Pulse Electronics Sales Dip in Q1

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Pulse Electronics Corporation (NYSE:PULS), a leading provider of electronic components, today reported results for its first quarter ended March 28, 2014.

First Quarter Highlights

• Net sales were $81.7 million, down 3.7 percent from $84.8 million in the prior-year quarter, and down 7.0 percent from $87.8 million in the fourth quarter.
• Operating loss (U.S. GAAP) was $1.4 million compared with a profit of $1.0 million in the prior-year quarter and a profit of $1.2 million in the fourth quarter.
• Non-GAAP operating profit was $0.1 million, compared with $1.6 million in the prior-year quarter and $2.2 million in the fourth quarter.
• Orders increased 6 percent compared with the prior-year quarter, and the book-to-ship ratio in the first quarter was 1.05.
• Completed exchange transactions for $20.7 million of outstanding convertible senior notes, as previously announced.

CEO Comments

“While the industry environment remained challenging, our operating results for both revenue and non-GAAP operating profit this quarter were within our guidance, but lower both year over year and sequentially consistent with general industry conditions,” said Pulse Chairman and Chief Executive Officer Ralph Faison. “Orders in the quarter were nicely higher than revenue and ahead of last year’s trend. Smartphone demand remained weak as expected.

“As has been widely reported across our industry by peers and analysts, order rates for network and power that began to strengthen late in the fourth quarter of 2013 continued to grow through the first quarter and provide a positive outlook for Pulse in the coming quarters,” added Mr. Faison. “We believe these increased orders will result in sequential revenue growth in coming months. At the same time, we expect the smartphone market to return to a more normal demand situation that should provide improved opportunity for wireless revenue.

“We continue to maintain our focus on and commitment to EBITDA growth as the company’s primary objective in 2014. We implemented a number of cost and expense reduction actions during the quarter to better align our cost structure with the size of the business, and we will continue to pursue these activities in the second quarter. Our previous cost and expense reductions have significantly reduced the company’s breakeven point, as evidenced by our positive non-GAAP operating profit this quarter despite revenue under $82 million. We believe any future increase in revenue should result in good growth in EBITDA and EBITDA margin.

“Additionally, we continue to address the issues of wireless segment performance. We are currently executing on a new antenna manufacturing technology we have developed and that is already commercially proven. Antennas produced with this technology better meet the needs of the high-end smartphone and mobile device industry both technically and financially. Further, we are optimistic that successful partnerships with our customers will drive improved operating performance in the future,” Mr. Faison concluded.