Earnings Preview: Amphenol

Amphenol (APH) is expected to report Q2 earnings before market open Thursday, July 17, with a conference call scheduled for 1:00 pm ET.

Guidance

The consensus estimate is 58c for EPS and $815.51M for revenue, according to First Call. Collins Stewart believes Amphenol will at least meet its 2Q08 sales projection of $813M and pro forma EPS estimate of 58c. The firm is projecting only a modest uptick in gross margin to 32.8% in Q2 versus 32.6% in Q1.

Analyst Views

Looking into 3Q08, Collins believes its sales projection of $820M and pro forma EPS estimate of 59c should be achievable, however, the slowing economic environment could take away some upside. The firm believes Amphenol will conservatively update its 2008 outlook, currently at EPS of $2.26 to $2.31, with potentially only a very modest change to the upside. Also, Collins believes Amphenol will continue to be active in the acquisition department during 2008, which should provide further downside protection in the challenging demand environment.

Citigroup's Q2 estimate is slightly above the Street, at $819M in revenue and 59c in EPS as checks indicate price increases announced in March/April have been sticking, and more are likely to come. This should help offset recent raw material price increases and provide some cushion to margins.

Key focus for the conference call: Update to CY08 sales outlook of +12.5% to +14%, which Citigroup feels could prove to be conservative but prudent given the economy; update on Aerospace product wins at Airbus; commentary on the changing raw material prices (aluminum, copper, and gold); details on the acquisition pipeline going forward; and an update on the integration of two acquisitions announced in Jan 2008.