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MFLEX Posts $191 Million in Q3 Sales
August 5, 2011 | MFLEXEstimated reading time: 3 minutes
Multi-Fineline Electronix, Inc., 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 its fiscal third quarter ended June 30, 2011. Net sales in the third quarter of fiscal 2011 were $191.8 million, an increase of 6% from net sales of $181 million in the same period of the prior year. The increase in net sales was primarily due to continued strength of smartphone and tablet programs the company won in recent quarters.
Gross margin during the third quarter of fiscal 2011 was 12.2%, compared to 12.3% for the same period in the prior year. During the fiscal 2011 third quarter, improved product mix and operating efficiencies were more than offset by higher labor costs in China, pricing pressure and an appreciating Chinese Yuan.
GAAP net income for the third quarter of fiscal 2011 was $8.8 million, or $0.36 per diluted share, compared to GAAP net income of $2.4 million, or $0.09 per diluted share, for the same period in fiscal 2010. Included in the fiscal 2011 third quarter results is a benefit from the reversal of $1.5 million in previously accrued stock compensation expense related to performance-based stock grants that were deemed by the company as not probable to be achieved, partially offset by $1 million in impairment and restructuring costs related to facilities held for sale in California and Arizona. In addition, fiscal 2010 third quarter results included approximately $4.2 million in pre-tax impairment and restructuring costs and non-cash income tax expenses associated with the consolidation of manufacturing operations. Third quarter fiscal 2011 non-GAAP net income was $9.3 million, or $0.38 per diluted share. This compares to non-GAAP net income of $6.1 million, or $0.24 per diluted share in the same period last year. A reconciliation of GAAP net income to non-GAAP net income is provided in the table at the end of this press release.
Cash flow from operating activities for the third quarter of fiscal 2011 was $16.5 million. At June 30, 2011, the company had cash and cash equivalents of $100.0 million, or $4.11 per diluted share.
Commenting on the third quarter results, Reza Meshgin, Chief Executive Officer, said, "While we achieved year-over-year net sales growth of 6 percent during the third quarter, our top-line results were below our expected guidance range. As we reported in our pre-announcement last month, net sales were impacted by a reduction in demand primarily from one key customer in the latter part of the quarter. Going forward, we remain optimistic about our ability to drive profitable growth. In addition, we plan to initiate a new share repurchase program during the fourth quarter."
Share Repurchase Program
The company intends to enter into a 10b5-1 plan later in the fourth quarter to repurchase shares of the company's common stock. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors.
Outlook
For the fourth quarter of fiscal 2011, the company expects net sales to range between $190 and $210 million, and gross margin to range between 11% and 12% based on the projected product mix and sales volume.
Commenting on the company's business outlook, Meshgin noted, "During the fourth quarter, we expect new programs to ramp due to expected high seasonal demand. However, these new programs coupled with cost and pricing pressures are expected to impact our fourth quarter gross margin. Looking further ahead, we continue to expect to benefit from strong market share at our key customers and ramping sales to a recently added new OEM customer. As we enter fiscal 2012, we expect to leverage increasing sales volumes to generate improved profitability."
About MFLEX
MFLEX 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. For more information, visit www.mflex.com.