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Executives

Richard Schuster - SVP and COO

Arthur Nadata - Chairman, President CEO

Kurt Freudenberg - EVP and CFO

Ken Smith - President of Distribution Division and EVP

Chris Winslow - Senior Vice President of Systems Distribution

Analysts

Chuck Bennett - IBC

Russ Silvestri - Skiritai Capital LLC

John Deysher - Pinnacle

Edward Flynn - Trident Partners

Mike Nery - Nery Asset Management

Presentation

Nu Horizons Electronics Corp. (NUHC) Q4 2010 Earnings Call May 6, 2010 4:30 PM ET

Operator

Good day, and welcome to the Nu Horizons fiscal fourth quarter and full year 2010 financial results conference call. Today’s call is being recorded.

Please note that for the purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, our statements today may include certain forward-looking statements that involves risks and uncertainties that could cause actual results to differ materially.

Such statements are based upon, among other things, assumptions made with information currently available to the management, including management’s own assessment of the Nu Horizons industry and competitive landscape. During the presentation, your line will be in a listen-only mode. And at the conclusion there will be a question-and-answer session. Instructions on how to signal for a question will be given at that time.

I will now turn the call over to Richard Schuster, Senior Executive Vice President, and Chief Operating Officer of Nu Horizons Electronics Corporation. Please go ahead, Mr. Schuster.

Richard Schuster

Thank you. Good afternoon, and welcome to our fourth quarter and full year financial results conference call. Joining me on the conference call today from Nu Horizons' management are Arthur Nadata, Chairman of the Board; Martin Kent, our recently appointed President and Chief Executive Officer; Kurt Freudenberg, Executive Vice President and Chief Financial Officer; Ken Smith, President of Distribution Division and Executive Vice President; and Chris Winslow, Senior Vice President of Systems Distribution.

Kurt will give an overview of the numbers for the year and fourth quarter of fiscal 2010. I will then give a brief market overview and synopsis of the industry, and our Company’s performance, and then we will open the call to questions you may have.

At this point, I’d like to turn the call over to Kurt for a review of the financial results.

Kurt Freudenberg

Thank you, Rich. Good afternoon, everyone. Consolidated net sales for the Q4 fiscal 2010 are $186,923,000 compared to $150,770,000 in the comparable period last year. The 24% increase. Sequential quarterly consolidated sales increased $7,470,000 or 4.2% over the third quarter of fiscal 2010.

Q4 2010 sales excluding Xilinxs was $131,495,000, sequential quarterly sales in the active electronics component segment were up 1.3% North America, up 10.3% in Asia and up 1.8% in Europe.

Sequential sales in our passive component segment for Q4 of fiscal 2010, increased 3.6% and were up 36.8% compared to Q4 to prior year. Our consolidated book-to-bill ratio was 1.171 in the fourth quarter of fiscal 2010.

Fourth quarter 2010 selling general and administrative expenses decreased $2,330,000 to $2,389,000 or 18.5% over the prior year’s fourth quarter. Allowance decreases in compensation related expenses, associated with our cost reduction actions, as well as decrease in professional fees, foreign exchange expense and depreciation expenses.

Following the announcement of the termination of Xilinx distribution agreement in Q1 fiscal 2011, the company implemented 49 [ph] employee workforce reduction, which is expected to reduce SG&A expense by $3 million per year. Not including severance cost of $3,40,000.

In the fourth quarters of 2010 and 2009, the company conducted the required evaluations of its goodwill impairment charges, which resulted in non-cash impairment charges for the year, reporting unit in the active electronics components segment, amounted $2,615,000 and $7,443,000 for fiscal year ended February 28, 2010 and 2009 respectively.

While the goodwill impairment charges reduced reported results on the US generally accepted accounting principles, since some charges were non-cash in nature, they do not affect the company's liquidity or cash flows from operating activities. For the fiscal year ended February 28, 2010, consolidated net sales decreased to $670,727,000 from 750, 954,000 in the comparable period last year.

Consolidated sales for the full year of fiscal 2010, excluding Xilinx was $455,780,000. The consolidated gross profit margin for fiscal 2010 was 14.1% as compared to 15.1% last year, which is primarily due to higher volume of low margin business in Asia and North America.

The fiscal 2010 gross margin, excluding Xilinx is 15.1%. For 2010 fiscal year, selling, general administrative expenses decreased $22.3 million or 19.8%, due primarily to savings associated with reductions and compensation related expenses, due to various cost reductions actions influence in fiscal 2009, as well decrease in the commission freight expense, professional fees and other miscellaneous operating expenses.

As a percent of sales, net interest expense was standing at 0.3% to 0.4% of sales in each of the fiscal years ended February 28, 2010 and 2009 respectively. Net interest expense decreased 44% to $1.7 million from fiscal 2009 to fiscal 2010, as a result of lower volume as it was offset somewhat by increases in borrowings.

The effective tax rate is higher than the statutory rate of 35%, during the February [ph] of 2010, primarily due to the recording in the fourth quarter, or fiscal 2010, of $1,396,000 valuation allowance, against the U.S net deferred tax assets, and an increased in the valuation allowance for certain operating losses, partially offset by foreign income earned at lower tax rates than the U.S tax rates lower or state and local income taxes and cash burn [ph].

The net loss for the fourth quarter of fiscal 2010 was $2,546,000 million or $0.14 per share. As compared to a net loss of $10.7 million or $0.59 per share for the fourth quarter of the prior year. Excluding goodwill impairment charges and 2010 provision for U.S. tax valuation allowance, and certain other unusual items, non-GAAP net income for the fourth quarter of fiscal 2010 was $1,465,000 or $0.08 per diluted share as compared to a net loss of $2,547,000 or $0.14 per share for the fourth quarter of the prior year.

The net loss for fiscal 2010 was $2,297,000 or $0.13 per share, as compared to a net loss of $9,235,000 or $0.51 per share for fiscal 2009. Excluding goodwill impairment charges, in the fiscal 2010 provision for a U.S. net deferred tax valuation allowance and certain other unusual items, non-GAAP net income for the full year was $2,546,000 or $0.14 per diluted share, compared to a net income of $1,140,000 or $0.06 per diluted share in the prior year.

A reconciliation of GAAP and non-GAAP net income for both the quarter and the fiscal year ended February 28, 2010 is posted on the company’s website under Investor Relations.

The company has a strong balance sheet, February 28, 2010. The company had $170,196,000 of working capital. Our current ratio was 2.9 to 1, and our bank debt to equity ratio was 0.27 to 1. Additionally, the company had $38.6 million of unused cash available under all of these bank facilities on February 28, 2010.

Pursuant to the terms of the distribution agreement with Xilinx, Nu Horizons has the right to return all unsold inventory to Xilinx, at their expense, for a full refund of the original purchase price.

The net value of Xilinx inventories at February 28, 2010 was $41.2 million. Our balance sheet have strengthened by the increase cash level which is free to following (inaudible).

The remain opportunistic will restructure the use to resolving cash which maybe use for debt reduction, acquisitions, working capital or funding of internally generate growth initiatives.

Now, I’ll turn the call back over to Rich.

Rich Schuster

Thank you, Kurt. Based on Nu Horizons financial results throughout its fiscal 2010 and for the fourth quarter in particular, we have seen a substantial rebound in revenues. Net revenues increased sequentially in every quarter of fiscal 2010 inclusive of Xilinx products. Excluding Xilinx products were reported even better quarterly sequential revenue growth of 10.5%. There are other positive implications relating to the change with Xilinx that we will address in a few minutes.

Regarding supply developments, earlier this month, we were named by Lattice Semiconductor as its new global distributor. Prior to this announcement, Nu Horizons had been a distributor for Lattice only in the Asia Pacific Region. Lattice has advised us that is disengage from other distributors of its products throughout the world and we believe that our new role as the global distributor will result immediate customer revenue transfer as well as the opportunity to participate in any increased demand for Lattice products globally.

Our standard relationship with Lattice is indicative of certain of our many corporate qualities, including according to Lattice management ‘our demand creation abilities, seamless global infrastructure, world-class logistics, expert technical knowledge and award winning customer service.’

Our most important recent announcement was issued earlier this week. We named our new Chief Executive Officer. Often with that we’ll remain with the company in an employee capacity during a transitional period and there after we’ll remain our Chairman. Assuming the CEO position effective May 3rd, Martin Kent, will possess a strong international experience, public company experience and the ability to manage complex engineered products and systems for cutting-edge technologies.

We are increasingly demonstrating our capabilities as the partner of choice for fast growing and world leading technology OEMs and suppliers. This is the future of Nu Horizons and we believe Martin Kent is highly qualified to lead us in pursuit of discussion.

Further strengthening our management team. In February, we announced the promotion of Ken Smith, the Service President of the Company’s Global Distribution Division. Ken showing Nu Horizons seven years ago and most recently served as Executive Vice President of worldwide sales and marketing. Our positioned he assumed in 2008. Kent has played a center role in driving our sales growth in recent years and we expect him to be in even greater for us going forward.

Our enhance management team is focused on growth through global diversification. This diversification is designed to enable us to avoid revenue concentration issues such as what we experienced with Xilinx. Excluding Xilinx, no supplier represents more than 10% of our revenue today. Our aggregate gross margin percentage has improved and as stated earlier we have experienced more rapid quarter-over-quarter growth with our remaining and recently added supplier of partners.

Concentrating both on diversified growth and expanded services in our three primary regions of North America, Asia Pacific and Europe is expected to allow us to participate in some of the world’s fastest technology based growth trends. Leveraging a ratio of one field application engineer the every two outside account managers, we’ve building tools to processes and partnerships that are designed to penetrate the growing vertical markets in North America and globally. Including military and aerospace, industrial instrumentation and test, medical, digital multimedia, and transport, and security and homeland defense.

As an example, the military market is very exciting to us. We have recently been awarded certification for being ITAR Compliant. This is the international traffic and arms regulations that enable us to distribute products under a standard military approval process managed by the government. In addition to selling military products from our current supplier partners recent additions in this space include Semicoa Corporation and Aeroflex Corporation. Both leaders in the design and manufacture of highly liability and JANS qualified components.

We continue to make progress with our growth initiatives as measured by design activity, new supplier agreements, current supplier franchise expansion and vertical market customer targeting and solution selling. Well these are all catalyst for future revenue growth, the near term outlook has considerably improve. Our book-to-bill ratio has increase from 1.12 with the end of our fiscal third quarter to 1.17 at the end of the fourth quarter on February 28. Exclusive of Xilinx, our Q4 book-to-bill was 1.19.

Now, let’s drove down on how our growth initiatives impacted the performance of our businesses in the fourth quarter and for our fiscal year 2010. In the fourth quarter we saw a further strengthening on our active electronic components distribution segment with sequential revenue growth of 4.2%.

Sequential design revenue growth of 11.7% and 1.17 book-to-bill for the quarter. We’re seeing similar trends throughout the past three quarters. All geographies experience for sequential growth on positive book-to-bill. Moreover, we believe we see a strong vote of confidence in royalty from the majority of our suppliers which suggest that we maybe picking up new business from many of them in future quarters.

Encouraging indication is at for the months of March and April. Excluding Xilinx the first two months of our fiscal 2011 first quarter our book-to-bill ratio was 1.17 as compared to 0.93 for the same period last year. Revenue for the Systems group was up 6.8% from quarter three fiscal 2010, and up 15.9% from quarter four fiscal 2009.

Gross profit increase 14.4% from Q3 fiscal 2010, and increased 2.8% from Q4 fiscal 2009. During the fourth quarter we focused on driving our relationship without the Alcatel-Lucent. Progress was made in securing new customers and transferring existing partners. This transfer of existing partners is expected to expand at a greater pace during the first two quarters of fiscal 2011. Oracle closed on their acquisition of Sun Microsystems during the fourth quarter and as there were short interruption, business has resumed to our normal level.

Over the past two quarters Nu Horizons in conjunction with our partners has won several new IBM designs within the military, aerospace and homeland security sectors. Initial deployments are currently schedule to take place during the first and second quarters with rollout plans for the second half of fiscal year. These are significant defense programs and have the potential to deliver substantial revenue growth over the following 18 to 36 months.

In addition, we've expanded our available IBM portfolio to include the higher end System p products and Midrange storage to address more complex OEM applications. We are currently completing our training and certifications in these portfolio additions while engaging with IBM on new business opportunities.

Our passive components subsidiary NIC continued to show growth in the fourth quarter and closed fiscal 2010 with 1.22 book-to-bill. Demand for passive components started to increase in the second quarter of fiscal 2010, due to improving economic conditions, inventory replenishment and higher consumption in many sectors. Capacity remains tight with extended lead times and increased prices. NIC however, was able to pipeline substantial production to help satisfy our increased customer demands.

Gross profit margins remained steady and design activity continues to be robust. The demand has continued to be strong for the start of fiscal 2011 and we believed it will continue for at least the first half of 2011. NIC was profitable for fiscal 2010 and intends to aggressive remarkable standard and newly introduce products this fiscal year to continue the growth.

We have made considerable progress on a company wide basis with our strategic initiatives in the fourth quarter and this momentum has carried-forward. Our current bookings and design activity strongly suggest that the industry across the broad is improving with particular strength in our key focus areas. With demand returning, we have added new lines and are aggressively seeking new partnerships to further accelerate our growth rate. Our goal is to increase our market share globally.

This concludes the presentation of our prepared remarks. We'll now pass the call back to the operator, so that we may open the conference call to any questions you may have. Thank you.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) And we'll take our first question from Chuck Bennett with IBC.

Chuck Bennett - IBC

How you doing?

Kurt Freudenberg

Hi.

Chuck Bennett - IBC

Three questions basically. First one I saw Avnet, they came out with a platform called CloudReady which is I guess, looking to enhance the customers ability to access these capabilities and I was curious to see if you had anything or you've been looking in that direction for any business?

Kurt Freudenberg

I don’t think we are aware of that, I am sorry.

Richard Schuster

Should I say?

Kurt Freudenberg

Okay.

Richard Schuster

Yeah, we've been studying in the cloud revolution here now for last number of years and clearly number of our customers participated in but because we focused pretty much exclusively on the OEM market place much of the deployments that you read about are really more centered around service providers and around data centers. So we're always sort of tushery [ph] involved in that as some of our customers may get involved in delivering cloud computing solutions. But we're not putting together a portfolio, at least not today for our OEMs.

Chuck Bennett - IBC

I see. Second question is kind of an opinion. I am curious what is stopping you, I guess us from showing the invested public debt or actually work more than $3.50 share, if a person would lend maybe offer some money and as what would he buy with that money, would he buy anyway Tee [ph] would he buy Avnet. And I am asking this because for sometime the book value is not anywhere new with the price of the stock is, there is a big disconnect here and I am sitting with a pretty big position and I've been sitting with this over year and I am asking myself why am I sitting in this stock or in this situation when its clear that no ones really ever answer that question or show the invested public that we're actually work more that what we're sitting here at now. Can you do anything? Can you -- would you have anyway down locked the value that proceed by near lift?

Richard Schuster

This is Richard. I’ll try to answer your concern certainly because you know certainly we thought of that and we feel similar to you that we do have more value than the price of the stock is showing. Over the last few years we’ve had some contingencies and of course we had consent with the recession.

At the same time, we’ve always concentrated on building the infrastructure of the company, building the value proposition of the company. We believe now that the economy has improved, our industry is certainly improved. We’re on the cusp of showing the growth and the earnings that we think we can achieve. Even with the loss of one of our major lines we’re attracting new suppliers, new customers and building around that and over it.

So, we will certainly, we’ve also hired Investment Relations firm. We will be talking to the marketplace we would be going out and seeing investors, telling them you know what we’re doing. We brought on a new dynamic CEO who is a very experienced in our industry. He will be going out and explaining you know what he feels the company can accomplish. Obviously he took this position what the anticipation that he can grow the company and give our shareholders more value.

So that, that is one of our main goals and I think you’ll be hearing more communication from the management team as we move along.

Chuck Bennett - IBC

Last question, are you afraid since the position between you and Arthur are about 400,000 shares a piece. Would you be afraid and maybe someone coming in and acquiring more shares above you two, and mixing this up a little bit?

Richard Schuster

I don’t think we have a fear of that. Difficult to answer that question, I don’t think we have a fear. We’re at this point, we want to give our shareholders as much value as we can and our concentration is on growing the business profitability.

Chuck Bennett – IBC

Just my opinion, if someone came in and actually bought the stock, it probably give a hint and where people think it should be, I mean, that’s really the only thing I am looking at. It’s been many years since anyone took money out of pocket and invested in the company since a lot of people have investing in this thing for years, buying the stock everyday. It would probably help opinions, maybe even the reality a little bit if somebody actually took a step in that direction. That’s it.

Richard Schuster

Okay. Thank you.

Chuck Bennett – IBC

Thanks.

Operator

We will take our next question from Russ Silvestri with Skiritai.

Russ Silvestri – Skiritai Capital LLC

Hello.

Kurt Freudenberg

Yes, hello.

Russ Silvestri – Skiritai Capital LLC

How are you guys doing?

Kurt Freudenberg

How are you doing [ph]?

Russ Silvestri – Skiritai Capital LLC

I am good. Thanks. Nice day out here in San Francisco. Just addressing the one question that last, the gentleman previous, I mean, there is multitude of things that you guys could be doing. You guys can be generating cash, I mean, why you used that to back buy the stock or you maybe do something more aggressive the Dutch auction. I mean people make the point that all liquidity is the issue, but the value then why don’t we allow those shareholders who want to get out, you let them get out and let’s enhance the value for those who aren’t interested in staying. So I’d ask the Company to at least consider the opportunity of Dutch auction, utilizing the cash in that manner at this point in time. My question though it relates to lead times, in the direction of lead times and then I jump on the call little late, I don’t know if you say anything about the test issue I know that the SEC doesn’t you know send the letters saying that we are no longer investigating this but I just wondering if there is any intensity from the SEC or if it’s kind of tied off with exact cases [ph]?

Kurt Freudenberg

Yes, it’s basically stag of and we are having any further enquiries and the expense are going down to about almost dropping. So, for couple of quarters now, it’s been very quite.

Russ Silvestri – Skiritai Capital LLC

Okay. And in regards to lead times?

Kurt Freudenberg

Lead times have increased, I think more on the passive side, then on the active side Kent can you address that.

Kent Smith

Yes, on the active side high percentage what we saw is proprietary product as you now. We have seen lead times go out a bit, a little bit more in the order of two weeks or so beyond the standards somewhat four or eight weeks. And it’s say that they are reasonably stable but we’re seeing individual customers challenged in getting products like which said on the passive side and with individual products there some individual items that are unusually far out there. That’s going out a little bit, but still not crazy with our product at the active components.

Russ Silvestri – Skiritai Capital LLC

Okay. And this is a follow up to that -- over two months through the current quarter I am just curious how those the first two months of this quarter have been going, are they similar in terms of picking up that we’ve seen since beginning of the year? Or what’s being happening in the March and April?

Unidentified Company Representative

Yes, we did mentioned in the -- you may have miss the part of the…

Russ Silvestri – Skiritai Capital LLC

Okay.

Unidentified Company Representative

But we did mentioned at the first two months showed increased book-to-bill and we’re seeing that strong start to the new year. And from indications from our suppliers and customers, we believe that the strength of the industry will certainly remain through the first half and into the second half of the calendar year.

Russ Silvestri – Skiritai Capital LLC

Okay, thank you.

Operator

We will take our next question from John Deysher with Pinnacle

John Deysher – Pinnacle

Hi, good afternoon.

Richard Schuster

Good afternoon

John Deysher - Pinnacle

Couple of questions. One the road show that you alluded to perhaps with the CEO, what's the timeframe on that at this point? Is that six months out, nine months out or kind of what you are thinking about generally speaking?

Richard Schuster

We are putting together plans starting in the near future. In the next few weeks we’ll be seeing people and will be putting together right queries [ph] for seeing people in major metro palms areas.

John Deysher - Pinnacle

Okay, so within the next month or so, sounds like?

Richard Schuster

Yes.

John Deysher - Pinnacle

Okay, the workforce reduction in the first quarter, did you say that, that saving $10 million a year?

Unidentified Company Representative

No, its 49 employees and was about $29.

John Deysher - Pinnacle

Okay.

Unidentified Company Representative

That’s not including severance about 340,000.

John Deysher - Pinnacle

Okay, so 3 million, so how does that unfold going forward, I mean …

Unidentified Company Representative

Actual number, it's an annual number, so, of the 12 months of these (inaudible)

John Deysher - Pinnacle

Okay, so I mean we can do it on a monthly basis, it's not skewed one direction or the other direction.

Unidentified Company Representative

No.

John Deysher - Pinnacle

And then two balance sheet related questions, one on inventories, ended the year 117 versus 108 or so, it seems a little strange given that sales were down I would guess some of that is Xilinx inventory?

Unidentified Company Representative

Yes, some of it is Xilinx and we actually had which means the moment on increase in demand. We’ve seen in the first few months in the fiscal year, so we build inventory to supply those sales.

John Deysher - Pinnacle

Okay. And on the Xilinx side, roughly how much of that is -- how much of the inventory is Xilinx and when do you think that we’re getting cash for that?

Unidentified Company Representative

At the end of the year it was about $42 million. It’s come down a bit now but it was $42 million at year end. And I would suspect that we’ll see cash coming probably sometime in the month of June.

John Deysher - Pinnacle

Okay. That comes in a lump sum in June or starts in June?

Unidentified Company Representative

It’s not clear. It would be probably over a period of three weeks.

John Deysher - Pinnacle

Okay. So, you get 42 starting in. Okay.

Unidentified Company Representative

Remember that, part of that 42 is being sold to our curve. So, it’s going to be a lower number. They actually returns on something much less than that.

John Deysher - Pinnacle

Right that’s one way or the other it’s --?

Unidentified Company Representative

The one way or the other, yes.

John Deysher - Pinnacle

Yes.

Richard Schuster

Yes, because you are not necessarily placing that inventory, so you’ll have the receivable and then what you return you’ll get the cash on. So, you’ll have the receivables was cash.

Unidentified Company Representative

There will be -- you know, some works are going forward as agreements suppliers and we build some of their inventory but not at the same rate.

John Deysher - Pinnacle

Okay. And some of that cash will be use to pay-down the debt. Is that?

Unidentified Company Representative

Yes.

John Deysher - Pinnacle

Okay, good. And on the receivables, that’s also up from the year end, some of that because of the strong forth quarter, but there’s – is there any customers who are giving you difficulty at this point in terms of

Richard Schuster

No.

John Deysher - Pinnacle

Okay. So --

Unidentified Company Representative

That’s pretty -- when our customer basis is pretty widespread and we have no problems.

John Deysher - Pinnacle

Okay. So, we should agree the increase in receivables is being related to customers who are difficult in paying?

Richard Schuster

Its purely a, mostly a function of increased sales.

Kurt Freudenberg

DSOs are stays pretty front, pretty standard.

Unidentified Analyst

Okay. Very good thank you.

Richard Schuster

You’re welcome.

Operator

(Operator Instructions) We will take our next question from Edward Flynn with Trident Partners.

Edward Flynn – Trident Partners

How are you guys?

Richard Schuster

Very well.

Edward Flynn – Trident Partners

Real quick into the question, would you be adverse at the stage of the game is why consolidation going on, would you be adverse to getting, brought [ph] out at this point even though you just hired a new CEO?

Richard Schuster

We obviously, it’s a public company. We have a responsibility to be open and listen and talk to people and always consider a value for our shareholders.

Edward Flynn – Trident Partners

In this environment, because it is -- so Avnet when a couple of companies, the guy that you just hired on, congratulations by the way.

Richard Schuster

Thank you.

Edward Flynn – Trident Partners

His company was just brought out correct?

Richard Schuster

Avnet.

Edward Flynn – Trident Partners

However, not too longer by Avne.

Richard Schuster

January 2009.

Edward Flynn – Trident Partners

2009, okay. I just want to ask you, your book value is 799, stock is in the toe [ph] of it, if anybody wanted to actually approach you, I think now will be the best time because you got a recovery that I am seeing in the semiconductor area, I mean this would be the time to tell it, are there the people -- are the people out there making initial increase or anything like that?

Richard Schuster

No, we can’t comment on that, obviously and….

Edward Flynn – Trident Partners

Would you take north of 8 bucks?

Kurt Freudenberg

Certainly, we can’t comment on that.

Edward Flynn – Trident Partners

All right. Try to keep make it happen, believe that's fast to get higher, I appreciate it guys. Thank you…

Kurt Freudenberg

We're on your side. Thank you.

Unidentified Company Speaker

Welcome.

Operator

And we'll take a next question from Mike Nery with Nery Asset Management.

Mike Nery - Nery Asset Management

Hi, I just had a couple questions Martin what's your -- what's going to be your primary focus at Nu Horizons and what you see as Nu Horizon biggest opportunities?

Martin Kent

I still say a great opportunity to component distribution market. I still believe there are out there number of customers as there was a lot of new customers. My focus Rich referred to when he was talking about looking up bringing on new lines, looking at expanding the products of offerings, that helps us to supply more to existing customers, that helps us to bring new customers to the business. So my primary focus really is of making sure we're operating efficiently and that we're taking a wider range of products out to the customers base that we have and that we're bringing new customs into our business in over the regions that we operate.

Mike Nery – Nery Asset Management

And I guess, you alluded to this a little bit, not you Martin, but I guess Kurt mentioned in terms of the cash coming in and then the credit availability. Are you primarily looking at bringing in new lines organically or you looking at making acquisitions? What kind of is the outlook for the company as a whole?

Kurt Freudenberg

As in products, I mean, we would look at products -- if you look at my previous experience when I was a CEO of Abacus I made seven acquisitions during the time I was CEO to expand the Abacus business. It's something that I would obviously consider.

Mike Nery – Nery Asset Management

Okay. And when you look at you know, if we were to make acquisitions you know, obviously our stock is a half of book value, there is probably the not a whole a lot of things we could buy at those types of valuation levels. So, it probably doesn't make a whole lot of sense to use our stock to make acquisitions. Would you use that or what kind of is your tolerance for making deals and sizes and things like that?

Kurt Freudenberg

Nery, I think we have to evaluate all possible financing in revenues, and where we fixed on any particular one. I mean, obviously your some combination of all the above my work, just depends on the -- the one in seller and what kind of deal he wants to make or she wants to make.

Mike Nery – Nery Asset Management

Okay. And in terms of -- so, okay, well, thanks very much. I appreciate it.

Kurt Freudenberg

Thank you.

Arthur Nadata

Thank you.

Operator

(Operator Instruction) That is all the questions we have it at this time. I would like to turn the conference back over to Mr. Nadata.

Arthur Nadata

I would like to thank everyone for participating on this conference call. We welcome your questions and look forward to the next conference call. Thank you all and have a good day.

Operator

Thank you, everybody for participating today, available today beginning at 7.30 pm Eastern Time and will be available until May 13, by dialing 888-203-1112 or 719-457-0820 and using your pass code you may a get replay of today’s conference. Once again thank you for your participation. You may now disconnect.

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