Hutchinson: Fiscal 4Q12 Financial Results

Hutchinson Technology Incorporated reported a net loss of $14.7 million, or $0.62 per share, on net sales of $63.6 million for its fiscal fourth quarter ended September 30, 2012.

Excluding certain items, the company’s non-GAAP net loss for the quarter was $13.0 million or $0.54 per share.

In the preceding quarter, the company reported a net loss of $13.9 million, or $0.59 per share, on net sales of $61.0 million. Excluding certain items, the non-GAAP net loss in the preceding quarter was $14.6 million, or $0.62 per share. For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial statements.

The company’s suspension assembly shipments totaled 105.2 million in the 14-week fiscal 2012 fourth quarter, down 2% on a weekly shipment basis compared with 100.1 million in the 13-week fiscal 2012 third quarter. Decreased shipments of suspensions for enterprise applications were partially offset by an increase in shipments of suspensions for mobile applications.

Industry sources estimate that disk drive shipments in the quarter ended in September declined by approximately 11% compared with the preceding quarter. "Increased allocations on existing programs and participation on new program ramps are helping us offset near-term market weakness," said Rick Penn, Hutchinson Technology’s president and CEO.

Average selling price in the fiscal 2012 fourth quarter was $0.58, flat with both the preceding quarter and the prior year’s fourth quarter. Dual-stage actuated (DSA) suspensions, which carry a higher selling price and are costlier to manufacture, increased to 5% of the company’s product mix from 1% in the preceding quarter. The company expects its product mix to continue to shift toward DSA suspensions for new disk drive programs throughout fiscal 2013.

The company incurred a gross loss of $0.2 million in the fiscal 2012 fourth quarter, an improvement of $1.0 million compared to the preceding quarter. Despite lower production volume and resulting lower fixed cost leverage than in the preceding quarter, gross margin benefited from a higher mix of TSA+ suspensions and from measures taken to control costs, including a one-week shutdown in early July.

Penn said that about half of the pre-flood production capacity at the company’s Thailand assembly operation is now installed. "We are ramping our Thai operations as planned and program qualifications are in progress," said Penn. "We currently expect to have approximately one-half of our total assembly output coming from our Thailand assembly operation by the end of our fiscal 2013 third quarter."

Cash and investments at the end of the 2012 fourth quarter totaled $54.9 million, down from $61.7 million at the end of the preceding quarter. Cash generated by operations totaled $2.5 million in the fiscal 2012 fourth quarter, and capital expenditures totaled $6.3 million. For fiscal 2013, the company currently estimates capital spending will total $15 million to $20 million.

Regarding the company’s outlook, Penn said the company expects fiscal 2013 first quarter suspension assembly shipments to be 100 million to 105 million, an increase of 2 to 7% on a weekly basis compared with the 14-week fiscal 2012 fourth quarter.

HDD shipments in this period are expected to be about flat with the preceding quarter. "Overall, we are encouraged by our position on new and existing disk drive programs," said Penn. "Looking ahead, we expect our financial results to benefit from higher volume and improved fixed cost leverage, increased adoption of DSA suspensions, the cost advantages we will realize as we increase output from our Thailand assembly operation, and our continued focus on cost reduction."