Molex Inc. (MOLX) Tuesday said it slipped to a loss in the third quarter on hefty pre-tax restructuring charges and on lower revenues hurt by customer's cutting down on inventory, amid economic headwinds. Orders for the quarter were down 47% from the prior year. The electronic components maker also said it expects an increase in its pre-tax restructuring charge through the end of fiscal year 2010, along with annualized cost saving to reach around $200 million. Citing continued improvement in order rate, Molex also sees fourth quarter revenues, in line with current Street estimates. Following the news, Molex gained more than 19%, in after-hours trading on the Nasdaq.
Third quarter net loss of Molex was $58.60 million or $0.34 per share, compared to a profit of $50.31 million or $0.28 per share in the same quarter a year ago.
On average, nine analysts polled by Thomson Reuters expected a loss of $0.07 per share for the quarter. Analysts' estimates typically exclude one-time items.
Quarterly results were impacted by a pretax restructuring charge of $44.3 million primarily related to severance for headcount reductions and the costs associated with plant closures.
Molex's revenue for the quarter plunged 38.5% to $505.54 million from $822.29 million in the prior-year quarter, below Street estimates of $528.14 million.
Revenues were impacted by persisting decline in the global economy, worsened by customer initiatives to reduce their inventory. Revenue in local currencies fell 37.1% as currency translation decreased revenue by $12.0 million, compared with last year's March quarter.
In the sequentially preceding second quarter, Molex reported a slip to loss of 87.24 million or $0.50 per share on revenues that dropped 20.8% to $666.73 million in the same quarter a year ago.
Among others in the industry, Amphenol Corp. (APH), an electrical and electronic components manufacturer, reported a decline in first-quarter profit to $74.41 million, or $0.43 per share, as sales declined 14% to $660.01 million from the year-ago quarter.
Loss from operations for the quarter under review for Molex was $90.12 million, compared to a profit of $80.42 million in the year-earlier quarter. Total operating expenses surged to $183.42 million from $174.04 million in the comparable quarter last year.
Gross profit margin was 18.5%, compared with 30.9% in the prior year March quarter, and 26.4% in the December 2008 quarter, being impacted by lower absorption of manufacturing overhead resulting from significantly lower production volume.
SG&A expense declined $28.6 million from last year's March quarter and $5.5 million from the December 2008 quarter, due to the cost reduction and restructuring programs. Research and development expense was $34.9 million, compared with $41.7 million in the prior year quarter due primarily to salary reductions and cost containment activities.
Orders for the March quarter were $475 million, down 47% from the prior year quarter and down 16% from the December 2008 quarter. Order backlog on March 31, 2009 was $251 million, compared with $461 million at March 31, 2008 and $285 million at December 31, 2008.
Martin Slark, chief executive officer said, "We believe that the revenue and orders for the quarter were below the level of current market demand, a result of inventory reductions within the supply chain."
Molex has also said it trimmed the salary of its employees in the US as well as in most international operations, while lowering headcount by 25%, over the last two quarters.
For the nine-month period, Molex slipped to a loss of $101.55 million or $0.58 per share from a profit of $162.83 million in the year-ago period.
Revenue for the period was down at $2.01 billion, compared to $2.46 billion at the year-ago period.
Looking ahead, Molex said its pretax restructuring charge through the end of fiscal year 2010 is estimated to increase to a range of $240 to $250 million. Cumulative restructuring charges were $174 million through March 31, 2009, and the company estimates that the additional restructuring charges in fiscal 2009 will approximate $50 million, with the remaining $20 to 25 million to be recognized in fiscal 2010. The expected annualized cost savings from the restructuring program is approximately $200 million.
For the fourth-quarter, Molex forecast revenue in the range of $525 million to $575 million, in line with current Street estimates of $537.69 million.
The company in a statement said, "While orders appear to have bottomed in the March quarter, future visibility remains limited. As a result, the company considers it prudent to provide a wide range in its outlook."
MOLX closed Thursday's regular trading at $16.38, up $0.62 or 3.93%, on a volume of 1.58 million shares. In after-hours trading, the stock further gained $3.01 or 18.38%, to trade at $19.39. In the last 52-week period, the stock traded in the range of $9.68 to $30.61, on a three-month average volume of 1.58 million shares.
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