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SigmaTron International Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: August 14, 2012 09:30PM
SigmaTron International Inc. (SGMA) filed Annual Report for the period ended 2012-04-30. Sigmatron International has a market cap of $13.8 million; its shares were traded at around $3.5 with a P/E ratio of 12.1 and P/S ratio of 0.1.
Highlight of Business Operations:Gross profit decreased to $15,254,541, or 9.7% of net sales, in fiscal year 2012 compared to $15,787,206, or 10.4% of net sales, in the prior fiscal year. The Company continued to experience pricing pressures from both its customers and suppliers, which negatively affected the Companys margins in fiscal year 2012. The Company expects continuing pressure on margins until the economy starts a sustained recovery. The Company is hopeful to see that start during fiscal year 2013. Until that time, the Company will carefully manage its cost structure and also work on integrating Spitfire into SigmaTron, which the Company believes will ultimately improve its economies of scale and provide new revenue opportunities. The decrease in gross profit in fiscal year 2012 was partially offset by a foreign currency gain of $133,979, compared to a foreign currency loss of $157,971 in the prior fiscal year.
Selling and administrative expenses increased in fiscal year 2012 to $12,611,673, or 8.0% of net sales, compared to $11,460,908, or 7.6% of net sales, in fiscal year 2011. The aggregate dollar increase in specific expense categories in fiscal year 2012 totaled $1,422,629 of which $530,565 resulted from professional fees incurred related to the Spitfire acquisition and the rest related to office and accounting salaries, commissions, bank fees, legal and accounting fees increasing. The increase in fiscal year 2012 was partially offset by a decrease of $271,864 in multiple categories, including bonus expense, travel, amortization expense and other subcategories of selling and administrative expenses. The Company expects to incur additional professional fees in the first quarter of fiscal year 2013 related to the Spitfire acquisition.
The Company reported net income of $1,134,324 in fiscal year 2012 compared to a net income of $1,978,034 for fiscal year 2011. Basic and diluted earnings per share were each $0.29 for fiscal year 2012 compared to basic and diluted earnings per share of $0.52 and $0.51, respectively, for the year ended April 30, 2011.
In fiscal year 2011, the Company relocated its Hayward, CA operation to Union City, CA. The new plant layout increased productivity and assisted in attracting interest from many new customers including some in the aviation, defense and medical markets. The Company will continue to target these markets in fiscal 2013. The Company incurred relocation expenses as a result of the move. Relocation expenses of $892,390 were recorded as a component of cost of products sold, which consisted primarily of moving expenses related to equipment, the write-off of leasehold improvements and the restoration of the Hayward facility. The related after tax amount was $562,206. Net income adjusted on a non-GAAP basis to exclude relocation expenses for fiscal year 2011 was $2,540,240. The non-GAAP basic and diluted earnings per share, as adjusted, for fiscal year 2011 were $0.66 and $0.65, respectively. The Company believes the relocation expense is a onetime event and the non-GAAP disclosure provides meaningful information regarding the Companys results of operations.
Cash flow provided by operating activities was $9,808,310 for the fiscal year ended April 30, 2012, compared to cash flow used in operating activities of $185,067 for the prior fiscal year. Cash flow provided by operating activities in fiscal year 2012 was primarily the result of net income, the non-cash effects of depreciation and amortization, a decrease in inventory and an increase in accounts payable. The decrease in inventory of $7,147,110 was the result of the improvement of inventory management practices. The increase in accounts payable of $1,402,892 was due to timing of payments in the ordinary course of business. Net cash provided by operations in fiscal year 2012 was partially offset by an increase in accounts receivable. The increase in accounts receivable of $4,381,326 was due to increased sales volume and timing of cash receipts from a significant customer.
Stocks Discussed: SGMA,