- 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 CallIEC 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.Company Contact:Thomas L. BarbatoSenior Vice President and Chief Financial OfficerIEC Electronics Corp.(315) 332-4493[email protected]Agency Contact:John Nesbett/Jennifer BelodeauIMS Investor Relations(203) 972 – 9200[email protected]
IEC ELECTRONICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETSJANUARY 1, 2021 and SEPTEMBER 30, 2020(unaudited; in thousands, except share and per share data)January 1,2021September 30,2020ASSETSCurrent assets:Cash$102$312Accounts receivable, net of allowance28,28530,361Unbilled contract revenue11,8418,773Inventories55,69551,374Other current assets2,1861,757Total current assets98,10992,577Property, plant and equipment, net49,86823,587Deferred income taxes4,6754,840Operating lease right-of-use assets, net of accumulated amortization230260Other long-term assets6121,700Total assets$153,494$122,964LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Current portion of operating lease obligation$62$61Current portion of finance lease obligation1,449436Accounts payable26,65229,733Accrued payroll and related expenses1,5633,659Other accrued expenses553457Customer deposits22,19219,783Total current liabilities52,47154,129Long-term debt32,16621,476Long-term operating lease obligation168184Long-term finance lease obligation26,6696,616Other long-term liabilities1,3731,404Total liabilities112,84783,809STOCKHOLDERS’ EQUITYPreferred stock, $0.01 par value:500,000 shares authorized; none issued or outstanding——Common stock, $0.01 par value:Authorized: 50,000,000 sharesIssued: 11,633,521 and 11,556,214 shares, respectivelyOutstanding: 10,578,033 and 10,500,726 shares, respectively106105Additional paid-in capital49,11549,161Accumulated deficit(6,985)(8,522)Treasury stock, at cost: 1,055,488 shares(1,589)(1,589)Total stockholders’ equity40,64739,155Total liabilities and stockholders’ equity$153,494$122,964
IEC ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTHREE MONTHS ENDED JANUARY 1, 2021 and DECEMBER 27, 2019(unaudited; in thousands, except share and per share data)Three Months EndedJanuary 1,2021December 27,2019Net sales$47,481$44,734Cost of sales41,74139,495Gross profit5,7405,239Selling and administrative expenses3,5193,299Operating profit2,2211,940Interest expense457415Income before income taxes1,7641,525Provision for income taxes227336Net income$1,537$1,189Net income per common share:Basic$0.15$0.11Diluted$0.14$0.11Weighted average number of shares outstanding:Basic10,524,84210,365,766Diluted10,920,86610,695,977
IEC ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWSTHREE MONTHS ENDED JANUARY 1, 2021 and DECEMBER 27, 2019(unaudited; in thousands)Three Months EndedJanuary 1,2021December 27,2019CASH FLOWS FROM OPERATING ACTIVITIESNet income$1,537$1,189Non-cash adjustments:Stock-based compensation242152Depreciation and amortization1,127776Increase in reserve for doubtful accounts5228Increase in inventory reserve and warranty reserve3121,063Deferred tax expense165320Amortization of deferred gain(29)(29)Changes in operating assets and liabilities:Accounts receivable2,024(924)Unbilled contract revenue(3,068)(474)Inventories(4,595)(1,742)Other current assets(429)(611)Other long-term assets444(1)Accounts payable(3,994)1,531Change in book overdraft position913284Accrued expenses(2,038)(1,088)Customer deposits2,4091,869Net change in lease right-of-use assets and liabilities15—Net cash flows (used in)/provided by operating activities(4,913)2,343CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property, plant and equipment(7,599)(324)Net cash flows used in investing activities(7,599)(324)CASH FLOWS FROM FINANCING ACTIVITIESAdvances from revolving credit facility34,12215,809Repayments of revolving credit facility(24,220)(17,965)Borrowings under other loan agreements2,910—Repayments under other loan agreements(2,147)(343)Payments under finance lease(227)(81)Proceeds received from lease financing obligation2,151415Proceeds from exercise of stock options68130Proceeds from employee stock plan purchases4540Cash paid for taxes upon vesting of restricted stock(400)(24)Net cash flows provided by/(used in) financing activities12,302(2,019)Net cash change for the period(210)—Cash, beginning of period312—Cash, end of period$102$—
IEC ELECTRONICS CORP.
NON-GAAP FINANCIAL MEASURES RECONCILIATION TABLETHREE MONTHS ENDED DECEMBER 27, 2019(unaudited; in thousands, except share and per share data)Three Months EndedDecember 27, 2019Reconciliation of adjusted gross profit:Gross profit$5,239Non-cash charge(1)987Adjusted gross profit$6,226Reconciliation of adjusted gross margin:Gross margin11.7%Non-cash charge(1)2.2%Adjusted gross margin13.9%Reconciliation of adjusted net income:Net income$1,189Non-cash charge(1)987Income tax effect(2)(207)Adjusted net income$1,969Reconciliation of adjusted net income per common share:Net income per common share, basic$0.11Non-cash charge, per common share, net of tax(1)(2)0.08Adjusted net income per common share, basic$0.19Net income per common share, diluted$0.11Non-cash charge, per common share, net of tax(1)(2)0.07Adjusted 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.