Nam Tai Electronics, Inc. Q2 2012 Sales Up 62.8%, Gross Profit Margin At 9.2%

SHENZHEN, China, Aug. 6, 2012 /PRNewswire/ -- Nam Tai Electronics, Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTE) today announced its unaudited results for the second quarter ended June 30, 2012.

KEY HIGHLIGHTS
(In thousands of US Dollars, except per share data, percentages and as otherwise stated)


Quarterly Results

Half year Results


Q2 2012

Q2 2011

YoY(%)(d)

1H 2012

1H 2011

YoY(%)(d)

Net sales (a)

$205,146

$125,994

62.8

$299,208

$268,404

11.5

Gross profit (a)

$18,937

$6,696

182.8

$22,012

$12,319

78.7

% of sales

9.2%

5.3%

-

7.4%

4.6%

-

Operating income (loss) (a)

$11,231

$(503)

-

$8,283

$(1,449)

-

% of sales

5.5%

(0.4%)

-

2.8%

(0.5%)

-

per share (diluted)

$0.25

$(0.01)

-

$0.18

$(0.03)

-

Net income (b) (c)

$9,397

$3,003

212.9

$5,763

$5,021

14.8

% of sales

4.6%

2.4%

-

1.9%

1.9%

-

Basic earnings per share

$0.21

$0.07

200.0

$0.13

$0.11

18.2

Diluted earnings per share

$0.21

$0.07

200.0

$0.13

$0.11

18.2

Weighted average number of shares ('000)







Basic

44,804

44,804

-

44,804

44,804

-

Diluted

44,814

44,833

-

44,817

44,844

-

Notes:
(a)  The above table excluded the discontinued Liquid Crystal Display Panels (LCDP) business. For the three months ended June 30, 2012 and June 30, 2011, the net sales of the discontinued business were $10.8 million and $21.7 million, gross profit was $0.4 million and $2.8 million and operating (loss) income was ($0.1 million) and $1.2 million, respectively. For the six months ended June 30, 2012 and June 30, 2011, the net sales of the discontinued business were $22.3 million and $41.2 million, gross (loss) profit was ($1.1 million) and $5.3 million and operating (loss) income was ($3.6 million) and $2.4 million, respectively. Please see page 6 of the Company's Condensed Consolidated Statements of Operations for further details. This information has been published on the Company's website at http://www.namtai.com/quarterly/quarterly.htm in the quarterly earnings report of 2Q2012 on page 6, Condensed Consolidated Statements of Operations.
(b)  Net income for the three months ended June 30, 2012 included income from customer compensation of $4 million, income from discontinued business (net of tax) of $1.0 million, interest income of $0.4 million, other income of $2.9 million, which included subsidy received as an advanced technology allowance of $2.6 million from Wuxi government as an incentive for the Company's investment and facility expansion in Wuxi, and an exchange loss of $0.3 million.
(c)  Net income for the six months ended June 30, 2012 included income from customer compensation of $10.7 million, loss from discontinued business (net of tax) of $1.5 million, interest income of $0.8 million, other income of $5.0 million, which included subsidy received as an advanced technology allowance of $2.6 million from Wuxi government as an incentive our investment and facility expansion in Wuxi, and an exchange gain of $0.5 million.
(d)  Percentage change is not applicable when either of the two periods contains a loss.

SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE SECOND QUARTER OF 2012

1. Quarterly Sales
(In thousands of US Dollars, except percentage information)

Quarter

2012

2011

YoY(%)

(Quarterly)

YoY(%)

(Quarterly accumulated)

1st Quarter

$94,062

$142,410

(33.9)

(33.9)

2nd Quarter

$205,146

$125,994

62.8

11.5

3rd Quarter

-

$127,600



4th Quarter

-

$129,073



Total

$299,208

$525,077



Note:
* The above table excluded certain discontinued business. Please see page 6 of the Company's Condensed Consolidated Statements of Operations for further details. This information has also been published on the Company's website at http://www.namtai.com/quarterly/quarterly.htm in the quarterly earnings report of 2Q2012 on page 6, Condensed Consolidated Statements of Operations.

2. Key Highlights of Financial Position


As at June 30,

As at December 31,


2012(a)

2011(a)

2011(a)

Cash on hand (b)

$147.4 million

$212.3 million

$118.5 million

Ratio of cash to current liabilities

0.61

1.96

0.88

Current ratio

1.56

3.11

2.22

Ratio of total assets to total liabilities

2.35

4.09

3.38

Return on equity

3.5%

3.0%

0.2%

Ratio of total liabilities to total equity

0.74

0.32

0.42

Debtors turnover

68 days

42 days

46 days

Inventory turnover

41 days

21 days

19 days

Average payable period

109 days

53 days

54 days

Notes:
(a)  The Company's ratios as at June 30, 2011 have been restated according to the reclassified assets and liabilities resulted from discontinued business. Please see page 7 of the Company's Condensed Consolidated Balance Sheets for further information. This information has also been published on the Company's website at http://www.namtai.com/quarterly/quarterly.htm in the quarterly earnings report of 2Q2012 on page 7, Condensed Consolidated Balance Sheets.
(b)  According to the definition of "Balance Sheet" under the Financial Accounting Standard Board (the "FASB") Accounting Standards Codification ("ASC") 210-10-20, cash equivalents are short-term, highly liquid investments that are readily convertible to cash. Only investments with original maturities of three months or less when purchased qualify under that definition. Therefore, the fixed deposits maturing over three months are not classified as cash on hand but require separate disclosure.

OPERATING RESULTS

Sales in the second quarter of 2012 were $205.1 million, an increase of 62.8%, as compared to sales of $126.0 million for the same quarter of 2011. Gross profit margin in the second quarter of 2012 was 9.2%, up 3.9% from 5.3% in the second quarter of last year. Gross profit in the second quarter of 2012 was $18.9 million, an increase of 182.8%, as compared to $6.7 million in the second quarter of last year. Net income in the second quarter of 2012 was $9.4 million, or $0.21 per diluted share, an increase of 212.9%, as compared to net income of $3.0 million, or $0.07 per diluted share in the second quarter of last year.

For the six months ended June 30, 2012, net sales were $299.2 million, an increase of 11.5%, as compared to $268.4 million in the same period of 2011. Gross profit margin in the first six months of 2012 was 7.4%, as compared to 4.6% in the same period of last year. Gross profit was $22.0 million, an increase of 78.7%, as compared to $12.3 million in the same period of last year. Operating income for the six months of 2012 was $8.3 million, as compared to operating loss of $1.4 million in the same period of last year. Net income for the six months ended June 30, 2012 was $5.8 million, or $0.13 per share (diluted), as compared to net income of $5.0 million, or $0.11 per share (diluted), in the same period last year.

The improvement of the Company's results in the second quarter of 2012 was mainly due to three factors. First, sales increased significantly by 62.8%, as a result of the Company's Wuxi manufacturing facility ramping up the production of larger quantities of high-resolution liquid crystal display modules ("LCMs") for tablets in June 2012. Second, the Company had $6.5 million in other income, of which $4 million was compensation income from customers for a percentage of the costs and overhead expenses incurred in relation to the postponement of the mass production of certain products. The Company also recorded $2.6 million of subsidy granted as an advanced technology incentive allowance from the Wuxi government as a result of the Company's investment and facility expansion in Wuxi. Third, the Company's gross and net profit also improved after the Company discontinued certain production orders that have had low sales and poor performance for the past few years.

With respect to the discontinued low profit margin businesses, for the three months ended June 30, 2012 and June 30, 2011, its net sales were $10.8 million and $21.7 million, gross profit was $0.4 million and $2.8 million, and operating (loss) income was ($0.1 million) and $1.2 million, respectively. For the six months ended June 30, 2012 and June 30, 2011, their net sales were $22.3 million and $41.2 million, gross (loss) profit was ($1.1 million) and $5.3 million, and operating (loss) income was ($3.6 million) and $2.4 million, respectively. Please see page 7 of the Company's Condensed Consolidated Statements of Operations for further details. This information has also been published on the Company's website at http://www.namtai.com/quarterly/quarterly.htm in the quarterly earnings report of 2Q2012 on page 6, Condensed Consolidated Statements of Operations.

EXPANSION PROJECTS

The Company purchased a parcel of land of approximately 470,000 square feet from the Wuxi government to expand its Wuxi manufacturing facility. The stone-laying ceremony was held on July 12, 2012 for the construction of the facility's new additions. The expanded facility will include office buildings, a research and development center, an environmental and safety control center, a SMT plant and warehouse, labor union buildings and employee activity centers. With respect to the expansion of its Shenzhen facility, the Company is actively working with the Shenzhen government to facilitate the release of the land.

COMPANY OUTLOOK

The Company's revenue increased by 62.8% for the second quarter of 2012, as compared to the second quarter of 2011, excluding the contribution from the discontinued the low profit margin businesses. This significant revenue increase was principally due to commencement of the production of high-resolution LCMs for tablets at the Company's Wuxi facility beginning in June 2012. Net income in the second quarter of 2012 also increased significantly to $9.4 million, as compared to net income of $3.0 million in same quarter of 2011.

Regarding the business of high-resolution LCMs for smartphones in the Shenzhen manufacturing facility, the Company has recently reached an agreement with its customer for the pricing and business terms and has received the relevant production orders. The production pilot run will be started in August 2012 and the mass production will commence in September 2012.

For the second half of 2012, the Company's management anticipates the tablet LCM business will run smoothly and the smartphone LCM orders will also commence their production in Shenzhen, which could generate further increases in sales and the Company's profit may also continue to improve. 

SECOND QUARTER RESULTS ANALYST CONFERENCE CALL AND WEBCAST

The Company will hold a conference call on Monday, August 6, 2012, at 8:30 a.m. (EDT). Shareholders, media, and interested investors are invited to listen to the live webcast at www.namtai.com by clicking on the conference call link (under events) or over the phone by dialing 877.407.0778 just prior to its start time. International participants may dial 201.689.8565. Analysts who wish to receive the toll free dial-in number for this conference call are invited to contact us at 212.245.4577 or via email to kevin@cameronassoc.com.

PAYMENT OF QUARTERLY DIVIDENDS FOR 2012

As announced on October 31, 2011, the Company has set payment of quarterly dividends for 2012. The dividends for Q3 2012 were paid on July 20, 2012. The following table updates the previously announced schedule for declaration and payment of quarterly dividends in 2012.

Quarterly Payment

Record Date

Payment Date

Dividend

(per share)

Status

Q1 2012

December 31, 2011

January 20, 2012

$0.07

PAID

Q2 2012

March 31, 2012

April 20, 2012

$0.07

PAID

Q3 2012

June 30, 2012

July 20, 2012

$0.07

PAID

Q4 2012

September 30, 2012

October 20, 2012

$0.07


Total for Full Year 2012

$0.28


PROPOSED SCHEDULE OF RELEASE OF QUARTERLY FINANCIAL RESULTS FOR Q3 AND Q4 2012

Announcements of Financial Results

Quarter

Date of release

Q3 2012

November 5, 2012 (Mon)

Q4 2012

February 4, 2013 (Mon)


FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD CAUSE OUR SHARE PRICE TO DECLINE

Certain statements included in this press release and the subsequent conference call, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "seek" or "believe". These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activities, performance, or achievements expressed or implied by the forward-looking statements, including, but not limited to, a deterioration of the markets for the Company's customers' products and the global economy as a whole, which could negatively impact the Company's revenue and the ability of the Company's customers to confirm prior orders or pay for the Company's products; the sufficiency of the Company's cash position and other sources of liquidity to operate its business; the negative effects of increased competition pressure on the Company's revenues and margins; component quality or shortage, whether or not cause by customers change in specifications, delay in the Company's ability to take possession of land for development of additional production facilities, continued inflation and appreciation of the Renminbi against the US dollar; rising labor costs in China and changes in the labor supply and labor relations our ability to win additional government business. In particular, you should consider the risks outlined under the heading "Risk Factors" in our most recent Annual Report on Form 20-F and in our Current Report filed from time to time on Form 6-K. The Company's decision to continue dividend payments in 2012 does not necessarily mean that dividend payments will continue thereafter. Whether future dividends will be declared depend upon the Company future growth and earnings, of which there can be no assurance, as well as the Company's cash flow needs for further expansion. Accordingly, there can be no assurance that cash dividends on the Company's common shares will be declared beyond those declared for 2012, what amount that dividends may be or whether such dividends, once declared for a specific period, will continue for any future period, or at all. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements apply only as of the date of this press release and the subsequent investors conference call; as such, they should not be unduly relied upon as circumstances change. Except as required by law, we are not obligated, and we undertake no obligation, to release publicly any revisions to these forward-looking statements that might reflect events or circumstance occurring after the date of this release or those that might reflect the occurrence of unanticipated events.

ABOUT NAM TAI ELECTRONICS, INC.

We are an electronics manufacturing and design services provider to a select group of the world's leading OEMs of telecommunications, consumer electronic, medical and automotive products. Through our electronics manufacturing services operations, we manufacture electronic components and subassemblies, including LCD modules, FPC subassemblies and image-sensor modules and PCBAs. These components are used in numerous electronic products, including mobile phones, laptop computers, digital cameras, electronic toys, handheld video game devices, and entertainment devices. We also manufacture finished products, including mobile phone accessories, home entertainment products and educational products. We assist our OEM customers in the design and development of their products and furnish full turnkey manufacturing services that utilize advanced manufacturing processes and production technologies.

Nam Tai Electronics, Inc. is a corporation registered in the British Virgin Islands and listed on the New York Stock Exchange (Symbol "NTE"). All the Company's operations are located in the People's Republic of China.

Please refer to the Nam Tai website (www.namtai.com) or the SEC website (www.sec.gov) for Nam Tai press releases and financial statements.

SOURCE Nam Tai Electronics, Inc.



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