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MFLEX Reports Strong Fiscal 2012 First Quarter Financial Results

ANAHEIM, Calif., Feb. 2, 2012 /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 strong financial results for its fiscal first quarter ended December 31, 2011.  Net sales in the first quarter of fiscal 2012 were $239.3 million, exceeding the high end of the Company's guidance range, compared to net sales of $241.2 million in the same period of the prior year.  

Gross margin during the first quarter of fiscal 2012 was 12.2 percent, compared to 14.3 percent for the same period in fiscal 2011.  The year-over-year decline was attributable to higher capacity related costs to support anticipated 2012 customer demand, as well as rising labor costs and an appreciating yuan in China.  Sequentially, gross margin increased 220 basis points primarily due to improved capacity utilization.

Net income for the first quarter of fiscal 2012 was $13.5 million, or $0.56 per diluted share, compared to net income of $15.1 million, or $0.62 per diluted share, for the same period in the prior year.

Cash flows from operating activities for the first quarter of fiscal 2012 were $5.7 million.  At December 31, 2011, the Company had cash and cash equivalents of $75.8 million, or $3.14 per diluted share.

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

During the first quarter of fiscal 2012, the Company repurchased approximately 391,000 shares at a weighted-average purchase price of $20.08 per share, for a total purchase price of $7.9 million.

Outlook

For the second quarter of fiscal 2012, the Company expects net sales to range between $210 and $225 million, and gross margin to range between 10.5 and 11.5 percent based on the projected product mix and sales volume.

Commenting on the Company's business outlook, Reza Meshgin, Chief Executive Officer of MFLEX, noted, "We anticipate continued strong demand for our flex assemblies for both smartphones and tablets in the second quarter of fiscal 2012.  However, we expect lower sequential sales to reduce our capacity utilization and in turn, gross margin during the quarter.  Looking further ahead, with increasing opportunities in the smartphone and tablet industries, we continue to expect year-over-year top line growth and sequential margin expansion in the second half of 2012."

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 2012 first quarter financial results.  The dial-in number for the call in North America is 1-877-941-2332 and 1-480-629-9866 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 4508078.

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; net sales; sales; net income; profitability; growth; gross margins; customer mix and concentration; seasonality of the Company's business; customer and seasonal demand; capacity, utilization and capacity expansion; product mix; market share; and programs and the ramping thereof.  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," "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, 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 and costs; currency fluctuations; 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, pricing pressures 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 December 31, 2011.  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,


2011


2010

Net sales

$ 239,344


$ 241,154

Cost of sales

210,182


206,680

  Gross profit

29,162


34,474

Operating expenses:




  Research and development

2,079


2,751

  Sales and marketing

6,387


7,433

  General and administrative

5,064


5,050

     Total operating expenses

13,530


15,234

Operating income

15,632


19,240

Other income (expense), net:




  Interest income

292


223

  Interest expense

(154)


(116)

  Other income (expense), net

471


(165)

     Income before income taxes

16,241


19,182

Provision for income taxes

(2,697)


(4,081)

     Net income

$   13,544


$   15,101





Net income per share:




  Basic

$       0.57


$       0.63

  Diluted

$       0.56


$       0.62

Shares used in computing net income per share:




  Basic

23,893


23,960

  Diluted

24,152


24,298



Multi-Fineline Electronix, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)













December 31,


September 30,



2011


2011






Cash and cash equivalents


$   75,808


$   97,890

Accounts receivable, net


191,311


150,507

Inventories


76,411


87,166

Other current assets


21,623


17,836

         Total current assets


365,153


353,399

Property, plant and equipment, net


236,018


244,026

Other assets


27,705


28,320

         Total assets


$ 628,876


$ 625,745






Accounts payable


$ 154,385


$ 162,790

Other current liabilities


33,089


31,544

         Total current liabilities


187,474


194,334

Other liabilities


16,441


15,328

Stockholders' equity


424,961


416,083

         Total liabilities and stockholders' equity


$ 628,876


$ 625,745



Multi-Fineline Electronix, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)






Three Months Ended


December 31,


2011


2010

Cash flows from operating activities




Net income

$ 13,544


$ 15,101

Adjustments to reconcile net income to net cash provided by operating activities:




    Depreciation and amortization

12,709


11,169

    Provision for doubtful accounts and returns

1,799


2,064

    Deferred taxes

(3)


(34)

    Stock-based compensation expense

1,367


1,643

    Asset impairments

(565)


-

    Loss on disposal of equipment

13


5

Changes in operating assets and liabilities

(23,125)

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