Multi-Fineline Electronix, Inc. (MFLX)
F1Q09 (Qtr End 12/31/08) Earnings Call Transcript
February 5, 2009 5:30 am ET
Reza Meshgin – President & CEO
Lasse Glassen – IR, Financial Relations Board
Tom Liguori – EVP and CFO
Matt Sheerin – Thomas Weisel Partners
Rich Kugele – Needham & Company
Aaron Husock – Lanexa Global
Rob Time [ph] – Robert W. Baird & Company
Jiwon Lee – Sidoti & Company
Previous Statements by MFLX
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I would now like to turn the conference over to Reza Meshgin, President and CEO of MFLEX. Please go ahead.
Thank you. Welcome to MFLEX's 2009 first quarter conference call. Today, I will discuss our operational highlights and business outlook and Tom Liguori; our CFO will discuss our financial results for the first quarter of fiscal 2009. Phil Harding, our Chairman, Tom and I will be available to answer your questions at the conclusion of our presentation. Lasse Glassen from the Financial Relations Board will now review our forward-looking statements before we begin our discussion.
Thank you, Reza, and good afternoon, everyone. I would like to remind you all that certain statements made in the conference call 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; sales; net income; earnings; operating expenses; capital expenditures; cash flow; tax rates and the benefits expected from the Company's reorganization, value of auction rate securities; DSO; DIO; gross margin including factors which may affect gross margin; yields; growth of the Company's customer base; expected demand and order from the Company's customers, including effects of the economy and seasonality on demand; market opportunities and competitive advantages; expected benefits from the acquisition of Pelikon; the utilization of flex and flex assemblies; program and product mix; the cost and benefits of new programs; the Company's manufacturing facilities, capabilities, capacity, and expansion thereof; the Company's ability to ramp production; uses of the Company's cash; credit facilities; and liquidity.
Additional forward-looking statements include but are not limited to, statements pertaining to other financial items; plans, strategies, objectives of management or future operations; the Company's operations and financial conditions 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.
For all of the foregoing forward-looking statements the Company claims the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from the Company's expectations. Important factors that could cause actual results to differ materially from those stated or implied by the Company's forward-looking statements include the risks detailed from time to time in the Company's SEC reports and in this afternoon's news release. Forward-looking statements represent the Company's judgment as of the date of this call. The Company disclaims any intent or obligation to update these forward-looking statements.
And with that, I'll turn the call back over to Reza. Reza?
Thank you, Lasse. I am pleased to report that the operating momentum we generated in the second half of last year carried over in to fiscal 2009, helping produce record breaking first quarter results that exceeded our expectation for most of the key metrics.
During the first quarter, we generated net sales of $216.6 million, which were the highest quarterly net sales in our Company's history. This broke the previous net sales record of $213.1 million established in the fourth quarter of fiscal 2008. We recorded net income of $14.1 million or $0.56 per diluted share, an increase compared to $0.54 per diluted share recorded in the first quarter of fiscal 2008.
And our business continues to generate a significant amount of cash. Cash flow from our operating activities exceeded $20 million or more than 65% higher than the same quarter last year.
As you know, we were somewhat cautious about our outlook on our last conference call. At the time of the call, we had good visibility on the first two months of the quarter. However, we believe the third month of the quarter was at risk due to the possibility of customers reducing orders due to the weakening economy.
We were very pleased that we did not see any deferrals and shipments remained consistent throughout the entire quarter, which reflected the strong end-user demand for many of the products.
Similar to recent prior quarters, we continued to benefit from our focus on the high end of the portable electronics device market. Smartphones are an attractive market opportunity for MFLEX. As a category, smartphones experienced strong growth in fiscal 2008 and industry analysts project they will continue generating strong growth in 2009 despite the overall economy challenges.
Having more complex product designs, smartphones tend to have higher flex content than the ordinary mobile phone, which increases our revenue per device. We believe the technology that's required to package these more complex flex assemblies differentiates MFLEX and gives us a competitive advantage in the marketplace.
In addition to smartphone, we also have had success with programs for other popular consumer handheld electronic devices. In the first quarter, net sales from this type of device comprise a significant portion of our overall business and more than doubled compared to the fourth quarter of fiscal 2008.