MOLX Molex Incorporated (MM)

Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic components company, today reported results for its second quarter ended December 31, 2011.

   

Three Months Ended

Dec. 31,   Sept. 30,   Dec. 31,

USD millions, except per share data

2011 2011 2010 Net revenue $ 857.6 $ 936.0 $ 901.5 Net income 64.0 80.5 78.3 Earnings per share 0.36 0.46 0.45  

Revenue for the December 2011 quarter was $857.6 million, down 8.4% from the September 2011 quarter and 4.9% from the December 2010 quarter. The impact of the floods in Thailand reduced revenue in the December quarter by approximately $15 million. Revenue in local currencies declined 7.8% from the September 2011 quarter and 6.6% from the December 2010 quarter. Net income for the December 2011 quarter was $64.0 million or $0.36 per share, compared with net income of $80.5 million or $0.46 per share for the September 2011 quarter and net income of $78.3 million or $0.45 per share for the December 2010 quarter. In the December 2011 quarter, we recorded a one-time charge for additional income tax expense of $2.7 million ($0.02 per share). This charge reflects the cumulative effect of a reduction in future tax benefits from deferred tax assets in Japan resulting from a decrease in the Japanese statutory corporate tax rate enacted in November 2011.

“We continue to be optimistic about the future as our new product pipeline is quite strong and long-term growth opportunities remain healthy,” commented Martin P. Slark, Molex’s Chief Executive Officer. “The uncertain economic environment coupled with the disruption from the floods in Thailand, however, made the December quarter challenging from a booking and revenue perspective. We are pleased with our cost control, cash flow and resulting margins and are encouraged by improvements in recent booking trends. During the quarter we completed the purchase of Temp-Flex Cable, Inc., a specialty wire and cable company. Temp-Flex increases our presence in the medical market and will complement our high performance cable business.”

Other financial highlights for the quarter ended December 31, 2011:

• Gross profit margin was 30.7%, compared with 30.1% in the December 2010 quarter and 31.3% in the September 2011 quarter.
• SG&A expense was $163.1 million, compared with $159.0 million in the December 2010 quarter and $169.2 million in the September 2011 quarter.
• Capital expenditures were $52.3 million or 6.1% of revenue.
• Depreciation and amortization was $59.9 million or 7.0% of revenue.
• Backlog was $346.3 million, a decrease of $40.9 million or 10.6% from the September 2011 quarter.
• The book-to-bill ratio was 0.95 to 1.
• Inventory days outstanding was 91 days compared with 87 days in the December 2010 quarter and 84 days in the September 2011 quarter.
• Accounts receivable days outstanding was 71 days compared with 73 days in the December 2010 quarter and 69 days in the September 2011 quarter.
• Cash flow from operations was $141.0 million.
• The effective tax rate was 33.7%. Excluding the impact of the adjustment for deferred tax assets in Japan, the effective tax rate was 30.9%.

Outlook

Based upon current order rates, backlog and normal seasonality, the Company estimates revenue in a range of $830 to $860 million for the March 2012 quarter. At this level of revenue, the Company expects earnings per share in a range of $0.32 to $0.36 assuming constant foreign currency rates and commodity prices and an effective tax rate of 32%.

Earnings Conference Call Information

A conference call will be held on Wednesday, January 25, 2012 at 8:30 am central time. Please dial (888) 679-8038 to participate in the call. International callers should dial (617) 213-4850. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 82556528. 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 34557282.

Other Investor Events

Feb. 14, 2012 – Goldman Sachs Technology and Internet Conference 2012 in San Francisco, CA

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, and the Form 10-Q for the quarter ended September 30, 2011, which are 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 40 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)     Dec. 31,   June 30, 2011 2011 (unaudited)

ASSETS

Current assets: Cash and cash equivalents $ 607,336 $ 532,599 Marketable securities 11,230 13,947 Accounts receivable, less allowances of $38,525 and $42,297 respectively 708,197 811,449 Inventories 552,264 535,953 Deferred income taxes 130,759 129,158 Other current assets   39,084   32,239 Total current assets 2,048,870 2,055,345 Property, plant and equipment, net 1,135,735 1,168,448 Goodwill 166,409 149,452 Non-current deferred income taxes 37,273 38,178 Other assets   181,831   186,429 Total assets $ 3,570,118 $ 3,597,852  

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities: Current portion of long-term debt and short-term borrowings $ 127,631 $ 119,764 Accounts payable 317,103 359,812 Accrued expenses: Accrual for unauthorized activities in Japan 188,601 182,460 Income taxes payable 27,672 2,383 Other   215,233   217,628 Total current liabilities 876,240 882,047 Other non-current liabilities 20,538 23,879 Accrued pension and postretirement benefits 93,056 100,866 Long-term debt   196,671   222,794 Total liabilities   1,186,505   1,229,586   Commitments and contingencies   Total stockholders’ equity   2,383,613   2,368,266 Total liabilities and stockholders’ equity $ 3,570,118 $ 3,597,852        

Molex Incorporated

Condensed Consolidated Statements of Income

(in thousands, except per share data) (unaudited)   Three Months Ended Six Months Ended December 31, December 31, 2011 2010 2011 2010 Net revenue $ 857,598 $ 901,465 $ 1,793,583 $ 1,799,137 Cost of sales   594,661   630,420   1,237,918   1,253,016 Gross profit   262,937   271,045   555,665   546,121   Selling, general and administrative 163,073 159,044 332,298 316,100 Unauthorized activities in Japan   2,723   2,713   5,645   8,255 Total operating expenses   165,796   161,757   337,943   324,355   Income from operations 97,141 109,288 217,722 221,766   Interest (expense) income, net (2,094 ) (1,788 ) (3,485 ) (3,123 ) Other income   1,482   4,792   1,758   4,441 Total other (expense) income, net   (612 )   3,004   (1,727 )   1,318   Income before income taxes 96,529 112,292 215,995 223,084   Income taxes   32,513   34,009   71,462   69,697   Net income $ 64,016 $ 78,283 $ 144,533 $ 153,387   Earnings per share: Basic $ 0.36 $ 0.45 $ 0.82 $ 0.88 Diluted $ 0.36 $ 0.45 $ 0.82 $ 0.88   Dividends declared per share $ 0.2000 $ 0.1750 $ 0.4000 $ 0.3275   Average common shares outstanding: Basic 175,830 174,664 175,656 174,510 Diluted 176,985 175,556 176,778 175,329    

Molex Incorporated

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)   Six Months Ended December 31, 2011 2010   Operating activities: Net income $ 144,533 $ 153,387 Add non-cash items included in net income: Depreciation and amortization 121,174 120,804 Share-based compensation 11,402 11,460 Other non-cash items 5,213 7,275 Changes in assets and liabilities: Accounts receivable 94,400 3,221 Inventories (26,442 ) (67,631 ) Accounts payable (40,976 ) (36,945 ) Other current assets and liabilities (7,183 ) (11,280 ) Other assets and liabilities   (10,608 )   2,184 Cash provided from operating activities 291,513 182,475   Investing activities: Capital expenditures (95,055 ) (132,728 ) Acquisitions (24,000 ) - Proceeds from sales of property, plant and equipment 2,202 1,400 Proceeds from sales or maturities of marketable securities 6,553 5,203 Purchases of marketable securities   (4,787 )   (3,612 ) Cash used for investing activities (115,087 ) (129,737 )   Financing activities: Proceeds from revolving credit facility 75,000 50,000 Payments on revolving credit facility (220,000 ) (15,000 ) Payments on short-term loans (27,389 ) (11,479 ) Proceeds from issuance of long-term debt 150,000 - Payments of long-term debt (287 ) (24,572 ) Cash dividends paid (70,186 ) (53,186 ) Exercise of stock options 2,630 1,820 Other financing activities   (2,087 )   (1,954 ) Cash used for financing activities (92,319 ) (54,371 )   Effect of exchange rate changes on cash   (9,370 )   17,671 Net increase in cash and cash equivalents 74,737 16,038 Cash and cash equivalents, beginning of period   532,599   376,352 Cash and cash equivalents, end of period $ 607,336 $ 392,390