Anaheim, Calif. /PRNewswire via COMTEX News Network/ -- Multi-Fineline Electronix, Inc. reported financial results for the fiscal 2010 first quarter ended December 31, 2009. Net sales in the first quarter of fiscal 2010 were $229.5 million, a record quarterly amount for the Company and a 6.0 percent increase from net sales of $216.6 million in the same period of the prior year. The increase in net sales was primarily due to significantly higher sales to two major customers (consistent with recent trends) partially offset by substantially lower sales to one customer. Net sales in the first quarter of fiscal 2010 grew approximately 15 percent sequentially from $199.2 million in the fourth quarter of fiscal 2009 due primarily to higher sales of flex assemblies for smartphones and other consumer electronic devices that are experiencing strong marketplace demand.

 

Net income for the first quarter of fiscal 2010 was $16.3 million, or $0.63 per diluted share, compared to net income of $14.1 million, or $0.56 per diluted share, for the same period in fiscal 2009.

 

"In what is historically our strongest quarter of the year, we executed very well and delivered on record demand during the December quarter for our flex assemblies for smartphones and other consumer electronic devices, driving net sales to the highest quarterly level in the history of the Company," said Reza Meshgin, Chief Executive Officer of MFLEX. "Our success in the first quarter was due in part to our ability to efficiently meet our OEM customers' high-volume production requirements for complex flex assemblies, which we believe helps give us a competitive advantage and expand our business. Gross margin of 15.9 percent was at the high end of our expected range and our ongoing focus on improving yields and labor productivity continued to mitigate the pressure on our gross margin from a higher material content in the product mix during the quarter. This operational excellence coupled with effective cost management helped generate net income of $16.3 million, or $0.63 per diluted share."

 

Gross margin during the first quarter of fiscal 2010 was 15.9 percent, compared to 15.3 percent for the same period in the prior year. The year-over-year increase in gross margin is primarily due to improved yields and labor productivity partially offset by the higher material content of programs during the quarter. Sequentially, gross margin increased from 14.1 percent in the fourth quarter of fiscal 2009 due primarily to the leveraging of manufacturing costs over higher sales volumes and a favorable product mix.

 

The company remains committed to maintaining a strong balance sheet and liquidity position. At December 31, 2009, cash and cash equivalents grew to $141.0 million, or $5.47 per diluted share.

 

The company has fine-tuned its outlook for the second quarter of fiscal 2010. Based on its most recent forecast, the company now expects net sales to be closer to the bottom of the $160 to $180 million range provided last month. In addition, based on this expected sales volume and product mix, second quarter gross margin is projected to be approximately 13 percent.

 

Commenting on the Company's business outlook, Meshgin noted, "With the benefit of an additional four weeks since providing guidance in early January, we now have greater visibility on our second quarter outlook and we have fine-tuned our projections for net sales and gross margin. Our second quarter guidance reflects the normal seasonality after the holidays, the Chinese New Year in February, as well as some programs approaching the end of their life cycle. However, we believe our market share is unchanged with our major customers and fully expect to participate on follow-on programs that are projected to be launched during 2010.

 

"We continue to expect year-over-year net sales growth in the second half of fiscal 2010 and we are very optimistic about our longer-term opportunities to profitably grow our business. We are continuing to work aggressively to demonstrate the broad applications for our products and services. Given our positive outlook for growth, construction of our new state-of-the art manufacturing facility, MFC3, is progressing on schedule. In addition to expanded manufacturing capacity, we believe MFC3 will provide the advanced technological capabilities necessary to accommodate a larger customer base in the future," said Meshgin.

 

For more information, visit www.mflex.com.