Molex Reports Revenue and EPS above Guidance

Business Wire

LISLE, Ill.--(BUSINESS WIRE)--

Molex Incorporated (MOLX) and (MOLXA), a global electronic components company, today reported results for its first quarter ended September 30, 2013.

First Quarter Results

  Three Months Ended
Sep 30,   Jun 30,   Sep 30,

USD millions, except per share data

2013 2013 2012
 
Net revenue $ 936.4 $ 882.9 $ 916.9
Net income 84.1 57.1 71.3
Earnings per share 0.46 0.32 0.40
 

Net revenue for the September 2013 quarter was $936.4 million, an increase of 6.1% from the June 2013 quarter and an increase of 2.1% from the September 2012 quarter. In local currencies, net revenue increased 6.1% compared with the June 2013 quarter and 4.0% compared with the September 2012 quarter. Orders for the September 2013 quarter were $939.1 million, an increase of 6.7% from the June 2013 quarter and a decrease of 0.5% from the September 2012 quarter.

Net income for the September 2013 quarter was $84.1 million, an increase of 47.1% from the June 2013 quarter and an increase of 17.9% from the September 2012 quarter. Earnings per share was $0.46 for the September 2013 quarter, $0.32 for the June 2013 quarter and $0.40 for the September 2012 quarter. Net income for the September 2013 quarter was impacted by an after-tax charge of $5.4 million ($0.03 per share) for costs associated with the pending merger with Koch Industries.

“Continued improvement in our core markets drove solid sequential revenue growth during the September quarter, as we exceeded the top end of our guidance range for both revenue and earnings per share. The automotive, telecom and mobile devices markets were very strong during the quarter, and are areas where Molex has exceptional technology and a breadth of innovative product offerings,” commented Martin P. Slark, Chief Executive Officer. “Higher revenue, favorable product mix, lower material costs, and increased equipment utilization drove margins and earnings per share above expectation, despite merger-related expenses.”

Other financial highlights for the quarter ended September 30, 2013:

  • Gross profit margin was 32.3%, compared with 29.1% in the June 2013 quarter and 29.3% in the September 2012 quarter.
  • SG&A expense was $179.4 million, compared with $174.0 million in the June 2013 quarter and $163.1 million in the September 2012 quarter. The current quarter includes $8.0 million of pre-tax costs associated with the pending merger. Excluding the merger-related costs, SG&A expense would be $171.4 million or 18.3% of revenue.
  • Backlog was $471.6 million, an increase of 4.2% from the June 2013 quarter and an increase of 5.9% from the September 2012 quarter.
  • The book-to-bill ratio was 1 to 1 compared with 1 to 1 for the June 2013 quarter and 1.03 to 1 for the September 2012 quarter.
  • Capital expenditures were $47.0 million or 5.0% of revenue.
  • Inventory days outstanding was 88 days compared with 84 days in the June 2013 quarter and 84 days in the September 2012 quarter.
  • Accounts receivable days outstanding was 68 days compared with 69 days in the June 2013 quarter and 69 days in the September 2012 quarter.
  • The effective tax rate was 29.0%, which included a $1.2 million benefit due to the release of a valuation reserve resulting from improved operating performance.

Merger Agreement

On September 9, 2013, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Koch Industries, Inc. which, if completed, will result in Molex stockholders receiving $38.50 per share in cash or a total purchase price of approximately $7.2 billion. Final consideration will also include a dividend adjustment amount.

The transaction is subject to customary closing conditions, approval by the holders of a majority of common voting shares (Common Stock and Class B Common Stock, voting separately as a class) and regulatory approvals, but is not subject to any condition with regard to the financing of the transaction. Additional details are included in the Company’s 2013 Proxy Statement.

The Annual Meeting of Stockholders has been scheduled for November 15, 2013, and regulatory approvals are pending with the following jurisdictions: the European Union, China, Israel, Japan, Mexico, South Korea, Turkey and Ukraine.

Earnings Conference Call Information

A conference call will be held on Wednesday, October 23, 2013 at 8:30 a.m. central time. Please dial (888) 680-0865 to participate in the call. International callers should dial (617) 213-4853. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 94153617. 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 49270509.

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. 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, 2013, which is incorporated by reference and in other reports that Molex files or furnishes with the Securities and Exchange Commission. Among other risks and uncertainties, there can be no guarantee that the pending merger with Koch Industries, Inc. will be completed, or if it is completed, the time frame in which it will be completed. The pending merger is subject to the satisfaction of certain conditions contained in the Merger Agreement. Pursuing the pending merger could disrupt certain of our current plans, operations, business, and employee relationships. 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, 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 75-year-old global manufacturer of electronic, electrical and fiber optic interconnection systems. Based in Lisle, Illinois, USA, the Company operates 45 manufacturing locations in 17 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 (MOL, MOLA). The Company’s voting common stock (MOLX) is included in the S&P 500 Index.

   

Molex Incorporated

Condensed Consolidated Balance Sheets

(in thousands)
 
Sep 30, Jun 30,
2013 2013
(Unaudited)
 

ASSETS

Current assets:
Cash and cash equivalents $ 665,156 $ 711,561
Marketable securities 11,083 10,378
Accounts receivable, less allowances of $41,376 and $40,855, respectively 736,983 703,434
Inventories 580,481 531,810
Deferred income taxes 54,100 54,163
Other current assets   39,901   32,538
Total current assets 2,087,704 2,043,884
Property, plant and equipment, net 1,128,494 1,114,092
Goodwill 231,050 191,053
Non-current deferred income taxes 51,735 52,543
Other assets   187,034   185,282
Total assets $ 3,686,017 $ 3,586,854
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Short-term borrowings and current portion of long-term debt $ 42,458 $ 54,283
Accounts payable 354,565 347,700
Accrued expenses:
Salaries, commissions and bonuses 123,729 113,433
Other 144,866 127,652
Income taxes payable   20,833   15,966
Total current liabilities 686,451 659,034
Other non-current liabilities 20,702 18,382
Accrued pension and other postretirement benefits 74,431 76,275
Long-term debt   315,000   310,000
Total liabilities   1,096,584   1,063,691
 
Commitments and contingencies
 
Total stockholders’ equity   2,589,433   2,523,163
Total liabilities and stockholders’ equity $ 3,686,017 $ 3,586,854
   

Molex Incorporated

Condensed Consolidated Statements of Income

(Unaudited)
(in thousands, except per share data)
 
Three Months Ended
Sep 30,
2013 2012
Net revenue $ 936,367 $ 916,921
Cost of sales   633,816     648,504  
Gross profit   302,551     268,417  
 
Selling, general and administrative 179,429 163,121
Unauthorized activities in Japan   -     2,561  
Total operating expenses   179,429     165,682  
 
Income from operations 123,122 102,735
 
Interest expense, net (1,827 ) (810 )
Other (expense) income, net   (2,918 )   1,196  
Total other (expense) income, net   (4,745 )   386  
 
Income before income taxes 118,377 103,121
 
Income taxes   34,298     31,807  
 
Net income $ 84,079   $ 71,314  
 
Earnings per share:
Basic $ 0.47 $ 0.40
Diluted $ 0.46 $ 0.40
 
Dividends declared per share $ 0.24 $ 0.22
 
Average common shares outstanding:
Basic 178,247 176,621
Diluted 181,545 178,564
   

Molex Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)
(in thousands)
 
Three Months Ended
Sep 30,
2013 2012
 
Operating activities:
Net income $ 84,079 $ 71,314
Add (deduct) non-cash items included in net income:
Depreciation and amortization 57,245 57,742
Share-based compensation 6,195 6,160
Other non-cash items (206 ) 3,767
Changes in assets and liabilities:
Accounts receivable (14,881 ) (7,903 )
Inventories (32,900 ) (28,902 )
Accounts payable (1,359 ) 49,569
Other current assets and liabilities 10,521 4,326
Other assets and liabilities   (9,843 )   11,331  
Cash provided from operating activities   98,851     167,404  
 
Investing activities:
Capital expenditures (47,018 ) (69,413 )
Acquisitions (62,993 ) -
Proceeds from sales of property, plant and equipment 131 1,914
Proceeds from sales or maturities of marketable securities 1,789 3,168
Purchases of marketable securities (2,574 ) (4,099 )
Insurance proceeds and other investing activities   (920 )   9,722  
Cash used for investing activities (111,585 ) (58,708 )
 
Financing activities:
Proceeds from revolving credit facility, short-term loans and debt 63,510 10,000
Payments on revolving credit facility, short-term loans and debt (70,557 ) (41,611 )
Cash dividends paid (42,723 ) (38,827 )
Exercise of stock options 7,680 1,715
Other financing activities   (1,112 )   (1,026 )
Cash used for financing activities (43,202 ) (69,749 )
 
Effect of exchange rate changes on cash   9,531     9,608  
Net (decrease) increase in cash and cash equivalents (46,405 ) 48,555
Cash and cash equivalents, beginning of period   711,561     637,417  
Cash and cash equivalents, end of period $ 665,156   $ 685,972  
 

Contact:
Molex Incorporated
Steve Martens, VP Investor Relations
630-527-4344

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