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SigmaTron International, Inc. Reports Second Quarter Financial Results for Fiscal 2019

ELK GROVE VILLAGE, Ill., Dec. 12, 2018 (GLOBE NEWSWIRE) -- SigmaTron International, Inc. (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. Frauendorfer
1-800-700-9095

                       
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                
                       
                       
      Three Months   Three Months     Six Months   Six Months  
      Ended   Ended     Ended   Ended  
      October 31,    October 31,      October 31,    October 31,   
       2018     2017      2018     2017  
                       
  Net sales   $77,001,091     $72,959,074     $148,415,148     $144,183,367  
                       
  Cost of products sold     70,307,006       65,855,506       135,932,007       130,322,745  
                       
  Gross profit     6,694,085         7,103,568       12,483,141         13,860,622  
                       
  Selling and administrative expenses     5,817,155       5,642,273       11,751,271       11,554,419  
                       
  Operating income      876,930       1,461,295       731,870       2,306,203  
                       
  Other expense     474,879       309,841       1,053,432       573,904  
                       
  Income (loss) before income tax      402,051       1,151,454       (321,562 )     1,732,299  
                       
  Income tax expense     1,125,992       415,339       928,986       613,302  
                       
  Net (loss) income    ($723,941 )   $736,115     ($1,250,548 )   $1,118,997  
                       
                       
  Net (loss) income per common share -  basic   ($0.17 )   $0.18     ($0.30 )   $0.27  
                       
  Net (loss) income per common share -  assuming dilution   ($0.17 )   $0.17     ($0.30 )   $0.26  
                       
                       
  Weighted average number of common equivalent                     
    shares outstanding - assuming dilution   4,230,008       4,326,854     4,226,833       4,302,977  
                       
                       
                       
  CONDENSED CONSOLIDATED BALANCE SHEETS                    
                       
      October 31,   April 30,            
      2018    2018            
                       
  Assets:                    
                       
  Current assets   $130,029,775     $120,029,726            
                       
  Machinery and equipment-net     34,407,753       35,288,997            
                       
  Deferred income taxes     512,547       1,109,681            
  Intangible assets     2,900,440       3,088,085            
  Other assets     1,679,460       1,713,481            
                       
  Total assets   $169,529,975     $161,229,970            
                       
  Liabilities and stockholders' equity:                    
                       
  Current liabilities   $63,677,299     $59,378,486            
                       
  Long-term obligations     48,176,973       43,041,533            
                       
  Stockholders' equity     57,675,703       58,809,951            
                       
  Total liabilities and stockholders' equity   $169,529,975     $161,229,970