IEC - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the IEC Electronics Fourth Quarter 2020 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. There is a question and answer session will follow the formal presentation. [Operator Instruction] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Nesbett, of IMS Investor Relations. sir. you, Thank

begin. You may

John Nesbett

and thank morning, for you Good calling.

have the Chief and President this Financial we call morning, Jeff CEO; Schlarbaum, On Officer. and Tom Barbato,

other or required new The or ahead, I whether moment will and forward-looking Securities harbor that limited company in call, statements believes, release Before XX-K statements actual statements events will read call Commission. are are correct contains when immediately similar and result uncertainties performance get started, during quarterly forward-looking the turn deemed like Jeff describes occur forward-looking that annual the but take we than before expects not call not results, future company the or of Form be different but the publicly risks a to statements, sales, no of be set be financial backlog those implied of Schlarbaum. made XX-Q prospects upon as results I'd the rather expressed certain with earnings statements it filed as the reports statements. These these current expectations over future but reflect include, cause or This statement. that to, a accuracy now safe company's Exchange and otherwise, or or reports uncertainties go to as by other may are conference and statements. by on Jeff. results in anticipates turnaround and to of and call capacities company's are what or dependent the a these include, to the statements company's number operations, any limited all on forth obligation report undertakes operating to, as to efforts, may such and the the events. any company's of not and to and business The future ultimate Specific recent law. future capabilities Please forward-looking this concerning based fact, initiatives, historical risks update issued and is guidance, other except statements Form or information, strategic most on regarding this

Jeff Schlarbaum

and good morning, Thank everyone. you, John,

me This say, safe eventual normalcy. return has long finds haul, been First call an I some everyone all to off, staying hope and I looking this pandemic let and know we're healthy. forward to a

Now let call me to the our turn business. over

of Our XXXX, We of picture, posted for for to big delivered per $X.X we year, gross And would fiscal three, target to believe growth the fourth report have our us In Revenues cash at quarter moment million achieved delivered. organic the out one, quarter million. double-digit start sales, of three return generating kept for above closed continue I'm we our we the to at of we share. of IEC. firmly margin XX.X% $XX and net solid a for benchmark Stepping quarterly diluted $X.XX and internal quarter strong $XX.X fourth away and a looking the of million year from income the two, basic latest or and to achieve industry-leading reaffirmed significant primary any given to drive margins; pleased three, goals: the results on to operating I progress. represented flow. all year;

notable country, pandemic. However, because achievements our all global and challenges they by given the economic this our occurred all faced during health are more that

million also and to fiscal fiscal the I of our ship credit $XXX backlog XXXX point ability through a months. strategy out these results this year reputation we the to as $XXX.X million, $XXX.X in within was next a because upcoming our our a and confident premier to million, in the of XXXX a closed increase more XX-month a programs. it solid at of for demand period while growth makes critical year-end. for circumstances partner that presented mission continue employees services double-digit to expected was again fiscal XX% customers unfulfilled is backlog importantly, year-end in The this backlog expected is once our belief to And the to a will to just diverse testament achieve life-saving XX represents XX-month who us electronic Our organic and adverse drive with year-over-year following manufacturing year. our ship from fiscal $XXX We million continue the derived execute products. that year range

has sharpen on As customers ours end years our model. over past sales our many that manufacturing who and been vertically a markets by the few you strategy and based improve embrace value service on highly XXX% integrated focus our unique, of of model to U.S. primary know, focusing

Our top both to recognition from sales marketplace and we valued we customers progress, In well $XX expand awarded a focus a been excellence multiyear and had capabilities with service were has executional announce defense new example, initial IEC quickly that highest with customers. combined at our products, ability driven as this projects as production, highly relationships pleased low-rate priorities as to to looking from existing global contract one million growing the to our and past contractor. of a complex dedication March customer evaluate engineered highly interest shift customer quality reaffirming and the our manufacturing in

this for the revenue during customer million. commencing while fiscal we revenue $XX production deliveries, However, minimal during the up was the from phase customer contract increased initial brand-new realized This to XXXX. the prior contract anticipate as generate by we contract us. award additional fiscal XXXX, And of ramps significant a initial from an we'll

bookings our substantial meaningful generating we of line cash growth operating addition flow. the begin and levels to throughout fiscal In top XXXX,

significant when operating we inventory. million primarily fiscal in year, backlog was $XX the our For continued XXXX, $XX of to growth, cash associated consuming million, with reflecting a flow from were fiscal cash swing support investments year-over-year

believe continued U.S. continue cost, to share capture processes, our our us to are integrated manufacturing drive enable while property As lead positioned we intellectual with critical control efficiently risks vertically support the our capabilities our we us and customers market managing advanced in-house We associated times the protections. XXXX, custom fiscal to competitively have and the move associated forward the footprint growth. control, revenue in we believe exclusive components to quality allows better to with organic required

a point they're Our attract many ability base, to to deliver more outsourcing strengthened us. an has diverse our surpass earning win and electronic capable as customer complex enabled the opportunities larger, that reliable and trust has services reputation that of to the to customer and expectations provider us exceptionally programs them with of more and manufacturing

just-in-time consistently customer service, the for grow our extraordinarily elements levels U.S. important the responsive capably believe customer on these manufacturing leveraged our to and and new product are quality, delivery For options, and our of to highest continue deliver to and best looking ability base. contracts we've we customers solutions win

the access key a pool, campus expect that establishing facility believe we to capabilities. And to area in quarter, during have York. experienced announced will square Rochester, the as past. improve a looking some us New block, in alleviate we building will of which always fourth a expansion to constraints we're this workforce of Rochester that labor our new broader prominent we provides facility We However, purchase serve end, the XX,XXX the foot an

combined growth consolidate believe ideal will assembly growing location this to organic customer need the operation. resources during with anticipated to it skilled double-digit Our goal the an expanded demand, support operation from ongoing fiscal region, more footprint addressing provide We to ability provide is location an metals its facility new specialty critical our and and electronic current support with entire our and importantly, to recruit XXXX beyond. us and Rochester Rochester across a

of commence soon the January anticipate our headquarters facility XXXX. move-in new we will also to expect Speaking new process we starting facilities, New that in York and open in

Our about with improving expected experienced any to features two serve stages ability series while We're selling new operational financial facility, state-of-the-art move produce in in The building candidates layout the newly the we're goal are our operational quarters. consecutive throughout to year, joining by performance will successes combined custom-designed enhanced exceed flow a plan our into is to as facility, customers, Rochester, purchased by presented enhance energized disruptions, which of believe XXXX. potential million new state-of-the-art minimize a our internal excited efficiencies. and fiscal for and in of appeal we manufacturing facility our talented to to our our the both our including to challenges our the and also IEC pandemic, revenue team. Despite considering employee global $XX the

industry-leading margins gross delivered profitability. improved and we doing While so, also

market share provider products. our customer intend strengthening on our on needs diversify manufacturing manufacturing meet base. grow remains IEC and we electronic an saving, of mission-critical customers, for who to focus and capabilities complexity to continue their capture life And the engineered high as Our rely services our highly and to

Tom XXXX financial fiscal turn around will fiscal Now, provide more performance. fourth I to over Tom? detail to the full quarter call and our

Tom Barbato

the compared quarter, the compared the margin fourth in Jeff, XXXX Revenue $X.X compared fiscal $X.X as Gross of flow of Thanks, XXXX. Selling operating sales compared of $X.X $X.X as and good fourth profit Gross sales of compared of to administrative of for million, of to percentage in the or Jeff The XXXX of $X.X $X.XX cash XX.X% on basic of for of increased fiscal share to of of sales per X.X% XXXX fourth per of fiscal of $X.X to and and million fiscal in in morning, million generated diluted decreased XXXX. the in of fourth net in slightly basic quarter the X.X% was gross diluted to of fourth during $X.X noted fourth the margin fiscal $X.XX X.X% of fourth the XXXX. the quarter we fiscal quarter income to XX.X% of million fourth net everyone. was sales and build was or to a compared quarter of earlier, to and what $XX.X million usage quarter in fiscal increase the fourth flow quarter quarter an fiscal of the quarter XXXX. To share quarter quarter company fiscal gross expenses XXXX. operating fourth income million million recorded fiscal million as of profit $X.X XXXX. million cash and XXXX

in was to and to in increase medical Now of sales the million looking year at the sector fiscal million XXXX. driven $XX.X $XXX.X prior in XX.X% and year. for million, compared $XXX the an fiscal primarily $XX.X aerospace by results an Revenue increase of in Growth in million. defense the sales full increased the sector

of customers, XXXX, issued defense tables a fiscal increase net regarding Looking the offset demand was million, non-GAAP customers certain at and Please the million as for XXXX profit various million sales decreased decreased this customers. of sales and Industrial The of a gross due at fiscal sales activities revenue XX.X% for to a for an basic $XX.X million increase related to XX.X% $XX.X higher by diluted for year. demand profit of fiscal slightly tables revenue certain medical partially or or ramping basic related saw to and XX%, XXXX offset increased this in sales. at our of aerospace employee-related of fiscal per to professional in inventory Sales sector. comparison a sales at of sectors the $X.X primarily fiscal for morning with at diluted million sector decrease end per XXXX. of expenses to in fluctuations $XX.X $XX.X fiscal the impact XXXX Please to existing million new in or or million for on products industrial increases $XX with These basic fiscal programs these $X.XX of $XX.X increases expenses issued inventory the share $X.X quarter XXXX this programs Net was in million, in in Adjusting million first XX% customers, $X.XX medical distribution compared saw an reductions million customers. and Gross to production disengaging see $X.XX medical XX.X% were primarily of related Gross provided demand revenue income onetime million and and per per of to further which we $X per of the this regarding XX%. fiscal sector fees, share. The market quarter delays. and X% in well $X.X programs impacted in $X.XX refer and in as $X.XX administrative release costs. further onetime profit measures. ramping variety in or two in per net aerospace programs sales or customer, million the resulted defense share was net in full as or charge, measure. fiscal other the the customers, press $XX.X by in $XX.X for primarily was at $X.XX reconciliation $X.X write-down the onetime fiscal compared at income as adversely in and driven Adjusted for morning and ending diluted XXXX, prior adjusted was or to information information margin administrative the reconciliation by first reorganization for gross was offset for other selling XXXX. release customer with reserve, Selling million income by X.X% of year in by adjusted customer press by primarily included compared non-GAAP due increased ending. to hold in ending sector

XXXX, For operating we to of of last flow by cash in $XX.X an flow operations improvement fiscal million $XX.X generated million operating $XX year year-over-year. compared cash million, used from activities

Now balance sheet. looking at our

$XX.X fiscal strong capital balance with million working stockholders' and equity. in $XX.X in XXXX million Our remains sheet in

that to of You'll was end end inventory XXXX. XXXX at million the compared the at million of fiscal see $XX.X fiscal $XX.X

to a despite as with see our a help XX, the of at to the XXXX at comparison to of $XX.X customers consumed September September shortages. to $XX.X grew million in customer the $XX.X million deposits year. deposits within continue associated willingness risks We XXXX, ongoing million result, fiscal being part XX, on component And mitigate

but Jeff the was to at next fiscal year million, expected at XXXX XX-month what $XXX.X earlier, higher months. expected the reiterate within to backlog with fiscal $XXX.X end ship fiscal period ship XXXX. was slightly million million XX just closed million, $XXX.X mentioned Finally, that we the year-end of Backlog $XXX the with backlog following within of to just of

into in backlog XX.X it this to XX.X% at encouraging -- continue XX months XX-month increase XXXX. that, increase With fiscal deliverable So XXXX turn back year-end -- deliver is within I'll we backlog Jeff. fiscal as

Jeff Schlarbaum

over we margins industry-leading believe we customers generating turn flow. on mission intent provider awards operator and U.S.-based solid back advance of new to winning majority a a I achieve for Thank vertically double-digit was as strong our our world call for our able complex to Great. continuing to you, organic a the critical products electronic XXXX Fiscal XXX% and Tom. program manufacturing for growth, regulated highly operating cash the ability continued grow for we uniquely Despite With throughout calendar positioned one solutions fiscal we're proved as leadership products. right. highly where IEC, and integrated are reputation in life-saving will All now provider premier our as progress year position experienced and of driving we health of manufacturing this the industries. questions. has economic goals year, public and any primary to were that, for the the on three challenges And deliver We XXXX.

Operator

you. Thank Instructions] [Operator

Our first Sakai line question. Chris with from Please proceed your comes of with question Singular. the

Chris Sakai

three know I hit a the guys and question for you had on goals I congrats. -- year your

was are come when? And out goals for guys you Just to if wondering, going so, with XXXX?

Jeff Schlarbaum

Yes.

we've place in of market. business industry-leading years, XXXX. of we've our continued So for to been the the class I we're into a that in of expect that and last despite that for the delivered generate delivering double-digit put forward couple a margins. to continue continuation carry ahead XXXX of we consistently challenges reaffirm that model some And poised macro Margins, would say, I've and we to growth, is XXXX. Chris, what should

invested start that that then demand we'll we in acquiring in we But and performance. believe in leadership XXXX in we we've to that the position and will that again, cash a preserve into ago well again, be cash. were were our And the investing lot finally ago, investment a year so we year of we lastly, convert operating a positioned materials that expected -- to margin time seeing. saying And this

that was and achieved we And the as put that well. forth, we so goal third that

So I we'll forward that cash continue as believe to deliver to look into flow. able be XXXX, operating we

data most So those I to of believe flow. double-digit points want but continuing that solid growth, goals, the maybe we not see think are specifically important the margins cash and ones that in you go-forward generate exact terms are industry-leading to

And so in-store that's what for we have XXXX.

Chris Sakai

Okay. Rochester the that? And associated the -- a Great. this we Is And just I will are look what on of margin? the purchase had how then large? this? with Are it costs improve at question Or should they facility.

Jeff Schlarbaum

it. ways area One, a business operation of metals look couple in have precision -- to stand-alone a I today. metals Rochester at that's here's the So a

So we will be exiting that facility.

that we the and associated overhead building we're the it eliminate we'll So that going move new into purchased. operation, with to

a So one that's trade We'll pretty of just wash. much for another.

the put initial some of that terms balance In there'll be some pressure on of that margins. modest start-up operation, costs will

what that the investment one skill, with endless is business at of the of having we've challenges when growth. bring an we're in our And new continued forward. can that programs this talent that, say ready However, I is had supply customers is

in talent gain a us So and will skill strength. the allow invest facility to and this development much to broader bench access market

to So certainly driving is demonstrated growth. which we'll have sustain we so far, industry-leading be what able

foreseeable year safety allow net And to so But put future grow is very and modest there'll to net. be to continue a the that to in going safety us strongly. this investment place that for

excited pretty it. about yes, So we're

Operator

Mark with the Please Our question. your proceed next Instructions] Boyd question from line with comes [Operator Capital. of Shawn Next

Shawn Boyd

Can hear me okay? you

Jeff Schlarbaum

I fine. hear you can

Shawn Boyd

award large from Congrats you the defense out If year, contractor. and the quarter gentlemen. could, the on called Great. I

didn't to that revenues this ramp year. Did that quarter? September escalated million, was $XX I out that in possibly? but think generate $XX supposed material the push Was actually to any it million

Jeff Schlarbaum

it No. didn't. talks components a have had in No, this The that for been program times particular pretty times. with associated of many long with been the a that It really the company time. product into we've was significant lead lead designed

really qualification really and we some the didn't units So year, anticipated early-stage very we any in building prior fiscal only production. vision

So you. pretty be it's with much to schedule, honest on

So last we'll of balance up, improve deliver able is lead and we to the The work in pivoting no. early probably actually ramps soon component qualification were the that but production. some assemblies the we surprised some to fiscal of be quarter, of times finishing were to

excited here over a getting we're couple next the altitude the to quarters. production So about prospects cruising of pretty of

Shawn Boyd

Got Jeff. it. That's good hear, to

to So contribution that quarter in? a do we in start December really that would material March? be revenues or here kick the to When see

Jeff Schlarbaum

and it phase I at say test the production deliveries to of -- there. start approval early a of a And Yes, and steady get then quarter. would finish we calendar look qualification calendar we into would this quarters perspective QX and up -- volumes higher that production all then ramp pivot preceding from I steady sort in in from to for

Shawn Boyd

it. Got

ago, me wrong the the were in XX% XXs. of in. high know, don't correct Okay. XX-month now more covering great for I'm And specifically -- here. that, I wondering we backlog XX%, and XX% what A the on XX% please But covered going XX% to more you're A year here. on math second to growth, your we're, a -- and switching if is, I'm were year see. And before So to months, forward XX sort over we The the right? gears of covered.

little on you the customers? Is it and getting visibility. helping year Can more you give larger just shift better, towards color just medical? little a What's more going Is a better that there? each bit us that? is So

Jeff Schlarbaum

Yes.

on that expanding mean reoccurring it's of customers and then see continuing a levels new in to foundation I of strong layering then into it. programs those where customers reached top that. And think to to are revenue layering it's all, we're some that maturity, new build with I we're addition customer on in programs a have testament from first some we -- of

grow a thing well started back I demand. the look a consistently time actually fair inside think I year continuing pretty nontrivial of of bit And to base earlier, and in and so you diversified for as byproduct longer-term a we hard saw And of if last years to months. And we spill the and bookings. programs beyond just predict, customers ago, The three a year. one ago to increasing our of of way is probably first said it's see a backlog XX backlog much year, beyond was entire the -- generating

the backlog re-ups think years going to backlog, I hard for the we'll customer a me program when increases happen. and for numbers another and so in predict it's And on see two significant some to as that that's fluctuations

And start we're So that proxy really I the important as revenue-wise looking least backlog, that's really of think about it's into intermediate future, like next we what's it the more and more convertible into at what more look to we XX think all likely as the to of in a months. at future.

So and it's been this linear XX-month year-over-year growth, another a just is that. in Shawn, that backlog, extension steady of

demand. So I of progress and it's of securing continued a just sign maturity think

Shawn Boyd

Got it.

Okay. in headroom. double-digit -- backlog And at to put versus way for like a backlog there good target of opportunity seems simply it that amount or looking growth pretty Is but the kind our your not the to mouth, growth, XX-month of potential there's words XX%

Jeff Schlarbaum

we should to at that, produce double-digit confidence continue of lot a be to able Absolutely. me Gives rates.

Shawn Boyd

Yes.

Okay.

separate -- ad, that. Obviously, Moving and bigger of like new second. a from year then, with into down the seems facility it would this it a was for the transition just this the CapEx be Rochester course,

kind if that. Does Tom, million maybe if so, give how us down $X that Can you us you on you far? could Just come feel, XXXX? of year. in could, you spent if a help this And

Tom Barbato

'XX, back probably new did and facility if you New say 'XX well here we expected. look just I we would what our the the headquarters additional And have to up No. and than I as at York. history lower would mean in there's new stand required facility investments in as levels both spend that were

moving of wanted our have upgrading with it concert we we to many some with that through in equipment, do to to some because customers. our because programs, And we wanted -- with validation relative process go a to of our of is

have didn't introduce then to to to want again. and validate, validate we So move new have equipment,

So the the continue of from go light a the you make facilities, those to history, really things. see that it But I nice be only And that year think fairly will equipment this fiscal have things growth And you'll investments as offset also we'll to over earlier, made years up back year. with us were an standpoint, period, by kind our look going the complement we position investment in do and and last if to we're two once. we're we and well Jeff lining and then so platform, to be at those just mentioned Albuquerque going having positions the forward. for investments

Shawn Boyd

it. Got

for Last me. Okay. question

the past? and over we in facility, prospects early maybe might I'm be going that know opening some now the to I they need? to the to that door make program you transition this, this I capable the new weren't you ask to at is saying, the it and Are but anyway. As of well, it ask looking Are this

Jeff Schlarbaum

going with positive that comprehended be yet. associated think new consequences I completely we Yes, there's building haven't to the

benefactors capacity demonstrate that building execution, to hosting they some customer new like support horsepower, be very facility, capable, all I come but we're we're today, technically their that. programs. we're going respects setup not support to think how continue produce to into both this a customers to the envision And best-in-class particular customer. that In think also visually away. that of tremendous it's the maybe to I type but goes new will that we custom-designed facility, apparent have state-of-the-art innovations, that's new on what it in the not to And see just of I scales for be only when visits starting to older

built the to the you you it and the door see you front all see for speed. walk horsepower design, and custom and see You

a we've I how comes, think and it's say, me opportunities help had it. When, track to record the business, it new will to growing hard for think us. where I but fast pretty for of good going this provide and only

Operator

[Operator Instructions] Thank you.

comes next your the [David proceed question Please [Newrick Sheere] Hotels]. Our line with of from with question.

Unidentified Analyst

how any Dave I we doing Shear were just with was the growing? testing business? Is here. wondering that of

Jeff Schlarbaum

Yes. nice Good Good you. to and to morning talking question, Dave.

referring achieved So to over our XXXX, up what in New Albuquerque, sales production for serve we And lab. some to in have year laboratory you're -- ramp it's long long little -- we a ago. bring a out unique customers. a to started a cycle. is Mexico industry and We our that We're service analytical to testing the operation. certifications It's continuing

component there's talked before, think I it different about I've of types testing.

and where supplier. we're the testing entry-level the all certified solution And customers so higher want for the higher And with they not to level of one in we're testing, a sort also mid only one-stop mid can investing end entry-level component today, really but testing. do the testing, but

take So which ramp and customers than we little anticipated has our time, but because probably want today, really got a had it a ramp of we've a portion shop, over it's to get going slower one-stop sales we that will of needle-moving been to really then year in manner. a good can this next expertise balance the drive probably start. us more But of that a level it the

Operator

this questions time. We would comments. like floor management I back at the no now over have to further for turn to closing

Jeff Schlarbaum

great. Well,

with continue the like forward global we continued health speaking in I'd to again look and calling for work thank with pandemic. associated interest everyone continued quarter. we the you next and through to We your you, for IEC, safety wish First, as everyone, Thank everyone to challenges say in.

Operator

Ladies teleconference. and gentlemen, today's conclude does this

wonderful You at may your day. have lines this disconnect and time. your Thank for participation, a you

Iec Electronics (IEC) 20 Nov 202020 Q4 Earnings call transcript