IEC Electronics Corp. (Nasdaq: IEC) today announced results for the
fiscal 2020 fourth quarter and year ended September 30, 2020
(“fiscal 2020”).
IEC reported revenues of $46.4 million for the fourth quarter of
fiscal 2020, an increase of 5.7% as compared to revenues of $43.9
million for the fourth quarter of the year ended September 30,
2019 (“fiscal 2019”). Gross profit for the fourth quarter of fiscal
2020 was $6.7 million, or 14.5% of sales, compared to gross profit
of $6.4 million, or 14.6% of sales in the fourth quarter of fiscal
2019. Selling and administrative expenses were $3.8 million in the
fourth quarter of fiscal 2020, a slight increase compared to the
fourth quarter of fiscal 2019, and decreased slightly as a percent
of sales to 8.2% as compared to 8.4% in the fourth quarter of
fiscal 2019. Operating income was $2.9 million for the fourth
quarter of fiscal 2020, an increase of $0.2 million, or 8.3% when
compared to the same quarter in the prior fiscal year. The Company
reported net income of $1.9 million, or $0.18 per basic and diluted
share for the fourth quarter of fiscal 2020, compared to net income
of $1.8 million, or $0.17 per basic and diluted share in the fourth
quarter of fiscal 2019. The Company also reported operating cash
inflow of $7.3 million during the fourth quarter of fiscal 2020, as
compared to $1.2 million of cash flows used by operations for the
same period in fiscal 2019.
For fiscal 2020, the Company reported revenues of $182.7
million, an increase of 16.4% as compared to revenues of $157.0
million for fiscal 2019. Gross profit for fiscal 2020 was $24.1
million, or 13.2% of sales, which includes the negative impact of a
one-time inventory reserve of $1.0 million related to a
reorganization at a customer in the medical sector, compared to
gross profit of $21.6 million, or 13.8% of sales in fiscal 2019.
Adjusted for the impact of the one-time inventory reserve, taken in
the first quarter of fiscal 2020, adjusted gross margin for fiscal
2020 was 13.7% of sales. Selling and administrative expenses were
$14.0 million in fiscal 2020, or 7.7% of sales, as compared to
$14.1 million, or 9.0% of sales, in fiscal 2019. Operating income
was $10.1 million for fiscal 2020, an increase of 33.9% when
compared to the same period in the prior fiscal year. The Company
reported net income of $6.8 million, or $0.65 per basic and $0.63
per diluted share for fiscal 2020, compared to net income of $4.7
million, or $0.46 per basic and $0.45 per diluted share in fiscal
2019. Adjusted for the impact of the one-time inventory reserve,
taken in the first quarter of fiscal 2020, adjusted net income per
common share would have been $0.72 per basic and $0.70 per diluted
share for fiscal 2020. Please see the reconciliation tables
included in this release for further information regarding these
non-GAAP measures. The Company also reported operating cash flow of
$15.0 million during fiscal 2020, as compared to $10.5 million of
cash flows used by operations in fiscal 2019, an increase of over
$25 million year over year.
Jeffrey T. Schlarbaum, President and CEO of IEC Electronics
commented, “Our fourth fiscal quarter showed continued solid
performance, closing out a strong year for IEC. At the start of
fiscal 2020, we established three primary goals for our Company: to
drive double-digit organic growth for the fiscal year, continue to
achieve industry-leading margins and to generate operating cash
flow and we delivered on all three. Our ability to reach these
goals is a credit to our employees, who continued to execute our
strategy despite adverse circumstances, and a testament to our
growing reputation as a premier partner for the manufacture of
life-saving and mission critical products.
“Our robust year-end backlog of $194.5 million is derived from a
diverse range of customers. Notably, $180.2 million of the backlog
is expected to ship within the next twelve months, which represents
a year-over-year increase of 19.1% when compared to $151.3 million
at the end of fiscal 2019. We are focused on continuing to enhance
our offerings to build upon our leadership position as a 100%
U.S.-based integrated manufacturing partner. We are pleased with
the operational and financial success that we achieved in fiscal
2020, despite the challenges presented by the global pandemic, and
we are energized by the opportunities ahead in fiscal 2021 to drive
continued growth and profitability.”
Conference Call
IEC will host a conference call today, Friday, November 20, 2020
at 10:00 a.m. Eastern Time, to discuss its financial results for
the fiscal 2020 fourth quarter and year ended September 30,
2020.
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: 38325.
To access the live webcast, log onto the IEC website at
http://www.iec-electronics.com. The webcast can also be accessed at
https://www.webcaster4.com/Webcast/Page/2149/38325. An online
replay will be available shortly after the call.
About IEC ElectronicsIEC 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 9001:2015, AS9100D, 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 release 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 within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private Securities Litigation Reform Act of 1995. In some
cases, you can identify forward-looking statements by terms such as
“may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “targets,” “forecasts,” “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: the continued impact of the COVID-19
pandemic on our business, including our supply chain, workforce and
customer demand; business conditions and growth or contraction in
our customers’ industries, the electronic manufacturing services
industry and the general economy; our ability to control our
material, labor and other costs; our dependence on a limited number
of major customers and suppliers; uncertainties as to availability
and timing of governmental funding for our customers; the impact of
government regulations, including U.S. Food and Drug Administration
regulations; unforeseen product failures and the potential product
liability claims that may be associated with such failures;
technological, engineering and other start-up issues related to new
programs and products; variability and timing of customer
requirements; the potential consolidation of our customer base;
availability of component supplies; dependence on certain
industries; the ability to realize the full value of our backlog;
the types and mix of sales to our customers; litigation and
governmental investigations; intellectual property litigation;
variability of our operating results; our ability to maintain
effective internal controls over financial reporting; 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.
Company Contact: |
Thomas L. Barbato |
Senior Vice President and
Chief Financial Officer |
IEC Electronics Corp. |
(315) 332-4493 |
tbarbato@iec-electronics.com |
|
Agency
Contact: |
John Nesbett/Jennifer
Belodeau |
IMS Investor Relations |
(203) 972 - 9200 |
jnesbett@institutionalms.com |
IEC ELECTRONICS CORP.CONSOLIDATED BALANCE
SHEETSSEPTEMBER 30, 2020 and 2019 (in thousands, except share
and per share data)
|
September 30,2020 |
|
September 30,2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
312 |
|
|
$ |
— |
|
Accounts receivable, net of allowance |
30,361 |
|
|
27,618 |
|
Unbilled contract revenue |
8,773 |
|
|
9,529 |
|
Inventories |
51,374 |
|
|
44,267 |
|
Federal income tax receivable |
— |
|
|
517 |
|
Other current assets |
1,757 |
|
|
1,454 |
|
Total current assets |
92,577 |
|
|
83,385 |
|
|
|
|
|
Property, plant and equipment,
net |
23,587 |
|
|
19,433 |
|
Deferred income taxes |
4,840 |
|
|
7,154 |
|
Operating lease right-of-use
assets, net of accumulated amortization |
260 |
|
|
— |
|
Other long-term assets |
1,700 |
|
|
860 |
|
|
|
|
|
Total assets |
$ |
122,964 |
|
|
$ |
110,832 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of long-term debt |
$ |
— |
|
|
$ |
1,371 |
|
Current portion of operating lease obligation |
61 |
|
|
— |
|
Current portion of finance lease obligation |
436 |
|
|
338 |
|
Accounts payable |
29,733 |
|
|
23,690 |
|
Accrued payroll and related expenses |
3,659 |
|
|
3,174 |
|
Other accrued expenses |
457 |
|
|
668 |
|
Customer deposits |
19,783 |
|
|
13,229 |
|
Total current liabilities |
54,129 |
|
|
42,470 |
|
|
|
|
|
Long-term debt |
21,476 |
|
|
28,910 |
|
Long-term operating lease
obligation |
184 |
|
|
— |
|
Long-term finance lease
obligation |
6,616 |
|
|
6,685 |
|
Other long-term
liabilities |
1,404 |
|
|
1,527 |
|
Total liabilities |
83,809 |
|
|
79,592 |
|
|
|
|
|
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: 11,556,214 and 11,394,036 shares, respectively |
|
|
|
Outstanding: 10,500,726 and 10,338,548 shares, respectively |
105 |
|
|
103 |
|
Additional paid-in
capital |
49,161 |
|
|
48,001 |
|
Accumulated deficit |
(8,522 |
) |
|
(15,275 |
) |
Treasury stock, at cost:
1,055,488 shares |
(1,589 |
) |
|
(1,589 |
) |
Total stockholders’
equity |
39,155 |
|
|
31,240 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
122,964 |
|
|
$ |
110,832 |
|
IEC ELECTRONICS CORP.CONSOLIDATED STATEMENTS OF
OPERATIONSTHREE MONTHS AND YEARS ENDED SEPTEMBER 30, 2020 and
2019 (in thousands, except share and per share data)
|
Three Months Ended |
|
Years Ended |
|
September 30,2020 |
|
September 30,2019 |
|
September 30,2020 |
|
September 30,2019 |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
Net sales |
$ |
46,446 |
|
|
$ |
43,922 |
|
|
$ |
182,714 |
|
|
$ |
156,981 |
|
Cost of sales |
39,709 |
|
|
37,528 |
|
|
158,594 |
|
|
135,337 |
|
Gross profit |
6,737 |
|
|
6,394 |
|
|
24,120 |
|
|
21,644 |
|
|
|
|
|
|
|
|
|
Selling and administrative
expenses |
3,792 |
|
|
3,675 |
|
|
13,986 |
|
|
14,076 |
|
Operating profit |
2,945 |
|
|
2,719 |
|
|
10,134 |
|
|
7,568 |
|
|
|
|
|
|
|
|
|
Interest expense |
327 |
|
|
485 |
|
|
1,438 |
|
|
1,645 |
|
Income before income taxes |
2,618 |
|
|
2,234 |
|
|
8,696 |
|
|
5,923 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
691 |
|
|
440 |
|
|
1,943 |
|
|
1,176 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
1,927 |
|
|
$ |
1,794 |
|
|
$ |
6,753 |
|
|
$ |
4,747 |
|
|
|
|
|
|
|
|
|
Net income per
common share: |
|
|
|
|
|
|
Basic |
$ |
0.18 |
|
|
$ |
0.17 |
|
|
$ |
0.65 |
|
|
$ |
0.46 |
|
Diluted |
$ |
0.18 |
|
|
$ |
0.17 |
|
|
$ |
0.63 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
Basic |
10,497,809 |
|
|
10,343,774 |
|
|
10,417,445 |
|
|
10,306,947 |
|
Diluted |
10,881,025 |
|
|
10,574,050 |
|
|
10,727,438 |
|
|
10,518,126 |
|
IEC ELECTRONICS CORP.CONSOLIDATED STATEMENTS of
CASH FLOWSTHREE MONTHS AND YEARS ENDED SEPTEMBER 30, 2020 and
2019 (in thousands)
|
Three Months Ended |
|
Years Ended |
|
September 30,2020 |
|
September 30,2019 |
|
September 30,2020 |
|
September 30,2019 |
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
(unaudited) |
|
|
|
|
Net income |
$ |
1,927 |
|
|
$ |
1,794 |
|
|
$ |
6,753 |
|
|
$ |
4,747 |
|
Non-cash adjustments: |
|
|
|
|
|
|
|
Stock-based compensation |
213 |
|
|
152 |
|
|
739 |
|
|
567 |
|
Depreciation and amortization |
890 |
|
|
785 |
|
|
3,332 |
|
|
2,832 |
|
Change in reserve for doubtful accounts |
20 |
|
|
16 |
|
|
114 |
|
|
(14 |
) |
Change in excess/obsolete inventory reserve |
42 |
|
|
(100 |
) |
|
1,268 |
|
|
(81 |
) |
Deferred tax expense |
563 |
|
|
845 |
|
|
2,314 |
|
|
1,577 |
|
Amortization of deferred gain on sale of leaseback |
(28 |
) |
|
(29 |
) |
|
(114 |
) |
|
(114 |
) |
|
|
|
|
|
|
|
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
(61 |
) |
|
(1,022 |
) |
|
(2,857 |
) |
|
(2,436 |
) |
Unbilled contract revenue |
1,744 |
|
|
(2,224 |
) |
|
756 |
|
|
(5,196 |
) |
Inventories |
(4,557 |
) |
|
657 |
|
|
(8,375 |
) |
|
(13,828 |
) |
Federal income tax receivable |
1,034 |
|
|
(517 |
) |
|
517 |
|
|
(517 |
) |
Other current assets |
(371 |
) |
|
439 |
|
|
(303 |
) |
|
293 |
|
Other long-term assets |
(526 |
) |
|
2 |
|
|
(856 |
) |
|
(434 |
) |
Accounts payable |
6,439 |
|
|
(3,963 |
) |
|
5,251 |
|
|
(2,670 |
) |
Change in book overdraft position |
(225 |
) |
|
(1,727 |
) |
|
(332 |
) |
|
(2,329 |
) |
Accrued expenses |
831 |
|
|
199 |
|
|
274 |
|
|
1,588 |
|
Customer deposits |
(656 |
) |
|
3,479 |
|
|
6,554 |
|
|
5,634 |
|
Net change in lease right-of-use assets and liabilities |
(15 |
) |
|
— |
|
|
(15 |
) |
|
— |
|
Other long-term liabilities |
— |
|
|
— |
|
|
— |
|
|
(75 |
) |
Net cash flows provided
by/(used in) operating activities |
7,264 |
|
|
(1,214 |
) |
|
15,020 |
|
|
(10,456 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
(3,201 |
) |
|
(999 |
) |
|
(6,268 |
) |
|
(2,118 |
) |
Proceeds from disposal of
property, plant and equipment |
— |
|
|
— |
|
|
— |
|
|
20 |
|
Net cash flows used in
investing activities |
(3,201 |
) |
|
(999 |
) |
|
(6,268 |
) |
|
(2,098 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Advances from revolving line
of credit |
20,515 |
|
|
23,882 |
|
|
76,038 |
|
|
81,225 |
|
Repayments of revolving line
of credit |
(26,219 |
) |
|
(21,244 |
) |
|
(82,724 |
) |
|
(67,575 |
) |
Borrowings under other loan
agreements |
1,782 |
|
|
— |
|
|
1,782 |
|
|
391 |
|
Repayments under other loan
agreements |
— |
|
|
(342 |
) |
|
(3,904 |
) |
|
(1,231 |
) |
Payments under finance
lease |
(103 |
) |
|
(80 |
) |
|
(387 |
) |
|
(310 |
) |
Proceeds received from lease
financing obligation |
1 |
|
|
— |
|
|
416 |
|
|
— |
|
Debt issuance costs |
— |
|
|
(28 |
) |
|
(84 |
) |
|
(55 |
) |
Proceeds from exercise of
stock options |
273 |
|
|
22 |
|
|
434 |
|
|
101 |
|
Proceeds from employee stock
plan purchases |
— |
|
|
7 |
|
|
87 |
|
|
60 |
|
Cash paid for employee taxes
upon vesting of restricted stock |
— |
|
|
(5 |
) |
|
(98 |
) |
|
(53 |
) |
Restricted (non-vested) stock
grants, net of forfeitures |
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Net cash flows (used
in)/provided by financing activities |
(3,751 |
) |
|
2,213 |
|
|
(8,440 |
) |
|
12,554 |
|
|
|
|
|
|
|
|
|
Net cash increase for the
year |
312 |
|
|
— |
|
|
312 |
|
|
— |
|
Cash, beginning of year |
— |
|
|
— |
|
|
— |
|
|
— |
|
Cash, end of year |
$ |
312 |
|
|
$ |
— |
|
|
$ |
312 |
|
|
$ |
— |
|
IEC ELECTRONICS CORP.NON-GAAP FINANCIAL MEASURES
RECONCILIATION TABLEYEAR ENDED SEPTEMBER 30, 2020(unaudited;
in thousands, except share and per share data)
|
Year Ended |
|
September 30,2020 |
Reconciliation to adjusted
gross profit: |
|
Gross profit |
$ |
24,120 |
|
Non-cash charge (1) |
987 |
|
Adjusted gross profit |
$ |
25,107 |
|
|
|
Reconciliation to adjusted
gross margin: |
|
Gross margin |
13.2 |
% |
Non-cash charge (1) |
0.5 |
% |
Adjusted gross margin |
13.7 |
% |
|
|
Reconciliation to adjusted net
income: |
|
Net income |
$ |
6,753 |
|
Non-cash charge (1) |
987 |
|
Income tax effect (2) |
(207 |
) |
Adjusted net income |
$ |
7,533 |
|
|
|
Reconciliation to adjusted net
income per common share: |
|
Net income per common share,
basic |
$ |
0.65 |
|
Non-cash charge, net of tax
(1)(2) |
0.07 |
|
Adjusted net income per common
share, basic |
$ |
0.72 |
|
|
|
Net income per common share,
diluted |
$ |
0.63 |
|
Non-cash charge, net of tax
(1)(2) |
0.07 |
|
Adjusted net income per common
share, diluted (3) |
$ |
0.70 |
|
(1) A non-cash charge related to the increase in our excess and
obsolete inventory reserve due to a reorganization at a customer of
IEC.(2) The income tax effect related to the non-cash charge was
calculated using an effective tax rate of 21%.(3) Adjusted net
income per common share, diluted is calculated based on adjusted
net income and reflects the dilutive impact of shares, where
applicable, based on adjusted net income.
Non-GAAP Financial Measures
In addition to reporting net income, net income per share basic
and diluted, gross profit and gross margin, U.S. generally accepted
accounting principle (“GAAP”) measures, we present adjusted net
income, adjusted net income per basic and diluted share, adjusted
gross profit and adjusted gross margin, which are non-GAAP
measures, to reflect the impact of a one-time inventory reserve
related to a Chapter 11 reorganization at one of the Company’s
customers in the medical sector. The Company’s management believes
these non-GAAP measures are important measures of our performance
because they allow management, investors and others to evaluate and
compare our performance from period to period by removing the
impact of the one-time inventory reserve. Adjusted net income,
adjusted net income per basic and diluted share, adjusted gross
profit and adjusted gross margin, are not measures of financial
performance under GAAP and are not calculated through the
application of GAAP. As such, they should not be considered as a
substitute for the GAAP measures of net income, net income per
basic and diluted share, gross profit and gross margin, and
therefore, should not be used in isolation of, but in conjunction
with, the GAAP measures. These non-GAAP measures may produce
results that vary from the GAAP measures and may not be comparable
to a similarly titled non-GAAP measure used by other companies.
IEC Electronics (NASDAQ:IEC)
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IEC Electronics (NASDAQ:IEC)
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