67 WALL STREET, New York - December 18, 2012 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Commercial Aviation and Energy Expenditures - Industrial Restructuring - Emerging Markets Penetration - Heightened M&A Activity - Future Growth and Market Share Gains - Increased Commercial Aircraft Production Rate - Defense Budget Uncertainty - Growth Opportunities in Data Security -
Companies include: Molex Inc. (MOLX)
In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, the CEO of Molex discusses the outlook for his company for investors:
TWST: Please begin with a brief description of Molex and then tell us what you see as your business and company today.
Mr. Slark: Molex is a global manufacturer of interconnect systems, switches and other related products. We have 40 plants in 16 countries and approximately 36,000 employees. Last year, we sold billions of connectors to about 10,000 different customers in virtually every end market you can think of. Based on revenue, we're the third-largest connector company in the world.
TWST: What are the dominating trends in both the electronic components industry and the industries to which it markets? What are some challenges and tailwinds that you see over the next two- to five-year time frame?
Mr. Slark: I think the biggest trend in electronics industry is the desire that people have to be able to access data on a global basis. And of course the real trend there is to be able to download that data at faster and faster speeds and to do it in a more mobile environment. So it's really going more towards digital information, with people downloading at faster rates into mobile devices. That's driving a lot more mobile devices around the world and requires a lot more infrastructure to support those mobile devices. What we are increasingly seeing is more and more electronics being used in people's lives. This means we are seeing more electronics being used in automobiles, in the medical industry and in industrial applications where people are moving from mechanical to electronic controls. The good thing for us and other electronic companies is that there continue to be more and more electronics in everybody's lives. Our goal is to get our connectors used in all those applications.
TWST: What is the financial snapshot right now for Molex's balance sheet, P&L? Perhaps you could share some of the highlights from a recent earnings report.
Mr. Slark: Last fiscal year we reported revenues of about $3.5 billion. Revenues for the first quarter ended September 30, were up by 6.8% sequentially, and we had record bookings of $944 million. We also had relatively strong operating margins. We reported 11.2% pretax income for the quarter. When you talked about what are some of the challenges we face, the global economic climate probably is the biggest challenge, especially the economy in Europe. The Americas is holding together reasonably well with relatively slow growth. And some of our Asian economies are doing quite well, but with slower rates of growth than we have seen in the last few years. And with Molex being a global company, our diversity helps us insulate ourselves from slowdowns in any particular geography.
TWST: What is the current business mix, domestic versus international? Have you seen a change in the types of clients?
Mr. Slark: Molex is unusual in that we are based in the U.S., but only 26% of our revenue is in the Americas. Close to 60% of our revenue is in Asia and then the balance is in Europe. The fastest-growing region of the world for us is Asia, but one of the interesting trends within our business is that it's very global in nature. Many of our largest customers continue to do design and development work in North America and Europe, and perhaps Japan, but often the volume production is being done in low-cost labor countries in Asia. So we have to provide engineering support in the countries in which they develop the product and manufacturing support in the countries where they make the products.
TWST: Tell us what it means to have a pipeline and the R&D efforts that support that pipeline. How far out are you planning at this point with respect to your various products and services?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.