IEC ANNOUNCES FISCAL 2021 FIRST QUARTER RESULTS
02/03/2021 - 08:30 AM
REVENUE OF $47.5 MILLION IN THE QUARTER; UP 6.1% YEAR OVER YEAR GROSS MARGIN OF 12.1% IN THE QUARTER, UP 40 BASIS POINTS YEAR OVER YEAR NET INCOME OF $1.5 MILLION , UP 29.3% YEAR OVER YEAR NEWARK, N.Y., Feb. 03, 2021 (GLOBE NEWSWIRE) -- IEC Electronics Corp. (Nasdaq: IEC) today announced results for the fiscal 2021 first quarter ended January 1, 2021 (“fiscal 2021”).
IEC reported revenues of $47.5 million for the first quarter of fiscal 2021, an increase of 6.1% as compared to revenues of $44.7 million for the first quarter of the year ended September 30, 2020 (“fiscal 2020”) and a slight sequential increase as compared to the fourth quarter of fiscal 2020. Gross profit for the first quarter of fiscal 2021 was $5.7 million , or 12.1% of sales, compared to gross profit of $5.2 million , or 11.7% of sales in the first quarter of fiscal 2020, which included the negative impact of a one-time inventory reserve of $1.0 million related to a reorganization at one of the Company’s medical customers. Selling and administrative expenses were $3.5 million in the first quarter of fiscal 2021, a slight increase compared to the first quarter of fiscal 2020, and 7.4% percent of sales for both periods. Operating income was $2.2 million for the first quarter of fiscal 2021, an increase of $0.3 million , or 14.5% when compared to the same quarter in the prior fiscal year.
The Company reported net income of $1.5 million , or $0.15 per basic share and $0.14 per diluted share for the first quarter of fiscal 2021, compared to net income of $1.2 million , or $0.11 per basic and diluted share in the first quarter of fiscal 2020. As previously discussed, adjusted for the impact of a one-time inventory reserve in the first quarter of fiscal 2020, adjusted net income per common share would have been $0.19 per basic share and $0.18 per diluted share. Please see the reconciliation tables included in this release for further information regarding these non-GAAP measures. The Company also reported operating cash usage of $4.9 million during the first quarter of fiscal 2021, as compared to $2.3 million of cash provided by operating activities for the same period in fiscal 2020.
Jeffrey T. Schlarbaum, President and CEO of IEC Electronics Corp. commented, “We delivered a strong start to fiscal 2021, achieving revenue growth, improved gross margin and enhanced profitability. Revenue grew both year over year and sequentially despite employee absenteeism across several of our manufacturing facilities due to COVID-19, largely related to contact tracing precautions rather than positive cases. This resulted in underutilization on the production floor for a portion of the first quarter of fiscal 2021. The post-holiday spike in virus cases appears to be receding, and with workforce attendance returning to normal levels, we expect to see production levels normalize.
“As we move through fiscal 2021, we believe IEC is well-positioned to drive continued organic growth, maintain industry-leading margins and deliver enhanced profitability. Our reputation as a consistent and reliable manufacturing partner for high complexity, life-saving and mission critical products continues to gain traction with customers in the marketplace. Likewise, as a 100% U.S.-based manufacturer with a full suite of vertically integrated production services, we believe we have a competitive advantage in attracting partners from a variety of regulated industries who are looking for the highest levels of intellectual property protection and supply chain management. We believe we are competitively positioned to continue to win new customers and programs and look forward to continuing to grow our leadership position as a provider of highly complex manufacturing solutions.”
Conference Call
IEC will host a conference call today, Wednesday, February 3, 2021 at 10:00 a.m. Eastern Time, to discuss its financial results for the fiscal 2021 first quarter ended January 1, 2021.
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: 39521.
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/2149/39521. 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, and 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,” “appears,” “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.
IEC ELECTRONICS CORP.(unaudited; in thousands, except share and per share data)
January 1, September 30, ASSETS Current assets: Cash $ 102 $ 312 Accounts receivable, net of allowance 28,285 30,361 Unbilled contract revenue 11,841 8,773 Inventories 55,695 51,374 Other current assets 2,186 1,757 Total current assets 98,109 92,577 Property, plant and equipment, net 49,868 23,587 Deferred income taxes 4,675 4,840 Operating lease right-of-use assets, net of accumulated amortization 230 260 Other long-term assets 612 1,700 Total assets $ 153,494 $ 122,964 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of operating lease obligation $ 62 $ 61 Current portion of finance lease obligation 1,449 436 Accounts payable 26,652 29,733 Accrued payroll and related expenses 1,563 3,659 Other accrued expenses 553 457 Customer deposits 22,192 19,783 Total current liabilities 52,471 54,129 Long-term debt 32,166 21,476 Long-term operating lease obligation 168 184 Long-term finance lease obligation 26,669 6,616 Other long-term liabilities 1,373 1,404 Total liabilities 112,847 83,809 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: 11,633,521 and 11,556,214 shares, respectively Outstanding: 10,578,033 and 10,500,726 shares, respectively 106 105 Additional paid-in capital 49,115 49,161 Accumulated deficit (6,985 ) (8,522 ) Treasury stock, at cost: 1,055,488 shares (1,589 ) (1,589 ) Total stockholders’ equity 40,647 39,155 Total liabilities and stockholders’ equity $ 153,494 $ 122,964
IEC ELECTRONICS CORP.(unaudited; in thousands, except share and per share data)
Three Months Ended January 1, December 27, Net sales $ 47,481 $ 44,734 Cost of sales 41,741 39,495 Gross profit 5,740 5,239 Selling and administrative expenses 3,519 3,299 Operating profit 2,221 1,940 Interest expense 457 415 Income before income taxes 1,764 1,525 Provision for income taxes 227 336 Net income $ 1,537 $ 1,189 Net income per common share: Basic $ 0.15 $ 0.11 Diluted $ 0.14 $ 0.11 Weighted average number of shares outstanding: Basic 10,524,842 10,365,766 Diluted 10,920,866 10,695,977
IEC ELECTRONICS CORP.(unaudited; in thousands)
Three Months Ended January 1, December 27, CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,537 $ 1,189 Non-cash adjustments: Stock-based compensation 242 152 Depreciation and amortization 1,127 776 Increase in reserve for doubtful accounts 52 28 Increase in inventory reserve and warranty reserve 312 1,063 Deferred tax expense 165 320 Amortization of deferred gain (29 ) (29 ) Changes in operating assets and liabilities: Accounts receivable 2,024 (924 ) Unbilled contract revenue (3,068 ) (474 ) Inventories (4,595 ) (1,742 ) Other current assets (429 ) (611 ) Other long-term assets 444 (1 ) Accounts payable (3,994 ) 1,531 Change in book overdraft position 913 284 Accrued expenses (2,038 ) (1,088 ) Customer deposits 2,409 1,869 Net change in lease right-of-use assets and liabilities 15 — Net cash flows (used in)/provided by operating activities (4,913 ) 2,343 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (7,599 ) (324 ) Net cash flows used in investing activities (7,599 ) (324 ) CASH FLOWS FROM FINANCING ACTIVITIES Advances from revolving credit facility 34,122 15,809 Repayments of revolving credit facility (24,220 ) (17,965 ) Borrowings under other loan agreements 2,910 — Repayments under other loan agreements (2,147 ) (343 ) Payments under finance lease (227 ) (81 ) Proceeds received from lease financing obligation 2,151 415 Proceeds from exercise of stock options 68 130 Proceeds from employee stock plan purchases 45 40 Cash paid for taxes upon vesting of restricted stock (400 ) (24 ) Net cash flows provided by/(used in) financing activities 12,302 (2,019 ) Net cash change for the period (210 ) — Cash, beginning of period 312 — Cash, end of period $ 102 $ —
IEC ELECTRONICS CORP.(unaudited; in thousands, except share and per share data)
Three Months Ended December 27, 2019 Reconciliation of adjusted gross profit: Gross profit $ 5,239 Non-cash charge (1) 987 Adjusted gross profit $ 6,226 Reconciliation of adjusted gross margin: Gross margin 11.7 % Non-cash charge (1) 2.2 % Adjusted gross margin 13.9 % Reconciliation of adjusted net income: Net income $ 1,189 Non-cash charge (1) 987 Income tax effect (2) (207 ) Adjusted net income $ 1,969 Reconciliation of adjusted net income per common share: Net income per common share, basic $ 0.11 Non-cash charge, per common share, net of tax (1)(2) 0.08 Adjusted net income per common share, basic $ 0.19 Net income per common share, diluted $ 0.11 Non-cash charge, per common share, net of tax (1)(2) 0.07 Adjusted net income per common share, diluted (3) $ 0.18
(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.
