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Multi-Fineline Electronix, Inc. (MFLX)
F3Q09 (Qtr End 6/30/09) Earnings Call Transcript
August 6, 2009 5:30 pm ET
Reza Meshgin – President and CEO
Lasse Glassen – IR, Financial Relations Board
Tom Liguori – EVP and CFO
Alberto Mann – Thomas Weisel Partners
Rich Kugele – Needham & Company
Brian Jones – RBC
Jiwon Lee – Sidoti & Company
Ladies and gentlemen, thank you for standing by, and welcome to the MFLEX fiscal 2009 third quarter conference call.
Previous Statements by MFLX
» Multi-Fineline Electronix F2Q09 (Qtr End 3/31/09) Earnings Call Transcript
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» Multi-Fineline Electronics Inc. F4Q08 Earnings Call Transcript
I would now like to turn the conference over to Mr. Reza Meshgin, President and CEO of MFLEX. Please go ahead.
Thank you. Welcome to MFLEX's fiscal 2009 third 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 third 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. Lasse?
Thank you, Reza, and good afternoon everyone. I would like to remind you all that certain statements made in this 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, operating expenses, capital expenditures, cash balances, cash flow, tax rates, DSO, DIO, inventory levels, gross margin, productivity and operating efficiencies, yields, growth and diversification of the company's customer base, expected demand from the company's customers, and for products within different markets, including the effect of the economy and seasonality on such demand, product lifecycles, market opportunities and competitive advantages, expected benefits from the Pelikon acquisition, the utilization of flex and flex assemblies, programs, product mix, and material content and wrapping thereof, the company's manufacturing facilities, capabilities, capacity, and expansion thereof, including the MFC3 project, solid operations in other proposed sites, 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, or objectives of management for future operations, the company's operations and financial conditions or prospects, and any other statement that is not of historical fact, including any statements 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 would now like to turn the call back over to Reza. Reza?
Thank you, Lasse. Despite the global economic challenges, we have continued to generate solid financial results. I am pleased with our operating execution in the third quarter, where we maintain our gross margin within our targeted range while delivering our flex assemblies for larger startup programs in support of major product launches by key customers.
During the third quarter, we generated net sales of $174.5 million, which was also within our guidance range of $160 million to $180 million. Third-quarter net sales increased 4% compared to net sales of $167.6 million in the same period last year, and we are slightly on a sequential quarter basis from net sales of $174.1 million generated in the second quarter.
We recorded net income of $11.7 million or $0.46 per diluted share. This compares to net income of $8.8 million or $0.34 per diluted share in the third quarter of fiscal 2008 and $8.7 million or $0.34 per diluted share in the previous quarter. Net income in the third quarter of fiscal 2009 was positively impacted by a one-time net amount of $2.4 million tax credit, representing $0.09 per diluted share, which Tom will discuss in more detail in his remarks.
In addition, our business continues to generate a significant amount of cash. Cash flow from operating activities was $22.2 million for the quarter. And the strength of our balance sheet, highlighted by a substantial cash balance provides us significant financial flexibility to grow our business. It is worth noting that our cash balance has more than doubled during the nine months of fiscal 2009.
From a customer demand standpoint, the third quarter proceeded as expected. Our sales mix continues to primarily come from flex assemblies for smartphones and portable consumer electronic devices that are continuing to experience strong end user demand.
During the third quarter, our four largest customers represented approximately 96% of our net sales, which was similar to the last several quarters. As you are probably aware, for competitive and customer confidentiality reasons, we do not disclose these large customers by name, but instead refer to them as customers A, B, C, and D.