SigmaTron International, Inc. Reports Second Quarter Financial Results for Fiscal 2019
December 12 2018 - 10:00AM
SigmaTron International, Inc. (NASDAQ: SGMA), an electronic
manufacturing services company, today reported revenues and
earnings for the quarter ended October 31, 2018.
Revenues increased to $77 million for the second quarter of
fiscal 2019 from $73 million for the same quarter in the prior
year. Net income decreased to a net loss of $723,941 in the
second fiscal quarter compared to net income of $736,115 for the
same period in the prior year. Basic and diluted loss per
share were each $0.17 for the quarter ended October 31, 2018
compared to basic and diluted earnings per share of $0.18 and
$0.17, respectively, for the same quarter in fiscal 2018.
For the six months ended October 31, 2018, revenues increased to
$148.4 million compared to $144.2 million for the same period ended
October 31, 2017. Net loss for the six-month period ended
October 31, 2018 was $1,250,548 compared to net income of
$1,118,997 for the same period in the prior year. Basic and
diluted loss per share for the six months ended October 31, 2018,
were each $0.30 compared to basic and diluted earnings per share of
$0.27 and $0.26, respectively, for the six months ended October 31,
2017.
Commenting on SigmaTron’s second quarter, fiscal 2019 results,
Gary R. Fairhead, President, Chief Executive Officer and Chairman
of the Board, said, “Our second quarter is disappointing in terms
of our net income but it was a better quarter than the first
quarter as we achieved both revenue growth and pre-tax income.
Unfortunately, our net income number was negatively impacted
due to a tax valuation allowance related to operations in Vietnam
and China.
“While we experienced good revenue growth which occurred near
the end of the second quarter, we begin the third quarter facing
major challenges as a result of the trade dispute between the
United States and China. First, as to our cash flow,
customers are delaying payment as they review tariff
billings. Second, the significant additional paperwork and
administration the trade dispute creates is non-income
generating. Third, many of our customers are reassessing
their supply chains which is resulting in additional time and
energy commitments from SigmaTron management. Finally, and
most importantly, we are beginning to see signs that the tariffs
are starting to negatively affect our projected revenue into
2019. We believe that trend will accelerate during the third
quarter.
“In addition to the trade dispute, the new administration in
Mexico took office on December 1, 2018. They have not made
any final announcements regarding a new compensation structure in
Mexico, but have previously indicated this will happen. Any
increase in their labor costs will need to be passed on to our
customers.
“On a positive note, we have seen some improvement in the
electronic component marketplace with regards to lead-time.
Prices are not falling and in some cases continue to
increase, but there have been fewer decommitments by suppliers and
some lead-times have shortened. As our customers continue to
weigh the positives and negatives related to production in Mexico
or China, we remain in a position to provide our services through
either location which is a benefit of our global footprint.
“We have seen several new programs that were previously delayed
finally go into production, which is good news. We are
actively addressing with customers where appropriate price
increases as a result of increased interest rates and labor cost.
We expect to have some of these price increases in place by
January 1, 2019. We continue to have some interesting new
opportunities that we are working on as well. I fully expect
that the third quarter will remain volatile and unpredictable but
the trajectory going forward still remains positive.
Hopefully the China trade dispute will be resolved early next
year.”
Headquartered in Elk Grove Village, IL, SigmaTron International,
Inc. is an electronic manufacturing services company that provides
printed circuit board assemblies and completely assembled
electronic products. SigmaTron International, Inc. operates
manufacturing facilities in Elk Grove Village, Illinois; Acuna,
Chihuahua, and Tijuana Mexico; Union City, California; Suzhou,
China, and Ho Chi Minh City, Vietnam. SigmaTron
International, Inc. maintains engineering and materials sourcing
offices in Elgin, Illinois and Taipei, Taiwan.
Note: This press release contains
forward-looking statements. Words such as “continue,”
“anticipate,” “will,” “expect,” “believe,” “plan,” and similar
expressions identify forward-looking statements. These
forward-looking statements are based on the current expectations of
the Company. Because these forward-looking statements involve
risks and uncertainties, the Company’s plans, actions and actual
results could differ materially. Such statements should be
evaluated in the context of the risks and uncertainties inherent in
the Company’s business including, but not necessarily limited to,
the Company’s continued dependence on certain significant
customers; the continued market acceptance of products and services
offered by the Company and its customers; pricing pressures from
the Company’s customers, suppliers and the market; the activities
of competitors, some of which may have greater financial or other
resources than the Company; the variability of the Company’s
operating results; the results of long-lived assets and goodwill
impairment testing; the variability of the Company’s customers’
requirements; the availability and cost of necessary components and
materials; the ability of the Company and its customers to keep
current with technological changes within its industries;
regulatory compliance, including conflict minerals; the continued
availability and sufficiency of the Company’s credit arrangements;
changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese
regulations affecting the Company’s business; the turmoil in the
global economy and financial markets; the stability of the U.S.,
Mexican, Chinese, Vietnamese and Taiwanese economic, labor and
political systems and conditions; currency exchange fluctuations;
and the ability of the Company to manage its growth. These
and other factors which may affect the Company’s future business
and results of operations are identified throughout the Company’s
Annual Report on Form 10-K, and as risk factors, may be detailed
from time to time in the Company’s filings with the Securities and
Exchange Commission. These statements speak as of the date of
such filings, and the Company undertakes no obligation to update
such statements in light of future events or otherwise unless
otherwise required by law.
For Further Information Contact:SigmaTron International,
Inc.Linda K. Frauendorfer1-800-700-9095
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CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
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Three Months |
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Three Months |
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Six Months |
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Six Months |
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Ended |
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Ended |
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Ended |
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Ended |
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October
31, |
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October
31, |
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October
31, |
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October
31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Net sales |
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$77,001,091 |
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$72,959,074 |
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$148,415,148 |
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$144,183,367 |
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Cost of products
sold |
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70,307,006 |
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65,855,506 |
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135,932,007 |
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130,322,745 |
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Gross profit |
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6,694,085 |
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7,103,568 |
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12,483,141 |
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13,860,622 |
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Selling and
administrative expenses |
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5,817,155 |
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5,642,273 |
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11,751,271 |
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11,554,419 |
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Operating
income |
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876,930 |
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1,461,295 |
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731,870 |
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2,306,203 |
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Other expense |
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474,879 |
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309,841 |
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1,053,432 |
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573,904 |
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Income (loss) before
income tax |
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402,051 |
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1,151,454 |
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(321,562 |
) |
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1,732,299 |
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Income tax expense |
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1,125,992 |
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415,339 |
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928,986 |
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613,302 |
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Net (loss)
income |
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($723,941 |
) |
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$736,115 |
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($1,250,548 |
) |
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$1,118,997 |
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Net (loss) income per
common share - basic |
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($0.17 |
) |
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$0.18 |
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($0.30 |
) |
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$0.27 |
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Net (loss) income per
common share - assuming dilution |
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($0.17 |
) |
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$0.17 |
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($0.30 |
) |
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$0.26 |
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Weighted average number
of common equivalent |
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shares
outstanding - assuming dilution |
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4,230,008 |
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4,326,854 |
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4,226,833 |
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4,302,977 |
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CONDENSED
CONSOLIDATED BALANCE SHEETS |
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October 31, |
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April 30, |
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2018 |
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2018 |
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Assets: |
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Current assets |
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$130,029,775 |
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$120,029,726 |
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Machinery and
equipment-net |
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34,407,753 |
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35,288,997 |
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Deferred income
taxes |
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512,547 |
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1,109,681 |
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Intangible assets |
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2,900,440 |
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3,088,085 |
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Other assets |
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1,679,460 |
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1,713,481 |
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Total assets |
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$169,529,975 |
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$161,229,970 |
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Liabilities and
stockholders' equity: |
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Current
liabilities |
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$63,677,299 |
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$59,378,486 |
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Long-term
obligations |
|
48,176,973 |
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43,041,533 |
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Stockholders'
equity |
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57,675,703 |
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58,809,951 |
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Total liabilities and
stockholders' equity |
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$169,529,975 |
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$161,229,970 |
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