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MFLEX Reports Solid Financial Results for Full Year and Fourth Quarter Fiscal 2009
Full-year net sales of $764 million are highest in Company history
Cash and cash equivalents increases to $140 million, or $5.45 per diluted share
ANAHEIM, Calif., Nov. 4 /PRNewswire-FirstCall/ -- 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 the fourth quarter and fiscal year ended September 30, 2009. Net sales in the fourth quarter of fiscal 2009 were $199.2 million, a 6.5 percent decrease from net sales of $213.1 million in the same period of the prior year. The decrease in net sales was primarily due to substantially lower sales to two customers (consistent with recent prior quarters), partially offset by significantly higher sales to one other major customer with new product launches. Net sales in the fourth quarter of fiscal 2009 grew 14 percent sequentially from $174.5 million in the third quarter of fiscal 2009 due primarily to higher sales of flex assemblies for smartphones and other consumer electronic devices that are experiencing strong marketplace demand.
Net income for the fourth quarter of fiscal 2009 was $11.6 million, or $0.45 per diluted share, compared to net income of $7.6 million, or $0.30 per diluted share, for the same period in fiscal 2008. Net income in the fourth quarter of fiscal 2008 was negatively impacted by three non-recurring charges totaling $9.8 million net of tax, or $0.38 per diluted share.
"Our solid fourth quarter and record full-year results validate our value-added service model that includes working directly with our customers during the design phase of a program and maintaining a high level of interaction throughout the product lifecycle. This provides us with the ability to quickly ramp production of complex flex assemblies and has proven instrumental in expanding our relationship with major customers. Today's smartphones and the other consumer electronic devices for which we manufacture flex assemblies have increasingly short product lifecycles. We believe that our ability to help our customers reduce the time-to-market differentiates MFLEX and gives us a significant competitive advantage in the marketplace. We believe the traction that we have gained with the leading smartphone and consumer electronic device OEMs affirms our approach and we look forward to building upon this momentum in fiscal 2010 and beyond," said Reza Meshgin, Chief Executive Officer of MFLEX.
Financial Highlights
Gross margin during the fourth quarter of fiscal 2009 was 14.1 percent, compared to 16.1 percent for the same period in the prior year. The year-over-year decrease in gross margin is primarily due to the higher material content of current programs, partially offset by improved yields and labor productivity. Sequentially, gross margin declined from 14.3 percent in the third quarter of fiscal 2009 due to higher material costs associated with the fourth quarter product mix partially offset by improved labor utilization.
Cash flow from operating activities for the fourth quarter of fiscal 2009 was $27.0 million.
At September 30, 2009, the Company had cash and cash equivalents of $139.7 million, or $5.45 per diluted share. Cash and cash equivalents increased by $12.7 million compared to the balance at June 30, 2009.
For the fiscal year ended September 30, 2009, net sales increased 4.9 percent to a record $764.4 million from $728.8 million in fiscal 2008. The Company also generated record net income in fiscal 2009 of $46.1 million, or $1.81 per diluted share, compared to $40.5 million, or $1.59 per diluted share, during the prior fiscal year.
Outlook
For the first quarter of fiscal 2010, the Company expects net sales to range between $225 and $240 million, and gross margin to range between 14.0 percent and 16.0 percent based on the projected product mix and ramp of new programs.
Commenting on the Company's business outlook, Mr. Meshgin said, "For the first quarter of fiscal 2010, we expect to benefit from the normal seasonal increase in customer demand associated with the holiday season coupled with our success on new programs for smartphones and other consumer electronic devices. Based on our current forecast, we anticipate year-over-year net sales growth in the first quarter and we expect to achieve the highest quarterly net sales in the history of the Company. In addition, through improvements in yields and labor productivity, we continue to work diligently to mitigate the pressure on our gross margins from higher material costs associated with the current product mix.
"In anticipation of continued growth in fiscal 2010, we are moving forward with capital expenditures in support of our previously announced capacity expansion initiatives. Construction of our new manufacturing facility, MFC3, is progressing on schedule and we continue to expect that this new facility will be on-line during fiscal 2010 to help meet our future capacity requirements," said Mr. Meshgin.
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 financial results for the fourth quarter of fiscal 2009. The dial-in number for the call in North America is 1-877-941-8632 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 4176695.
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 mobile phones and smart mobile devices, medical devices, computer/data storage, portable bar code scanners and other handheld 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; net sales; sales; net income; cash balances, cash flow and uses of cash; tax rates; operating expenses; capital expenditures; inventory levels; profitability; gross margins, including factors that could affect gross margins; yields; labor productivity and operating efficiencies; growth and diversification of the Company's customer base; the Company's relationship and opportunities with, and expected demand and orders from, its customers (including the effect of the economy and seasonality on demand); demand for smartphones and other consumer electronic devices; product lifecycles; the Company's competitive advantages, service model and market opportunities; expected benefits from the acquisition of Pelikon and the Morphpad(TM) display; the utilization of flex and flex assemblies; current and upcoming programs, product mix and the material content and ramping thereof; the Company's manufacturing capabilities, capacity and ability to ramp/expand production of flex and flex assemblies and capacity; and plans regarding expansion of the Company's manufacturing facilities. 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 "assume," "can," "will," "plan," "expect," "estimate," "aim," "intend," "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 or seasonality on the demand for electronic devices, the Company's success with new and current customers and those customers' success in the marketplace, the Company's ability to develop and deliver new technologies, the Company's ability to diversify its customer base and markets, the Company's effectiveness in managing manufacturing processes and costs and expansion of its operations, the Company's ability to manage quality assurance issues, the degree to which the Company is able to utilize available manufacturing capacity, enter into new markets and execute its strategic plans, the impact of competition, pricing pressures and technological advances, 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, 2009. 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: Lasse Glassen
Investor Relations
Tel: 213-486-6546
Email: investor_relations@mflex.com
(SUMMARY FINANCIAL INFORMATION FOLLOWS)
Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share and share data)
(unaudited)
Three Months Ended Twelve Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $199,172 $213,095 $764,432 $728,805
Cost of sales 171,043 178,693 653,568 611,517
------- ------- ------- -------
Gross profit 28,129 34,402 110,864 117,288
------ ------ ------- -------
Operating
expenses
Research and
development 1,614 752 5,505 2,470
Sales and marketing 5,565 3,756 22,146 17,957
General and
administrative 6,116 8,366 25,486 30,518
Impairment and
Restructuring costs 201 2,180 328 2,180
--- ----- --- -----
Total operating
expenses 13,496 15,054 53,465 53,125
------ ------ ------ ------
Operating income 14,633 19,348 57,399 64,163
Other income, net
Interest income 16 402 767 1,687
Interest expense (270) - (768) (106)
Other income (loss),
net 109 (1,010) (1,358) (2,742)
--- ------ ------ ------
Income before
income taxes 14,488 18,740 56,040 63,002
Provision for income
taxes (2,932) (11,100) (9,972) (22,523)
------ ------- ------ -------
Net income $11,556 $7,640 $46,068 $40,479
======= ====== ======= =======
Net income per share
Basic $0.46 $0.31 $1.84 $1.63
Diluted $0.45 $0.30 $1.81 $1.59
Shares used in computing
net income per share
Basic 25,094,472 24,993,420 25,026,039 24,828,732
Diluted 25,624,332 25,711,676 25,453,390 25,433,676
Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
September 30, September 30,
2009 2008
---- ----
Cash and cash equivalents $139,721 $62,090
Short term investments 11,812 -
Accounts receivable, net 129,270 162,419
Inventories 50,285 59,774
Other current assets 17,475 13,000
------ ------
Total current assets 348,563 297,283
Property, plant and
equipment 150,099 160,217
Other assets and long-term
investments 27,268 30,110
------ ------
Total assets $525,930 $487,610
======== ========
Accounts payable $122,524 $128,642
Other current liabilities 24,003 34,741
Notes payable 10,852 -
Other long term
liabilities 9,563 13,909
Stockholders' equity 358,988 310,318
------- -------
Total liabilities and
stockholders' equity $525,930 $487,610
======== ========
Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Cash flows from operating
activities
Net Income $11,556 $7,640 $46,068 $40,479
Adjustments to reconcile
net income to net cash
provided by operating
activities
Depreciation and
amortization 10,415 9,902 40,766 31,150
Provision for
doubtful accounts 2,259 (343) 2,489 216
Deferred taxes 4,196 (4,430) 4,311 (4,462)
Stock based
compensation expense 777 908 3,437 3,423
Asset impairments 554 3,162 1,932 3,612
(Gain) loss on disposal
of equipment (2) 267 (194) 718
Changes in operating assets
and liabilities (2,728) 3,033 14,328 7,203
------ ----- ------ -----
Net cash provided by
Operating activities 27,027 20,139 113,137 82,339
------ ------ ------- ------
Cash flows from investing
activities
(Purchase) sale of long term
investments - (821) 50 (6,300)
Purchases of property plant
and equipment (1) (18,124) (18,880) (31,971) (49,218)
Proceeds from sale of
equipment 11 102 795 300
Change in restricted cash 56 2,478 204 2,490
Cash paid for acquisition - - (872) -
--- --- ---- ---
Net cash used in
investing activities (18,057) (17,121) (31,794) (52,728)
------- ------- ------- -------
Cash flows from financing
activities
Income tax benefit related to
Stock option exercise 2,062 1,559 2,131 1,623
Debt issuance costs - - (891) -
Proceeds from exercise of
stock options 1,681 180 3,482 2,182
Purchase of treasury shares - - (8,410) -
--- --- ------ ---
Net cash provided by
(used in) financing
activities 3,743 1,739 (3,688) 3,805
Effect of exchange
rate on cash 2 745 (24) 719
--- --- --- ---
Net change in cash 12,715 5,502 77,631 34,135
Cash and cash equivalents
at beginning of period 127,006 56,588 62,090 27,955
------- ------ ------ ------
Cash and cash equivalents
at end of period $139,721 $62,090 $139,721 $62,090
======== ======= ======== =======
(1) Excludes $6,349 of capital expenditures accrued but not paid as of
September 30, 2009.
SOURCE Multi-Fineline Electronix, Inc.
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