TE Connectivity (NYSE:TEL) shares are up today after the contract manufacturing giant beat expectations with its fiscal third-quarter earnings and said it would acquire German connector maker Intercontec Group.
Schaffhausen, Switzerland-based TE Connectivity posted profits of $839 million, or $2.19 per share, on sales of $3.12 billion for the three months ended June 24, for a bottom-line gain of 171.5% on flat sales growth.
Adjusted to exclude 1-time items, earnings per share were $1.08, a full nickel ahead of estimates on The Street, where analysts were looking for sales of $3.13 billion; TE Connectivity’sown forecast called for adjusted EPS of $1 even to $1.06 on sales of $3.0 billion to $3.20 billion.
TE Connectivity raised its earnings outlook for the rest of the year, saying it now expects to post adjusted EPS of $5.13 to $5.19, up from prior guidance for $3.90 to $4.10. The company narrowed its full-year sales outlook, however, saying it now expects to log revenues of $12.15 billion to $12.35 billion, compared with $12.1 billion to $12.5 billion previously.
Fiscal fourth-quarter adjusted EPS are pegged at $1.17 to $1.23 on sales of $3.25 billion to $3.45 billion, the company said.
Investors responded by sending TEL shares up 3.9% to $61.93 apiece today in mid-afternoon trading.
“I am pleased with our third-quarter performance, with adjusted EPS up 20% and exceeding the high end of our guidance range,” chairman & CEO Tom Lynch said in prepared remarks. “Sales grew in the majority of our harsh environment businesses including Automotive, Commercial Transportation, Medical, Aerospace and Appliances, and in our SubCom business. This growth was offset by weakness in our Oil and Gas, Data and Devices and Industrial Equipment businesses. We continued to drive strong operating margins due to the expansion of our harsh environment portfolio and ongoing productivity improvements, despite an uncertain macro environment.
“Our targeted M&A strategy has enabled us to further strengthen our harsh environment portfolio. In the quarter, we bolstered TE’s position in the minimally-invasive interventional segment of the medical device market with the closing of the Creganna acquisition. We closed Jaquet, broadening our product offering in the automotive and industrial markets. Additionally, today we announced an agreement to acquire Intercontec Group, adding an important range of connector technology for industrial customers,” Lynch said.
The deal to buy Intercontec for an undisclosed amount is expected to close in September, bolstering its line of harsh connectivity applications for factory automation.
TE Connectivity also said it inked a deal with the U.S. Internal Revenue Service to settle “intercompany debt issues” dating back to its creation in the Tyco International implosion.
“All disputes with the IRS related to pre-separation from Tyco International are now closed,” the company said.