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MFLEX Reports Fiscal 2013 First Quarter Financial Results



          MFLEX Reports Fiscal 2013 First Quarter Financial Results

PR Newswire

IRVINE, Calif., Feb. 7, 2013

IRVINE, Calif., Feb. 7, 2013 /PRNewswire/ -- Multi-Fineline Electronix, Inc.
(NASDAQ: MFLX), a leading global provider of high-quality, technologically
advanced flexible printed circuit and value-added component assembly solutions
to the electronics industry, today reported financial results for its fiscal
first quarter ended December 31, 2012. Net sales in the first quarter of
fiscal 2013 were a company record at $289.7 million, up 21 percent from net
sales of $239.3 million in the same quarter last year. This increase was
primarily due to higher sales to a key customer, as well as sales growth to
the Company's newer customers.

Gross margin during the first quarter of fiscal 2013 was 8.5 percent, compared
to 12.2 percent for the same period in the prior year. The year-over-year
decline was primarily driven by unfavorable product mix and pricing pressure,
as well as the impact of idled labor costs and manufacturing capacity as a
result of production cuts toward the end of the quarter. 

Net income for the first quarter of fiscal 2013 was $8.3 million, or $0.35 per
diluted share, compared to net income of $13.5 million, or $0.56 per diluted
share, for the same period in the prior year.  

Net cash provided by operating activities for the first quarter of fiscal 2013
was $28.5 million. At December 31, 2012, the Company had cash and cash
equivalents of $92.7 million, or $3.86 per diluted share, and remained debt
free.

Non-GAAP Results
A reconciliation of GAAP net income and earnings per share to non-GAAP net
income and earnings per share is provided in the table at the end of this
press release.  

Share Repurchase Program
The Company's 10b5-1 plan expired on December 31, 2012 and the Company
repurchased approximately 76,200 shares at a weighted-average purchase price
of $18.95 per share, for a total purchase price of approximately $1.4 million.

Outlook
For the second quarter of fiscal 2013, the Company expects net sales to be
between $180 and $200 million and gross margin to be slightly negative based
on production build plans, projected sales volume and anticipated product mix.

Reza Meshgin, Chief Executive Officer of MFLEX, commented "Due to reduced
near-term demand forecasts, we have scaled back our production build plans
significantly below our anticipated revenue level for the second quarter in
order to work down inventory levels. While we continue to work on cost
improvements, including reduced headcount levels, we anticipate lower overhead
absorption, as well as unfavorable product mix, to negatively impact gross
margin. As a result, we expect to report an operating loss for the quarter.
Without the inventory reductions, we believe gross margin for the second
quarter would have been in the mid-single digits, which would have resulted in
income close to break-even."

Mr. Meshgin continued, "Near term challenges are widespread throughout our
industry. However, looking further ahead, we believe smartphone and tablet
demand remains strong and therefore anticipate a material improvement in both
our revenue and profitability as we enter into our fourth quarter."  

Conference Call
MFLEX will host a conference call at 8:30 a.m. Eastern time (5:30 a.m. Pacific
time) today to review its fiscal 2013 first quarter financial results. The
dial-in number for the call in North America is 1-877-941-6009 and
1-480-629-9819 for international callers. The call also will be webcast live
on the Internet and can be accessed by logging onto www.mflex.com.

The webcast will be archived on the Company's website for at least 60 days
following the call. An audio replay of the conference call will be available
for seven days beginning at 11:30 a.m. Eastern time (8:30 a.m. Pacific time)
today. The audio replay dial-in number for North America is 1-800-406-7325 and
1-303-590-3030 for international callers. The replay passcode is 4592614.

About MFLEX
MFLEX (www.mflex.com) is a global provider of high-quality, technologically
advanced flexible printed circuit and value-added component assembly solutions
to the electronics industry. The Company is one of a limited number of
manufacturers that provides a seamless, integrated end-to-end flexible printed
circuit solution for customers, ranging from design and application
engineering, prototyping and high-volume manufacturing to turnkey component
assembly and testing. The Company targets its solutions within the electronics
market and, in particular, focuses on applications where flexible printed
circuits are the enabling technology in achieving a desired size, shape,
weight or functionality of an electronic device. Current applications for the
Company's products include smartphones, tablets, computer/data storage,
portable bar code scanners and other consumer electronic devices. MFLEX's
common stock is quoted on the Nasdaq Global Select Market under the symbol
MFLX.

Certain statements in this news release are forward-looking statements that
involve a number of risks and uncertainties. These forward-looking statements
include, but are not limited to, statements and predictions regarding:
revenues; sales; net income; profitability; revenue growth; gross margins; the
timing and ramping of new programs; labor costs; new customer opportunities;
customer relationships; customer and product mix; inventory levels; production
build plans; demand forecasts; customer and market diversification strategies;
capacity, utilization and expansion of the Company's facilities; yields; and
labor efficiency. Additional forward-looking statements include, but are not
limited to, statements pertaining to other financial items, plans, strategies
or objectives of management for future operations, the Company's future
operations and financial condition or prospects, and any other statement that
is not historical fact, including any statement which is preceded by the words
"forecast," "guidance," "preliminary," "scheduled," "assume," "can," "will,"
"plan," "should," "expect," "estimate," "aim," "intend," "look," "see,"
"project," "foresee," "target," "anticipate," "may," "believe," or similar
words. Actual events or results may differ materially from those stated or
implied by the Company's forward-looking statements as a result of a variety
of factors including the effect of the economy on the demand for electronic
devices; the Company's success with new and current customers, those
customers' success in the marketplace and usage of flex in their products;
product mix; the Company's ability to develop and deliver new technologies;
the Company's ability to diversify and expand its customer base and markets;
the Company's effectiveness in managing manufacturing processes, inventory
levels, costs, yields and the ramping of new programs; currency fluctuations;
pricing pressure; the Company's ability to manage quality assurance and
workforce issues; the degree to which the Company is able to utilize available
manufacturing capacity, enter into new markets and execute its strategic
plans; electricity, material and component shortages; the impact of natural
disasters, competition and technological advances; the outcome of tax audits;
labor issues in the jurisdictions in which the Company operates; and other
risks detailed from time to time in the Company's SEC reports, including its
Annual Report on Form 10-K for the year ended September 30, 2012 and its
Quarterly Report on Form 10-Q to be filed for the quarter ended December 31,
2012. These forward-looking statements represent management's judgment as of
the date of this news release. The Company disclaims any intent or obligation
to update these forward-looking statements.  

(SUMMARY FINANCIAL INFORMATION FOLLOWS)

 

Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                           Three Months Ended
                                           December 31,
                                           2012              2011
Net sales                                  $     289,650     $     239,344
Cost of sales                              264,947           210,182
      Gross Profit                         24,703            29,162
Operating expenses:
   Research and development                2,033             2,079
   Sales and marketing                     6,537             6,387
   General and administrative              5,672             5,629
   Impairment and restructuring            -                 (565)
      Total operating expenses             14,242            13,530
Operating income                           10,461            15,632
Other income (expense), net:
   Interest income                         70                292
   Interest expense                        (111)             (154)
   Other income (expense), net             (15)              471
      Income before income taxes           10,405            16,241
Provision for income taxes                 (2,057)           (2,697)
      Net income                           $         8,348   $       13,544
Net income per share:
   Basic                                   $           0.35  $           0.57
   Diluted                                 $           0.35  $           0.56
Shares used in computing net income per
share:
   Basic                                   23,796            23,893
   Diluted                                 24,028            24,152

 

Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                            December 31,      September 30,
                                            2012              2012
Cash and cash equivalents                   $         92,652  $         82,322
Accounts receivable, net                    215,169           165,408
Inventories                                 106,056           124,770
Other current assets                        23,414            19,217
          Total current assets              437,291           391,717
Property, plant and equipment, net          267,470           274,886
Other assets                                29,868            29,807
          Total assets                      $       734,629   $       696,410
Accounts payable                            $       221,620   $       199,737
Other current liabilities                   42,037            36,111
          Total current liabilities         263,657           235,848
Other liabilities                           19,056            18,573
Stockholders' equity                        451,916           441,989
          Total liabilities and             $       734,629   $       696,410
stockholders' equity

 

Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                        Three Months Ended 
                                                        December 31, 
                                                       2012         2011
Cash flows from operating activities
Net income                                             $     8,348  $   13,544
Adjustments to reconcile net income to net cash
provided by operating activities:
     Depreciation and amortization                     14,418       12,709
     Provision for doubtful accounts and returns       1,932        1,799
     Deferred taxes                                    (50)         (3)
     Stock-based compensation expense                  1,307        1,384
     Income tax benefit related to stock option        -            (17)
exercises
     Restructuring asset recoveries                    -            (565)
     Loss on disposal of equipment                     6            13
Changes in operating assets and liabilities            2,496        (23,125)
             Net cash provided by operating            28,457       5,739
activities
Cash flows from investing activities
Purchases of property and equipment                    (15,913)     (20,346)
Proceeds from sale of equipment                        -            699
             Net cash used in investing activities     (15,913)     (19,647)
Cash flows from financing activities
Proceeds from exercise of stock options                29           35
Income tax benefit related to stock option             -            17
exercises
Tax withholdings for net share settlement of equity    (737)        (800)
awards
Repurchase of common stock                             (1,232)      (7,860)
             Net cash used in financing activities     (1,940)      (8,608)
Effect of exchange rate changes on cash                (274)        434
             Net increase (decrease) in cash           10,330       (22,082)
Cash and cash equivalents at beginning of period       82,322       97,890
Cash and cash equivalents at end of period             $    92,652  $   75,808

 

Multi-Fineline Electronix, Inc.
Selected Non-GAAP Financial Measures and Schedule Reconciling Selected
Non-GAAP Financial Measures to Comparable GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
                                            Three Months Ended
                                            December 31,
                                            2012              2011
GAAP net income                             $         8,348   $       13,544
Stock-based compensation                    1,307             1,384
Impairment and restructuring                -                 (565)
Income tax effect of non-GAAP adjustments   (420)             (219)
Non-GAAP net income                         $         9,235   $       14,144
GAAP diluted earnings per share             $           0.35  $           0.56
Effect of stock-based compensation, net of  0.03              0.04
tax on diluted earnings per share
Effect of impairment and restructuring, net -                 (0.01)
of tax on diluted earnings per share
Non-GAAP diluted earnings per share         $           0.38  $           0.59
Weighted-average diluted shares used in
calculating non-GAAP diluted earnings per   24,028            24,152
share

 

Use of Non-GAAP Financial Information

To supplement the condensed consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"), the Company
uses non-GAAP financial measures (non-GAAP net income and non-GAAP diluted
earnings per share) that exclude certain charges and gains. Management
excludes these items because it believes that the non-GAAP measures enhance an
investor's overall understanding of the Company's financial performance and
future prospects by being more reflective of the Company's recurring
operational activities and to be more comparable with the results of the
Company over various periods. Management uses non-GAAP financial measures
internally for strategic decision making, forecasting future results and
evaluating current performance. By disclosing non-GAAP financial measures,
management intends to provide investors with a more meaningful, consistent
comparison of the Company's core operating results and trends for the periods
presented. Non-GAAP financial measures are not prepared in accordance with
GAAP; therefore, the information is not necessarily comparable to other
companies' financial information and should be considered as a supplement to,
not a substitute for, or superior to, the corresponding measures calculated in
accordance with GAAP.

The items excluded from GAAP net income and diluted earnings per share in
calculating these non-GAAP financial measures, are as follows: (a) stock-based
compensation expense; and (b) impairment and restructuring activities,
including asset impairments, one-time termination benefits and other
restructuring-related costs. Management excludes these amounts when evaluating
its core operating activities and for strategic decision making and
forecasting of future results and believes that evaluating current
performance, and excluding such items from MFLEX's operations, provides
investors with a more meaningful way of evaluating the Company's current
operating performance.

Contact: Stacy Feit
         Investor Relations
         Tel: 213-486-6549
         Email: investor_relations@mflex.com

SOURCE Multi-Fineline Electronix, Inc.

Website: http://www.mflex.com
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