Circuits Assembly Online Magazine - IEC Continues Rebound, Sales Up 17% in March Quarter

NEWARK, NY -- IEC Electronics today announced fiscal second quarter revenues rose 17.4% yer-over-year to $37.3 million.

Net income fell by 56% to $700,000 for the period ended Mar. 29.

Gross margin slipped 290 basis points to 12.3%. Selling and administrative expenses increased to $3.3 million in the second quarter of fiscal 2019, or 8.9% of sales, versus $2.9 million, or 9.2% percent of sales.

Fiscal first half revenues increased 37% to $72.7 million, and net income was up 54% to $1.7 million.

Backlogs are up almost 20% since the start of the fiscal year, the company said.

“We achieved continued revenue momentum in the second quarter, driven by growth across all three of our market segments," said Jeffrey T. Schlarbaum, president and CEO, IEC. "In addition to the year-over-year improvement, this quarter represents our third consecutive quarter of sequential revenue growth. This growth is purely organic, a result of our success winning new programs from existing and new customers, which we believe demonstrates the value they see in our capabilities and the broad range of solutions we provide as a full service manufacturing partner. For our second fiscal quarter, our book to bill ratio was 1.1:1, and our backlog remains strong. “Second quarter margin performance was at the lower end of our expected range, related primarily to our focus on proactively investing in our workforce and other resource levels to meet the production needs generated by our strong backlog and booking activity. The life-saving, mission critical nature of the programs we support requires that we hire and train skilled staff in advance of converting customer orders from backlog to production. Additionally, our industry continues to contend with component shortages and while we’re becoming more adept at ensuring we have the right materials on hand to meet customer commitments, these shortages impacted production in the quarter and put pressure on our margin performance. Gross margin was also impacted in the second quarter by tariffs on raw materials from China, which affected reconciliation with certain customers between our quoted cost and our actual cost for select programs. We expect the tariff impact in our statement of operations to reverse in the second half of fiscal 2019, and we do not expect any long-term impact to our future performance.