What You Need To Know About Hutchinson Technology Incorporated (NASDAQ:HTCH)’s F3Q


Hutchinson Technology Incorporated (NASDAQ:HTCH) has released financial results for its F3Q2016 and it is a mixed bag as sales dipped but earnings improved. But the management is confident that the future is bright, especially considering how Hutchinson remains committed to reducing its operating costs.

What happened to topline?

Hutchinson Technology Incorporated (NASDAQ:HTCH)’s topline dipped to $53.2 million in the latest quarter compared to $54.2 million in the prior quarter and $54.7 million in the year-ago quarter. The management explained that the quarter-to-quarter decline in revenue was caused by sales of fewer suspension shipments in the latest quarter compared to the preceding quarter.

Hutchinson shipped 81 million suspensions in the latest quarter, down from 85.4 million in the prior quarter.

However, despite the decline in total sales and the number of suspension shipped in the latest quarter, the average selling price (ASP) of suspensions rose to $0.59 in F3Q2016 compared to $0.57 in F2Q2016.

The reason for the improvement in suspension ASP was due to the fact that more DSA suspensions, which have a higher price, were shipped in the latest quarter than in the preceding quarter. DSA suspensions made up 61% of the product mix shipped in F3Q compared to 49% of the product mix in F2Q.

How gross margin improved

Hutchinson’s gross margin was 13.4% in F3Q compared to 10.5% in the F2Q, which resulted in gross profit of $7.1 million in the latest quarter compared to $5.7 million in the previous quarter.

The improvement in gross profit and gross margin was supported by the decision by Hutchinson to shift nearly all of the final assembly production to Thailand. That move resulted in lower operating costs, which in turn lifted gross profit margin.

How did the bottom-line change?

Hutchinson Technology Incorporated (NASDAQ:HTCH) posted EPS loss of $0.20 in F3Q, which improved from EPS loss of $0.28 in F2Q. Adjusting for special items, EPS loss in the latest quarter was $0.18, narrower than adjusted EPS loss of $0.25 in the prior quarter.

In terms of liquidity, Hutchinson Technology Incorporated (NASDAQ:HTCH) finished F3Q with net cash of $50.7 million, down slightly from $51.3 million at the end of F2Q.


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