Amphenol Corporation (APH) reported impressive fourth quarter 2014 results with record earnings and revenues on the back of solid organic and inorganic growth. Net income for the reported quarter was $193.5 million or 61 cents per share compared with $167.9 million or 52 cents a share in the year-ago quarter.
For fiscal 2014, the company recorded net income of $709.1 million or $2.21 per share versus $635.7 million or $1.96 per share in the year-ago period
Excluding one-time items, adjusted earnings (amount adjusted to reflect the company’s 2-for-1 stock split) for the reported quarter stood at 63 cents per share compared with 53 cents in the year-earlier quarter. The adjusted earnings for fourth quarter 2014 beat the Zacks Consensus Estimate of 59 cents per share.
Excluding one-time items, adjusted earnings for fiscal 2014 stood at $2.25 per share compared with $1.93 in the year-ago period. Adjusted earnings for fiscal 2014 also beat the Zacks Consensus Estimate of $2.17 per share.
Impressive growth in the quarter was primarily attributable to Amphenol’s technology leadership and market and geographic diversification. It further reflected the company’s balanced organic and inorganic growth model. This was achieved on the back of a lean and flexible cost structure and an agile and entrepreneurial management team.
Revenues
The company reported record high revenues of $1,426.5 million in the fourth quarter of 2014, up 15% year over year. Revenues also exceeded the Zacks Consensus Estimate of $1,373 million. The year-over-year improvement was led by double-digit growth across diversified markets served by the company, which include automotive, industrial and mobile networks markets. In addition, accretive acquisitions contributed significantly to top-line growth.
For fiscal 2014, revenues were $5345.5 million compared with $4614.7 million reported in the year-ago period. Fiscal revenues also surpassed the Zacks Consensus Estimate of $5188.0 million.
Operating margin (excluding one-time items) improved 50 basis points year over year to 20.2%. The increase in operating margin was primarily due to focused operational execution and stringent cost-cutting measures.
Segment Performance
Segment-wise, Cable business sales represented 6% of total sales in the fourth quarter of 2014 and were up 3% year over year. Sales from the Interconnect business, which accounted for 94% of total sales, were up 15.3% year over year to $1,342.5 million.
Balance Sheet & Cash Flow
During the quarter, Amphenol purchased approximately 2.9 million shares. The company completed the buyback authorized under the company’s Jan 2013 stock repurchase program, and authorized a new two year open market stock repurchase plan for up to 10 million shares of the company’s stock.
Cash and cash equivalents stood at $968.9 million as of Dec 31, 2014 compared with $886.8 million as of Dec 31, 2013. Long-term debt aggregated $2,672.3 million as of Dec 31, 2014 compared with $1,431.4 million at year-end 2013.
Cash flow from operations for twelve months ended 2014 aggregated $880.9 million versus $769.1 million in the year-ago period.
Acquisition & Others
During the reported quarter, the company completed the acquisition of Goldstar Electric Systems Co., Ltd., a high technology interconnect assembly company. This acquisition is expected to be accretive to the company and enhance its presence in the industrial market in China and in the high growth heavy equipment segment.
Outlook
Despite the uncertainties prevailing in the global economy, Amphenol has bullish revenue and earnings expectations. The ongoing revolution in electronics enables the company to capitalize on the opportunities and strengthen its position in the market.
Amphenol expects first quarter 2015 sales in the range of $1.286 billion to $1.326 billion, representing a year-over-year increase of 3% to 6%. Adjusted EPS is expected to be in the range of 55 cents to 57 cents, a year-over-year increase of 10% to 14%.
For full year 2015, the company expects sales in the range of $5.493 billion to $5.653 billion, representing a year-over-year increase of 3% to 6%. Adjusted EPS is expected in the range of $2.41 to $2.49, a year-over-year increase of 7% to 11%.
Amphenol currently has a Zacks Rank #3 (Hold). Better-ranked stocks include Stantec Inc. (STN) sporting a Zacks Rank #1 (Strong Buy), and Methode Electronics, Inc. (MEI) and Corporate Executive Board Co. (CEB), carrying a Zacks Rank #2 (Buy).
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