(Source: PRNewswire-FirstCall)
ANAHEIM, Calif., May 7 /PRNewswire-FirstCall/ -- 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 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 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.
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 onto http://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 4064179.
