MOLX Molex Incorporated (MM)

Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic components company, today reported results for its first quarter ended September 30, 2011.

 

Three Months Ended

Sept. 30,   Jun. 30,   Sept. 30,

USD millions, except per share data

2011 2011 2010 Net revenue $ 936.0 $ 913.7 $ 897.7 Net income 80.5 77.3 75.1 Earnings per share 0.46 0.44 0.43  

Revenue for the September 2011 quarter was $936.0 million, an increase of 2.4% from the June 2011 quarter and an increase of 4.3% from the September 2010 quarter. This is a record for the Company and above the high end of the guidance provided on August 3, 2011. Revenue in local currencies increased 1.2% from the June 2011 quarter and declined 1.6% from the September 2010 quarter. Net income for the September 2011 quarter was $80.5 million or $0.46 per share, compared with net income of $77.3 million or $0.44 per share for the June 2011 quarter and net income of $75.1 million or $0.43 per share for the September 2010 quarter.

“Molex had another strong quarter, once again setting records for revenue and earnings per share. Production in Japan increased during the quarter as our operations recovered from the earthquake and tsunami and as our customers pushed to prepare for the Christmas selling season,” commented Martin P. Slark, Molex’s Chief Executive Officer. “We successfully converted the higher revenue to income, which allowed us to expand our margins and exceed our guidance for the September quarter.”

“While near term demand for our products is impacted by economic uncertainty, we remain confident that the long term trends of increased mobility, growth in emerging markets and a hardware replacement cycle will continue to drive the industry forward. With our global footprint, innovative design capabilities and improved cost structure, we are well positioned to capitalize on these opportunities.”

Other financial highlights for the quarter ended September 30, 2011:

• Gross profit margin was 31.3% in the September 2011 quarter, compared with 30.6% in the September 2010 quarter and 30.8% in the June 2011 quarter.
• SG&A expense was $169.2 million, or 18.1% of revenue compared with 17.5% in the September 2010 quarter and 18.4% in the June 2011 quarter.
• Capital expenditures were $42.8 million or 4.6% of revenue.
• Depreciation and amortization was $61.2 million or 6.5% of revenue.
• Backlog was $387.2 million, a decrease of $31.3 million or 7.5% from the June 2011 quarter.
• The book-to-bill ratio was 0.97 to 1 for the September 2011 quarter.
• Inventory days outstanding was 84 days compared with 85 days in the September 2010 quarter and 84 days in the June 2011 quarter.
• Accounts receivable days outstanding was 69 days compared with 76 days in the September 2010 quarter and 72 days in the June 2011 quarter.
• Cash flow from operations was $150.5 million, an increase of 141% from the September 2010 quarter and a new record.
• The effective tax rate was 32.6%. Excluding the reversal of a tax benefit for a significant number of employee stock options that expired unexercised during the quarter, the effective tax rate was 30.0%.

Outlook

At the current time, the global economic environment is very difficult to interpret and this uncertainty as well as our recent incoming order trend has been reflected in the Company’s outlook for the coming quarter. The Company estimates revenue in a range of $870 to $910 million for the December 2011 quarter. At this level of revenue, the Company expects earnings per share in a range of $0.37 to $0.43 assuming constant foreign currency rates and commodity prices and an effective tax rate in the range of 30% to 32%.

Earnings Conference Call Information

A conference call will be held on Tuesday, October 25, 2011 at 7:30 am central time. Please dial (888) 680-0890 to participate in the call. International callers should dial (617) 213-4857. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 469 206 39#. Internet users will be able to access the webcast, 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 10:30 am central time at (888) 286-8010 or (617) 801-6888 / pass code 47915877.

Other Investor Events

Oct 28, 2011 – Molex Annual Meeting of Stockholders in Lisle, IL

Nov 16, 2011 – UBS Global Technology & Services Conference in New York, NY

Nov 30, 2011 – Credit Suisse Annual Technology Conference, Scottsdale, AZ

Dec 7, 2011 – NASDAQ OMX 27th Investor Program in London

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. Words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “projects,” “estimates,” “potential,” and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based on currently available information and include, among others, the discussion under “Outlook.” These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions including 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; the risk that the value of our inventory may decline; 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 availability of credit and general market liquidity; fluctuations in currency exchange rates; natural disasters; the financial condition of our customers; labor cost increases; and the ability to realize cost savings from cost reduction initiatives, the outcome of legal proceedings and losses resulting from unauthorized activities in Molex Japan.

Other factors, risks and uncertainties are set forth in Item 1A “Risk Factors” of the Company’s Form 10-K for the year ended June 30, 2011, which is incorporated by reference and in other reports that Molex files or furnishes with the Securities and Exchange Commission. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed in these forward-looking statements. As a result, 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.

Molex Incorporated is a 73-year-old global manufacturer of electronic, electrical and fiber optic interconnection systems. Based in Lisle, Illinois, USA, the Company operates 39 manufacturing locations in 16 countries. The Molex website is www.molex.com.

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

Condensed Consolidated Balance Sheets

(in thousands)     Sept. 30,   June 30, 2011 2011 (unaudited)

ASSETS

Current assets: Cash and cash equivalents $ 557,376 $ 532,599 Marketable securities 11,150 13,947 Accounts receivable, less allowances of $40,685 and $42,297 respectively 782,833 811,449 Inventories 547,209 535,953 Deferred income taxes 131,819 129,158 Other current assets   40,917   32,239 Total current assets 2,071,304 2,055,345 Property, plant and equipment, net 1,144,023 1,168,448 Goodwill 148,349 149,452 Non-current deferred income taxes 39,404 38,178 Other assets   177,498   186,429 Total assets $ 3,580,578 $ 3,597,852  

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities: Current portion of long-term debt and short-term borrowings $ 129,781 $ 119,764 Accounts payable 349,657 359,812 Accrued expenses: Accrual for unauthorized activities in Japan 191,873 182,460 Income taxes payable 32,349 2,383 Other   222,930   217,628 Total current liabilities 926,590 882,047 Other non-current liabilities 22,253 23,879 Accrued pension and postretirement benefits 96,232 100,866 Long-term debt   176,925   222,794 Total liabilities   1,222,000   1,229,586   Commitments and contingencies   Total stockholders’ equity   2,358,578   2,368,266 Total liabilities and stockholders’ equity $ 3,580,578 $ 3,597,852  

Molex Incorporated

Condensed Consolidated Statements of Income

(in thousands, except per share data) (unaudited)     Three Months Ended September 30, 2011   2010   Net revenue $ 935,985 $ 897,672 Cost of sales   643,257     622,596 Gross profit   292,728     275,076   Selling, general and administrative 169,225 157,056 Unauthorized activities in Japan   2,922     5,542 Total operating expenses   172,147     162,598   Income from operations 120,581 112,478   Interest expense, net 1,391 1,335 Other (income) expense   (276 )   351 Total other expense, net   1,115     1,686   Income before income taxes 119,466 110,792   Income taxes   38,949     35,688   Net income $ 80,517   $ 75,104   Earnings per share: Basic $ 0.46 $ 0.43 Diluted $ 0.46 $ 0.43   Dividends declared per share $ 0.2000 $ 0.1525   Average common shares outstanding: Basic 175,466 174,370 Diluted 176,585 175,156  

Molex Incorporated

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)     Three Months Ended September 30, 2011   2010   Operating activities: Net income $ 80,517 $ 75,104 Add non-cash items included in net income: Depreciation and amortization 61,239 59,108 Share-based compensation 5,135 5,149 Other non-cash items 5,991 8,634 Changes in assets and liabilities: Accounts receivable 22,927 (29,343 ) Inventories (18,260 ) (57,988 ) Accounts payable (10,702 ) (24,876 ) Other current assets and liabilities 28,890 27,886 Other assets and liabilities   (25,188 )   (1,079 ) Cash provided from operating activities 150,549 62,595   Investing activities: Capital expenditures (42,804 ) (71,192 ) Proceeds from sales of property, plant and equipment 1,396 643 Proceeds from sales or maturities of marketable securities 4,868 2,184 Purchases of marketable securities   (2,777 )   (1,257 ) Cash used for investing activities (39,317 ) (69,622 )   Financing activities: Proceeds from revolving credit facility 30,000 20,000 Payments on revolving credit facility (195,000 ) (10,000 ) Payments on short-term loans (27,266 ) - Proceeds from issuance of long-term debt 150,000 797 Payments of long-term debt (143 ) (24,840 ) Cash dividends paid (35,068 ) (26,565 ) Exercise of stock options 620 358 Other financing activities   (1,014 )   (967 ) Cash used for financing activities (77,871 ) (41,217 )   Effect of exchange rate changes on cash   (8,584 )   12,536   Net increase (decrease) in cash and cash equivalents 24,777 (35,708 ) Cash and cash equivalents, beginning of period   532,599     376,352   Cash and cash equivalents, end of period $ 557,376   $ 340,644