Hutchinson: Preliminary Fiscal 1Q14 Financial Results

Hutchinson Technology Incorporated reported preliminary results for its fiscal 2014 first quarter ended December 29, 2013.

The company shipped 115.7 million suspension assemblies in the fiscal 2014 first quarter, up 13% from 102.6 million in the preceding quarter.

Rick Penn, president and CEO, said that suspension assembly demand for 2.5″ mobile drives was particularly strong during the quarter and the company responded quickly to meet the higher than expected demand.

Net sales for the quarter totaled approximately $70 million, compared with $63.7 million in the preceding quarter. ASP was $0.59, compared with $0.60 in the preceding quarter.

The company’s shipments of dual-stage actuated (DSA) suspension assemblies increased approximately 12% sequentially and accounted for 23% of first quarter shipments.

The company estimates that gross profit for the fiscal 2014 first quarter was 7% to 8% of net sales, compared to a gross loss of $400,000, or 1% of net sales, in the preceding quarter.

Penn said that manufacturing yields have improved in the company’s Thailand assembly operation and in its components operations.

“While we showed improvement over last quarter’s yields and efficiencies, we continue to focus on closing the gap to our targets,” said Penn.

In connection with the consolidation of its operations, the company said it expects to record asset impairment charges for one of its buildings of approximately $5 million in the fiscal 2014 first quarter. The impairment charges will be reported below gross profit.

Cash and investments totaled $40.2 million at the end of the fiscal 2014 first quarter, compared to $40.6 million at the end of the preceding quarter. Outstanding borrowings on the company’s revolving line of credit were reduced from $4.0 million at the end of the preceding quarter to $2.0 million at the end of the fiscal 2014 first quarter.

The company said that it currently expects a sequential decline in suspension assembly shipments and net sales during its fiscal 2014 second quarter, which is historically a seasonally weaker quarter.