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Pulse Electronics Corporation Reports Third Quarter ResultsSAN DIEGO --(Business Wire)-- Pulse (News - Alert) Electronics Corporation (OTC Pink: PULS), a leading provider of electronic components, today reported results for its third quarter ended September 26, 2014. Third Quarter Highlights
CEO Comments "Our operating results in the third quarter for non-GAAP operating profit improved despite lower revenue both sequentially and year-over-year as we continue to reap the benefits of our ongoing efforts to reduce manufacturing costs and operating expenses," said interim Chief Executive Officer Alan Benjamin. "Our Adjusted EBITDA increased 37 percent compared to the second quarter despite unexpectedly weaker revenue. Looking ahead, demand in the fourth quarter continues to be muted across most of our businesses at levels roughly similar to the third quarter, but we continue to remain focused on EBITDA growth with further efficiency improvements. "Our decision to delist our common stock from the NYSE and deregister it with the SEC (News - Alert) plus other initiatives to reduce our structural complexity will result in significant savings to the company and improve the focus on operational decision making," Mr. Benjamin continued. "We continue to identify opportunities for administrative expense reductions while using some of the savings to make select investments in other programs to reinvigorate profitable growth. "We made significant progress this quarter with FluidANT, our new, cutting-edge electronic printing technology that we have first applied in our wireless segment," added Mr. Benjamin. "We finalized our first program agreement this quarter and we expect this business to contribute significantly to the company's results in future quarters." Third Quarter Operating Performance Net sales were $88.2 million compared to $94.8 million in the prior-year quarter mainly due to weakness in specific product lines, particularly mobile handset antennas and certain automotive products. Demand for core network and power products and wireless infrastructure antennas was slightly higher than the previous year. Sequentially, net sales decreased 5.7 percent compared to second quarter net sales of $93.6 million due to weaker than expected demand in all segments that limited revenue opportunities later in the quarter. Cost of sales decreased 8.4 percent to $67.0 million from $73.2 million in the prior-year quarter. The company's gross profit margin was 24.0 percent compared with 22.8 percent in the prior-year quarter and 21.1 percent in the second quarter. Gross profit margin increased compared to the prior year mainly due to improved product mix and manufacturing efficiency improvement initiatives which offset higher labor costs in China. Sequentially, gross margin improved despite lower revenue mainly due to product mix and efficiency improvements. Operating expenses were $17.4 million and included $0.6 million of expenses related to initiatives to reduce the company's number of legal entities. These expenses are expected to continue for the foreseeable future at a somewhat lower rate, with the ultimate effect of significantly streamlining the company's structure and improving its administrative efficiency. Excluding the legal entity restructuring costs, operating expenses declined 8.5 percent from the third quarter of 2013, mainly due to results of actions related to the previously announced expense reduction initiative. Operating expenses decreased 1.1 percent sequentially (excluding legal entity restructuring costs), mainly due to lower compensation expense. Operating loss (U.S. GAAP) was $1.6 million compared with a profit of $0.5 million in the third quarter of 2013, mainly due to $4.1 million of costs related to the company's CEO transition, which more than offset higher gross profit margin and lower operating expenses. Non-GAAP operating profit was $4.6 million compared with $3.6 million in the prior-year quarter and $2.9 million in the second quarter. The company had $22.4 million of cash and cash equivalents at September 26, 2014 compared with $26.9 million at December 27, 2013. The decrease in cash mainly reflects the payment of cash consideration for the convertible bond exchange transactions, redemption of remaining convertible bonds, refinancing transaction fees and expenses, capital expenditures, and increases in working capital. Cash used in operating activities in the third quarter was $0.2 million due to growth in working capital typical to the second half of the year. Further Information Further information regarding the company's financial results for the third quarter can be found in its Form 10-Q, which will be filed with the SEC today. The company will no longer conduct conference calls to discuss quarterly results. About Pulse Electronics Corporation Pulse Electronics is a leading electronic components partner that helps customers build the next great product by providing the needed technical solutions. Pulse Electronics has a long operating history of innovation in magnetics, antennas and connectors, as well as the ability to ramp quickly into high-quality, high-volume production. The company serves the wireless and wireline communications, power management, military/aerospace and automotive industries. Pulse Electronics is a participating member of the IEEE, SFF, OIF (News - Alert), HDBaseT Alliance, CommNexus, and MoCA. Visit the Pulse Electronics website at www.pulseelectronics.com. Safe Harbor This press release contains statements, including projections of future business objectives and financial results, that are "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These forward-looking statements are based on the company's current information and expectations. There can be no assurance these forward-looking statements will be achieved. Actual results may differ materially due to the risk factors listed from time to time in the company's SEC reports including, but not limited to, those discussed in its Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. All such risk factors are incorporated herein by reference as though set forth in full. The company undertakes no obligation to update any forward-looking statement. Non-GAAP Measures In this press release and in other public statements, Pulse presents certain non-GAAP financial measures. These non-GAAP financial measures have limitations and may not be comparable with similar non-GAAP financial measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Set forth in Schedule A are the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures. These reconciliations should be carefully evaluated. Prior disclosures of non-GAAP figures may not exclude the same items and as such should not be used for comparison purposes. Management believes that these measures enhance investors' understanding of the company's financial performance and the comparability of the company's operating results to prior periods, as well as against the performance of other companies. Copyright © 2014 Pulse Electronics Corporation. All rights reserved. All brand names and trademarks are properties of their respective holders.
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