ROCHESTER, MN -- EMS firm Pemstar Inc. today reported fiscal third-quarter revenue from continuing operations rose to $253.9 million, compared to $171 million last year.

For the period ended Dec. 31, net income was $1 million, up from a loss of %15.9 million a year ago.
he increase included approximately $92.5 million of additional revenue resulting from the full turnkey operation with a wireless handset customer, per prior guidance.

or $(0.35) per share in the same quarter a year ago.

Roy Bauer, PEMSTAR's President and COO, stated, "This was an encouraging quarter for us. We achieved revenue and net income results at the high end of prior guidance as we executed on our business plans. We successfully finished the majority of our restructuring actions. We have a leaner structure and a clear go-forward strategy focused and aligned with our concept to customer solutions approach. Our strategy is centered on engineering, test and process-centric projects leading to manufacturing opportunities in industrial, medical, and other targeted, high complexity, high mix projects, where we have had a traditionally strong competitive advantage."

Greg Lea, PEMSTAR's Executive Vice President and CFO, commented, "This was an important quarter for PEMSTAR and represents our strongest financial performance in six quarters. Our adjusted EBITDA from continuing operations, which excludes restructuring charges, was $7.8 million. This is the second quarter in a row that we have achieved a positive adjusted EBITDA from continuing operations. Our receivables base is more current than it has been in recent years and we feel good about making positive improvements in the cash cycle. We expect to see the positive revenue momentum trend on a comparable quarterly basis going forward, while we also continue to improve liquidity and our cash cycle. We believe we are on track to improved financial performance."

Business Update

During the third quarter of fiscal 2006, sales from operations, excluding incremental turnkey revenue, to the industrial sector accounted for 38.6% of net sales; computing and data storage was 39.6% of net sales; communications was 20.5% of net sales; and medical was 1.3% of net sales.

At quarter's end, accounts receivable was $148.2 million and days sales outstanding was 53 versus $136.3 million in accounts receivable and DSO of 58, sequentially.

Net inventories were $65.7 million, down from $68.3 million for the September quarter, while inventory turns increased 2.5 turns, to 14.5 turns.

Pemstar's cash cycle was 30 days, down six days from the September quarter. Cash from operations was $3.1 million.

The firm trimmed debt to $102.3 million, versus $117.6 million as of Sept. 30.

Over 30 new projects were launched in the December quarter and eight new customers were added. Production has begun on General Dynamics' Land Warrior program. Other new programs are from Boston Scientific, Hitachi Global Storage, Honeywell, IBM and Spectralink.

In a statement, chairman and CEO Al Berning said, "We are encouraged by the pick-up in military/aerospace spending, and continued reports of stabilization from customers across the semiconductor capital equipment and computer and storage industries. Based on public guidance, this stabilization is expected to continue. We are optimistic about the progress in the military/aerospace industry."

The company guided for March quarter net sales of $185 million to $200 million, including seasonally softer turnkey revenue in China. It said earnings could range from a modest profit to a small loss.

• Prev
• Next