Molex Incorporated Molex Reports Results for Fiscal 2013 Third Quarter and Announces Dividend Increase

 
TIDMMOL 
 
 

Molex Incorporated (NASDAQ: MOLX) and (NASDAQ: MOLXA), a global electronic components company, today reported results for its third quarter ended March 31, 2013.

 
                                      Three Months Ended 
                                      Mar 31,   Dec 31,   Mar 31, 
USD millions, except per share data   2013      2012      2012 
Net revenue                           $ 852.9   $ 967.7   $ 837.1 
Net income                              44.8      70.4      64.9 
Earnings per share                      0.25      0.39      0.36 
 
 

Net revenue for the March 2013 quarter was $852.9 million, a decrease of 11.9% from the December 2012 quarter and an increase of 1.9% from the March 2012 quarter. In local currencies, net revenue declined 11.5% compared with the December 2012 quarter and increased 3.0% compared with the March 2012 quarter. Orders for the March 2013 quarter were $909.2 million, a decrease of 1.1% from the December 2012 quarter and an increase of 4.2% from the March 2012 quarter.

Net income for the March 2013 quarter was $44.8 million or $0.25 per share, compared with $70.4 million, or $0.39 per share, for the December 2012 quarter and $64.9 million, or $0.36 per share, for the March 2012 quarter. The current quarter was impacted by the previously announced litigation settlement related to unauthorized activities in Japan, which reduced net income by $21.8 million ($13.9 million after-tax or $0.08 per share) representing amounts related to the settlement not previously accrued.

"Revenue in the March quarter was weaker than expected, largely due to the sharp reduction in demand from one customer for certain new programs that were launched in the September quarter and ramped significantly in the December quarter. The remainder of the business experienced a normal seasonal decline in revenue. We were able to mitigate the impact of lower revenue by closely managing manufacturing and operating costs," stated Martin P. Slark, Chief Executive Officer. "Our backlog increased both sequentially and year over year and our order rate for the quarter was stable with sequential improvements in the automotive and industrial markets. The distribution channel was also stronger this quarter and we are optimistic that the remainder of calendar 2013 will provide more robust growth opportunities."

Other financial highlights for the quarter ended March 31, 2013:

 
 
    -- Gross profit margin was 29.1%, compared with 29.9% in the December 

2012 quarter and 30.5% in the March 2012 quarter.

 
    -- SG&A expense was $167.4 million, compared with $181.0 million in the 

December 2012 quarter and $163.9 million in the March 2012 quarter.

 
    -- Backlog was $463.0 million, an increase of 14.6% from the December 

2012 quarter and an increase of 22.8% from the March 2012 quarter.

 
    -- The book-to-bill ratio for the March quarter was 1.07 to 1 compared 

with 0.95 to 1 for the December 2012 quarter and 1.04 to 1 for the

March 2012 quarter.

 
    -- Capital expenditures were $55.9 million or 6.6% of revenue. 
 
    -- Inventory days outstanding was 89 days compared with 83 days in the 

December 2012 quarter and 93 days in the March 2012 quarter.

 
    -- Accounts receivable days outstanding was 70 days compared with 67 days 

in the December 2012 quarter and 72 days in the March 2012 quarter.

 
    -- The effective tax rate was 23.6%. Excluding the impact from the Japan 

litigation settlement, the effective tax rate was 26.6%.

Japan Litigation Settlement

As previously announced on February 15, 2013, Molex and Mizuho Bank settled litigation regarding previously reported unauthorized loans. Pursuant to the settlement, Molex agreed to pay ¥17 billion ($182.8 million) and Mizuho Bank agreed to release Molex cash accounts and provisional attachments and to release Molex from any future claims. During the third quarter, the Company recognized a charge to income from operations of $21.2 million ($13.5 million after-tax) largely for interest expense and legal fees, and incurred related transaction costs charged to other income (expense) of $0.6 million ($0.4 million after-tax).

Increase in Cash Dividend

The Board of Directors has approved an increase in the quarterly cash dividend to $0.24 per share, an increase of 9.1% from the previous cash dividend of $0.22 per share. The increase is effective for the cash dividend payable on July 25, 2013 to shareholders of record on June 28, 2013, for each share of Common Stock (MOLX), Class A Common Stock (MOLXA) and Class B Common Stock, and will continue quarterly until further action by the Board.

Outlook

Based upon current order rates and customer backlog, the Company estimates revenue in the range of $870 to $910 million for the June 2013 quarter. At this level of revenue, the Company expects earnings per share in the range of $0.33 to $0.37, 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 Tuesday, April 23, 2013 at 8:30 a.m. central time. Please dial [phone] to participate in the call. International callers should dial [phone]. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 58992005. 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 [phone] or [phone] / pass code 33101742.

Other Investor Events

May 8, 2013 / Jefferies 2013 Global Technology, Media and Telecom Conference in New York

June 13, 2013 / 33rd Annual William Blair Growth Stock Conference in Chicago

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 intended to identify such 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, 2012, and the Form 10-Q for the quarters ended September 30, 2012 and December 31, 2012, which are incorporated by reference and in other reports that Molex files or furnishes with the Securities and Exchange Commission.

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 forecasted 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, foreign 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, income tax fluctuations, 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 74-year-old global manufacturer of electronic, electrical and fiber optic interconnection systems. Based in Lisle, Illinois, USA, the Company operates 41 manufacturing locations in 15 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) 
                                             Mar. 31,      June 30, 
                                             2013          2012 
                                             (Unaudited) 
ASSETS 
Current assets: 
Cash and cash equivalents                    $ 702,786     $ 637,417 
Marketable securities                          10,145        14,830 
Accounts receivable, less allowances of        657,447       751,279 
$38,530 and $37,876,  respectively 
Inventories                                    544,633       531,825 
Income taxes receivable                        18,628      - 
Deferred income taxes                          38,601        110,789 
Other current assets                           30,015        33,098 
Total current assets                           2,002,255     2,079,238 
Property, plant and equipment, net             1,135,637     1,150,549 
Goodwill                                       191,551       160,986 
Non-current deferred income taxes              49,095        50,038 
Other assets                                   183,288       170,692 
Total assets                                 $ 3,561,826   $ 3,611,503 
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities: 
Current portion of short-term borrowings     $ 88,725      $ 104,933 
and long-term debt 
Accounts payable                               301,536       355,491 
Accrued expenses: 
Accrued liability for unauthorized           -               184,177 
activities in Japan 
Income taxes payable                         -               35,360 
Other                                          225,592       212,035 
Total current liabilities                      615,853       891,996 
Other non-current liabilities                  17,381        18,174 
Accrued pension and other                      92,020        115,176 
postretirement benefits 
Long-term debt                                 315,000       150,032 
Total liabilities                              1,040,254     1,175,378 
Commitments and contingencies 
Total stockholders' equity                     2,521,572     2,436,125 
Total liabilities and stockholders' equity   $ 3,561,826   $ 3,611,503 
 
 
Molex 
Incorporated 
Condensed 
Consolidated 
Statements 
of Income 
(Unaudited) 
(in thousands, 
except 
per share 
data) 
                 Three Months Ended        Nine Months Ended 
                 March 31,                 March 31, 
                 2013         2012         2013           2012 
Net revenue      $ 852,858    $ 837,080    $ 2,737,514    $ 2,630,663 
Cost of sales      604,326      581,904      1,931,395      1,819,822 
Gross profit       248,532      255,176      806,119        810,841 
Selling,           167,384      163,853      511,533        496,151 
general 
and 
administrative 
Unauthorized       21,210       2,521        25,398         8,166 
activities 
in Japan 
Total              188,594      166,374      536,931        504,317 
operating 
expenses 
Income from        59,938       88,802       269,188        306,524 
operations 
Interest           (1,582  )    (1,212  )    (3,525    )    (4,697    ) 
(expense) 
income, net 
Other income       265          1,561        (1,690    )    3,319 
(expense) 
Total other        (1,317  )    349          (5,215    )    (1,378    ) 
(expense) 
income, net 
Income before      58,621       89,151       263,973        305,146 
income taxes 
Income taxes       13,854       24,268       77,498         95,730 
Net income       $ 44,767     $ 64,883     $ 186,475      $ 209,416 
Earnings per 
share: 
Basic            $ 0.25       $ 0.37       $ 1.05         $ 1.19 
Diluted          $ 0.25       $ 0.36       $ 1.04         $ 1.18 
Dividends        $ 0.2200     $ 0.2000     $ 0.6600       $ 0.6000 
declared 
per share 
Average common 
shares 
outstanding: 
Basic              177,527      176,164      177,102        175,830 
Diluted            179,652      178,134      179,031        177,152 
 
 
Molex Incorporated 
Condensed Consolidated Statements of Cash Flows 
(Unaudited) 
(in thousands) 
                                                 Nine Months Ended 
                                                 March 31, 
                                                 2013          2012 
Operating activities: 
Net income                                       $ 186,475     $ 209,416 
Add non-cash items included in net income: 
Depreciation and amortization                      176,445       179,664 
Share-based compensation                           22,045        17,248 
Other non-cash items                               1,356         8,914 
Changes in assets and liabilities: 
Accounts receivable                                80,152        71,833 
Inventories                                        (23,751  )    (20,896  ) 
Accounts payable                                   (41,703  )    (38,382  ) 
Other current assets and liabilities               21,633        (4,747   ) 
Unauthorized activities in Japan                   (165,813 )  - 
Other assets and liabilities                       (22,349  )    7,328 
Cash provided from operating activities            234,490       430,378 
Investing activities: 
Capital expenditures                               (203,985 )    (149,427 ) 
Acquisitions                                       (55,299  )    (24,000  ) 
Proceeds from sales of property,                   15,189        3,373 
plant and equipment 
Proceeds from sales or maturities                  12,722        8,348 
of marketable securities 
Purchases of marketable securities                 (7,959   )    (8,881   ) 
Insurance proceeds and other                       9,962         11,000 
investing activities 
Cash used for investing activities                 (229,370 )    (159,587 ) 
Financing activities: 
Proceeds from revolving credit facility,           441,401       75,000 
short-term loans and debt 
Payments on revolving credit facility,             (277,434 )    (308,615 ) 
short-term loans and debt 
Net proceeds from issuance of long-term debt     -               149,521 
Cash dividends paid                                (116,706 )    (105,375 ) 
Exercise of stock options                          9,894         6,867 
Other financing activities                         (3,233   )    (3,199   ) 
Cash provided by (used for)                        53,922        (185,801 ) 
financing activities 
Effect of exchange rate changes on cash            6,327         (8,780   ) 
Net increase in cash and cash equivalents          65,369        76,210 
Cash and cash equivalents, beginning of period     637,417       532,599 
Cash and cash equivalents, end of period         $ 702,786     $ 608,809 
 
 

Molex IncorporatedSteve Martens, VP Investor Relations630-527-4344

 
 
 
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