ELK GROVE VILLAGE, IL -- SigmaTron today reported revenues for its fiscal third quarter ended Jan. 31 increased 31% to $93.7 million.

The EMS company reported a net loss of $2.7 million, including a $6.3 million non-cash impairment charge due to acquisitions, compared to net earnings of $200,000 the prior year.

The charge was tied to the company's previously announced merger agreement with Wagz, which closed on Dec. 31, 2021.

Gary R. Fairhead, chief executive Officer and chairman, said: “I’m pleased to report another strong quarter in terms of revenue and operating results. This was especially pleasing as our third quarter has historically been somewhat slower than other quarters because of the holiday period. In addition, the third quarter results include one month of operations for Wagz which, as an emerging company, is currently running at a monthly loss, which is expected. As mentioned, it was determined that under US GAAP guidance, we needed to record a non-cash impairment of the Wagz notes and investment in connection with our acquisition. The impairment essentially lowers the goodwill that we would have on the balance sheet going forward and because of the size of the impairment, can overshadow the continuing strong results for the Company.

“The non-cash impairment has no effect on our operations or on the status of Wagz. Ironically, the amount of the impairment is almost exactly equal to the one-time gain recorded in the first quarter for the forgiveness of the PPP Loan. Accordingly, the 9-month results could be viewed as reflecting the company’s performance this year without either extraordinary event in the financial results. I also note that as a result of the Wagz merger, the company’s outstanding shares increased by the number of shares issued to the Wagz stockholders (other than the company). Starting with the third quarter results, the weighted average number of shares outstanding for each reported period will include those shares.

“Regarding the continuing strong results, the status of the business remains little changed from our second quarter report. Our backlog remains strong. We have also added several new significant customers and several new programs with existing customers. However, the electronic component supply chain remains challenging. Lead-times remain extended with some parts on allocation. Price increases occur with little to no notice. De-commits on shipping dates continue as well. In addition, the Russia/Ukraine war has added another layer of uncertainty to the supply chain. From our current perspective, we do not see any improvement in sight. With that said, all of our operations’ teams continue to navigate these uncharted and choppy waters and have managed to keep the factories busy with enough parts.

“Also, we remain excited about the prospects for Wagz and its sophisticated technology. In the short time since closing, several new significant opportunities have come to Wagz from potential customers. Wagz has also updated its product roadmap and we believe Wagz will be going into calendar 2023 with the best in class pet collar and other linked products not far behind.

“In spite of the uncertainty that continues in the electronic component marketplace, we remain excited, optimistic and enthusiastic going forward. The company’s operating performance continues to be the best in its history and we do not see any weakening in sight. In fact, each quarter brings new opportunities to layer on to our existing business. Absent a significant slowdown of the economy, either in North America or globally, we believe that we are in a good position at this time.”

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