Yesterday after market close, Brightpoint Inc. (CELL) declared robust financial results for the first quarter of 2011. Quarterly total revenue was $1,114.9 million, an improvement of 40% year over year. This was also significantly above the Zacks Consensus Estimate of $969 million.
In the first quarter of 2011, the company managed 27.243 million wireless devises, up 21% year over year. Distribution average selling price was $200, up 29% year over year, depicting favorable product-mix toward costlier smartphones.
Quarterly GAAP net income from continuing operations was $8 million or 11 cents per share compared with a net income of $4.7 million or 7 cents per share in the prior-year quarter. However, adjusted (excluding special items) EPS in the reported quarter was 17 cents beating the Zacks Consensus Estimate by a penny.
Segment wise, Distribution revenues were $984.7 million in the first quarter of 2011 compared with $714.4 million in the year-ago quarter. Logistics Services revenues were $130.2 million compared with $80.9 million in the prior-year quarter.
In the reported quarter, on a GAAP basis, gross margin was 7.8% compared with 9.1% in the prior-year quarter. SG&A expenses were $65.7 million compared with $56.7 million in the year-ago quarter. The increase in expense was due to fluctuations in foreign currency exchange rates and acquisition of Touchstone Wireless.QuarterlyEBITDA was $26.2 million compared with $17 million in the year-ago quarter.
During the first quarter of 2011, Brightpoint used $97.4 million of cash for operations compared with $23.2 million in the year-ago quarter. Free cash flow (cash flow from operation less capital expenditure) in the reported quarter was a negative $120.2 million compared with a negative $27.6 million in the prior-year quarter.
At the end of the first quarter of 2011, Brightpoint had $27 million of cash & marketable securities on its balance sheet compared with $41.7 million at the end of 2010. Total debt was $196.4 million at the end of the reported quarter compared with $90.4 million at the end of 2010. Debt-to-capitalization ratio, at the end of the first quarter of 2011, was 0.43 compared with 0.29 at the end of 2010.
Future Financial Outlook
For fiscal 2011, management expects to manage wireless devices within the range of 111 million – 114 million, up 12% – 15% year over year. GAAP EPS will be within the range of 58 cents to 73 cents. Non-GAAP EPS will be within the range of 90 cents to $1.05. Stock-based compensation will be 32 cents per share. Capital expenditure will be within the range of $59 million – $63 million, up 40%-50% year over year.
Our Take
Brightpoint has solid supply-chain agreement with large mobile handset developers such as Research In Motion Ltd. (RIMM), Nokia Corp. (NOK), and HTC Corp., to name a few. We maintain our long-term Neutral recommendation on Brightpoint. Currently, it holds a short-term Zacks # 4 Rank (Sell) on the stock. We believe this Sell rating is mainly due to Brightpoint’s current valuation, which has moved up by more than 75% last year.
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