MULTI-FINELINE ELECTRONIX, INC. IRVINE, Calif., Feb. 4, 2016 /PRNewswire/ -- Multi-Fineline Electronix, Inc. (NASDAQ: MFLX), a leading global provider of high-quality, technologically advanced flexible printed circuits and assemblies, today reported financial results for its fourth quarter and full-year ended December 31, 2015. Fourth quarter 2015 net income was $10.4 million, or $0.41 per diluted share, compared to $16.0 million, or $0.65 per diluted share, in the same period last year.
Net sales for fourth quarter 2015 were $169.0 million, compared to $210.0 million for the same period last year. The decline was mainly attributable to softness in the tablet and smartphone markets.
Gross margin for the quarter was 11.8 percent, compared to 14.5 percent in the same period of the prior year. The decline was primarily due to lower overhead absorption as a result of the reduced net sales level.
The Company generated $52.4 million in cash flows from operating activities during the fourth quarter, increasing the Company's cash and cash equivalents balance to $214.2 million at December 31, 2015. The Company continues to maintain a strong balance sheet with no debt.
Reza Meshgin, Chief Executive Officer of MFLEX commented, "Our fourth quarter sales results were impacted by softness in our tablet and smartphone segments. Notwithstanding the lower than anticipated demand, we had solid operational performance and proactively controlled our costs, and achieved our sixth consecutive quarter of strong profitability. We also successfully managed our working capital, generating strong operating cash flows and growing our cash balance to $214 million, an all-time record for MFLEX."
Non-GAAP Results
Non-GAAP net income for fourth quarter 2015 was $11.5 million, or $0.45 per diluted share, compared to non-GAAP net income of $16.3 million, or $0.66 per diluted share, in the same period of the prior year. A reconciliation of GAAP net income and net income per share to non-GAAP net income and net income per share is provided in the table at the end of this press release.
Full Year 2015 Highlights
Net sales for the full-year ended December 31, 2015 were $636.6 million, compared to $631.5 million for the full-year ended December 31, 2014. Reflecting the success of the Company's 2014 restructuring, gross margin increased 820 basis points to 12.6 percent in 2015, supporting MFLEX's return to profitability. 2015 net income was $45.1 million, or $1.79 per diluted share, compared to a net loss of $(59.3) million, or $(2.45) per diluted share, in 2014. 2015 results include $1.8 million of pre-tax impairment and restructuring gains, while 2014 results were impacted by $33.5 million of pre-tax impairment and restructuring charges. Non-GAAP net income for 2015 was $47.6 million, or $1.89 per diluted share, compared to non-GAAP net loss of $(21.8) million, or $(0.91) per diluted share, in 2014. A reconciliation of GAAP net income (loss) and net income (loss) per share to non-GAAP net income (loss) and net income (loss) per share is provided in the table at the end of this press release.
Acquisition by DSBJ; Cancellation of Conference Call and Webcast
In light of today's announcement regarding the Company's definitive merger agreement to be acquired by Suzhou Dongshan Precision Manunfacturing Co., Ltd. ("DSBJ") (SZSE: 002384), MFLEX no longer plans to provide financial guidance and has cancelled its previously announced earnings conference call and webcast. Additional details regarding the transaction can be found in the press release entitled "MFLEX Enters Into Definitive Merger Agreement To Be Acquired By Suzhou Dongshan Precision Manufacturing Co., Ltd. For $23.95 Per Share," which is accessible on the investor relations section of the Company's website at www.mflex.com.
About MFLEX
MFLEX (www.mflex.com) is a global provider of high-quality, technologically advanced flexible printed circuits and assemblies to the consumer electronics industry with manufacturing facilities in Suzhou, China. The Company 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 consumer 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, personal computers, wearables and other consumer electronic devices. MFLEX's common stock is quoted on the Nasdaq Global Select Market under the symbol MFLX.
Forward-Looking Statements
This press release, and the documents to which the Company refers you in this communication, contain forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's current expectations or beliefs concerning future events, plans, strategies, or objectives that are subject to change, and actual results may differ materially from the forward-looking statements. Without limiting the foregoing, the words "expect," "plan", "believe," "seek," estimate," "aim," "intend," "anticipate," "believe," and similar expressions are intended to identify forward-looking statements. Forward-looking statements may involve known and unknown risks over which the Company has no control. Those risks include, without limitation (i) the risk that the proposed transaction by DSBJ may not be completed in a timely manner, or at all, which may adversely affect the Company's business and the price of its common stock, (ii) the failure to satisfy all of the closing conditions of the proposed transaction, including the adoption of the definitive agreement by the Company's stockholders and the receipt of certain governmental and regulatory approvals in the U.S. and in the People's Republic of China, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement, (iv) the effect of the announcement or pendency of the proposed transaction on the Company's business, operating results, and relationships with customers, suppliers and others, (v) risks that the proposed transaction may disrupt the Company's current plans and business operations, (vi) potential difficulties retaining employees as a result of the proposed transaction, (vii) risks related to the diverting of management's attention from the Company's ongoing business operations, and (viii) the outcome of any legal proceedings that may be instituted against the Company related to the definitive agreement or the proposed transaction. In addition, the Company's actual performance and results may differ materially from those currently anticipated due to a number of risks including, without limitation: (i) the conditions of markets generally and the industries in which the Company operates, including recent volatility in the Company's key industry segments, (ii) the Company's ability to diversify its product applications, expand its customer base, and enter into new market segments as a result of the proposed transaction, and (iii) other events and factors disclosed previously and from time to time in the Company's filings with the SEC, including the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2015. Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law, the Company does not undertake to update these forward-looking statements to reflect future events or circumstances.
Additional Information and Where to Find It
In connection with the proposed transaction, the Company will be filing relevant materials with the Securities and Exchange Commission (the "SEC"), including a preliminary proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, the Company will mail or otherwise make available the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the proposed transaction. Company stockholders and other investors are advised to carefully read these materials (including any amendments or supplements thereto) and any other relevant documents filed with the SEC in respect of the proposed transaction when they become available, as those documents will contain important information about the proposed transaction and the parties to the proposed transaction. Company stockholders and other investors may obtain free copies of the definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the proposed transaction (when they become available), along with other documents filed by the Company with the SEC, at the SEC's website (http://www.sec.gov) or through the investor relations section of the Company's website (http://www.mflex.com).
Participants in the Solicitation
The Company and its directors and executive officers may be deemed participants under SEC rules in the solicitation of proxies from the Company's stockholders in favor of the proposed transaction. Information about the Company's directors and executive officers and their interests in the solicitation, which may, in some cases, differ from those of the Company's stockholders generally, will be included in the proxy statement filed with the SEC in connection with the proposed transaction. Additional information about these directors and executive officers is available in the Company's proxy statement for its 2015 Annual Meeting of Stockholders, which was filed with the SEC on January 21, 2015, and in the Company's Transition Report on Form 10-K, which was filed with the SEC on February 13, 2015. To the extent that holdings of the Company's securities by the Company's directors and executive officers have changed since the amounts printed in the latest proxy statement or Form 10-K, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.
(SUMMARY FINANCIAL INFORMATION FOLLOWS)
Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2015 2014 2015 2014
---- ---- ---- ----
Net sales $169,045 $210,003 $636,599 $631,484
Cost of sales 149,144 179,516 556,543 603,644
------- ------- ------- -------
Gross profit 19,901 30,487 80,056 27,840
Operating expenses:
Research and
development 1,204 1,397 5,062 5,883
Sales and
marketing 3,266 4,819 14,718 17,926
General and
administrative 4,848 4,675 19,837 16,753
Impairment and
restructuring 51 (396) (1,757) 33,543
--- ---- ------ ------
Total operating
expenses 9,369 10,495 37,860 74,105
Operating income
(loss) 10,532 19,992 42,196 (46,265)
Other income and expense:
Interest income 457 239 1,722 1,055
Interest expense (85) (71) (367) (446)
Other income
(expense), net 1,345 199 5,303 1,401
----- --- ----- -----
Income (loss)
before income
taxes 12,249 20,359 48,854 (44,255)
Provision for
income taxes (1,827) (4,384) (3,772) (15,023)
Net income (loss) $10,422 $15,975 $45,082 $(59,278)
======= ======= ======= ========
Net income (loss) per share:
Basic $0.43 $0.66 $1.85 $(2.45)
Diluted $0.41 $0.65 $1.79 $(2.45)
Shares used in computing net income (loss) per
share:
Basic 24,428 24,268 24,367 24,169
Diluted 25,314 24,624 25,248 24,169
Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31 December 31,
2015 2014
---- ----
Cash and cash equivalents $214,234 $132,382
Accounts receivable, net 80,142 133,151
Inventories 56,455 65,627
Other current assets 5,664 19,200
----- ------
Total current assets 356,495 350,360
Property, plant and
equipment, net 131,987 164,345
Other assets 12,978 12,682
Total assets $501,460 $527,387
======== ========
Accounts payable $106,902 $143,032
Other current liabilities 26,044 44,717
------ ------
Total current liabilities 132,946 187,749
Other liabilities 7,432 11,178
Stockholders' equity 361,082 328,460
Total liabilities and
stockholders' equity $501,460 $527,387
======== ========
Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2015 2014 2015 2014
---- ---- ---- ----
Cash flows from operating activities
Net income (loss) $10,422 $15,975 $45,082 $(59,278)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 10,213 14,741 45,536 53,300
Deferred taxes (549) 508 (423) 8,072
Stock-based compensation expense 1,130 1,126 4,413 3,652
Income tax benefit related to stock
option exercises - - - (57)
Asset impairments (recoveries) (14) (1,816) (960) 16,425
Gain on disposal of equipment and
assets held for sale (99) (264) (929) (777)
Changes in operating assets and
liabilities 31,279 4,731 156 9,658
Net cash provided by operating
activities 52,382 35,001 92,875 30,995
Cash flows from investing activities
Purchases of property and equipment (4,563) (4,045) (15,186) (16,011)
Proceeds from sale of equipment and
assets held for sale 76 3,201 7,063 6,297
Change in restricted cash - - 520 (520)
Net cash used in investing activities (4,487) (844) (7,603) (10,234)
Cash flows from financing activities
Income tax benefit related to stock
option exercises - - - 57
Tax withholdings for net share
settlement of equity awards (749) (369) (1,683) (907)
Proceeds from exercise of stock
options - - - 782
Borrowings from lines of credit - - - 20,000
Repayment of borrowings under line of
credit agreement - - - (20,000)
Debt issuance costs - - - (442)
--- --- --- ----
Net cash used in financing activities (749) (369) (1,683) (510)
Effect of exchange rate changes on
cash (1,448) (73) (1,737) 244
------ --- ------ ---
Net change in cash 45,698 33,715 81,852 20,495
Cash and cash equivalents at
beginning of period 168,536 98,667 132,382 111,887
------- ------ ------- -------
Cash and cash equivalents at end of
period $214,234 $132,382 $214,234 $132,382
======== ======== ======== ========
Multi-Fineline Electronix, Inc.
Selected Non-GAAP Financial Measures and Schedule Reconciling Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income
(loss) $10,422 $15,975 $45,082 $(59,278)
Stock-based
compensation
expense 1,130 1,126 4,413 3,652
Impairment and
restructuring 51 (396) (1,757) 33,543
Valuation allowance
related to
restructuring - - - 5,001
Income tax effect of
non-GAAP
adjustments (115) (455) (121) (4,704)
Non-GAAP net income
(loss) $11,488 $16,250 $47,617 $(21,786)
======= ======= ======= ========
GAAP diluted income
(loss) per share $0.41 $0.65 $1.79 $(2.46)
Effect of stock-
based compensation,
net of tax on
diluted income
(loss) per share 0.04 0.04 0.16 0.14
Effect of impairment
and restructuring,
net of tax on
diluted income
(loss) per share - (0.03) (0.06) 1.20
Effect of valuation
allowance related
to restructuring on
diluted income
(loss) per share - - - 0.21
Non-GAAP diluted
income (loss) per
share $0.45 $0.66 $1.89 $(0.91)
===== ===== ===== ======
Weighted-average
diluted shares used
in calculating non-
GAAP diluted income
(loss) per share 25,314 24,624 25,248 24,169
Use of Non-GAAP Financial Information
To supplement the condensed consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company uses non-GAAP financial measures (non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share) that exclude certain charges and gains. Management excludes these items because it believes that the non-GAAP measures enhance an investor's overall understanding of the Company's financial performance and future prospects by being more reflective of the Company's recurring operational activities and to be more comparable with the results of the Company over various periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies' financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
The items excluded from GAAP net income (loss) and diluted net income (loss) per share in calculating these non-GAAP financial measures are as follows: (a) stock-based compensation expense, (b) impairment and restructuring activities and (c) valuation allowance related to restructuring.
Contact: Stacy Feit
Investor Relations
Tel: 213-486-6549
Email: investor_relations@mflex.com
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SOURCE Multi-Fineline Electronix, Inc.
