2018. Compared to 2017, Adjusted Diluted EPS grew 22% and 21% for the quarter and full year, respectively, and we achieved record adjusted operating margins of 21.0% and 20.7% for those same periods. Operating cash flow in the quarter and full year 2018 was a strong $378 million and $1.113 billion, respectively. The Company’s full year operating cash flow was particularly strong considering the $81 million payment made in the first quarter 2018 to fully fund our U.S. defined benefit pension plans, as well as the Company’s higher than normal tax-related payments during 2018 resulting from the Tax Act. Our strong operating cash flow generation is a clear confirmation of the quality of the Company’s earnings.”

“The Company continues to pursue a balanced yet flexible approach to deploying our financial strength in order to increase shareholder value. Consistent with this strategy, in January 2019, the Company completed the previously announced acquisition of SSI Controls Technologies (“SSI”). Based in Janesville, Wisconsin, SSI is a leading designer and manufacturer of sensors and sensing solutions for the global automotive and industrial markets with annual sales of approximately $180 million. We are excited by the long-term potential that this acquisition creates for Amphenol as we continue to expand the breadth of our sensor offering while also building on our already strong position in the global automotive and industrial markets. Also consistent with our balanced approach to capital deployment, the Company repurchased approximately three million shares during the fourth quarter of 2018, bringing total share repurchases in 2018 to approximately 11 million shares.”

“We are pleased by the Company’s excellent performance in 2018, which reflects the benefits of our deep commitment to developing enabling technologies for customers across all of our end markets, our ongoing strategy of market and geographic diversification, as well as the Company’s successful acquisition program. Most importantly, these results are a clear reflection of the Amphenol team’s outstanding execution in 2018.”

GUIDANCE:

Amphenol sees FY2019 EPS of $3.88-$3.96, versus the consensus of $4.00. Amphenol sees FY2019 revenue of $8.19-8.35 billion, versus the consensus of $8.39 billion.

Amphenol sees FY2019 EPS of $0.86-$0.88, versus the consensus of $0.90. Amphenol sees FY2019 revenue of $1.898-1.938 billion, versus the consensus of $1.95 billion.

“Looking ahead, there is a heightened level of uncertainty in the global economy, in particular related to trade policy. Considering this environment, together with our expectation for a higher than typical seasonal reduction in the mobile devices market related to the incremental sales we experienced in the fourth quarter of 2018, and assuming current currency exchange rates, we expect first quarter 2019 sales to be in the range of $1.898 billion to $1.938 billion and Adjusted Diluted EPS in the range of $0.86 to $0.88. For the full year 2019, we expect sales in the range of $8.190 billion to $8.350 billion, flat to an increase of 2% over 2018, and Adjusted Diluted EPS to be in the range of $3.88 to $3.96, an increase of 3% to 5% over 2018.”

“We are encouraged by the platform of strength created by the Company’s strong performance in 2018. The electronics revolution continues to create exciting new growth opportunities for Amphenol across each of our diversified end markets, with customers driving their products and networks to achieve ever higher levels of performance. This continues to create increased demand for our expanded range of high technology interconnect, sensor and antenna products. Our ongoing actions to leverage our competitive advantages and create sustained financial strength, as well as our initiatives to expand our high technology product offerings, both organically and through our successful acquisition program, have created an excellent base for future performance. I am confident in the ability of our outstanding, entrepreneurial management team to dynamically adjust to the always changing environment, to continue to generate strong profitability and to further capitalize on the many opportunities to expand our market position.”

For earnings history and earnings-related data on Amphenol (APH) click here.

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