Exhibit 99.1
NEWS RELEASE
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| Contact: | | Lasse Glassen |
| | | Investor Relations |
| | | Tel: 213-486-6546 |
| | | Email: investor_relations@mflex.com |
MFLEX REPORTS FINANCIAL RESULTS FOR SECOND QUARTER FISCAL 2009
Net sales increase 6% year-over-year; $8.7 million in net income, or $0.34 per diluted share
Cash and cash equivalents balance increases to $106 million
Anaheim, CA, May 7, 2009 – 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 second quarter ended March 31, 2009. Net sales in the second quarter of fiscal 2009 were $174.1 million, an increase of 6.2 percent from net sales of $163.9 million in the same period of the prior year. The increase in net sales was primarily due to substantially higher sales to two of the Company’s major customers, which were partially offset by lower sales to two other major customers. MFLEX’s major customers currently include four leading manufacturers of portable electronic devices.
During the second quarter of fiscal 2009, the Company’s two largest customers each accounted for 25 percent or more of net sales. The Company’s other two major customers each accounted for less than 10% of net sales during the second quarter of fiscal 2009.
Net income for the second quarter of fiscal 2009 was $8.7 million, or $0.34 per diluted share, compared to net income of $10.4 million, or $0.41 per diluted share, for the same period in fiscal 2008.
“The quarter proceeded generally in line with our expectations, as customer orders reflected challenging global economic conditions,” said Reza Meshgin, Chief Executive Officer of MFLEX. “From the sales mix perspective, we saw a continuation of the trends we have experienced over the past few quarters, with the majority of our sales consisting of flex assemblies for smartphones and portable consumer electronic devices that continue to experience strong end-user demand.
“To reduce cost and improve our operational performance as a world-class technology-manufacturing company, we have initiated ambitious lean-manufacturing and six sigma quality improvement initiatives that are expected to enhance our operational performance and bottom line
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results in both the short and long term. As a result, we have improved our responsiveness to customer demands and shorter order cycles while reducing our total headcount by approximately 35% since the beginning of the fiscal year. Moreover, by working with our supply chain partners, we have managed to lower their costs. We believe these actions will help offset the near-term impact of the competitive pricing environment without compromising MFLEX’s long-term growth objectives,” said Mr. Meshgin.
Financial Highlights
Gross margin during the second quarter of fiscal 2009 declined to 14.2 percent, compared to 17.6 percent for the same period in the prior year, primarily due to the higher material content of current programs partially offset by improved labor productivity and yields. Sequentially, gross margin declined from 15.3 percent in the first quarter of fiscal 2009 due to the deleveraging of fixed manufacturing costs resulting from a lower level of sales.
Cash flow from operating activities for the second quarter of fiscal 2009 was $45.7 million. This compares to $32.1 million in the comparable period in fiscal 2008.
At March 31, 2009, the Company had cash, cash equivalents and short-term investments of $106.5 million.
Share Repurchase Program
As announced on January 5, 2009, the board of directors of MFLEX approved a share repurchase program for up to 2,250,000 shares in the aggregate of the Company’s common stock. During the three months ended March 31, 2009, the Company implemented the first tranche of the program and spent $8.4 million to repurchase 562,500 shares of its common stock at an average price of $14.95 per share.
The Company has also established a new 10b5-1 plan to implement the second tranche of the share repurchase program, which consists of 562,500 shares.
Outlook
For the third quarter of fiscal 2009, the Company expects net sales to range between $160 and $180 million, and gross margin to range between 13% and 15% percent based on the projected product mix and leveraging of manufacturing costs.
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Commenting on the Company’s business outlook, Mr. Meshgin said, “We expect the sales mix by customer in the third quarter to be relatively consistent with our second fiscal quarter. Based on the volume of new programs starting up in the second half of calendar 2009, we currently expect to see a rebound in net sales beginning in the fourth quarter of fiscal 2009, unless economic conditions deteriorate further. While we continue to closely monitor the impact of the global economic slowdown on our customers, we are also moving forward with our capacity expansion and technology advancement initiatives so that we will be well positioned to capitalize on the increased demand for flex assemblies that we expect to see when economic conditions become more favorable. We broke ground in April on our new manufacturing facility, MFC3, and we continue to expect this facility to become fully operational during calendar 2010.”
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 second quarter of fiscal 2009. The dial-in number for the call in North America is 1-877-941-8632 and 1-480-629-9822 for international callers. The call also will be webcast live on the Internet and can be accessed by logging ontowww.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 4064179.
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.
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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, tax rates, operating expenses, capital expenditures, profitability, gross margins, including factors that could affect gross margins, yields, 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), the Company’s competitive advantages and market opportunities, expected benefits from the acquisition of Pelikon, the utilization of flex and flex assemblies, current and upcoming programs and product mix, the effect of start-up programs on gross margins, the Company’s manufacturing capabilities, capacity, and ability to ramp/expand production of flex and flex assemblies and capacity, including 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 on the demand for the mobile electronic devices, the impact of changes in demand for the Company’s products and the Company’s success with new and current customers, the Company’s ability to develop and deliver new technologies, the Company’s ability to diversify its customer base, 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 March 31, 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.
(SUMMARY FINANCIAL INFORMATION FOLLOWS)
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Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share and share data)
(unaudited)
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| | | Three Months Ended
March 31, | | | Six Months Ended
March 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Net sales | | $ | 174,097 | | | $ | 163,936 | | | $ | 390,727 | | | $ | 348,088 | |
Cost of sales | | | 149,429 | | | | 135,009 | | | | 332,987 | | | | 288,375 | |
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Gross profit | | | 24,668 | | | | 28,927 | | | | 57,740 | | | | 59,713 | |
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Operating expenses | | | | | | | | | | | | | | | | |
Research and development | | | 1,241 | | | | 588 | | | | 2,412 | | | | 1,081 | |
Sales and marketing | | | 6,070 | | | | 4,528 | | | | 11,405 | | | | 9,145 | |
General and administrative | | | 6,300 | | | | 7,753 | | | | 13,317 | | | | 14,530 | |
Impairment and restructuring costs | | | (185 | ) | | | — | | | | 127 | | | | — | |
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Total operating expenses | | | 13,426 | | | | 12,869 | | | | 27,261 | | | | 24,756 | |
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Operating income | | | 11,242 | | | | 16,058 | | | | 30,479 | | | | 34,957 | |
Other income, net | | | | | | | | | | | | | | | | |
Interest income | | | 252 | | | | 488 | | | | 637 | | | | 847 | |
Interest expense | | | (198 | ) | | | (12 | ) | | | (217 | ) | | | (71 | ) |
Other income (loss), net | | | 169 | | | | (2,129 | ) | | | (1,312 | ) | | | (1,780 | ) |
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Income before income taxes | | | 11,465 | | | | 14,405 | | | | 29,587 | | | | 33,953 | |
Provision for income taxes | | | (2,720 | ) | | | (3,981 | ) | | | (6,751 | ) | | | (9,943 | ) |
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Net income | | $ | 8,745 | | | $ | 10,424 | | | $ | 22,836 | | | $ | 24,010 | |
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Net income per share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.35 | | | $ | 0.42 | | | $ | 0.91 | | | $ | 0.97 | |
Diluted | | $ | 0.34 | | | $ | 0.41 | | | $ | 0.90 | | | $ | 0.95 | |
Shares used in computing net income per share | | | | | | | | | | | | | | | | |
Basic | | | 24,997,153 | | | | 24,760,848 | | | | 25,032,444 | | | | 24,706,958 | |
Diluted | | | 25,431,068 | | | | 25,390,410 | | | | 25,319,703 | | | | 25,282,228 | |
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Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
| | | | | | |
| | | March 31,
2009 | | September 30,
2008 |
Cash and cash equivalents | | $ | 106,478 | | $ | 62,090 |
Restricted cash | | | 59 | | | 1 |
Short term investments | | | 206 | | | — |
Accounts receivable, net | | | 114,489 | | | 162,419 |
Inventories | | | 29,858 | | | 59,774 |
Other current assets | | | 16,221 | | | 12,999 |
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Total current assets | | | 267,311 | | | 297,283 |
Property, plant and equipment, net | | | 146,954 | | | 160,217 |
Other assets and long-term investments | | | 41,729 | | | 30,110 |
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Total assets | | $ | 455,994 | | $ | 487,610 |
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Accounts payable | | $ | 82,087 | | $ | 128,642 |
Other current liabilities | | | 20,344 | | | 34,741 |
Notes payable | | | 10,558 | | | — |
Other liabilities | | | 15,945 | | | 13,909 |
Stockholders’ equity | | | 327,060 | | | 310,318 |
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Total liabilities and stockholders’ equity | | $ | 455,994 | | $ | 487,610 |
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Multi-Fineline Electronix, Inc.
Statement of Cash Flows
(in thousands, except per share and share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
March 31, | | | Six Months Ended
March 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Net Income | | $ | 8,745 | | | $ | 10,424 | | | $ | 22,836 | | | $ | 24,010 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 10,198 | | | | 7,630 | | | | 19,930 | | | | 13,935 | |
Provision for doubtful accounts | | | 67 | | | | 603 | | | | (166 | ) | | | 1,052 | |
Deferred taxes | | | (67 | ) | | | 48 | | | | (191 | ) | | | — | |
Stock based compensation expense | | | 1,174 | | | | 873 | | | | 1,884 | | | | 1,510 | |
Impairment of long term investments | | | — | | | | — | | | | 1,054 | | | | — | |
Restructuring costs | | | 13 | | | | — | | | | 324 | | | | — | |
Impairment of cost investment | | | — | | | | 450 | | | | — | | | | 450 | |
(Gain) Loss on disposal of equipment | | | (186 | ) | | | (297 | ) | | | (114 | ) | | | 161 | |
Changes in operating assets and liabilities | | | 25,765 | | | | 12,382 | | | | 17,438 | | | | 3,556 | |
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Net cash provided by operating activities: | | | 45,709 | | | | 32,113 | | | | 62,995 | | | | 44,674 | |
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Cash flows from investing activities | | | | | | | | | | | | | | | | |
Purchase of long term investments | | | — | | | | (3,300 | ) | | | — | | | | (6,300 | ) |
Cash paid for property plant and equipment | | | (3,473 | ) | | | (5,999 | ) | | | (10,130 | ) | | | (12,146 | ) |
Purchases of software and capitalized internal-use software | | | (287 | ) | | | (65 | ) | | | (728 | ) | | | (83 | ) |
Proceeds from sale of equipment | | | 520 | | | | — | | | | 535 | | | | 191 | |
Decrease in restricted cash, net | | | 204 | | | | 65 | | | | 145 | | | | 19 | |
Cash paid for acquisition | | | — | | | | — | | | | (872 | ) | | | — | |
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Net cash used in investing activities | | | (3,036 | ) | | | (9,299 | ) | | | (11,050 | ) | | | (18,319 | ) |
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Cash Flows from financing activities: | | | | | | | | | | | | | | | | |
Income tax benefit related to stock option exercise | | | 11 | | | | 12 | | | | 11 | | | | 25 | |
Proceeds from exercise of stock options | | | 707 | | | | 759 | | | | 871 | | | | 1,227 | |
Purchase of treasury shares | | | (8,410 | ) | | | — | | | | (8,410 | ) | | | — | |
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Net cash (used in) provided by financing activities | | | (7,692 | ) | | | 771 | | | | (7,528 | ) | | | 1,252 | |
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Effect of exchange rates on cash | | | (1 | ) | | | 340 | | | | (29 | ) | | | 455 | |
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Net change in cash | | | 34,980 | | | | 23,925 | | | | 44,388 | | | | 28,062 | |
Cash and cash equivalents at beginning of period | | | 71,498 | | | | 32,092 | | | | 62,090 | | | | 27,955 | |
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Cash and cash equivalents at end of period | | $ | 106,478 | | | $ | 56,017 | | | $ | 106,478 | | | $ | 56,017 | |
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