Diversified electronics maker TE Connectivity Ltd. (TEL: Quote), which changed its name from Tyco Electronics Ltd. in March 2011, reported Wednesday a profit for the first quarter that declined from last year, despite revenue growth, reflecting lower margins. Both adjusted earnings per share and quarterly revenues also missed analysts' expectations. The company also issued earnings and net sales guidance for the second quarter and for the full-year 2012, both below Street view.
"The first quarter was a slow start to our fiscal year due to lower-than-expected demand in our Communications and Industrial Solutions segment and our Telecom Networks business. This more than offset continued strength in our Transportation Solutions segment," CEO Tom Lynch said in a statement.
The Schaffhausen, Switzerland-based company reported net income of $260 million or $0.61 per share for the first quarter, higher than $265 million or $0.59 per share in the prior-year quarter. On a continuing operations basis, the latest quarter earnings were $252 million or $0.59 per share.
Excluded items, adjusted earnings from continuing operations declined to $284 million or $0.66 per share from $330 million or $0.73 per share in the year-go quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to post earnings of $0.70 per share for the first quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 3 percent to $3.31 billion from $3.20 billion in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $3.44 billion.
Net sales for transportation solutions grew 7.6 percent to $1.41 billion from a year ago, while communications and industrial solutions net sales decreased 11.5 percent to $1.08 billion from the year-ago quarter. Network solutions net sales totaled $829 million, 24.5 percent higher than last year.
Operating margins for the quarter contracted 110 basis points to 11.4 percent from last year's 12.5 percent.
"We delivered adjusted operating margins above 12 percent despite the lower sales volume due to pricing and cost reduction actions we implemented in the second half of last year," Lynch noted.
Total company orders were $3.2 billion in the first quarter. The book-to-bill ratio was 0.95 overall, and 0.98 excluding the Subsea Communications business.
Looking ahead to the second quarter, the company expects adjusted earnings in a range of $0.64 to $0.68 per share, on anticipated net sales between $3.3 billion and $3.4 billion. Analysts expect the company to report earnings of $0.76 per share, on quarterly revenues of $3.52 billion.
For fiscal 2012, TU connectivity anticipates adjusted earnings in the range of $2.90 and $3.10 per share, on projected net sales between $13.8 billion and $14.2 billion. Street is currently looking for full-year 2012 earnings of $3.27 per share, on annual revenues of $14.67 billion.
"We expect second quarter sales and earnings to be similar to the first quarter. We also expect our second half sales to increase by approximately 10 percent compared to the first half due to normal seasonal increases and the completion of customer inventory corrections. At these sales levels, our adjusted operating margins should return to about 14 percent," Lynch added.
TEL closed Tuesday's regular trading session at $35.71, up $0.13 on a volume of 2.39 million shares, higher than the three-month average volume of 2.69 million shares.
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by RTT Staff Writer
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