MFLEX Returns To Profitability - Reports Fiscal 2014 Fourth Quarter Financial Results

Generates $56 Million in Restructuring-Related Annual Cost Savings; Anticipates Sequential Revenue Growth in the December Quarter

Multi-Fineline Electronix, Inc. (NASDAQ: MFLX), a leading global provider of high-quality, technologically advanced flexible printed circuits and assemblies, today reported financial results for its fiscal fourth quarter ended September 30, 2014.  The Company returned to profitability with net income for the fourth quarter of fiscal 2014 of $5.9 million, or $0.24 per diluted share, compared to a net loss of ($18.5) million, or ($0.77) per share, for the same period in the prior year.

Reza Meshgin, Chief Executive Officer of MFLEX, commented, "We had a strong fiscal fourth quarter with net sales results at the high end of our guidance range, gross margin exceeding our guidance range and a return to profitability, an important milestone for the Company.  Our net sales increased 32 percent sequentially, driven by new programs that ramped across our customer base.  We posted strong gross margin results, up 15.6 percentage points sequentially, reflecting the benefits from our recently completed restructuring, strong operational execution, as well as favorable product mix during the quarter.  This drove the significant rebound in our bottom line performance."

Mr. Meshgin continued, "We completed our restructuring initiatives and generated $56 million in annual cost savings, exceeding our initial expectations, of which approximately 90 percent reduces cost of sales and 10 percent lowers our operating expenses.  Our reconfigured manufacturing operations are performing well and as demonstrated in our fiscal fourth quarter results, we are now better positioned to compete more effectively and efficiently in the flexible printed circuit board market."

Net sales in the fourth quarter of fiscal 2014 were $172.9 million, down 8 percent from net sales of $188.3 million in the same quarter last year, primarily due to lower net sales to a key customer, partially offset by a significant increase in sales to the Company's newer customer group.  Net sales to the newer customers in the quarter increased $36.2 million year-over-year to approximately $58.7 million.  These newer customers represented approximately 34 percent of total net sales in the fourth quarter of fiscal 2014, with one of these customers accounting for approximately 16 percent of net sales, supporting a more diversified customer base.  The Company's largest customer accounted for 60 percent of net sales during the fourth quarter of fiscal 2014, compared to 73 percent during the fourth quarter of the prior fiscal year.

Gross margin during the fourth quarter of fiscal 2014 was 10.1 percent, compared to a loss of (3.2) percent for the same period in the prior year.  The significant increase was primarily driven by cost reductions resulting from the recently completed restructuring plan, favorable product mix and strong manufacturing efficiency and yields.

Non-GAAP net income for the fourth quarter of fiscal 2014 was $6.9 million, or $0.28 per diluted share, compared to a non-GAAP net loss of ($18.1) million, or ($0.75) per share, in the same period a year ago.  Non-GAAP net income excludes the impact of stock-based compensation expense, impairment and restructuring charges and valuation allowances related to the restructuring.  A reconciliation of GAAP net income (loss) and net income (loss) per share to non-GAAP net income (loss) and net income (loss) per share is provided in the table at the end of this press release.

The Company generated $5.8 million in cash flows from operating activities during the fourth quarter of fiscal 2014.  MFLEX maintains a strong balance sheet with no debt and cash and cash equivalents of $98.7 million at September 30, 2014.

Outlook

As previously announced, the Company will be changing its year-end to December 31st.  For the fourth quarter of calendar 2014, the Company expects net sales to be between $180 and $210 million.  Gross margin is expected to range between 6 and 8 percent.

Commenting on the Company's business outlook, Mr. Meshgin noted, "We expect another sequential increase in net sales during the December quarter driven by anticipated demand across our customer base.  Our gross margin expectations reflect the benefits of our recently completed restructuring plan, as well as a more normalized product mix compared to the September quarter.  As a result of our improved cost structure, we expect to generate another quarter of net income. Looking further ahead, we intend to focus on continued customer and product diversification while maintaining solid relationships with our current customers.  We expect this, in conjunction with continued cost management, to lessen the variability in our quarterly results and produce solid profitability in the 2015 calendar year."
www.mflex.com

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