IEC Announces Fiscal 2019 Second Quarter Results

Newark, New York,  May 8, 2019 - IEC Electronics Corp. (NYSE American: IEC) today announced results for the fiscal 2019 second quarter and six months ended March 29, 2019.

 

IEC reported revenues of $37.3 million for the second quarter of fiscal 2019, an increase of 17.4% as compared to revenues of $31.8 million for the fiscal 2018 second quarter.  Gross margin for the second quarter of fiscal 2019 was 12.3% compared to 15.1% in the same quarter last year.  Selling and administrative expenses increased to $3.3 million in the second quarter of fiscal 2019, or 8.9% of sales, as compared to $2.9 million, or 9.2% percent of sales, in the second quarter of fiscal 2018.  The Company reported net income of $0.7 million, or $0.06 per basic and diluted share for the second quarter of fiscal 2019, compared to net income of $1.6 million, or $0.15 per basic and diluted share in the second quarter of fiscal 2018.

 

Revenues for the first six months ended March 29, 2019 increased 37% to $72.7 million as compared to $52.9 million for the first six months of fiscal 2018.  Gross margin for the first half of fiscal 2019 improved to 13.3% as compared to 11.9% in the first half of fiscal 2018.  Selling and administrative expenses increased to $6.7 million during the first six months of fiscal 2019 but decreased as a percentage of sales to 9.2%, as compared to $5.7 million or 10.8% of sales for the first six months of fiscal 2018.  Net income for the first half of fiscal 2019 was $1.7 million, or $0.17 per basic share, compared to $1.1 million, or $0.11 per basic share, in the same prior year period.

 

Jeffrey T. Schlarbaum, President and CEO of IEC Electronics commented, “We achieved continued revenue momentum in the second quarter, driven by growth across all three of our market segments.  In addition to the year over year improvement, this quarter represents our third consecutive quarter of sequential revenue growth.  This growth is purely organic, a result of our success winning new programs from existing and new customers, which we believe demonstrates the value they see in our capabilities and the broad range of solutions we provide as a full service manufacturing partner.  For our second fiscal quarter, our book to bill ratio was 1.1:1, and our backlog remains strong.

 

“Second quarter margin performance was at the lower end of our expected range, related primarily to our focus on proactively investing in our workforce and other resource levels to meet the production needs generated by our strong backlog and booking activity.  The life-saving, mission critical nature of the programs we support requires that we hire and train skilled staff in advance of converting customer orders from backlog to production.  Additionally, our industry continues to contend with component shortages and while we’re becoming more adept at ensuring we have the right materials on hand to meet customer commitments, these shortages impacted production in the quarter and put pressure on our margin performance.  Gross margin was also impacted in the second quarter by tariffs on raw materials from China, which affected reconciliation with certain customers between our quoted cost and our actual cost for select programs.  We expect the tariff impact in our statement of operations to reverse in the second half of fiscal 2019, and we do not expect any long-term impact to our future performance.”

 

Mr. Schlarbaum concluded, “Our backlog is up almost 20% since the start of the fiscal year, which reinforces our confidence that we will be able to deliver on our expectation of double digit year over year revenue growth in fiscal 2019.  We continue to be energized by the opportunities we are seeing and believe that our technical capabilities, proven dependability as a manufacturing partner and efficient operating model position the Company to deliver consistent levels of organic growth.”

 

Conference Call:

 

IEC will host a conference call, today, Wednesday, May 8, 2019 at 10:00 a.m. Eastern Time, to discuss its financial results for the fiscal 2019 second quarter and six months ended March 29, 2019.

 

The conference call may be accessed in the U.S. and Canada by dialing toll-free (877) 407-9210. International callers may access the call by dialing (201) 689-8049.

A replay of the teleconference will be available for 30 days after the call and may be accessed domestically by dialing (877) 481-4010 and international callers may dial (919) 882-2331.  Callers must enter conference ID: 46052.

To access the live webcast, log onto the IEC website at http://www.iec-electronics.com.  The webcast can also be accessed at http://www.investorcalendar.com/event/46052. An online replay will be available shortly after the call.

About IEC Electronics

IEC Electronics is a provider of electronic manufacturing services ("EMS") to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking.  As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100D, and ISO 13485, and is Nadcap accredited.  IEC Electronics is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM.  Additional information about IEC can be found on its web site at www.iec-electronics.com.

Note Regarding Forward-Looking Statements

 

References in this report to “IEC,” “IEC Electronics,” the “Company,” “we,” “our,” or “us” mean IEC Electronics Corp. and its subsidiaries except where the context otherwise requires. This release contains forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “optimistic,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words or phrases. These forward-looking statements include, but are not limited to, statements regarding future sales and operating results, future prospects, the capabilities and capacities of business operations, any financial or other guidance and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

 

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in our forward-looking statements: business conditions and growth or contraction in our customers’ industries, the electronic manufacturing services industry and the general economy; variability of our operating results; our ability to control our material, labor and other costs; our dependence on a limited number of major customers; the potential consolidation of our customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; technological, engineering and other start-up issues related to new programs and products; uncertainties as to availability and timing of governmental funding for our customers; the impact of government regulations, including FDA regulations; risks related to the accuracy of the estimates and assumptions we used to revalue our net deferred tax assets in accordance with the Tax Cuts and Jobs Act of 2017; the types and mix of sales to our customers; litigation and governmental investigations; intellectual property litigation; our ability to maintain effective internal controls over financial reporting; unforeseen product failures and the potential product liability claims that may be associated with such failures; the availability of capital and other economic, business and competitive factors affecting our customers, our industry and business generally; failure or breach of our information technology systems; and natural disasters. Any one or more of such risks and uncertainties could have a material adverse effect on us or the value of our common stock. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission.

 

All forward-looking statements included in this release are made only as of the date indicated or as of the date of this release. We do not undertake any obligation to, and may not, publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or which we hereafter become aware of, except as required by law. New risks and uncertainties arise from time to time and we cannot predict these events or how they may affect us and cause actual results to differ materially from those expressed or implied by our forward-looking statements. Therefore, you should not rely on our forward-looking statements as predictions of future events.

 

Contact:

Audra Gavelis

 

Director of Marketing & Investor Relations

 

IEC Electronics Corp.

 

(315) 332-4559

 

agavelis@iec-electronics.com

 

 

IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 29, 2019 and SEPTEMBER 30, 2018

(unaudited; in thousands, except share and per share data)

 

March 29,
 2019

 

September 30,
 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

 

 

$

 

Accounts receivable, net of allowance

27,822

 

 

25,168

 

Unbilled contract revenue

6,043

 

 

 

Inventories

38,843

 

 

34,126

 

Other current assets

1,800

 

 

1,747

 

Total current assets

74,508

 

 

61,041

 

 

 

 

 

Property, plant and equipment, net

19,614

 

 

20,110

 

Deferred income taxes

8,220

 

 

8,855

 

Other long-term assets

695

 

 

442

 

Total assets

$

103,037

 

 

$

90,448

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

1,632

 

 

$

1,449

 

Current portion of capital lease obligation

324

 

 

306

 

Accounts payable

26,405

 

 

28,689

 

Accrued payroll and related expenses

1,944

 

 

1,796

 

Other accrued expenses

557

 

 

458

 

Customer deposits

10,226

 

 

7,595

 

Total current liabilities

41,088

 

 

40,293

 

 

 

 

 

Long-term debt

25,574

 

 

16,002

 

Long-term capital lease obligation

6,857

 

 

7,027

 

Other long-term liabilities

1,589

 

 

1,750

 

Total liabilities

75,108

 

 

65,072

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Preferred stock, $0.01 par value:

 

 

 

500,000 shares authorized; none issued or outstanding

 

 

 

Common stock, $0.01 par value:

 

 

 

Authorized: 50,000,000 shares

 

 

 

Issued: 11,370,695 and 11,304,393 shares, respectively

 

 

 

Outstanding: 10,315,207 and 10,248,905 shares, respectively

103

 

 

102

 

Additional paid-in capital

47,695

 

 

47,326

 

Accumulated deficit

(18,280)

 

(20,463)

Treasury stock, at cost: 1,055,488 shares

(1,589)

 

(1,589)

Total stockholders’ equity

27,929

 

 

25,376

 

Total liabilities and stockholders’ equity

$

103,037

 

 

$

90,448

 

 

 

IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE and SIX MONTHS ENDED MARCH 29, 2019 and MARCH 30, 2018

(unaudited; in thousands, except share and per share data)

 

Three Months Ended

 

Six Months Ended

 

March 29,
 2019

 

March 30,
 2018

 

March 29,
 2019

 

March 30,
 2018

 

 

 

 

Net sales

$

37,294

 

 

$

31,768

 

 

$

72,735

 

 

$

52,923

 

Cost of sales

32,708

 

 

26,984

 

 

63,090

 

 

46,622

 

Gross profit

4,586

 

 

4,784

 

 

9,645

 

 

6,301

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

3,328

 

 

2,923

 

 

6,680

 

 

5,710

 

Operating income

1,258

 

 

1,861

 

 

2,965

 

 

591

 

 

 

 

 

 

 

 

 

Interest and financing expense

385

 

 

278

 

 

708

 

 

511

 

Income before income taxes

873

 

 

1,583

 

 

2,257

 

 

80

 

 

 

 

 

 

 

 

 

Income tax expense/(benefit)

203

 

 

4

 

 

515

 

 

(1,005)

 

 

 

 

 

 

 

 

Net income

$

670

 

 

$

1,579

 

 

$

1,742

 

 

$

1,085

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

0.06

 

 

$

0.15

 

 

$

0.17

 

 

$

0.11

 

Diluted

$

0.06

 

 

$

0.15

 

 

$

0.16

 

 

$

0.11

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

10,286,876

 

 

10,217,781

 

 

10,274,772

 

 

10,211,101

 

Diluted

10,678,058

 

 

10,348,662

 

 

10,574,076

 

 

10,316,762

 

 


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