Exhibit 99.1
SigmaTron International, Inc. Reports Financial Results for Third
Quarter Fiscal 2005
ELK GROVE VILLAGE, Ill.--(BUSINESS WIRE)--March 8, 2005--SigmaTron
International, Inc. (NASDAQ:SGMA), an electronic manufacturing
services company today reported revenues and earnings for the quarter
and nine-month periods ended January 31, 2005.
For the three months ended January 31, 2005, net revenues
increased to $28.3 million compared to net revenues of $23.9 million
for the same period ended January 31, 2004. Net income for the 2005
third fiscal quarter was $1.4 million compared to $1.2 million for the
2004 third fiscal quarter. Diluted earnings per share for the quarter
were $0.38 compared to $0.34 for the same period in the prior fiscal
year.
For the nine months ended January 31, 2005, net revenues increased
to $81.2 million compared to $75.3 million for the same period ended
January 31, 2004. Net income for the 2005 period was $3.9 million,
compared to $4.5 million for the 2004 period. Diluted earnings per
share for the nine months ended January 31, 2005, were $1.02 compared
to $1.28 for the nine months ending January 31, 2004.
Commenting on SigmaTron's third-quarter and nine-month results,
Gary R. Fairhead, president and chief executive officer, said, "In the
third fiscal quarter and for the first nine months of the fiscal year,
sales increased in the appliances and fitness industries. However,
competitive pricing pressures impacted our gross margins. In both
periods we also experienced a decrease in sales in the consumer market
due to slowing sales to a significant customer. We believe this
customer will cease to do business with SigmaTron in the fourth
quarter because they decided to move the production of their product
into a new company owned facility in Mexico. For the nine-month
period, sales in the gaming marketplace decreased due to softness in
end-market demand. Overall, customer price concessions, increases in
manufacturing supply costs, and increases in raw material component
costs continued to negatively impact our results in the reported
periods, and we expect this will continue."
Selling and administrative expenses increased in the nine-month
period primarily due to higher insurance, legal, financial compliance
and administrative costs. Interest expense rose in the nine-month
period due to an increase in interest for notes associated with the
purchase of the Company's corporate and manufacturing facilities.
Interest expense rose during the three- and nine-month periods in
connection with higher borrowings under the Company's revolving credit
facility, higher capital lease obligations and additional interest
expense associated with the acquisition of SigmaTron's affiliate, SMT
Unlimited, L.P., in Fremont, California.
"During the quarter," Fairhead continued, "Elk Grove Village's
operating results were robust in the third quarter, and we look
forward to this trend extending into the next quarter. At Fremont, the
quarter was weaker than the previous three months, but the location
continued to post positive operating results. We anticipate improved
sales volume in the fourth quarter at this location. Our Las Vegas
operation experienced marginal operating results, and a further
softness in business occurred in the first part of the fourth quarter.
"Our operation in China continued to ramp up during the third
quarter, although slower than expected, and generated positive income
from operations for the quarter. This operation now has approximately
170 employees, and we expect additional business will transition from
our Mexican location to China over the next six months. Our Mexican
facility posted solid operating results again due to continued strong
demand for its services. The facility also gained two new customers
during the quarter, which we are optimistic will become an important
part of Mexico's revenue stream going forward. We have seen increased
customer interest in our Mexican facility and we anticipate that most
of the business transferred to China will be replaced with new
business.
"As we announced, our Fremont facility was certified for 13485
medical device manufacturing. These quality standards are specific to
medical device systems and supplement the more generic ISO 9001 and
9002 standards that apply to many industries. We are extremely proud
of the hard work of our team at the Fremont plant in reaching full
compliance to international regulatory standards for medical device
manufacturing. Additionally, during the third quarter, we initiated
plans for entry into lead-free manufacturing services for our
customers that sell into the European marketplace. While compliance
with these mandated standards will require significant capital
expenditures in the near term, we are encouraged by the long-term
sales opportunities this accreditation could bring to us."
Fairhead concluded, "We are encouraged by trends at our plants in
Elk Grove Village, Mexico and China and new opportunities brought
about by recent manufacturing certification efforts. However, pricing
for components and their related commodities have continued to
escalate, and we believe this will continue to negatively impact our
results for the foreseeable future. We expect the fourth quarter to be
profitable, but weaker than the third quarter in terms of margins and
net results."
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, Las Vegas, Nevada, Acuna,
Mexico, Fremont, California and Suzhou-Wujiang, China. SigmaTron
International, Inc. maintains engineering and materials sourcing
offices in Taipei, Taiwan.
Note: To the extent any statements in this press release statement
may be deemed to be forward looking, such statements should be
evaluated in the context of the risks and uncertainties inherent in
the Company's business, including the Company's continued dependence
on certain significant customers; the continued market acceptance of
products and services offered by the Company and its customers; 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 availability and cost of necessary components;
the Company's ability to manufacture lead free assemblies by mid -
2006; regulatory compliance; the continued availability and
sufficiency of the Company's credit arrangements; changes in U.S.,
Mexican or Chinese regulations affecting the Company's business; the
continued stability of the Mexican and Chinese economic, labor and
political conditions, currency fluctuations, and the ability of the
Company to manage its growth, including expansion into China and
securing financing for the operation in China. 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 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 this press release and the Company undertakes
no obligation to update or revise such statements in light of new
information, future events or otherwise.
Financial table to follow...
CONSOLIDATED STATEMENTS OF OPERATION - UNAUDITED
Three Months Ended Nine Months Ended
January 31, January 31, January 31, January 31,
2005 2004 2005 2004
----------------------------------------------------
Net sales $28,301,593 $23,906,176 $81,241,451 $75,266,852
Cost of products
sold 23,518,837 19,459,181 66,639,964 60,547,366
----------------------------------------------------
Gross profit 4,782,756 4,446,995 14,601,487 14,719,486
Operating expenses 2,788,060 2,432,844 8,553,938 7,461,515
----------------------------------------------------
Operating income 1,994,696 2,014,151 6,047,549 7,257,971
Other (income)
deductions-net (361,541) (43,545) (345,259) 9,041
----------------------------------------------------
Income before
income tax
expense 2,356,237 2,057,696 6,392,808 7,248,930
Income tax expense 918,895 814,410 2,474,986 2,757,532
----------------------------------------------------
Net income $1,437,342 $1,243,286 $3,917,822 $4,491,398
====================================================
Net income per
common share -
assuming dilution $0.38 $0.34 $1.02 $1.28
====================================================
Weighted average number
of common equivalent
shares outstanding -
assuming dilution 3,822,157 3,655,200 3,832,121 3,521,565
====================================================
CONSOLIDATED BALANCE SHEET
January 31, April 30,
2005 2004
--------------------------
Current assets $39,403,285 $35,973,957
Property,
machinery and
equipment-net 25,634,501 25,707,901
Other assets 2,369,311 1,316,814
--------------------------
Total assets 67,407,097 62,998,672
==========================
Liabilities and
shareholders'
equity
Current
liabilities 15,743,658 13,086,206
Long-term
obligations 6,816,607 8,269,923
Minority interest
in affiliate - 439,787
Stockholders'
equity 44,846,832 41,202,756
--------------------------
Total liabilities
and stockholders'
equity $67,407,097 $62,998,672
==========================
CONTACT: SigmaTron International, Inc.
Linda K. Blake, 800-700-9095