Exhibit 99.1 Press Release dated November 5, 2003
(SUNTRON LETTERHEAD)
PRESS RELEASE
SUNTRON CORP. REPORTS FISCAL 2003 THIRD QUARTER RESULTS
PHOENIX, AZ.-NOVEMBER 5, 2003-Suntron Corporation (Nasdaq:SUNN), a leading
provider of integrated electronics manufacturing solutions, today reported
revenue and operating results for the third quarter of 2003. The Company
reported net sales of $79.6 million and a net loss of $7.1 million ($0.26 per
share). These results include $1.2 million of restructuring charges related to
the previously announced consolidation of the Company's Phoenix facilities.
Third quarter 2003 net sales of $79.6 million compares with $99.5 million
recognized in the same quarter last year, a 20.0% decrease. Sequentially, third
quarter net sales increased $4.8 million, or 6.4%, from $74.8 million reported
in the second quarter of 2003. The decline in net sales for third quarter 2003
compared with the prior year was primarily attributable to the continued soft
end markets served by Suntron's customers, particularly in the aerospace and
networking/ telecommunications markets. The sequential increase in net sales
from the second quarter was primarily attributable to growing revenues from new
customer wins, the delivery of certain large orders and the acquisition of
Trilogic Systems.
Gross profit for the third quarter of 2003 was a loss of $1.1 million, an
improvement of $16.5 million as compared to a loss of $17.6 million recognized
for the third quarter last year. The gross profit deficiencies in the third
quarters of 2003 and 2002 include $1.2 million and $12.1 million of
restructuring charges, respectively, related to facility closures and severance
costs. Sequentially, third quarter of 2003 gross profit increased $2.9 million
from a loss of $4.0 million reported in the second quarter of 2003. The gross
profit deficiency in the second quarter included $0.9 million of restructuring
charges. Gross margins were positively impacted by a reduction in restructuring
costs, improved capacity utilization and a reduction in manufacturing overhead.
Operating loss for the third quarter of 2003 was $6.4 million, an improvement of
$18.2 million as compared to an operating loss of $24.6 million recognized in
the third quarter last year. Sequentially, third quarter operating loss improved
by $3.5 million from the $9.9 million operating loss reported in the second
quarter of 2003. In addition to the factors positively impacting gross margins,
a reduction in selling, general and administrative (SG&A) expenses of $1.8
million and $0.7 million contributed favorably to year over year and sequential
results, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the
third quarter of 2003 was negative $0.5 million, an improvement of $18.1 million
as compared to EBITDA of negative $18.6 million recognized in the third quarter
last year. Sequentially, third quarter EBITDA increased $3.6 million from
negative $4.1 million reported in the second quarter of 2003. The factors
positively impacting operating loss were also primarily responsible for the
increased sequential and year over year improvement in EBITDA.
Net loss for the third quarter of 2003 was $7.1 million, an improvement of $17.4
million as compared to a net loss of $24.5 million recognized in the third
quarter last year. Sequentially, net loss improved $3.4 million from a net loss
of $10.5 million reported in the second quarter of 2003. The factors positively
impacting operating loss were also primarily responsible for the increased
sequential and year over year improvement in net loss.
Basic and diluted loss per share (EPS) for the third quarter of 2003 was $0.26
per share, an improvement of $0.63 from the loss of $0.89 per share recognized
in the third quarter last year. Sequentially, third quarter of 2003 EPS improved
by $0.12 per share from the $0.38 loss per share reported in the second quarter
of 2003.
Cash flow from operating activities for the third quarter was negative $6.2
million, a decrease of $11.7 million as compared to $5.5 million of positive
operating cash flow recognized in the third quarter last year. Sequentially,
third quarter of 2003 operating cash flow decreased $2.5 million from negative
$3.7 million reported in the second quarter of 2003. The primary reason for the
negative cash flow in the third quarter of 2003 was a reduction in operating
payables as compared with the prior quarter.
"While we are disappointed with our operating loss this quarter, we have made
significant improvements on a sequential and year over year basis. We have
continued to win new business with 30 new customers in our targeted markets
during 2003," said James Bass, Suntron president and chief executive officer.
"Additionally, our strategic emphasis on providing complete product life cycle
solutions to our customers in our target markets is beginning to have an impact,
as evidenced by the new customer wins and order strength from selected existing
customers. In this difficult business climate, we have taken significant steps
to align our costs with our current revenue outlook. We continue to focus on
cost control, asset management, and new business development in our target
markets of semiconductor capital equipment, aerospace and defense, medical and
industrial," said Mr. Bass.
"As we look ahead to the fourth quarter, we expect net sales will be up to 5%
lower sequentially due to softness in the aerospace market," said Mr. Bass. "We
expect to be operating cash flow neutral in the fourth quarter and cost
reduction actions initiated earlier in 2003 will continue to reduce our fixed
expenses in the fourth quarter. Our quote pipeline is robust with new and
existing customers in our targeted end markets, and Suntron's management team
continues to improve our quality and customer service metrics as we acquire new
business opportunities," concluded Mr. Bass.
ABOUT SUNTRON CORPORATION
Suntron delivers complete manufacturing services and solutions to support the
entire life cycle of complex products in the semiconductor capital equipment,
aerospace and defense, medical and industrial markets. Headquartered in Phoenix,
Arizona, Suntron operates seven full-service, assembly facilities and two
quick-turn assembly facilities in North America. Suntron is involved in printed
circuit card assembly, cable and harness production, plastic injection molding,
sheet metal, product design, engineering services, and full systems integration
and test. The Company has approximately 2,100 employees and contract workers.
INCOME STATEMENT SUMMARY
(Amounts in Thousands, Except Per Share Amounts)
Q3 Q2 Q3
2002 2003 2003
Net Sales $ 99,535 $ 74,845 $ 79,638
Gross Profit (Loss) (17,560) (3,995) (1,142)
SG&A Expense 6,864 5,715 5,039
Operating Loss (24,627) (9,897) (6,369)
Net Loss (24,478) (10,527) (7,120)
Net Loss Per Common Share (0.89) (0.38) (0.26)
Weighted Average Shares Outstanding 27,409 27,409 27,409
SELECTED FINANCIAL DATA
(Dollars in Thousands)
Q3 Q2 Q3
2002 2003 2003
EBITDA $ (18,578) $ (4,089) $ (486)
Cash Flow from Operating Activities 5,501 (3,737) (6,200)
Restructuring Related Charges 12,409 925 1,177
Working Capital (End of Period) 55,174 51,754 54,207
BALANCE SHEET SUMMARY
(Dollars in Thousands)
SEPT 29, JUNE 29, SEPT 28,
2002 2003 2003
Cash and Equivalents $ 82 $ 13 $ 23
Trade Receivables, Net 40,122 36,070 40,440
Inventories, Net 73,331 61,989 57,709
Other Current Assets 2,706 1,419 1,407
Property, Plant & Equipment, Net 65,326 52,363 48,393
Goodwill 6,987 7,395 8,996
Other Assets 3,609 3,059 2,654
TOTAL ASSETS $192,163 $162,308 $159,622
Operating Payables:
Accounts Payable $ 42,936 $ 31,934 $ 29,852
Accrued Liabilities 22,859 21,355 18,201
Financing Payables:
Outstanding Checks in Excess of Cash 2,417 689 1,331
Bank Debt 5,289 25,045 31,629
Accrued Business Acquisition -- 220 2,608
Cost and Capital Expenditures
Shareholders' Equity 118,662 83,065 76,001
TOTAL LIABILITIES AND EQUITY $192,163 $162,308 $159,622
The primary measure of our operating performance is net income (loss). However,
the Company's lenders and many investment analysts believe that other measures
of operating performance are relevant. One of these alternative
measures is Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"). Management emphasizes that EBITDA is a non-GAAP measurement that
excludes many significant items that are also important to understanding and
assessing Suntron's financial performance. Additionally, in evaluating
alternative measures of operating performance, it is important to understand
that there are no standards for these calculations. Accordingly, the lack of
standards can result in subjective determinations by management about which
items may be excluded from the calculations, as well as the potential for
inconsistencies between different companies that have similarly titled
alternative measures. In order to illustrate our EBITDA calculations, we have
provided the details below of the calculation as follows:
EBITDA CALCULATION
(Dollars in Thousands)
Q3 Q2 Q3
2002 2003 2003
Net Loss $(24,478) $(10,527) $ (7,120)
Income Tax Expense (Benefit) (40) -- --
Interest Expense 411 700 761
Depreciation and Amortization 5,529 5,738 5,873
EBITDA ($18,578) ($4,089) ($486)
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This release contains forward-looking statements that relate to future events or
performance. These statements reflect Suntron's current expectations, and
Suntron does not undertake to update or revise these forward-looking statements,
even if experience or future changes make it clear that any projected results
expressed or implied in this or other company statements will not be realized.
Furthermore, readers are cautioned that these statements involve risks and
uncertainties, many of which are beyond Suntron's control, which could cause
actual results to differ materially from the forward-looking statements. These
risks and uncertainties include, but are not limited to, general economic
conditions and specific conditions in the electronics industry, including the
aerospace and semiconductor segments of the electronics industry; Suntron's
dependence upon a small number of customers; the Company's ability to attract
new customers and maintain existing customers; the results of the Company's
restructuring and cost reduction efforts; changes or cancellations in customer
orders; the risks inherent with predicting revenue and earnings outcomes as well
as other factors identified as " Factors That May Affect Future Results" or
otherwise described in Suntron's filings with the Securities and Exchange
Commission from time to time.
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SUNTRON CONTACTS: Jim Bass Peter Harper
President and CEO CFO
Chris Hendriksen or
Stephanie Watkins
ir@suntroncorp.com
202-371-0150