MOLXA Molex Incorporated - Class A (MM)

Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic components company, today reported results for its fourth quarter and full fiscal year ended June 30, 2012.

 

Fourth Quarter Results

      Three Months Ended Jun. 30, Mar. 31, Jun. 30,

USD millions, except per share data

2012 2012 2011   Net revenue $ 858.5 $ 837.1 $ 913.7 Net income 72.0 64.9 77.3 Earnings per share 0.40 0.36 0.44  

Net revenue for the June 2012 quarter was $858.5 million, a 2.6% increase from the March 2012 quarter and 6.0% decrease from the June 2011 quarter. In local currencies, net revenue increased 3.3% compared with the March 2012 quarter and decreased 4.4% compared with the June 2011 quarter. Orders for the June 2012 quarter were $901.0 million, an increase of 3.3% from the March 2012 quarter, resulting in a book-to-bill ratio of 1.05 to 1.0 for the June 2012 quarter.

Net income for the June 2012 quarter was $72.0 million or $0.40 per share, compared with $64.9 million, or $0.36 per share, for the March 2012 quarter and $77.3 million, or $0.44 per share, for the June 2011 quarter.

“We are encouraged with our margin performance in the June quarter even though revenue was below our expectations. More importantly, bookings have now increased sequentially in Q3 and Q4 and new product design activity remains extremely strong,” commented Martin P. Slark, Chief Executive Officer. “At this time of global economic uncertainty, we have several new product introductions scheduled for the September quarter that, coupled with the pre-Christmas build, are expected to drive revenue growth at a rate in excess of the connector industry.”

Other financial highlights for the quarter ended June 30, 2012:

• Gross profit margin was 30.0%, compared with 30.5% in the March 2012 quarter and 30.8% in the June 2011 quarter. The March 2012 quarter benefitted from favorable product mix, while the June 2011 quarter was achieved with higher revenue and lower commodity costs.
• SG&A expense was $161.6 million, compared with $163.9 million in the March 2012 quarter and $167.9 million in the June 2011 quarter. SG&A expense included an insurance reimbursement of $6.0 million ($0.02 per share) related to losses incurred as a result of the March 2011 earthquake and tsunami in Japan.
• Backlog was $416.4 million, an increase of $39.5 million or 10.5% from the March 2012 quarter. This increase is a direct result of orders for new products that will launch in the September 2012 quarter.
• Capital expenditures were $77.7 million or 9.0% of revenue, including significant investments for new product introductions.
• The effective tax rate of 24.3% included a one-time benefit of $6.1 million ($0.03 per share) due to the recognition of foreign tax credits and the reversal of deferred tax liabilities related to the repatriation of foreign earnings. Excluding the one-time benefit, the effective tax rate was 30.8%.

 

Full Fiscal Year Results

  Twelve Months Ended Jun. 30,         Jun. 30,

USD millions, except per share data

2012

2011   Net revenue $ 3,489.2 $ 3,587.3 Net income 281.4 298.8 Earnings per share 1.59 1.70  

Net revenue for the full fiscal year ended June 30, 2012 was $3.5 billion, a 2.7% decrease from the prior fiscal year. Net revenue in local currencies decreased 4.3% from the prior fiscal year. Net income for the year ended June 30, 2012 was $281.4 million or $1.59 per share, compared with net income of $298.8 million or $1.70 per share in the prior fiscal year. The effective tax rate for the fiscal year ended June 30, 2012 was 29.7%.

“Despite the challenging economic environment, we are pleased with our overall operating performance during fiscal 2012. We worked hard to overcome disruptions from the earthquake and tsunami in Japan and the floods in Thailand. We were also very successful in fulfilling customer requirements in a record setting first quarter, which was followed by a significant slowdown in overall demand in the second quarter,” commented Martin P. Slark. “For the full year we increased our gross margin while significantly improving our quality and delivery metrics, introduced many new products and generated record cash flow which allowed us to increase our dividend by 10%.”

Outlook

Based upon current order rates, customer backlog and scheduled new product launches, the Company estimates revenue in a range of $900 to $940 million for the September 2012 quarter. At this level of revenue, the Company expects earnings per share in a range of $0.37 to $0.41 assuming constant foreign currency rates, unchanged 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 Wednesday, August 8, 2012 at 8:30 a.m. central time. Please dial (888) 679-8037 to participate in the call. International callers should dial (617) 213-4849. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 77269585. 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 a.m. central time at (888) 286-8010 or (617) 801-6888 / pass code 71037736.

Other Investor Events

Sep. 05, 2012 – Citi’s Annual 2012 Technology Conference in New York

Sep. 12, 2012 – Deutsche Bank’s dbAccess 2012 Technology Conference in Las Vegas

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 “expect,” “anticipate,” “outlook,” “forecast,” “could,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “should,” “may,” “assume,” “potential,” variations of such words 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 involve certain risks, uncertainties and assumptions that are difficult to predict. Respective risks, uncertainties, and assumptions that could affect the outcome or results of operations are described in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2011, and the Form 10-Q for the quarters ended September 30, 2011, December 31, 2011 and March 31, 2012.

We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. Reference is made in particular to forward-looking statements regarding growth strategies, industry trends, global economic conditions, success of customers, cost of raw materials, value of inventory, availability of credit, currency exchange rates, labor costs, protection of intellectual property, cost reduction initiatives, acquisition synergies, manufacturing strategies, product development introduction and sales, regulatory changes, competitive strengths, natural disasters, unauthorized access to data, government investigations and outcomes of legal proceedings. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions, 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

(Unaudited)

(in thousands)

    June 30,   June 30,

2012

2011

 

ASSETS

Current assets: Cash and cash equivalents $ 637,417 $ 532,599 Marketable securities 14,830 13,947 Accounts receivable, less allowances of $37,876 and $42,297, respectively 751,279 811,449 Inventories 531,825 535,953 Deferred income taxes 110,789 129,158 Other current assets   33,098   32,239 Total current assets 2,079,238 2,055,345 Property, plant and equipment, net 1,150,549 1,168,448 Goodwill 160,986 149,452 Non-current deferred income taxes 50,038 38,178 Other assets   170,692   186,429 Total assets $ 3,611,503 $ 3,597,852  

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities: Current portion of long-term debt and short-term borrowings $ 104,933 $ 119,764 Accounts payable 355,491 359,812 Accrued expenses: Salaries, commissions and bonuses 89,404 90,913 Restructuring 10,250 14,049 Accrual for unauthorized activities in Japan 184,177 182,460 Other 112,381 112,666 Income taxes payable   30,221   2,383 Total current liabilities 886,857 882,047 Other non-current liabilities 18,174 23,879 Accrued pension and postretirement benefits 115,176 100,866 Long-term debt   150,032   222,794 Total liabilities   1,170,239   1,229,586   Commitments and contingencies   Total stockholders’ equity   2,441,264   2,368,266 Total liabilities and stockholders’ equity $ 3,611,503 $ 3,597,852   Molex Incorporated Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share data)

    Three Months Ended   Years Ended June 30, June 30, 2012   2011 2012   2011 Net revenue $ 858,526 $ 913,666 $ 3,489,189 $ 3,587,334 Cost of sales   600,904     632,264     2,420,726     2,499,197   Gross profit   257,622     281,402     1,068,463     1,088,137     Selling, general and administrative 161,581 167,914 657,732 643,462 Unauthorized activities in Japan   3,093     3,366     11,259     14,476     Total operating expenses   164,674     171,280     668,991     657,938     Income from operations 92,948 110,122 399,472 430,199   Interest (expense) income, net (663 ) (859 ) (5,360 ) (5,708 ) Other income (expense)   2,836     (318 )   6,155     5,448   Total other income (expense)   2,173     (1,177 )   795     (260 )   Income before income taxes 95,121 108,945 400,267 429,939   Income taxes   23,160     31,669     118,890     131,131     Net income $ 71,961   $ 77,276   $ 281,377   $ 298,808     Earnings per share: Basic $ 0.41 $ 0.44 $ 1.60 $ 1.71 Diluted $ 0.40 $ 0.44 $ 1.59 $ 1.70   Dividends declared per share $ 0.2200 $ 0.2000 $ 0.8200 $ 0.7025   Average common shares outstanding: Basic 176,437 175,253 175,980 174,812 Diluted 178,231 176,795 177,382 175,943   Molex Incorporated Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

    Years Ended June 30, 2012   2011 Operating activities: Net income $ 281,377 $ 298,808 Add (deduct) non-cash items included in net income: Depreciation and amortization 236,974 242,171 Deferred income taxes 10,236 37,514 Loss on sale of property, plant and equipment 2,580 4,843 Share-based compensation 23,335 22,461 Other non-cash items (20,561 ) (22,554 ) Changes in assets and liabilities: Accounts receivable 44,161 (16,401 ) Inventories (5,338 ) (25,916 ) Accounts payable 312 (63,984 ) Other current assets and liabilities (10,246 ) (9,298 ) Other assets and liabilities   10,889     (1,493 ) Cash provided from operating activities   573,719     466,151     Investing activities: Capital expenditures (227,101 ) (262,246 ) Proceeds from sales of property, plant and equipment 3,444 1,804 Proceeds from sales or maturities of marketable securities 12,496 11,936 Purchases of marketable securities (14,934 ) (8,328 ) Acquisitions (24,000 ) (18,847 ) Other investing activities   22,400     4,972   Cash used for investing activities (227,695 ) (270,709 )   Financing activities: Proceeds from revolving credit facility 75,000 105,000 Payments on revolving credit facility (260,000 ) (20,000 ) Proceeds from short-term loans and current portion of long-term debt

 

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57,620 Payments on short-term loans and current portion of long-term debt (53,748 ) (60,270 ) Proceeds from issuance of long-term debt 150,000

 

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Payments on long-term debt (575 ) (48,356 ) Cash dividends paid (140,638 ) (114,410 ) Exercise of stock options 7,873 7,269 Other financing activities   (4,194 )   (4,044 ) Cash used for financing activities (226,282 ) (77,191 )   Effect of exchange rate changes on cash   (14,924 )   37,996   Net increase (decrease) in cash and cash equivalents 104,818 156,247 Cash and cash equivalents, beginning of year   532,599     376,352   Cash and cash equivalents, end of year $ 637,417   $ 532,599