conference date: February 10, 2011 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2010 (fourth quarter)
Overview: Another quarter of solid growth.
Basic data (GAAP) :
Revenues were $377.9 million, up 6% sequentially from $357.8 million and up 152% from $149.9 million in the year-earlier quarter.
Net income was $36.5 million, up 14% sequentially from $32.1 million, and way, way up from $2.4 million year-earlier.
EPS (earnings per share) were $0.41, up 14% sequentially from $0.36, and up over 8 fold from $0.05 year-earlier.
Normal seasonal down trend (including Chinese New Year) expected for Q1. Revenue between $338 and $358 million, with GAAP EPS from $0.27 to $0.36 and non-GAAP EPS $0.35 to $0.44.
Despite seasonal drop, would be a 16% revenue increase y/y on pro-forma basis.
In Q2 uptrend in revenue should resume, then accelerate in Q3 and Q4 as additional capacity comes online.
Record revenue and profitability. Better results than expected from strong printed circuit board (PCB) demand across tablets, networking equipment, and smartphones. Robust growth in Asia Pacific and low costs there increased profit margins. North American demand was also solid.
Combination with Meadville (April 9, 2010) added more than $0.20 per diluted share. Foreign exchange gains contributed about $0.02 to EPS.
Non-GAAP net income up 13% sequentially to $39.7 million, for EPS of $0.49.
EBITDA was $76.5 million, 20.2% of sales.
Cash and equivalents ended at $216.1 million. Up $51.9 million. Cash flow from operations $89 million. Inventories were $135.4 million. Long term debt was $458.3 million. $16.6 million depreciation.
$224.7 million Asian-Pacific segment revenues. 31% y/y sales.
$156.4 million North American segment revenues. 4% y/y increase in sales.
Networking and communications end market 37% of total revenue.
Computing storage and peripherals were 22% of revenue.
Aerospace and defense were 13% of revenue.
Cell phone and smart phone represented 12% of revenue.
Medical and industrial were 10% of sales. Other segment was 5%.
Top 5 customers 31% of sales, but no 10% customers. Apple, Cisco, Erikson, Huawei, and IBM.
Cost of goods sold was $287.9 million, leaving gross profit of $90.0 million. Operating expenses of $37.4 million include $9.5 million for sales and marketing, $23.4 million for G&A, $4.6 million amortization. Leaving operating income of $52.6 million. Other income $2.4 million. Income taxes $12.3 million.
$115 million in cap ex for 2011 in Asia-pacific for capacity expansion and advanced technology. $21 million cap ex in America. Will be funded by cash flow.
Commodity prices effects? We do have material cost increases, but we are able to keep up gross margins. Our ASPs tend to go up as we focus on high-technology PCBs. Margins should increase this year.
Growth drivers? Again, touch pads, smart phones, and Internet infrastructure. We need to expand capacity to take care of our current customers and bring in new customers. We will fill capacity as it is brought online.
Cisco's comments, effects on North American cap ex? It is a solid investment in advanced technology. Our networking customers are giving us mainly advanced routers. Our business was up in Q4, so we are optimistic about our networking business.
HDI work is for touch pad tablets and smart phones. The shift to that was the main driver of better margins in Asia. HDI was 36% of revenues.
We are doing extremely well attracting new customers. There is actually more demand than there is supply in the high technology PCB segment. Some trend watchers think smartphones may grow 40% a year for years.
A lot of new smartphone models are getting ready to launch, and Asia is increasingly following global seasonal patterns.
Basically, the strategy of being in early product development and high-volume high-technology PCB production turned out to be the right combination.
15% annual growth is a very real target, it should not be capacity constrained.
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