MFLEX Reports Fiscal 2013 Fourth Quarter And Full-Year Financial Results

   MFLEX Reports Fiscal 2013 Fourth Quarter And Full-Year Financial Results

PR Newswire

IRVINE, Calif., Nov. 7, 2013

IRVINE, Calif., Nov. 7, 2013 /PRNewswire/ -- Multi-Fineline Electronix, Inc.
(NASDAQ: MFLX), a leading global provider of high-quality, technologically
advanced flexible printed circuits and assemblies, today reported financial
results for its fiscal fourth quarter and full-year ended September 30, 2013.
Net sales in the fourth quarter of fiscal 2013 were $188.3 million, down 7
percent from net sales of $201.6 million in the same quarter last year
primarily due to lower net sales to a key customer, partially offset by a
$12.5 million increase in net sales to the Company's newer customers.

Gross margin during the fourth quarter of fiscal 2013 was (3.2) percent,
compared to 5.8 percent for the same period in the prior year. The decline
was primarily driven by under-absorbed overhead as a result of the reduced net
sales level and manufacturing capacity added in the last year. The Company
also recorded a $4.6 million inventory write-down primarily as a result of
inventory that became unusable due to a customer specification change and
inventory that became excess as a result of reduced demand from another
customer that is currently undergoing a business transition.

Net loss for the fourth quarter of fiscal 2013 was $18.5 million, or $0.77 per
share, compared to breakeven net income for the same period in the prior
year.

The Company generated $3.9 million in cash flows from operating activities
during the fourth quarter of fiscal 2013 and $73.4 million during fiscal 2013.
Cash and cash equivalents increased $22.8 million during fiscal 2013 to $105.2
million, or $4.40 per share, at September 30, 2013. The Company continues to
maintain a strong balance sheet with no debt. 

Commenting on the fiscal fourth quarter results, Reza Meshgin, Chief Executive
Officer of MFLEX said, "Though we saw a sequential rebound in net sales in the
fiscal fourth quarter, our revenue results were below our guidance range due
to a later start-up for some of our new programs and a reduction in orders
from a key customer that is currently undergoing a business transition. The
reduced net sales, coupled with the inventory write-downs, resulted in gross
margin below our expectations."

Fiscal Year 2013 Financial Highlights
Net sales for fiscal 2013 were $787.6 million, compared to $818.9 million in
fiscal 2012. Net loss for fiscal 2013 totaled $65.5 million, or $2.74 per
share. The results were impacted by lower net sales to two key customers,
overhead under-absorption due to the lower net sales and additional
manufacturing capacity, and specific inventory write-downs primarily the
result of unusable components and late specification changes for certain
programs. In addition, during fiscal 2013 the Company incurred an after-tax
goodwill impairment charge of approximately $6.2 million and an after-tax
stock-based compensation expense of $6.9 million primarily resulting from the
change in control that was triggered by the acquisition of the Company's
majority shareholder, WBL Corporation Limited. This compares to fiscal 2012
net income of $29.5 million, or $1.22 per diluted share. 

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

Outlook
For the first quarter of fiscal 2014, the Company expects net sales to be
between $190 and $220 million and approximately breakeven gross margin based
on production build plans, projected net sales volume and anticipated product
mix.

Commenting on the Company's business outlook, Mr. Meshgin noted, "We expect a
sequential increase in net sales in the fiscal first quarter, however our
outlook has moderated since our last report. In addition to the expected
decline from our customer that is undergoing a business transition, we are
also being impacted by weaker end-market demand for certain programs. In
light of the reduced net sales expectations, we are evaluating both our new
business opportunities and capacity needs in order to return the business to
profitability. We continue to solidify our relationships with our newer
customers and expect net sales from this group to continue to grow. We are
aggressively pursuing new customer and product opportunities to diversify our
revenue streams, improve our gross margin and support our long-term growth
objectives. In the meantime, we continue to maintain a very solid financial
foundation with positive cash flow, over $105 million in cash and no debt, to
support us through this transition period." 

Conference Call
MFLEX will host a conference call at 5:30 p.m. Eastern time (2:30 p.m. Pacific
time) today to review its fiscal 2013 fourth quarter and full-year financial
results. The dial-in number for the call in North America is 1-877-941-2332
and 1-480-629-9821 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 8:30 p.m. Eastern time (5:30 p.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 4646136.

About MFLEX
MFLEX (www.mflex.com) is a global provider of high-quality, technologically
advanced flexible printed circuits and assemblies 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, personal computers and other consumer electronic devices.
MFLEX's common stock is quoted on the Nasdaq Global Select Market under the
symbol MFLX.

Forward-Looking Statements

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:
revenue; net sales; sales volumes; net income; profitability; gross margins;
revenue growth; cash flow; overhead absorption; forecasts; impairment charges
and asset write-downs; demand for our end customers' programs; expansion and
diversification of the Company's customer base and product base; labor costs;
new customer opportunities; customer relationships; inventory levels;
production build plans; program allocation from our end customers; product
mix; and the ramping and launch of new programs. 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 and seasonality 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; demand for the
Company's products; the Company's market share in its customers' programs;
product mix; the Company's ability to develop and deliver new technologies;
the Company's effectiveness in managing manufacturing processes, inventory
levels, costs and yields; the ramping and launch of new programs; currency
fluctuations; pricing pressure and the Company's ability to remain cost
competitive; the Company's ability to manage quality assurance; the degree to
which the Company is able to utilize available manufacturing capacity, enter
into new markets and execute its strategic plans; asset write-downs and
impairment charges; utility, 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and its
Annual Report on Form 10-K to be filed for the year ending September 30,
2013. 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.



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

(SUMMARY FINANCIAL INFORMATION FOLLOWS)



Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                            Three Months Ended        Twelve Months Ended
                            September 30,             September 30,
                            2013         2012         2013         2012
Net sales                   $188,254     $201,587     $787,644     $818,932
Cost of sales               194,308      189,797      788,774      736,241
 Gross (loss) profit   (6,054)      11,790       (1,130)      82,691
Operating expenses:
 Research and development 1,964        1,405        7,776        7,615
 Sales and marketing      5,795        5,841        22,720       24,457
 General and              4,504        4,503        17,118       19,839
administrative
 Stock-based compensation
expense resulting from      -            -            9,582        -
change in control
 Impairment and           -            -            7,537        (2,468)
restructuring
 Total operating       12,263       11,749       64,733       49,443
expenses
Operating (loss) income     (18,317)     41           (65,863)     33,248
Other income (expense),
net:
 Interest income          323          288          727          1,352
 Interest expense         (126)        (114)        (487)        (555)
 Other income (expense),  774          (206)        1,002        1,656
net
 (Loss) income before  (17,346)     9            (64,621)     35,701
income taxes
(Provision for) benefit     (1,125)      2            (910)        (6,216)
from income taxes
 Net (loss) income     $ (18,471)   $    11  $ (65,531)   $ 29,485
Net (loss) income per
share:
 Basic                    $  (0.77)  $   0.00   $  (2.74)  $   1.24
 Diluted                  $  (0.77)  $   0.00   $  (2.74)  $   1.22
Shares used in computing
net (loss) income per
share:
 Basic                    24,047       23,760       23,898       23,783
 Diluted                  24,047       24,042       23,898       24,077



Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                               September 30,   September 30,
                                               2013            2012
Cash and cash equivalents                      $   105,150  $    82,322
Accounts receivable, net                      132,247         165,408
Inventories                                    86,853          124,770
Other current assets                           17,265          19,217
 Total current assets                 341,515         391,717
Property, plant and equipment, net             244,056         274,886
Other assets                                  24,643          29,807
 Total assets                         $   610,214  $   696,410
Accounts payable                               $   166,474  $   199,737
Other current liabilities                      32,486          36,111
 Total current liabilities            198,960         235,848
Other liabilities                              19,063          18,573
Stockholders' equity                           392,191         441,989
 Total liabilities and stockholders'  $   610,214  $   696,410
equity



Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                 Three Months Ended   Twelve Months Ended
                                 September 30,        September 30,
                                 2013        2012       2013         2012
Cash flows from operating
activities
Net (loss) income                $ (18,471)  $   11  $ (65,531)   $29,485
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
 Depreciation and            14,127      12,985     58,154       53,082
amortization
 Deferred taxes              385         146        (2,523)      (2,290)
 Stock-based compensation    603         596        13,612       4,900
expense
 Excess tax benefit related  -           (102)      (29)         (177)
to stock option exercises
 Asset impairments           -           -          7,537        -
 Restructuring asset         -           -          -            (2,468)
recoveries
 (Gain) loss on disposal of  (41)        181        (1,702)      (516)
equipment
Changes in operating assets and  7,329       (28,027)   63,852       (13,733)
liabilities
 Net cash provided
by (used in) operating           3,932       (14,210)   73,370       68,283
activities
Cash flows from investing
activities
Purchases of property and        (11,388)    (31,433)   (47,333)     (86,077)
equipment
Proceeds from sale of equipment  404         -          2,764        11,471
and assets held for sale
 Net cash used in    (10,984)    (31,433)   (44,569)     (74,606)
investing activities
Cash flows from financing
activities
Excess tax benefit related to    -           102        29           177
stock option exercises
Tax withholdings for net share   (692)       (19)       (3,454)      (1,131)
settlement of equity awards
Proceeds from exercise of stock  (1)         6          607          168
options
Repurchase of common stock       (473)       -          (2,090)      (8,844)
 Net cash (used in)
provided by financing            (1,166)     89         (4,908)      (9,630)
activities
Effect of exchange rate changes  (727)       445        (1,065)      385
on cash
 Net (decrease)      (8,945)     (45,109)   22,828       (15,568)
increase in cash
Cash and cash equivalents at     114,095     127,431    82,322       97,890
beginning of period
Cash and cash equivalents at     $105,150    $82,322    $105,150     $82,322
end of period



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        Twelve Months Ended
                             September 30,             September 30,
                             2013          2012        2013          2012
GAAP net (loss) income       $ (18,471)    $    11  $ (65,531)    $ 29,485
Stock-based compensation     603           596         13,612        4,900
expense
Impairment and restructuring -             -           7,537         (2,468)
Income tax effect of         (214)         (159)       (5,966)       (584)
non-GAAP adjustments
Non-GAAP net (loss) income   $ (18,082)    $  448    $ (50,348)    $ 31,333
GAAP diluted net (loss)      $   (0.77)  $  0.00    $   (2.74)  $  
income per share                                                     1.22
Effect of stock-based
compensation, net of tax on  0.02          0.02        0.37          0.14
diluted net (loss) income
per share
Effect of impairment and
restructuring, net of tax on -             -           0.26          (0.06)
diluted net (loss) income
per share
Non-GAAP diluted net (loss)  $   (0.75)  $  0.02    $   (2.11)  $  
income per share                                                     1.30
Weighted-average diluted
shares used in calculating   24,047        24,042      23,898        24,077
non-GAAP diluted net (loss)
income per 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 net
(loss) income 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 net (loss) income per
share in calculating these non-GAAP financial measures are as follows: (a)
stock-based compensation expense including additional expense resulting from
the change in control that was deemed to occur under the terms of the
Company's stock incentive plan following the acquisition of the Company's
majority shareholder, WBL Corporation Limited; and (b) impairment and
restructuring activities, including goodwill impairment charges and recoveries
on sale of previously impaired assets.



Multi-Fineline Electronix, Inc.
Product Mix
                     Three Months Ended
                     September 30,
                     2013        2012
Smartphones          78%         66%
Tablets              15%         27%
Consumer Electronics 6%          5%



Multi-Fineline Electronix, Inc.
Key Customer Revenue Contribution
          Three Months Ended
          September 30,
          2013           2012
"OEM C"   73%            86%
"OEM D"   6%             6%



For competitive and customer confidentiality reasons, the Company does not
disclose its customers by name.

SOURCE Multi-Fineline Electronix, Inc.

Website: http://www.mflex.com
 
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