Multi-Fineline Electronix, Inc. JANUARY 2016

Transcription

1 Multi-Fineline Electronix, Inc. JANUARY 2016

2 Forward-Looking Language Statement This includes forward-looking statements that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements and predictions regarding: revenues; net sales and losses; profitability and gross margins; cash flows and cash balances; manufacturing capacity; cost reductions and our cost structure; ramping of new programs; labor costs; new customer opportunities and the projected contribution of newer customers to our revenues; demand for our products; net income; operating expenses; capital expenditures; yields; absorption rates; the growth of, and trends in, the electronics markets; the seasonality of our sales; our competitors and our competitive strengths; emerging market opportunities; our technology advancement and our next steps with respect thereto; our diversification efforts; our relationship and opportunities with, and expected sales to, our customers; our objectives, vision and strategies; product trends; trends regarding the use of flex in smart phones, tablets, wearables, connected-home and other consumer electronic devices; market opportunities; current and upcoming programs and product mix; efficiencies in the company s location and workforce strategies; our manufacturing capabilities, capacity and utilization; and inventory levels. Additional forward-looking statements include, but are not limited to, statements pertaining to other financial items, plans, strategies or objectives of management for future operations, financial condition or prospects, and any other statement that is not historical fact, including any statement which is preceded by the words preliminary, assume, schedule, should, can, will, plan, expect, estimate, aim, intend, project, foresee, target, anticipate, may, believe, future, strategy, or similar words. Actual events or results may differ materially from the company s expectations. Important factors that could cause actual results to differ materially from those stated or implied by the company s forward-looking statements include the impact of changes in demand for our products or electronic devices; our success with customers; the success of our customers and their products; labor issues in the jurisdictions in which we operate; our ability to develop and deliver new technologies and diversify our customer base; our effectiveness in managing manufacturing processes, capacity, costs, quality assurance and yields; trends in flex usage; the degree to which we are able to utilize manufacturing capacity, enter into new markets and execute our strategic plans; our ability to manage inventory levels and yields; electricity, material and component shortages; the impact of competition, natural disasters, pricing pressures and technological advances; the outcome of tax audits, asset write-downs and impairment charges; and other risks detailed from time to time in the company s SEC reports, including its recent Quarterly and Annual Reports on Forms 10-Q and 10-K. These forward-looking statements represent management s judgment as of the date of this presentation. The company disclaims any intent or obligation to update these forward-looking statements. January

3 Investment Highlights LARGE AND GROWING ADDRESSABLE MARKET Well-positioned in smartphones, tablets and wearables/consumer electronic devices Opportunities for growth within customer base, with new customers and in additional end markets STRONG LONG-TERM CUSTOMER RELATIONSHIPS History of supplying the leading mobile industry players Known for ability to quickly adapt to market changes and provide certainty of production ramp KEY DIFFERENTIATORS MAKING MFLEX THE GO-TO FLEX SUPPLIER Market-leading electronics interconnect technology Engineering expertise to support customers during the design process Scale and quick time to market FINANCIAL PROFILE Five consecutive quarters of strong profitability following 2014 restructuring Strong cash flow and balance sheet provides substantial financial flexibility January

4 MFLEX Overview and Global Footprint NASDAQ: MFLX 52 WEEK HIGH/LOW: $26.05/$10.93 AVG. VOLUME: 127,000 shares INSTITUTIONAL OWNERSHIP: 35% MARKET CAP: $436M ENTERPRISE VALUE: $268M FOUNDED: 1984 PUBLIC: 2004 EMPLOYEES (9/30/15): ~9,000 REVENUE : $631M CASH BALANCE (9/30/15): $168M DEBT: None Irvine, US Headquarters Applications Engineering R&D Flex (FPC) Manufacturing FPC Assembly & Module Integration Maastricht, Netherlands Singapore Suzhou, China Seoul, Korea Taipei, Taiwan January 2016 *Balance sheet metrics as of 9/30/15; market statistics as of 1/8/16 4

5 Mission Be a leading global provider of high-quality, technologically advanced flexible printed circuits and assemblies Focus on applications and products: Where flexible printed circuits facilitate human interaction with electronic devices Where size, shape or weight is paramount Be the quickest and most responsive supplier to the OEMs that market portable electronics Be a global leader of electronics interconnect technology Much more than a flex manufacturer...mflex provides OEMs with unique packaging solutions required by the complex designs of today s portable consumer electronic devices January

6 Flex is a Key Enabling Technology in a Number of Large Addressable Markets MFLEX Currently Serves Smartphones & Tablets Wearables Connected Home Complex designs and features require flexible printed circuits Flexible printed circuits are essential in helping OEMs achieve desired form factors and functionality Flexible printed circuits are well-suited for wearables given their complexity and need to be light and bendable: Applications include smartwatches, headsets, gaming devices, fitness bands, smart-clothing and medical devices Flex is also suited for sensorrich, connected-home devices: Applications include consumer-targeted smart appliances, security/safety systems and home energy devices January

7 Flex Circuit Assembly Business 2015 = $54.6B 2019 = $64.5B $15,664 29% $8,943 16% $13,872, 25% $2,375 4% $2,920 5% $5,029 9% $4,750 9% $1,052 2% Computing & Business Consumer Defense Electronics Automotive Communications Industrial & Medical IC Packaging Displays * Value includes FPC, components, assembly and test Source: Prismark Partners LLC, November 2015 Estimates January

8 Key Functions of Flex Within a Typical Smartphone Flex makes 3D connections to: Audio/Speakers Keypad Side keys Headset jack Volume controls Motherboard Wi-Fi module Vibration controls Piezo and tactile sensors Displays Reduces packaging size: Putting components on the flex can reduce the size of motherboard January

9 Approximate Range of MFLEX Dollar Content in Typical Program Low-End Smartphone Typical Dollar Content to MFLEX Per Device: Less than $5 Mid/High-End Smartphone, Tablet and Wearable Device Typical Dollar Content to MFLEX Per Device: $5-$15 January

10 Evolution of Typical Program Win OEM Begins Design Of New Model MFLEX provides application engineering expertise to incorporate flex into design (at no cost to OEM) OEM Goes Out To Bid For Flex Requirements MFLEX uses insight gained in design phase to begin preparations for initial production of flex assemblies OEM Receives Bids From Flex Manufacturers MFLEX has a strong track record among its OEM customers in ability to quickly ramp production volumes to meet difficult requirements OEM Awards Program To MFLEX MFLEX wins program due to superior quality, competitive pricing, and speed of delivery January

11 Competitive Landscape Competitors are predominantly Asia-based: Japan Taiwan Korea Mix of public companies and divisions of larger enterprises Competitors Mektec Zhen Ding Technology (ZDT) Flexium Sumitomo Electric Fujikura Interflex Career Technologies The MFLEX Advantage: OEMs value MFLEX s engineering capabilities, scale and time to market January

12 Revenue Mix Wearables comprised 8.5% of total net sales in Q2/Q * Other/Consumer includes Wearables, Computer/Data Storage, Connected-Home, Industrial, Medical and Music Players January

13 Non-GAAP Diluted EPS Achieved Five Quarters of Significant Profitability Underscoring Success of 2014 Restructuring $0.75 $0.50 $0.25 $0.28 $0.66 $0.37 $0.49 $0.57 TTM Non-GAAP Diluted EPS: $2.09 $0.00 Q Q Q Q Q Doubled YoY Earnings per Share in Q Q Q Net Sales $165.7M $172.9M Cost of Sales $143.1M $155.3M Gross Margin 13.6% 10.1% Operating Income $13.4M $7.0M Non-GAAP Diluted Earnings Per Share $0.57 $ bps * The items excluded from GAAP diluted earnings per share and a reconciliation of GAAP to non-gaap figures can be found on pages January

14 Operating Cash Flow ($ millions) Strong Historical Operating Cash Flow Post- Restructuring $100 $80 $68 $73 $91 $60 $40 $20 $0 Restructuring FY12A FY13A FY14A FY15E $4 January 2016 Note: FY12 FY14 results based on prior fiscal year ended September 30 th convention. The Company s year-end is now December 31 st (FY15E is based on calendar year 2015) 14

15 MFLEX Balance Sheet Summary (Unaudited) (US$ in millions) September 30, 2015 Cash and Cash Equivalents $168.5 Working Capital $209.1 Total Assets $530.7 Total Debt $0 Stockholders Equity $355.5 January

16 Preliminary Fourth Quarter 2015 Results Expected Net Sales Preliminary Results* $169 Million 1 Expected Gross Margin % Cash and Cash Equivalents $214 Million Expect our 6 th consecutive quarter of strong profitability 1 Sales concentration with our largest customer is expected to be similar or slightly above Q levels * Preliminary results provided January 13, 2016 January

17 Key Growth Strategies Apply MFLEX s technology to additional market segments including: Automotive Industrial Medical Participate in growth of existing OEM customers mobile handset, tablet, and consumer electronics businesses Expand into existing OEM customers other consumer electronic programs: Wearables, tablets, laptops, displays, connected-home devices, etc. Develop new relationships with additional mobile handset and consumer electronic OEMs January

18 2016 Capital Spending Plan to Support Future Growth During FY14/15, MFLEX focused on consolidating and optimizing its manufacturing footprint. As a result, Cap Ex was focused on maintenance-type initiatives. To take advantage of new opportunities, MFLEX intends to make prudent Cap Ex investments in FY16: Technology/Capability Technology enhancements to upgrade existing factory capacity to more efficiently produce increasingly complex circuits and assemblies. Automation Continued focus on labor intensive processes, automated inspection and test. $MIL CY12A CY13A CY14A CY15E CY16E Cap Ex Depr Business Focus New Factory Automation/ Maintenance Maintenance Maintenance Technology/ Automation January

19 Investment Highlights LARGE AND GROWING ADDRESSABLE MARKET Well-positioned in smartphones, tablets and wearables/consumer electronic devices Opportunities for growth within customer base, with new customers and in additional end markets STRONG LONG-TERM CUSTOMER RELATIONSHIPS History of supplying the leading mobile industry players Known for ability to quickly adapt to market changes and provide certainty of production ramp KEY DIFFERENTIATORS MAKING MFLEX THE GO-TO FLEX SUPPLIER Market-leading electronics interconnect technology Engineering expertise to support customers during the design process Scale and quick time to market FINANCIAL PROFILE Five consecutive quarters of strong profitability following 2014 restructuring Strong cash flow and balance sheet provides substantial financial flexibility January

20 Multi-Fineline Electronix, Inc. NASDAQ: MFLX 8659 Research Drive Irvine, California Phone: Web: January

21 Supplemental Financial Data January

22 Quarterly Sales Trend (Unaudited Calendar Years) (US$ in millions) $290 $241 $239 $230 $227 $213 $217 $207 $208 $199 $192 $202 $184 $167 $164 $168 $174 $175 $192 $181 $170 $154 $140 $124 $130 $124 $111 $110 $113 $104 $174 $136 $188 $212 $131 $118 $173 $210 $149 $153 $166 $57 $84 $84 $77 $72$72 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q January

23 Reconciliation of Non-GAAP Financial Measures (Sept Qtr) Multi-Fineline Electronix, Inc. Selected Non-GAAP Financial Measures and Schedule Reconciling Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures (in thousands, except per share amounts) (unaudited) Three Months Ended Three Months Ended Six Months Ended June 30 June 30 September GAAP net income (loss) $ 11,875 $ (28,760) $ 20,971 $ (81,176) Stock-based compensation expense ,028 1,926 GAAP net income (loss) $ 13,689 $ 5,923 $ (18,471) Impairment and restructuring (143) 8,361 (1,323) 33,159 Stock-based compensation expense 1, Valuation allowance related to restructuring ,001 Income tax effect of non-gaap adjustments (38) (1,293) 173 (3,816) Impairment and restructuring (485) Non-GAAP net income (loss) $ 12,502 $ (20,720) $ 21,849 $ (44,906) Valuation allowance related to restructuring Income tax effect of non-gaap adjustments (179) (433) (214) GAAP diluted income (loss) per share $ 0.47 $ (1.19) $ 0.83 $ (3.37) Non-GAAP net income (loss) $ 14,280 $ 6,870 $ (18,082) Effect of stock-based compensation, net of tax on diluted income (loss) per share Effect of impairment and restructuring, net of tax on diluted income (loss) per share (0.04) 1.22 Effect of valuation allowance related to restructuring on diluted income (loss) per share GAAP diluted income (loss) per share $ 0.54 $ 0.24 $ (0.77) Non-GAAP diluted income (loss) per share $ 0.49 $ (0.86) $ 0.87 $ (1.86) Effect of stock-based compensation, net of tax on diluted income (loss) per share Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 25,347 24,145 25,239 24,118 Effect of impairment and restructuring, net of tax on diluted income (loss) per share (0.02) Effect of valuation allowance related to restructuring on diluted income (loss) per share Non-GAAP diluted income (loss) per share $ 0.57 $ 0.28 $ (0.75) Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 25,193 24,389 24,047 January

24 Reconciliation of Non-GAAP Financial Measures (June Qtr) Multi-Fineline Electronix, Multi-Fineline Inc. Electronix, Inc. Selected Non-GAAP Selected Financial Non-GAAP Measures Financial and Measures Schedule Reconciling and Schedule Selected Reconciling Non-GAAP Selected Financial Non-GAAP Measures Financial to Comparable Measures GAAP to Comparable Financial Measures GAAP Financial (in thousands, except (in thousands, per share except amounts) per share amounts) (unaudited) (unaudited) Three Months Ended Six Months Ended Three Months Ended Six Month June 30 June June June GAAP net income (loss) $ 11,875 $ 2015 (28,760) $ ,971 $ (81,176) 2015 Stock-based GAAP compensation net income expense (loss) 808 $ 11, $ (28,760) 2,028 $ 1,926 20,971 Impairment and Stock-based restructuring compensation expense (143) 8, (1,323) ,159 2,028 Valuation allowance related to Impairment and restructuring - - (143) - 8,361 5,001 (1,323) Income tax effect of non-gaap adjustments (38) (1,293) 173 (3,816) Valuation allowance related to restructuring Non-GAAP net income (loss) $ 12,502 $ (20,720) $ 21,849 $ (44,906) Income tax effect of non-gaap adjustments (38) (1,293) 173 GAAP diluted Non-GAAP income (loss) net per income share(loss) $ 0.47 $ 12,502 (1.19) $ (20,720) 0.83 $ $ 21,849 (3.37) Effect of stock-based compensation, net of tax on diluted income (loss) per share Effect of impairment GAAP diluted and restructuring, income (loss) net per of tax share on diluted income (loss) per share - $ $ (0.04) (1.19) $ Effect of valuation Effect allowance of stock-based related compensation, to restructuring net on diluted of tax on income diluted (loss) income per share (loss) per share Non-GAAP diluted income (loss) per share $ Effect of impairment and restructuring, net of tax on diluted income (loss) per share 0.49 $ (0.86) - $ $ (1.86) (0.04) Effect of valuation allowance related to restructuring on diluted income (loss) per share Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 25,347 24,145 25,239 24,118 Non-GAAP diluted income (loss) per share $ 0.49 $ (0.86) $ 0.87 Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 25,347 24,145 25,239 January

25 Reconciliation of Non-GAAP Financial Measures (March Qtr) Multi-Fineline Electronix, Inc. Selected Non-GAAP Financial Measures and Schedule Reconciling Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures (in thousands, except per share amounts) (unaudited) Three Months Ended March GAAP net income (loss) $ 9,096 $ (52,416) Stock-based compensation expense 1, Impairment and restructuring (1,180) 24,798 Valuation allowance related to restructuring - 5,001 Income tax effect of non-gaap adjustments 211 (2,523) Non-GAAP net income (loss) $ 9,347 $ (24,186) GAAP diluted income (loss) per share $ 0.36 $ (2.18) Effect of stock-based compensation, net of tax on diluted income (loss) per share Effect of impairment and restructuring, net of tax on diluted income (loss) per share (0.04) 0.93 Effect of valuation allowance related to restructuring on diluted income (loss) per share Non-GAAP diluted income (loss) per share $ 0.37 $ (1.00) Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 25,101 24,091 January

26 Reconciliation of Non-GAAP Financial Measures (Dec 2014 Qtr) Multi-Fineline Electronix, Inc. Selected Non-GAAP Financial Measures and Schedule Reconciling Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures (in thousands, except per share amounts) (unaudited) Three Months Ended December 31, GAAP net income (loss) $ 15,975 $ (9,279) Stock-based compensation expense 1, Impairment and restructuring (396) - Income tax effect of non-gaap adjustments (455) (212) Non-GAAP net income (loss) $ 16,250 $ (8,870) GAAP diluted income (loss) per share $ 0.65 $ (0.39) Effect of stock-based compensation, net of tax on diluted income (loss) per share Effect of impairment and restructuring, net of tax on diluted income (loss) per share (0.03) - Non-GAAP diluted income (loss) per share $ 0.66 $ (0.37) Weighted-average diluted shares used in calculating non-gaap diluted income (loss) per share 24,624 24,084 January

27 Use of Non-GAAP Financial Information To supplement the condensed consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company uses non-gaap financial measures (non- GAAP net loss and non-gaap diluted net loss per share) that exclude certain charges and gains. Management excludes these items because it believes that the non-gaap measures enhance an investor's overall understanding of the Company's financial performance and future prospects by being more reflective of the Company's recurring operational activities and to be more comparable with the results of the Company over various periods. Management uses non-gaap financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-gaap financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies' financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. The items excluded from GAAP net income (loss) and diluted net income (loss) per share in calculating these non-gaap financial measures are as follows: (a) stock-based compensation expense, (b) impairment and restructuring activities and (c) valuation allowance related to restructuring. January