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Wednesday April 23, 11:53 AM
Molex Reports Results including Record Orders for 2008 Third Fiscal Quarter |
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Lisle, Illinois, United States, Wednesday, April 23, 2008 -- (Business Wire India) -- Molex Incorporated (NASDAQ:MOLX)(NASDAQ:MOLXA), a global electronic components company, reported results for its 2008 third fiscal quarter.
2008 Third Quarter Results
Revenue for the quarter ended March 31, 2008 was $822.3 million, an increase of 1.9% over the same period last fiscal year. Revenue in local currencies declined 4.4% as currency translation increased revenue by $51.1 million compared with last year's March quarter.
When compared with the same period last fiscal year, revenue in the telecom market increased 5.7%. Revenue in the data and consumer electronics markets increased 8.7% and 1.7% respectively. Revenue in the automotive market increased 5.4%, due to gains in Japan and Europe. Revenue in the industrial market declined 18.4%, the result of divesting certain low margin businesses and a delay in shipments related to a seasonal project.
Net income for the March quarter was $50.3 million, or $0.28 per share. Included in the current quarter was an after-tax charge of $4.9 million ($0.03 per share) relating to the previously announced restructuring program and an income tax charge of $10.5 million ($0.06 per share) due to foreign tax credit adjustments resulting from the recent filing of our fiscal 2007 tax return. Without these charges, earnings per share would have been $0.37 per share. Earnings per share were $0.33 (including a restructuring charge of $0.02) in the December 2007 quarter and $0.35 in the prior year March quarter.
Gross profit margin for the March quarter was 30.9%, improving to the highest level since the prior year March quarter when gross profit margin was 31.1%. SG&A expense for the March quarter was 20.4% of revenue, compared with 19.7% in the December quarter, and 20.1% in the prior year quarter. The effective tax rate for the March quarter was 42.1%, reflecting the income tax charge mentioned previously.
Orders for the March quarter were $898.0 million, increasing 14.7% compared with the prior year quarter and 4.5% sequentially. Orders have increased sequentially in each of the three quarters during the current fiscal year. Year over year order growth was strong in all major markets, with the exception of the industrial market which was flat. Compared with the prior year quarter, order growth in the telecom market was very strong increasing by 35%. Order growth was strong in the data and consumer electronics markets which increased 13.0% and 11.1% respectively. Order growth in the medical electronics market was 14.1%. While the medical electronics market currently represents only 2.7% of total revenue, the Company expects significant long term growth in this market coincidental with the aging population demographic.
The Company's order backlog on March 31, 2008 increased 33.2% to $461.0 million, compared with $346.0 million in the prior year March quarter. Backlog as of December 2007 was $375.0 million.
Martin P. Slark, CEO and Vice-Chairman, commented on the third quarter, "We were very pleased with our operating results, especially the sequential improvement in gross profit margin. Since the transition to the new global product division and sales and marketing organization, we have made steady progress in improving operating efficiencies. We have also reduced capital spending as a percentage of revenue by 210 basis points during the current fiscal year. In the March quarter our restructuring activities advanced significantly with the completion of our plant expansion in China."
"Demand trends were very positive with record new orders and a 1.09 book to bill ratio. We believe this demonstrates the enhanced ability of our global sales and marketing organization to generate additional business including design wins within our customers new products."
Research and Development and Capital Spending
Research and development expenditures for the March quarter were $41.7 million, compared with $40.6 million in the prior year March quarter. Capital expenditures for the March quarter were $61.0 million, compared with $63.6 million in the prior year March quarter. Capital expenditures for the first three quarters of fiscal 2008 were 6.7% of revenue, compared with 8.8% of revenue in the prior year period. This reduction is consistent with the Company's goal of increasing asset efficiency by lowering the incremental investment required to drive future growth.
Depreciation expense was $61.8 million, compared with $58.3 million in the prior year March quarter and $60.3 million in the December quarter.
Nine-Month Results
Revenue for the nine-months ended March 31, 2008 was $2.46 billion, a decrease of 0.7% compared with the prior fiscal year. During the current fiscal year, currency translation increased revenue by $104.4 million. Net income of $162.8 million, or $0.89 per share declined 21.7% compared with last year's net income of $208.0 million, or $1.12 per share. Included in the current fiscal year results is an after-tax charge of $11.1 million ($0.06 per share) relating to the restructuring program and an income tax charge of $10.5 million ($0.06 per share) as a result of foreign tax credit adjustments resulting from the recent filing of our fiscal 2007 tax return.
Stock Buyback
During the quarter, the Company repurchased 2,085,000 shares of Class A Common Stock (MOLXA) and 325,000 shares of Common Stock (MOLX) at a total cost of $54.4 million. The Board of Directors previously authorized the repurchase of up to $200.0 million of common stock through June 30, 2008, and approximately $33.8 million remains under this authorization.
Fourth Quarter Outlook
Martin P. Slark commented, "We entered the fourth quarter with considerable momentum. New orders in the third quarter were a record. We believe we have significant competitive advantage by combining our new product technologies with our global presence, both in access to stronger overseas demand and through the diversification of a global customer base. The recently implemented product division based organization is also providing opportunities to expand both sales and profits. In addition, the restructuring initiatives are moving forward, with increases in operating margins expected in fourth quarter."
As a result, the Company anticipates a sequential improvement in revenue and earnings per share for the fourth fiscal quarter ending June 30, 2008. The Company expects that revenue will be in a range of $850 to $890 million, and earnings per share will be in a range of $0.36 to $0.40. These estimates include a restructuring charge of approximately $0.03 per share.
Forward-Looking Statements
Statements in this release that are not historical are forward-looking and are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Forward-looking statements are based on currently available information and include, among others, the discussion under "Fourth Quarter Outlook." These risks and uncertainties include those associated with the operation of our business, including the risk that customer demand will decrease either temporarily or permanently, whether due to the Company's actions or the demand for the Company's products, and that the Company may not be able to respond through cost reductions in a timely and effective manner; price cutting, new product introductions and other actions by our competitors; fluctuations in the costs of raw materials that the Company is not able to pass through to customers because of existing contracts or market factors; the challenges attendant to plant closings and restructurings, including the difficulty of predicting plant closing and relocation costs, the difficulty of commencing or increasing production at existing facilities, and the reactions of customers, governmental units, employees and other groups, the challenges attendant to plant construction; and the ability to realize cost savings from restructuring activities, as well as difficulty implementing the transition to a product-focused organization structure.
Other risks and uncertainties are set forth in Item 1A "Risk Factors" of the Company's Form 10-K for the year ended June 30, 2007, which is incorporated by reference and in reports that Molex files or furnishes with the Securities and Exchange Commission. This release speaks only as of its date and Molex disclaims any obligation to revise these forward-looking statements or to provide any updates regarding information contained in this release resulting from new information, future events or otherwise.
Earnings Conference Call Information
A conference call was held on Tuesday, April 22, 2008 at 4:00 pm central. Please dial (888) 679-8035 to participate in the conference call. International callers please dial (617) 213-4848. Please dial in at least five minutes prior to the start of the call and refer to participant passcode 26199576. Internet users will be able to access the web-cast, including slide materials, live and in replay in the "Investors" section of the Company's website at www.molex.com. A 48-hour telephone replay will be available at approximately 6:00 pm central at (888) 286-8010 or (617) 801-6888 / passcode 79248697.
Other Investor Events
May 8, 2008 - Merrill Lynch Tech Conference in New York
May 14, 2008 - Credit Suisse Hardware, Semi & Supply Chain Conference in Boston
June 3, 2008 - NASDAQ market open in New York
June 18, 2008 - William Blair & Company Conference in Chicago
August 5, 2008 - Molex FY08 Q4 Press Release and Conference Call
August 6, 2008 - Molex Analysts Meeting in Rosemont, Illinois
Note: The Company's SEC filings, as well as news releases and other supplementary financial data are available on the Company's website at www.molex.com.
Molex Incorporated is a 68-year-old manufacturer of electronic components, including electrical and fiber optic interconnection products and systems, switches and integrated products, with 59 plants in 19 countries throughout the world.
Editor's note: Molex is traded on the NASDAQ Global Select Market (MOLX and MOLXA) in the United States and on the London Stock Exchange. The Company's voting common stock (MOLX) is included in the S&P 500 Index.
Molex Incorporated
Adjusted Results
(Unaudited)
(in thousands, except per share data)
Three months ended March 31, 2008:
U.S. Restructuring Tax Adjusted
GAAP Adjustment Adjustment Results(1)
---------- ------------- ----------- ----------
Net revenue $822,285 $- $- $822,285
Cost of sales 567,824 - - 567,824
---------- ------------ ---------- ----------
Gross profit 254,461 - - 254,461
---------- ------------ ---------- ----------
Selling, general and
administrative 167,639 - - 167,639
Restructuring costs
and asset impairments 6,399 (6,399) - -
---------- ------------ ---------- ----------
Total operating
expenses 174,038 (6,399) - 167,639
---------- ------------ ---------- ----------
Income from operations 80,423 6,399 - 86,822
Investment income 4,462 - - 4,462
Interest income, net 2,044 - - 2,044
---------- ------------ ---------- ----------
Other income, net 6,506 - - 6,506
---------- ------------ ---------- ----------
Income before income
taxes 86,929 6,399 - 93,328
Income taxes 36,623 1,497 (10,544) 27,576
---------- ------------ ---------- ----------
Net income $50,306 $4,902 $10,544 $65,725
========== ============ ========== ==========
Earnings per share:
Basic $0.28 $0.37
Diluted $0.28 $0.37
Average common shares
outstanding:
Basic 179,385 179,385
Diluted 180,086 180,086
Nine months ended March 31, 2008:
U.S. Restructuring Tax Adjusted
GAAP Adjustment Adjustment Results(1)
---------- ------------- ---------- ----------
Net revenue $2,456,455 $- $- $2,456,455
Cost of sales 1,712,729 - - 1,712,729
---------- ------------ ---------- ----------
Gross profit 743,726 - - 743,726
---------- ------------ ---------- ----------
Selling, general and
administrative 493,973 - - 493,973
Restructuring costs
and asset impairments 16,286 (16,286) - -
---------- ------------ ---------- ----------
Total operating
expenses 510,259 (16,286) - 493,973
---------- ------------ ---------- ----------
Income from operations 233,467 16,286 - 249,753
Investment income 7,241 - - 7,241
Interest income, net 6,964 - - 6,964
---------- ------------ ---------- ----------
Other income, net 14,205 - - 14,205
---------- ------------ ---------- ----------
Income before income
taxes 247,672 16,286 - 263,958
Income taxes 84,846 5,193 (10,544) 79,495
---------- ------------ ---------- ----------
Net income $162,826 $11,093 $10,544 $184,463
========== ============ ========== ==========
Earnings per share:
Basic $0.90 $1.02
Diluted $0.89 $1.01
Average common shares
outstanding:
Basic 181,260 181,260
Diluted 182,156 182,156
(1) Adjusted results is a non-GAAP financial measure. We refer to non-GAAP financial measures to describe earnings for such periods excluding the items referenced above. This is in addition to disclosing the most directly comparable measure for such periods determined in accordance with generally accepted accounting principles (GAAP). We believe that these non-GAAP financial measures provide useful information to investors because they provide information about the estimated financial performance of Molex's ongoing business and provide for greater transparency of supplemental information used by management in its financial and operational decision-making. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Molex Incorporated
Condensed Consolidated Balance Sheets
(in thousands)
March 31, June 30,
2008 2007
----------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $453,854 $378,361
Marketable securities 38,361 82,549
Accounts receivable, less allowances of $40,970
and $31,064, respectively 746,705 685,666
Inventories 457,974 392,680
Other current assets 57,766 51,571
----------- ----------
Total current assets 1,754,660 1,590,827
Property, plant and equipment, net 1,191,337 1,121,369
Goodwill 373,451 334,791
Other assets 315,782 269,121
----------- ----------
Total assets $3,635,230 $3,316,108
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $309,634 $279,847
Accrued expenses 210,162 187,890
Other current liabilities 149,421 63,214
----------- ----------
Total current liabilities 669,217 530,951
Other non-current liabilities 26,105 25,612
Accrued pension and postretirement benefits 118,890 108,693
Long-term debt 155,689 127,821
----------- ----------
Total liabilities 969,901 793,077
----------- ----------
Commitments and contingencies
Total stockholders' equity 2,665,329 2,523,031
----------- ----------
Total liabilities and stockholders' equity $3,635,230 $3,316,108
=========== ==========
Molex Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- ---------------------
2008 2007 2008 2007
--------- --------- ---------- ----------
Net revenue $822,285 $807,014 $2,456,455 $2,474,026
Cost of sales 567,824 556,026 1,712,729 1,695,120
--------- --------- ---------- ----------
Gross profit 254,461 250,988 743,726 778,906
--------- --------- ---------- ----------
Selling, general and
administrative 167,639 162,471 493,973 496,463
Restructuring costs and
asset impairments 6,399 - 16,286 -
--------- --------- ---------- ----------
Total operating expenses 174,038 162,471 510,259 496,463
--------- --------- ---------- ----------
Income from operations 80,423 88,517 233,467 282,443
Investment income 4,462 1,699 7,241 5,308
Interest income, net 2,044 2,080 6,964 6,169
--------- --------- ---------- ----------
Other income, net 6,506 3,779 14,205 11,477
--------- --------- ---------- ----------
Income before income taxes 86,929 92,296 247,672 293,920
Income taxes 36,623 26,978 84,846 85,874
--------- --------- ---------- ----------
Net income $50,306 $65,318 $162,826 $208,046
========= ========= ========== ==========
Earnings per share:
Basic $0.28 $0.36 $0.90 $1.13
Diluted $0.28 $0.35 $0.89 $1.12
Dividends declared per share $0.1125 $0.0750 $0.3375 $0.2250
Average common shares
outstanding:
Basic 179,385 183,985 181,260 183,922
Diluted 180,086 185,271 182,156 185,591
Molex Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine Months Ended
March 31,
---------------------
2008 2007
--------- -----------
Operating activities:
Net income $162,826 $208,046
Add non-cash items included in net income:
Depreciation and amortization 184,675 177,138
Share-based compensation 18,539 19,616
Other non-cash items 3,568 4,763
Changes in assets and liabilities:
Accounts receivable 12,604 24,488
Inventories (22,540) (29,724)
Accounts payable (6,179) (56,396)
Other current assets and liabilities 8,915 (64,444)
Other assets and liabilities (9,551) (8,233)
-------- ----------
Cash provided from operating activities 352,857 275,254
Investing activities:
Capital expenditures (163,440) (219,435)
Proceeds from sales of property, plant and
equipment 11,417 3,891
Proceeds from sales or maturities of marketable
securities 843,493 4,449,264
Purchases of marketable securities (798,921) (4,349,497)
Acquisitions (42,503) (237,207)
Other investing activities (9,733) 3,575
-------- ----------
Cash used for investing activities (159,687) (349,409)
Financing activities:
Proceeds from revolving credit facility 65,000 44,000
Payments on revolving credit facility - (44,000)
Proceeds from issuance of long-term debt - 131,045
Payments of long-term debt (1,705) (26,570)
Cash dividends paid (54,557) (41,382)
Exercise of stock options 8,534 7,967
Purchase of treasury stock (166,199) (19,967)
Other financing activities (900) 384
-------- ----------
Cash (used for) provided by financing activities (149,827) 51,477
Effect of exchange rate changes on cash 32,150 9,437
-------- ----------
Net increase (decrease) in cash and cash
equivalents 75,493 (13,241)
Cash and cash equivalents, beginning of period 378,361 332,815
-------- ----------
Cash and cash equivalents, end of period $453,854 $319,574
======== ==========
Media contact details
CONTACT:
Molex Incorporated
Neil Lefort
Senior Vice President
(630)527-4344
CONTACT:
Molex Incorporated
Neil Lefort
Senior Vice President
(630)527-4344
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