U.S. Markets closed

Edited Transcript of IEC earnings conference call or presentation 9-May-18 3:00pm GMT

Thomson Reuters StreetEvents

Q2 2018 IEC Electronics Corp Earnings Call

NEWARK May 17, 2018 (Thomson StreetEvents) -- Edited Transcript of IEC Electronics Corp earnings conference call or presentation Wednesday, May 9, 2018 at 3:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Audra Gavelis

* Jeffrey T. Schlarbaum

IEC Electronics Corp. - President, CEO & Director

* Michael Thomas Williams

IEC Electronics Corp. - VP of Finance & CFO

================================================================================

Conference Call Participants

================================================================================

* Alex C. Gates

Clayton Partners LLC - Chief Compliance Officer and Research Analyst

* Christian Francisco Herbosa

NOBLE Capital Markets, Inc., Research Division - Government Services and Defense Technology Associate Analyst

* James Anderson

R.F. Lafferty & Co., Inc., Research Division - Research Analyst

* Nehal Sushil Chokshi

Maxim Group LLC, Research Division - MD

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Greetings, and welcome to the IEC Electronics Second Quarter 2018 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Audra Gavelis, Director of Marketing and Investor Relations. Please go ahead.

--------------------------------------------------------------------------------

Audra Gavelis, [2]

--------------------------------------------------------------------------------

Thank you for calling in. On the call this morning we have Jeff Schlarbaum, President and CEO as well as Michael Williams, Chief Financial Officer.

Before we get started, I would like to take a moment to read the safe harbor statement. This conference call contains certain statements that are or may be deemed to be forward-looking statements. These forward-looking statements, such as when the company describes what it believes, expects or anticipates will occur and other similar statements include, but are not limited to, statements regarding future sales and operating results, future prospects, strategic initiatives, turnaround efforts, 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 the company's current expectations concerning future results and events. The ultimate accuracy of these forward-looking statements is dependent upon a number of risks and uncertainties that may cause the company's actual results or performance to be different than as expressed or implied by these statements.

Specific risks and uncertainties include but are not limited to those set forth in the company's earnings release issued immediately before this call and in the company's most recent annual report on Form 10-K, our quarterly report on Form 10-Q and our other reports filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or correct any of the forward-looking statements made during the call whether as a result of new information, future events or otherwise, except as required by law.

I will now turn the call over to Jeff Schlarbaum. Please go ahead, Jeff.

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Audra, and good morning, everyone. Our fiscal second quarter showed strong performance with revenue levels, enhanced margins and improved profitability, when compared to the same quarter last year as well as our fiscal 2018 first quarter results. Our year-over-year revenue growth of 49% and 50% sequential growth for fiscal 2018 second quarter can be attributed to our focused go-to-market strategy as well as our operational execution, which has led to high levels of customer satisfaction and has allowed us to convert our growing backlog into revenue. As this quarter demonstrated, this top line growth has led to improved margins and bottom line performance.

There are 3 primary factors driving the increased volumes we're experiencing. First, we're seeing increased volumes from existing customers for the legacy programs we have supported. Demand from our existing customers is driven by their end markets, and their manufacturing needs can fluctuate over time. We believe IEC's ability to be flexible and responsive is the competitive advantage that positions us as a solid manufacturing partner for programs that we can service over a long period of time. Second, we're seeing an increase in new program conversions or brand-new assemblies from existing customers. Over the past couple of years, we have continued to improve our operational execution, which has resulted in our customers directing a greater share of their outsourced work to IEC. And finally, we're adding new programs from new customers.

Throughout fiscal 2017, we rebuilt our sales funnel, which resulted in a strong pipeline of new opportunities. We have started to convert several new opportunities into new customers, and we've begun the onboarding process that we believe will evolve into large-scale, long-term programs.

To provide a little more context around the progress we're seeing, attracting new customers and programs, I can provide the following color. During the first half of fiscal 2018, for example, the number of NPIs or new product introductions from our largest facility in Newark, were almost tripled when you compare that to the same period in fiscal 2017. We also believe that more than 20% of our total revenue for fiscal 2018 will be associated with new product introductions versus approximately 10% in fiscal 2017. Also, we're experiencing an almost 30% year-over-year increase for fiscal 2018 second quarter in the number of unique assemblies manufactured at our largest facility in Newark.

Our success attracting new customers and new programs is, of course, a positive development, but it's also important to note that the onboarding process of new products is complicated, and at times, it can be lengthy. Once we win a new project, we work through several steps in the process that result in customer acceptance and approval for production.

During the process, however, there are often customer-driven changes that occur and that can add time to our original manufacturing production assumptions. So while the additional processing steps can impose slight margin pressure during these early stages, we're confident, and we expect that we can improve our efficiencies over time, which will lead to improved margins and higher levels of customer satisfaction.

This brings me to another topic: the ongoing global supply chain component constraints. As you know, in fiscal 2018 Q1, we mentioned that one of our challenges, which is affecting the entire industry, was associated with difficult in producing -- in procuring certain electronic components and in some cases, facing long lead times or allocation restrictions due to limited global supplies. These shortages can impact our ability to fulfill our customers' orders and lengthen production times as well as add some amount of unpredictability as we wait for a specific component to complete a job.

At this time, there are strong indications that this constrained environment will continue into the foreseeable future. So we remain focused on working with our supply chain partners and customers to mitigate the risk. While we've seen an increase of inventory in fiscal 2018, primarily driven by increases in customer demand, in this component-constrained environment, the timing of deliveries continues to contribute to some variability in our business planning.

Regardless, our sales funnel and backlog continue to be robust. And we continue on our path of driving organic growth through the balance of fiscal 2018. In fact, exiting fiscal 2018 Q2, in light of our 50% sequential revenue growth over fiscal 2018 Q1, we also experienced a greater than 1:1 book-to-bill ratio, further demonstrating that our backlog has continued to grow.

Our fiscal 2018 second quarter demonstrated great progress converting backlog to sales. We have solid existing relationships, which we continue to strengthen by delivering operational execution and the flexibility to meet changing project needs. Not only has this led to new electronic manufacturing service awards from long-standing customers, it's also now producing a growing level of business for our vertical service offerings, such as our lab services, our wire and cable harness assembly and our precision metal fabrication and machining.

Our customers are increasingly looking at IEC as a one-stop shop for a large percentage of their outsourced work, which we expect will lead to a higher level, more strategic engagement over time. Likewise, IEC's growing recognition as a leading provider of vertically integrated manufacturing solutions for lifesaving and mission-critical products has introduced us to new audiences. And we're pleased to onboard these new strategic customers at a growing rate.

With that, I will now turn the call over to Mike to review the company's detailed financial performance. Mike?

--------------------------------------------------------------------------------

Michael Thomas Williams, IEC Electronics Corp. - VP of Finance & CFO [4]

--------------------------------------------------------------------------------

Thank you, Jeff, good morning, everyone. Revenue for the second quarter of fiscal 2018 was $31.8 million, an increase of 49% as compared to second quarter of fiscal 2017 and 50% greater than the first quarter of fiscal 2018.

Our conversion of backlog to sales improved this quarter, and several program deliveries shifted from the first quarter to the second quarter and our overall execution improved.

Looking at the 3 business segments. In the second quarter of fiscal 2018, we saw revenue distribution of 64% from our aerospace and defense sector, 22% from medical and 14% from industrial. The aerospace and defense sector saw net increase of $10.8 million as compared to fiscal 2 -- or Q2 of 2017, primarily driven by new programs from 2 existing customers, which contributed to $8.3 million of the growth. Another $3.1 million was related to existing customers with increased demand on existing programs.

Although the medical sector increased significantly over fiscal 2018 Q1, it was only up a modest $200,000 over the second quarter of fiscal 2017. The year-over-year increase was related to increased revenue from -- of approximately $1.1 million from one customer whose demand had previously been on hold for over a year. This increase was partially offset by decreases in demand from other customers.

We expect the medical sector to remain roughly 20% of our revenue next quarter, but will start to increase as a percentage of our total revenue as several customers ramp up their demand.

The industrial sector decline of $600,000 was primarily due to decreased demand from multiple customers whose end markets have softened, partially offset by modest increases in demand from other customers.

Gross profit for the second quarter of fiscal 2018 was $4.8 million or 15.1% of sales compared to $2.3 million or 10.7% of sales in the second quarter of fiscal 2017. The margin improvement was driven mainly by the increased revenue, leveraging our overhead and better utilizing labor.

Selling and administrative expense increased $300,000 and represented 9.2% of sales in the second quarter compared to 12.5% of sales in the same quarter of the prior fiscal year. The increase in expense was primarily due to higher wage and related expenses.

The company recorded net income of $1.6 million in the second quarter of fiscal 2018 or $0.15 per share compared to a net loss of $615,000 or a loss of $0.06 per share in the second quarter of fiscal 2017.

Now looking at the results for the first 6 months of 2018. Revenue increased 25% to $52.9 million compared to $42.3 million in the prior fiscal period. Growth was primarily driven by an increase in sales in aerospace and defense sector of $13.3 million, partially offset by decreases of $2 million and $700,000 in the medical and industrial sectors respectively.

The growth was almost all in our fiscal Q2 2018 results as fiscal Q1 2018 was relatively flat to prior fiscal year. Gross profit increased $2.2 million from 9.6% of sales in the first half of fiscal 2017 to 11.9% of sales in the first half of fiscal 2018, directly related to the increase in revenue.

Selling and administrative expense increased to $5.7 million and represented 10.8% of sales in the first 6 months of fiscal 2018 compared to $5.1 million or 12% of sales in the prior fiscal period. The increase in expenses was primarily due to a higher wage and related expenses of $500,000.

Net income for the first 6 months was $1.1 million or $0.11 per share as compared to a net loss of $1.5 million or $0.14 per share in the same prior year period.

However, in fiscal Q1 of 2018, we did record a net tax benefit of approximately $1 million resulting from the release of the valuation allowance and our alternative minimum tax credits as a result of December 2017 U.S. Tax Cuts and Jobs Act.

Now turning over to our balance sheet. We continue to focus on our cash conversion cycle. Inventory at March 30, 2018 was $21 million compared to $15.6 million at September 30, 2017. But was roughly flat to the $20.9 million in inventory we reported as of the end of fiscal Q1 2018. This improvement was directly related to our improved conversion of backlog as previously mentioned. But it's important to note that the industry-wide supply constraint is challenging our ability to manage on-hand inventory.

Additionally, we reported $1.3 million in assets held for sale as the company entered into a $2 million purchase and sale agreement for the Rochester facility in fiscal Q3. As part of the transaction, the company will enter into a 15-year lease agreement. Part of the proceeds from the transaction will be used to pay off the Celmet Building term loan of $700,000, which matures later this year, and the remainder will be applied to term loan B.

Also, on April 20, after the close of the second quarter, we entered into the fifth amendment to our fifth amended and restated credit facility agreement with M&T Bank, increasing our revolving credit facility to $22 million in an effort to increase working capital flexibility to support our growth initiatives.

With that, I'll turn the call back over to Jeff.

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [5]

--------------------------------------------------------------------------------

Great. Thanks, Mike. We've identified 3 key elements necessary to continue our growth trajectory as we move through fiscal 2018: first, clearly focusing on our target end markets and customers; second, driving sales conversions; and third, continue operational excellence. An estimated $40 billion in electronics product assembly is outsourced in the U.S. and approximately $18 billion of that comes from our target end markets. Our sales team continues to focus exclusively on customers that have in whole or in part a domestic outsource strategy for their complex, high-reliability products and who are looking for long-term strategic partners.

We believe IEC is well positioned competitively because we are exclusively U.S.-based. We have a broad set of capabilities to minimize customer supply chain risks with our vertical service offering, and we have the technical know-how to solve complex manufacturing challenges.

Throughout fiscal 2017, we rebuilt our new business pipeline in terms of both business processes in execution, but more importantly, it's resulted in the creation of many new opportunities. We're now at the stage where new opportunities are converted into new program awards in parallel with consistently adding new prospects to our funnel of future opportunities.

Finally, our operational excellence is paramount to our continued growth. In order to capture new customers and to win new programs from existing customers, IEC must continue to deliver consistent execution for highly complex programs and provide customized solutions to address the ever-changing technology landscape. During the fiscal 2018 second quarter, we announced a facility expansion of our Newark headquarter operation with the construction of a new state-of-the-art advanced manufacturing center.

In association with this announcement, we are also pleased to report the state of New York pledged $5 million in state aid, tied to the creation of over 360 local jobs over the next 5 years. With our current Newark facility residing in a 100-year-old building, we recognized that the ability to design from the ground up a new state-of-the-art facility would be a more prudent way of offering our growing customer base unmatched capabilities for their manufacturing needs versus the capital expenditures required to modernize the current one. We're projecting the opening of the new facility to occur in the middle of 2019.

Our fiscal 2018 second quarter results clearly demonstrated progress as we continue to navigate our path to growth. This is an exciting time for our company, and we look forward to continuing our growth momentum as we move through the balance of fiscal 2018.

With that, I will now turn the call over to questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from the line of Ben Klieve with NOBLE Capital.

--------------------------------------------------------------------------------

Christian Francisco Herbosa, NOBLE Capital Markets, Inc., Research Division - Government Services and Defense Technology Associate Analyst [2]

--------------------------------------------------------------------------------

This is actually Christian Herbosa on for Ben. I have 2 questions. First, you mentioned that you're seeing ramping demand in the medical sector. So excluding the impact of your 2 major customers, can you talk about the contribution that new customers are providing?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Yes. So great question, and thanks for asking. So fiscal Q2 volume increases we saw were largely attributed to our existing customers in the medical sector that we've serviced over the course of time. However, I can tell you that in the current quarter Q3, we're ramping up some new medical programs that will have impact in our Q3 fiscal revenue results. And we anticipate growing impact going forward. But it's related to Q2 as primarily related to our legacy customers.

--------------------------------------------------------------------------------

Christian Francisco Herbosa, NOBLE Capital Markets, Inc., Research Division - Government Services and Defense Technology Associate Analyst [4]

--------------------------------------------------------------------------------

Okay, great. That's good to hear. And then my second question is regarding the new aerospace and defense programs that represented the bulk of the growth this quarter, are those programs at a full run rate in terms of revenue and margins? Or is that business still ramping?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [5]

--------------------------------------------------------------------------------

It's the latter. There -- some of them are legacy programs that are increasing in volume. So those margins are more predictable and more mature. There were, however, a number of newer programs in the revenue stream for Q2. And so those will increase in volumes over the course of time, and our margins attributed to those should improve over time as well.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

Our next question comes from the line of Nehal Chokshi with Maxim Group.

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [7]

--------------------------------------------------------------------------------

Fantastic results and actually, quite surprising in the context that December quarter disappointed partially due to the golden screw problem that you had discussed. It sounds like that problem is persisting because you know that the components are still a constraint here. So from that context, can you explain how you navigated through the golden screw problem in the March quarter? And I'll probably have a follow-up.

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [8]

--------------------------------------------------------------------------------

Absolutely. Thanks, Nehal. Good question. Yes, you're right. So the golden screw, as you referred to and certainly, I have in the past, problem still exists. And the benefit that we had in Q2 is that, in Q1, we fell short of our revenue execution expectation because we didn't have the full kits to build the products for our customers in that period. However, as we moved into the Q2 period, a lot of those part shortages were starting to clear up. So it's really a timing issue in Q1 that helped us in Q2 start out a bit stronger with fuller kits to produce for our customers, which obviously increased our revenue in the period. As we look at Q3, it's -- we're experiencing some similar constraints as we have in the past, but as we get the benefit of time, those lead times that may be in Q1 were out several quarters. Now as we move through time, those quarters are starting to move in, in terms of those delivery expectations. So while we'll have the constraints ongoing, it shouldn't provide that level of disruption that we saw in Q1.

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [9]

--------------------------------------------------------------------------------

Okay, great. You actually answered my follow-up question, but I have other questions as well. Do you expect medical vertical to increase Q-o-Q?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [10]

--------------------------------------------------------------------------------

I'm sorry, (inaudible).

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [11]

--------------------------------------------------------------------------------

Do you expect the medical vertical to increase Q-o-Q for fiscal Q3, i.e., the June quarter?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [12]

--------------------------------------------------------------------------------

Yes, we do.

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [13]

--------------------------------------------------------------------------------

You do. Okay. And so now it's safe to say that you expect overall revenue to also increase Q-o-Q?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [14]

--------------------------------------------------------------------------------

Yes, we do. And my only caution there is just as not fully being in our control the supply constraints, that provides a bit of unpredictability, but with the backlog growth that we've seen, the orders are continuing to come in and book at a very brisk pace. And so the backlog is strong. We continue to see strong demand from a diverse array of our customers. So yes, we see -- overall, as we look towards this quarter and actually, as we enter into the Q4 and the balance of our fiscal '18, we absolutely see continued growth. So that's the best way, I guess -- answer that question.

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [15]

--------------------------------------------------------------------------------

Okay. Are you willing to disclose what the backlog was at the end of the March quarter or where it currently is?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [16]

--------------------------------------------------------------------------------

Yes. So we're going to eventually, I do think, get in a position where the business matures, it becomes more predictable, and we'll be able to project and be more transparent with the key metrics of the business. It was up. It was better than one to one. And as you know, Nehal, we had a better than 50% sequential growth. So with almost $32 million in sales and our backlog exceeding the revenue in terms of book to bill, we had a nice backlog increase. And obviously, we're at that for now.

--------------------------------------------------------------------------------

Nehal Sushil Chokshi, Maxim Group LLC, Research Division - MD [17]

--------------------------------------------------------------------------------

Okay, great. My follow-up question is that, looks like all the cash conversion cycle components trended in direction how you wanted to. And I think, I guess, my question is, do you think you're now at the optimal levels for your cash conversion cycle components? Or is there still more work to do there?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [18]

--------------------------------------------------------------------------------

No, there's still some more work to do there and -- we're -- our inventory levels are higher than I would like them to be only because typically, when we're more just-in-time, and we have the parts all being delivered when expected from the supply chain, we can convert them into sales and then replenish with raw material received and convert those into sales. Right now, some of the lumpiness and the deliberation of the supply chain are causing me to bring on raw materials that now are just sitting in stores, waiting for the proverbial golden screw. And so the revenue -- I mean, the inventory levels are higher than I'd like them to be, and we certainly have opportunity to improve them going forward.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

Our next question comes from the line of James Anderson with R.F. Lafferty.

--------------------------------------------------------------------------------

James Anderson, R.F. Lafferty & Co., Inc., Research Division - Research Analyst [20]

--------------------------------------------------------------------------------

I think you mentioned on the call that a lot of the revenue growth, it's in the first half of 2018, came from the aerospace and defense. And it seems like that was weighted in particular to the second quarter. I wonder if you expect this, I guess, outsized growth in the aerospace and defense quarter segment relative to the other business operating segments. And what the customer concentration is in that segment?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [21]

--------------------------------------------------------------------------------

Yes, so it's a fair question. The strength we're seeing in the aerospace and defense work, it hasn't come as a surprise. When we're out working with customers to convert new programs, both new and existing on the medical front, given the regulatory challenges and obstacles, the ramp to revenue timeline is longer than in the aerospace and defense and certainly in the industrial sector. I expect that those other sectors, especially in the medical, to catch up over time. So I don't see the aerospace and defense continuing to be -- continuing to grow as a percentage of our revenue. I see that kind of as a -- being somewhere in that 50% or better but not continuing to grow beyond the levels that it's at today. So I expect the other categories to start catching up and certainly, where I see that catch up is mostly in the medical space.

--------------------------------------------------------------------------------

James Anderson, R.F. Lafferty & Co., Inc., Research Division - Research Analyst [22]

--------------------------------------------------------------------------------

Okay, great. That's very helpful. And it sounds like there is something of an industry-wide component shortages, as you've repeatedly mentioned. Is there a point where the components shortage will hurt your ability to grow your backlog?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [23]

--------------------------------------------------------------------------------

I mean, it's affecting everyone. So we're not in this alone. It's affecting the entire industry. It will affect our ability to produce all of the products that our customers want when they want them. I don't anticipate that it's going to affect our ability to book new orders over time. Our customer demand seems to be fairly robust and steady. So I don't see any reason why that would be disrupted with these component constraints. It just means that some of the backlog might grow at a faster rate than we can execute it for our customers. But I don't think it will hurt our bookings.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from the line of Alex Gates with Clayton Partners.

--------------------------------------------------------------------------------

Alex C. Gates, Clayton Partners LLC - Chief Compliance Officer and Research Analyst [25]

--------------------------------------------------------------------------------

It was excellent to see the progress. Most of my questions have actually been answered already. But I guess, just thinking more broadly. Jeff, do you think, given where the backlog is and having some of these programs now ramp up to where they are, how sustainable do you think about this level of revenue that you guys generated in this quarter kind of going forward for the back half of this year and moving on to next year?

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [26]

--------------------------------------------------------------------------------

Yes. That's a fair question, Alex. The programs that we're supporting are long-run programs. We don't see these as sort of short term or onetime customer demand requirements. These are really longer-run program awards that our customers are winning, and we're winning as well. So from a sustainability standpoint, I see these as building a platform for continued growth and really the fluctuations of future revenue would be associated with timing of customers' requirements and/or the supply chain constraints that we've talked about. But the business that we won and that we ramped up in the course of Q2 and continued throughout the year, I think, is really just foundational business that we'll build upon going over time.

--------------------------------------------------------------------------------

Alex C. Gates, Clayton Partners LLC - Chief Compliance Officer and Research Analyst [27]

--------------------------------------------------------------------------------

That's excellent. And then maybe just one last question, going to the 3 factors of growth that you outlined. One of them is from, obviously, existing customers where you're incrementally winning business, I would expect, at the expense of other EMS companies. Maybe you could just talk a little bit about what you're doing right and how you're incrementally winning more business.

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [28]

--------------------------------------------------------------------------------

Okay. Well, this is just opinion in this area, right? I mean, it's a subject to debate. But what I would tell you, Alex, is what we're seeing is we have a laser focus on the end markets and the type of products that we service. And many of our large publicly-traded competitors are much more broad-based in their focus. I mean, they service a wide variety of end market sectors. They service those customers in a wide variety of global geographies. And for us, we're laser-focused on the mission-critical, high-reliability applications in the U.S. And I think that our attention to detail and our ability to execute has been a large factor in us being able to support our customers, and as a result, be the benefactor of new program awards.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Jeffrey Schlarbaum for closing remarks.

--------------------------------------------------------------------------------

Jeffrey T. Schlarbaum, IEC Electronics Corp. - President, CEO & Director [30]

--------------------------------------------------------------------------------

Well, thank you very much. We appreciate everybody calling in. And one last thing I would like to mention is that IEC will be presenting at the LD Micro Conference on June 4 in California. So we hope to see some of you there. And with that, we look forward to speaking with everyone again next quarter. And thanks again for calling in.

--------------------------------------------------------------------------------

Operator [31]

--------------------------------------------------------------------------------

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.