Electronic components maker Molex, Inc. (MOLX) reported Tuesday a loss for the first quarter as higher restructuring charges and lower revenue reversed its year-ago profit. However on a non-GAAP basis, the company reported first-quarter net income that was down 47% from last year, but still topped analysts' expectations by three cents. The company also provided earnings guidance for the second quarter, below consensus estimate, but refrained from providing full-year outlook citing limited visibility caused by current economic conditions.
In a statement, chief executive officer, Martin Slark said, "We continue to see month over month improvements in revenue and orders in virtually all of our key markets. The increase in orders of 26% from the June quarter was the second consecutive quarter of increasing orders and gives us strong momentum going into the December quarter. Order rates in two key markets, consumer electronics and data, surpassed prior year levels."
First Quarter Results
The Lisle, Illinois-based company reported a net loss of $11.60 million or $0.07 per share for the first quarter ended September 30, 2009, compared to net income of $44.30 million or $0.25 per share in the prior-year quarter. However, net loss for the September quarter significantly narrowed from $219.7 million or $1.27 per share reported in the June quarter.
The results for the latest quarter include $38.55 million or $0.22 per share of restructuring costs and asset impairments, and $4.80 million or $0.03 per share of tax adjustment related to stock compensation, while the year-ago quarter included $15.67 million or $0.09 per share of restructuring costs and asset impairments.
Excluding the items, non-GAAP net income for the quarter declined to $31.75 million or $0.18 per share from $59.96 million or $0.34 per share in the year ago quarter. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the first quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter declined to $674.03 million from $838.99 million in the same quarter last year, but topped analysts' consensus estimate of $661.0 million. However, net revenues grew 18% sequentially from $570.6 million in the previous quarter.
Orders for the first quarter declined to $724.4 million from $795.9 million in the corresponding quarter a year ago. However, orders increased 26% sequentially.
Peer Performance
Among Molex's peers, Wallingford, Connecticut-based Amphenol Corp. (APH) reported earlier in the month a 28% year-over-year drop in profit for the third quarter, reflecting lower sales on weak demand created by the economic downturn as well as currency translation impact. Net income was $80.92 million or $0.47 per share, down from $112.96 million or $0.63 per share last year. Quarterly net sales declined 17% to $716.57 million from $863.66 million a year ago.
Another peer, Schaffhausen, Switzerland-based Tyco Electronics Ltd. (TEL) is scheduled to report financial results for the fourth quarter on November 4, 2009. The company said back in July that it expects GAAP earnings from continuing operations for the fourth quarter in a range of $0.15 to $0.22 per share, including restructuring and other charges of about $0.11 per share and about $0.04 per share related to a net gain on early retirement of debt. Adjusted earnings from continuing operations are expected to be in a range of $0.22 to $0.29 per share.
Other Metrics
Molex' loss from operations for the first quarter was $10.10 million compared to income of $61.34 million in the prior-year quarter.
The company's total operating expenses for the quarter were $201.52 million, up from $188.13 million in the year-ago quarter.
Gross profit for the quarter was $191.42 million, down from $249.47 million in the year-ago quarter, while gross margin percentage declined 130 basis points to 28.4% from 29.7% in the year-ago quarter, but increased a significant 430 basis points from previous quarter's 24.1%.
Selling, general and administrative expense declined to $145.63 million from $166.35 million in the same quarter last year. Capital expenditures for the quarter were $45.6 million or 6.8% of revenue, compared to $45.3 million in the comparable quarter a year ago.
The company's order backlog at the end of the first quarter was $304.2 million, compared to $385.5 million at the end of the year-ago quarter. The company ended the first quarter with cash and cash equivalents of $521.0 million, compared to $439.01 million at end of the prior-year quarter.
Looking ahead…
"As in the June quarter, we saw significant operating leverage as gross margin benefited from the increase in revenue and ongoing cost containment actions. This is strong evidence that our restructuring program is yielding the intended results. Looking forward, we are assessing the sustainability of the recovery as well as the impact of rising raw material costs and the weaker dollar," Slark added.
For the second quarter, Molex expects earnings in a range of $0.11 to $0.15 per share, including a restructuring charge of $0.07 per share. The company also estimates revenues in the range of $680 million to $720 million. Analysts expect the company to report earnings of $0.19 per share for the second quarter, on revenues of $683.62 million.
The company also noted that it will not provide full year guidance at this time, due to the limited visibility caused by current economic conditions.
Stock Quote
MOLX closed Tuesday's regular trading session at $21.20, down $0.01 or 0.05% on a volume of 1.55 million shares, higher than the three-month average volume of 1.41 million shares. In the past 52-week period, the stock has been trading in a broad range of $9.68 to $22.41.
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