Hutchinson Reports Preliminary 1FQ15

Hutchinson Technology Incorporated reported preliminary results for its fiscal 2015 first quarter ended December 28, 2014.

The company shipped 121.7 million suspension assemblies in the fiscal 2015 first quarter, up 4% from 117.1 million in the preceding quarter.

Rick Penn, president and CEO, said the higher shipments resulted from the company’s increased participation on customers’ programs.

Net sales for the quarter totaled approximately $72 million, compared with $70.3 million in the preceding quarter.

ASP was $0.58, flat compared to the preceding quarter.

The company estimates that gross margin for the fiscal 2015 first quarter was 15% to 16% of net sales, up from 13% in the preceding quarter, due to the higher volume in the quarter and improved operating performance. It also estimates that its fiscal 2015 first quarter operating loss was reduced to approximately $1 million, compared to an operating loss of $1.5 million in the preceding quarter. R&D expenses for the quarter increased to approximately $6 million, compared to $4.8 million in the preceding quarter, primarily due to process development costs for the company’s SMA OIS actuators.

“We’re still in the early phases of bringing our OIS actuator to the market, and we continue to focus on increasing our OIS production efficiency and capacity,” said Penn.

He also said that a smartphone incorporating the company’s SMA OIS actuators was introduced last week for sale in Taiwan and China.

In connection with the financing transactions that closed in October 2014, the company expects to record a loss on debt extinguishment of approximately $4.3 million in the fiscal 2015 first quarter.

Cash and investments totaled approximately $35 million at the end of the fiscal 2015 first quarter, compared to $38.9 million at the end of the preceding quarter. The company also held approximately $45 million of cash that is restricted in use, including $35 million of cash held in an escrow account to partially fund the previously announced redemption of its $39.8 million of 8.50% Convertible Senior Notes that will occur on January 15, 2015.

As previously disclosed, the company obtained a $15 million term loan during the fiscal 2015 first quarter. Outstanding borrowings on the company’s revolving line of credit were reduced from $9.5 million at the end of the preceding quarter to zero at the end of the fiscal 2015 first quarter. Subsequent to the end of the fiscal 2015 first quarter, the company received a $15 million advance payment from a customer for suspension assemblies expected to ship to that customer in the fiscal 2015 second quarter.

The company expects a sequential decline in suspension assembly shipments and net sales during its fiscal 2015 second quarter, which is historically a seasonally weaker quarter.