Sigmatron International, Inc. Reports First Quarter Financial Results For Fiscal 2025

Rhea-AI Summary

SigmaTron International (NASDAQ: SGMA) reported its Q1 fiscal 2025 results, showing a 14% decrease in revenues to $84.8 million compared to $98.1 million in the same period last year. The company posted a net loss of $3.3 million, or $0.54 per share, compared to a net income of $0.3 million, or $0.04 per share, in Q1 fiscal 2024. Despite the year-over-year decline, revenues increased 4.4% sequentially from Q4 fiscal 2024. CEO Gary R. Fairhead noted ongoing market softness but expressed optimism for increased activity in Q4 calendar 2024. The company is focusing on reducing inventory and working capital requirements, while continuing efforts to de-lever its balance sheet with Lincoln International.

Positive

• 4.4% sequential revenue increase from Q4 fiscal 2024
• Ongoing efforts to reduce inventory and working capital requirements
• Progress in de-leveraging the balance sheet with Lincoln International

Negative

• 14% year-over-year revenue decrease to $84.8 million
• Net loss of $3.3 million compared to $0.3 million profit in Q1 fiscal 2024
• Loss per share of $0.54 compared to $0.04 income per share last year
• Continued market softness affecting customer demand

Insights

Financial Analyst

SigmaTron's Q1 fiscal 2025 results paint a challenging picture. The $84.8 million revenue represents a significant 14% year-over-year decline, coupled with a net loss of $3.3 million. This stark contrast to the $0.3 million profit in the same quarter last year is concerning. The EPS loss of $0.54 vs. $0.04 gain last year further underscores the company's struggles. However, the 4.4% sequential revenue growth from Q4 fiscal 2024 offers a glimmer of hope. The focus on inventory reduction to improve working capital is prudent, but the company's ability to navigate this downturn while maintaining customer relationships will be crucial. Investors should closely monitor the anticipated market recovery in Q4 2024 and the progress of de-leveraging efforts with Lincoln International.

Market Research Analyst

The electronic manufacturing services sector is facing widespread softness, as evidenced by SigmaTron's results. This aligns with broader economic trends of reduced consumer spending and supply chain recalibrations. The company's proactive cost-cutting measures, including overhead reductions and adjusted manufacturing schedules, are standard industry responses. The anticipated uptick in Q4 2024 could signal a sector-wide recovery, but it's important to verify this trend across multiple players. SigmaTron's focus on new projects with existing customers is a smart strategy for future growth. However, the inventory reduction efforts may lead to potential supply chain challenges if demand surges unexpectedly. Investors should watch for signs of industry-wide recovery and SigmaTron's ability to capitalize on new opportunities while managing its financial health.

Tech Expert

SigmaTron's financial challenges reflect broader issues in the tech manufacturing sector. The 14% revenue decline suggests a significant drop in orders, likely due to clients managing their own inventory levels and potentially shifting to alternative suppliers or in-house production. The sequential 4.4% growth is promising but needs to be sustained. The company's focus on new projects is important for long-term viability, especially in a rapidly evolving tech landscape. However, the continued cost-cutting measures, while necessary, could impact SigmaTron's ability to innovate and adapt to emerging technologies. The balance between maintaining operational efficiency and investing in future capabilities will be critical. Investors should monitor SigmaTron's ability to secure projects in growth areas like IoT, 5G, or renewable energy tech to offset current market softness.

ELK GROVE VILLAGE, Ill., Sept. 19, 2024 (GLOBE NEWSWIRE) -- SigmaTron International, Inc. (NASDAQ: SGMA), an electronic manufacturing services company, today reported revenues and earnings for the fiscal quarter ended July 31, 2024.

For the three months ended July 31, 2024, revenues decreased $13.4 million, or 14 percent, to $84.8 million compared to $98.1 million for the same period in the prior year. Net income/(loss) for the three-month period ended July 31, 2024, was a loss of $3.3 million compared to income of $0.3 million for the same period in the prior year. Basic and diluted income/(loss) per share for the three months ended July 31, 2024 was a loss of $0.54, compared to income of $0.04 income per share for the same period last year.

Commenting on SigmaTron’s first quarter fiscal 2025 results, Gary R. Fairhead, Chief Executive Officer and Chairman of the Board, said, “The softness that we have seen in our revenue has continued as expected and disclosed in our press release dated September 3, 2024. As we stated, the softness has continued through the first quarter of fiscal 2025 and our customers continued to indicate that they believe activity will start to increase in the fourth quarter of calendar 2024. As you can see from the financial statements, revenue is down 14.4% year over year for the first quarter. However, sequentially, the first quarter of fiscal 2025 was up 4.4% over the fourth quarter of fiscal 2024. We hope that’s the beginning of the trend that we have been told to expect. We have continued to react to these market conditions as we have been throughout this period by reductions in overhead and costs coupled with reduced manufacturing schedules. We have already done another reduction in August and we will continue to evaluate the situation as we finish calendar 2024.

“Also, as mentioned several times before, one area of focus remains the reduction of inventory to reduce working capital requirements and that has continued during the first quarter as expected. It will remain a focus for the balance of this calendar year. Our relationships with our customers remain excellent. We are working with many of them on new projects and remain optimistic that calendar 2025 will be a much stronger year. We have continued to discuss this situation with others in our industry and understand that this softness seems to be pervasive across many of their customers and markets as well. We have also continued our efforts with Lincoln International to de-lever our balance sheet and we have made progress in several areas. We remain hopeful that our customers’ expectations will start to materialize sooner rather than later and in the interim, we will continue to focus on managing the market conditions as we currently are experiencing them.”

About SigmaTron International, Inc.

Headquartered in Elk Grove Village, Illinois, SigmaTron International, Inc. operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”). The EMS segment includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products. The Company and its wholly-owned subsidiaries operate manufacturing facilities in Elk Grove Village, Illinois; Acuna, Chihuahua, and Tijuana Mexico; Union City, California; Suzhou, China; and Biên Hòa City, Vietnam. In addition, the Company maintains an International Procurement Office and Compliance and Sustainability Center in Taipei, Taiwan. The Company also provides design services in Elk Grove Village, Illinois, U.S.

Forward-Looking Statements

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 direct and indirect 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 impact of material weaknesses in internal controls over financial reporting; the results of long-lived assets and goodwill impairment testing; the risks inherent in any merger, acquisition or business combination, including the ability to achieve the expected benefits of acquisitions as well as the expenses of acquisitions; the collectability of aged account receivables; the variability of the Company’s customers’ requirements; the impact of inflation on the Company’s operating results; the availability and cost of necessary components and materials; the impact acts of war may have to the supply chain; 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; the costs of borrowing under the Company’s senior and subordinated credit facilities, including under the rate indices that replaced LIBOR; increasing interest rates; the ability to meet the Company’s financial and restrictive covenants under its loan agreements; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business; the turmoil in the global economy and financial markets; public health crises, including COVID-19 and variants; the continued availability of scarce raw materials, exacerbated by global supply chain disruptions, necessary for the manufacture of products by the Company; the stability of the U.S., Mexican, Chinese, Vietnamese and Taiwanese economic, labor and political systems and conditions; global business disruption caused by the Russian invasion of Ukraine and related sanctions and the Israel-Hamas conflict; 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.
James J. Reiman
1-800-700-9095

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
		Three Months				Three Months
		Ended				Ended
		July 31,				July 31,
			2024				2023
Net sales			84,776,978				98,130,356
Cost of products sold			78,371,784				88,479,136
Gross profit			6,405,194				9,651,220
Selling and administrative expenses			6,623,866				6,842,805
Operating (loss) income			(218,672	)			2,808,415
Other expense			(2,268,275	)			(2,700,451	)
(Loss) income before income tax			(2,486,947	)			107,964
Income tax (expense) benefit			(802,213	)			154,135
Net (loss)/income		$	(3,289,160	)		$	262,099
Net (loss)/income per common share - basic		$	(0.54	)		$	0.04
Net (loss)/income per common share - diluted		$	(0.54	)		$	0.04
Weighted average number of common equivalent
shares outstanding - assuming dilution			6,119,288				6,100,284
CONDENSED CONSOLIDATED BALANCE SHEETS
		July 31,				April 30,
			2024				2024
Assets:
Current assets		$	167,894,193				175,902,619
Machinery and equipment-net			32,497,960				33,755,078
Deferred income taxes			8,752,870				4,432,210
Intangibles			897,567				979,188
Other assets			8,799,128				8,724,880
Total assets		$	218,841,718			$	223,793,975
Liabilities and stockholders' equity:
Current liabilities		$	145,416,405				145,888,791
Long-term obligations			10,571,046				11,832,931
Stockholders' equity			62,854,267				66,072,253
Total liabilities and stockholders' equity		$	218,841,718			$	223,793,975

FAQ

What were SigmaTron's (SGMA) Q1 fiscal 2025 financial results?

SigmaTron (SGMA) reported Q1 fiscal 2025 revenues of $84.8 million, down 14% year-over-year, with a net loss of $3.3 million or $0.54 per share.

How did SigmaTron's (SGMA) Q1 fiscal 2025 performance compare to the previous quarter?

SigmaTron's (SGMA) Q1 fiscal 2025 revenues increased 4.4% sequentially compared to Q4 fiscal 2024, despite the year-over-year decline.

What strategies is SigmaTron (SGMA) implementing to address current market conditions?

SigmaTron (SGMA) is focusing on reducing inventory and working capital requirements, implementing cost-cutting measures, and working with Lincoln International to de-lever its balance sheet.

When does SigmaTron (SGMA) expect market conditions to improve?

SigmaTron (SGMA) indicates that customers expect activity to start increasing in the fourth quarter of calendar 2024, with hopes for a stronger calendar year 2025.