Amphenol Beats by a Penny (APH) (MOLX)

Sales came in at a record $1.103 billion, up 6.7% year over year and 3.9% sequentially, and beat management’s guidance range of $1.080 billion to $1.100 billion. The results also surpassed the Zacks Consensus Estimate of $1.091 billion. The unfavorable foreign currency exchange rates negatively impacted sales by approximately $19 million in the third quarter of 2012.

On a year-over-year basis, Amphenol saw strength in industrial, commercial aerospace and telecommunications and data communications equipment markets. Compared with the prior quarter, mobile devices emerged as a growth driver for the company based on the ramp up of new mobile computing devices.

Product-wise, Interconnect products generated sales of $1,033.3 million, up 7.9% year over year. Cable products generated sales of $70.0 million, down 7.3% year over year.

Gross margin came in at 31.2%, marginally down from 31.5% in the previous quarter, but roughly flat on a year-over-year basis. Operating margin improved to 19.5% from 19.4% in the previous quarter and 18.0% in the year-ago quarter.

During the quarter, Amphenol purchased 0.5 million shares. Amphenol ended the quarter with cash and cash equivalents of $725.5 million, up from $646.0 million at the end of the previous quarter. Debt at the end of the quarter increased to $1,511.3 million from $1,454.5 million at the end of the previous quarter. Earlier, Amphenol increased the quarterly dividend to $0.105 per share.

Guidance

Assuming stable economic conditions and current currency exchange rates, Amphenol projects sales between $1.095 billion and $1.115 billion in the fourth quarter of 2012. Earnings per share (excluding one-time items) are forecasted between 88 cents and 91 cents.

For 2012, management now projects revenues between $4.241 billion and $4.261 billion compared with its earlier revenue estimate between $4.210 billion and $4.250 billion and up 8% from 2011. Earnings per share are expected between $3.41 and $3.44 versus the previous estimate of $3.38 to $3.44 and up 12% – 13% from 2011.

The ongoing revolution in electronics continues to create opportunities for Amphenol, which competes with Molex Incorporated (MOLX). The company serves a variety of end markets and the diversification in those markets enables it to post strong results even amid an uncertain economic environment.