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For Further Information Contact:
SigmaTron International, Inc.
Linda K. Blake
1-800-700-9095
SigmaTron International, Inc. Reports
Year End Financial Results for Fiscal 2007
ELK GROVE VILLAGE, Illinois, July 13, 2007--SigmaTron International, Inc. (NASDAQ:
SGMA), an electronic manufacturing services company, today reported revenues and earnings
for the fiscal year ended April 30, 2007. Revenues increased 32.9 percent to $165.9 million in
fiscal 2007 from $124.8 million in the prior year. Net income decreased to $1.70 million in
fiscal 2007 compared to $1.88 million in fiscal 2006. Diluted earnings per share from
continuing operations for the year ended April 30, 2007, were $0.44 compared to $0.48 in fiscal
2006.
For the fourth quarter of fiscal 2007, revenues increased to $39.5 million compared to $34.5
million for the same quarter in the prior year. Diluted earnings per share from continuing
operations for the fiscal 2007 fourth quarter were $0.17 per share compared to $0.06 per share
for the same period of fiscal 2006.
Commenting on SigmaTron’s results, Gary R. Fairhead, President and Chief Executive Officer,
said, “When comparing our fourth quarter to the third quarter of fiscal 2007 we can see some
modest financial progress. Revenue for the fourth quarter was down 11% from the third quarter,
yet net income was up 9.7 times. Clearly this is due in no small part to the poor performance
in the third quarter, but I believe it also reflects two other events. The first is that the
integration of Able Electronics into SigmaTron is now finished. The second is that the
European Economic Community July 1, 2006 deadline for completing the transition to the RoHS
standard created almost chaotic conditions for SigmaTron through much of 2006. That transition,
largely completed by the end of our fiscal first quarter of fiscal 2007, was immediately
followed by a sharp increase in revenues during the second and third quarters, creating
significant inefficiencies in our supply chain, operations and many customers’ forecasts.
“When comparing fiscal 2007 to 2006, we experienced continued revenue growth with a small
decline in net income. The revenue growth was driven by the following: 1) inclusion of
customers from the Able acquisition for a full year versus ten months, 2) short term demand
increases related to the RoHS conversion, which have now run their course, 3) organic growth
from existing customers and 4) several new significant customers.
“During fiscal 2007 net income was negatively impacted by the following: 1) the operating
inefficiencies caused by the RoHS conversion required by many customers, 2) the longer than
expected integration of Able Electronics into SigmaTron, 3) increased raw material cost
related to the RoHS conversion, soaring commodity prices and increased transportation costs,
4) continuous pricing pressures from customers, 5) increasing regulatory costs and 6)
increased interest expense directly tied to increases in working capital requirements.
“For fiscal 2007, we saw continued satisfactory results from our Acuna, Mexico and
Suzhou-Wujiang, China operations. Both operations are growing in size and as reported in the
last quarter, we are looking at increasing the Acuna operation and facility. China has started
to modestly expand its customer base, and received its first intra-China order just before the
end of fiscal 2007. Elk Grove Village had a significantly better fiscal 2007 than 2006 from a
financial perspective. Much of their results were tied to the RoHS conversion and customers’
request for geographical proximity during the transition. While we expect some of Elk Grove
Village’s revenue to migrate to some of our offshore locations during fiscal 2008, we have other
opportunities for the operation and we fully expect Elk Grove Village to be a positive contributor
to our fiscal 2008 financial results. Finally, our Taiwan branch grew slightly during fiscal 2007.
It continues to add value to our supply chain, and we are exploring ways to create income from its
supply chain knowledge and experience.
“Our Tijuana, Mexico and Hayward, California operations did not perform to expectations during
fiscal 2007. The integration of those operations took longer than anticipated, and we had to put
in place new systems and in some areas new personnel. The integration is now complete and we have
clearly made financial progress at both operations during the fourth quarter. Real challenges
remain for both operations, as well as the entire company, but it appears we are heading in the
right direction.
“Our company remains well positioned for an electronic manufacturing services company our size,
and we believe we will continue to be attractive to our current customers as well as new customers.
I believe we will be able to attract new and significant relationships. However, pricing pressures
abound, and our marketplace remains very competitive. Our expectation is that we have gotten some
of our challenges behind us, and even though we are heading into a slower quarter we are positioned
to build on the momentum we experienced at the end of fiscal 2007.”
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 and Tijuana, Mexico, Hayward, California and Suzhou-Wujiang,
China. SigmaTron International, Inc. maintains engineering and materials sourcing offices in Taipei,
Taiwan.
Note: This press release contains forward-looking statements. Words such as “continue,”
“anticipate,” “will,” “expects,” “believe,” “plans,” and similar expressions identify forward-looking
statements. These forward-looking statements are based on the current expectations of SigmaTron
(including its subsidiaries). 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 our continued dependence on certain significant customers; the
continued market acceptance of products and services offered by the Company and its customers;
pricing pressures from our 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 our
operating results; the variability of our customers’ requirements; the availability and cost of
necessary components and materials; the ability of the Company and our customers to keep current
with technological changes within our industries; regulatory compliance; the continued availability
and sufficiency of our credit arrangements; changes in U.S., Mexican, Chinese or Taiwanese regulations
affecting the Company’s business; the continued stability of the U.S., Mexican, Chinese and Taiwanese
economic systems, labor and political conditions; and the ability of the Company to manage its growth,
including its expansion into China. 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 risk factors and 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 this press release and the Company
undertakes no obligation to update such statements in light of future events or otherwise.
Financial tables to follow...
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
------------ ------------ ------------- -------------
Net sales $39,506,066 $34,518,861 $165,909,106 $124,786,476
Cost of products
sold 34,764,577 30,959,190 148,150,350 109,986,377
------------ ------------ ------------- -------------
Gross profit 4,741,489 3,559,671 17,758,756 14,800,099
Selling and
administrative
expenses 3,236,421 2,955,630 12,872,353 10,925,646
------------ ------------ ------------- -------------
Operating income 1,505,068 604,041 4,886,403 3,874,453
Other expense
(income) -net 620,830 234,755 2,291,900 1,012,566
------------ ------------ ------------- -------------
Income from continuing
operations before income
tax and interest
of affiliate 884,238 369,286 2,594,503 2,861,887
Income tax
expense 229,166 144,014 896,179 935,589
------------ ------------ ------------- -------------
Income from
continuing
operations 655,072 225,272 1,698,324 1,926,298
Minority
interest in
affiliate - - - -
------------ ------------ ------------- -------------
Income before
discontinued
operations 655,072 225,272 1,698,324 1,926,298
Loss from operations of
discontinued Las
Vegas location - (12,648) - (72,403)
Income tax
benefit - (4,933) - (28,237)
------------ ------------ ------------- -------------
(Loss) income on
discontinued
operation - (7,715) - (44,166)
------------ ------------ ------------- -------------
Net income $655,072 $217,557 1,698,324 $1,882,132
============ ============ ============= =============
Net income per
common share -
continuing
operations $0.17 $0.06 $0.45 $0.51
Net income per
common share -
discontinued
operations $0.17 $0.00 $0.45 ($0.01)
------------ ------------ ------------- -------------
Net income per
common share -
basic $0.17 $0.06 $0.45 $0.50
============ ============ ============= =============
Net income per
common share -
assuming
dilution $0.17 $0.06 $0.44 $0.48
============ ============ ============= =============
Weighted average number of
common equivalent
shares outstanding -
assuming
dilution 3,885,055 3,905,791 3,879,155 3,894,731
============ ============ ============= =============
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, April 30,
2007 2006
------------ ------------
Current assets $66,663,956 55,362,530
Machinery and equipment-net 30,971,107 30,544,307
Intangible assets 1,461,772 2,186,350
Goodwill 9,298,945 9,298,945
Other assets 1,006,126 1,548,240
------------ ------------
Total assets $109,401,906 $98,940,372
============ ============
Liabilities and shareholders' equity
Current liabilities 23,790,708 21,029,469
Long-term obligations 35,870,177 30,016,092
Stockholders' equity 49,741,021 47,894,811
------------ ------------
Total liabilities and stockholders'
equity $109,401,906 $98,940,372
============ ============
Contact:
SigmaTron International, Inc.
Linda K. Blake, 800-700-9095
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