ELK GROVE VILLAGE, IL – SigmaTron International reported fiscal second quarter revenues of $77 million, up 5.5% year-over-year.

For the quarter ended Oct. 31, the firm posted a net loss of $723,941, compared to net income of $736,115 for the same period in the prior year.

For the six months ended Oct. 31, revenues increased 2.9% to $148.4 million compared to the same period in 2017. Net loss for the six-month period was $1.25 million compared to net income of $1.1 million for the same period in the prior year.

“Our second quarter is disappointing in terms of our net income, but it was a better quarter than the first quarter, as we achieved both revenue growth and pre-tax income,” said Gary R. Fairhead, president and CEO. “Unfortunately, our net income number was negatively impacted due to a tax valuation allowance related to operations in Vietnam and China.

“While we experienced good revenue growth, which occurred near the end of the second quarter, we begin the third quarter facing major challenges as a result of the trade dispute between the United States and China. First, as to our cash flow, customers are delaying payment as they review tariff billings.  Second, the significant additional paperwork and administration the trade dispute creates is non-income generating. Third, many of our customers are reassessing their supply chains, which is resulting in additional time and energy commitments from SigmaTron management. Finally, and most important, we are beginning to see signs that the tariffs are starting to negatively affect our projected revenue into 2019. We believe that trend will accelerate during the third quarter.

“In addition to the trade dispute, the new administration in Mexico took office on Dec. 1, 2018.  They have not made any final announcements regarding a new compensation structure in Mexico but have previously indicated this will happen. Any increase in their labor costs will need to be passed on to our customers.

“On a positive note, we have seen some improvement in the electronic component marketplace with regard to lead-time.  Prices are not falling and, in some cases, continue to increase, but there have been fewer decommitments by suppliers and some lead-times have shortened.  As our customers continue to weigh the positives and negatives related to production in Mexico or China, we remain in a position to provide our services through either location, which is a benefit of our global footprint.

“We have seen several new programs that were previously delayed finally go into production, which is good news.”

• Prev
• Next