MFlex Says Q2 Revenue Drop Will Lead to Restructuring PDF Print E-mail
Written by Mike Buetow   
Wednesday, 15 January 2014 08:33

IRVINE, CA -- MFlex today said preliminary fiscal first quarter revenue will be within previous company guidance albeit sharply lower than a year ago. Continued softness in the current quarter will spur restructuring and losses, the company said.

For the period ended Dec. 31, the flex circuit maker and assembler expects net sales of approximately $210 million, compared to net sales of $289.7 million in the same quarter last year. Gross margin during the quarter is anticipated to be in-line with expectations of approximately breakeven, compared to 8.5% in the prior year.

The company expects the current period's revenue will show a "significant sequential decline" that could approach 40%.

MFlex expects to provide its complete financial results and business outlook on Feb. 6. The company is among the Top 50 EMS companies in the world.

Chief executive Reza Meshgin said, "Our preliminary fiscal first quarter results were in-line with our expectations, reflecting ongoing program ramps, as well as new programs that started up during the quarter. Net sales to our newer customers more than doubled sequentially, and are expected to represent approximately 23% of total net sales."

He added that the current quarter's negative outlook is expected to result in a net loss. "We are working toward reducing our revenue volatility by continuing to grow our new customers and transitioning to a broader and more profitable product mix."

"As we indicated last quarter, our excess capacity has had a negative effect on our profitability, which has been exacerbated by the quarter to quarter net sales volatility that we have experienced. As a result, we have undertaken a review of our manufacturing capacity in an effort to align our cost structure with net sales levels while maintaining the long-term capacity necessary to support our growth objectives. We are in the process of finalizing our implementation plans, including obtaining the necessary approvals. Once completed, we expect to have a significantly improved cost structure to drive profitability and competitiveness. We expect our fiscal second quarter results to reflect significant impairment and restructuring charges, however the cash component should be less than $20 million. We expect this amount to be partially offset in future quarters as we sell idled assets."

MFlex had approximately $111 million in cash on hand as of Dec.. 31 and no debt.



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