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SigmaTron International Inc. Reports Operating Results (10-Q)

December 13, 2011 | About:
10qk

10qk

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SigmaTron International Inc. (SGMA) filed Quarterly Report for the period ended 2011-10-31.

Sigmatron International Inc. has a market cap of $14.4 million; its shares were traded at around $3.8 with a P/E ratio of 8.1 and P/S ratio of 0.1.

Highlight of Business Operations:

Net sales increased for the three month period ended October 31, 2011 to $39,902,653 from $38,195,193 for the three month period ended October 31, 2010. Net sales increased for the six month period ended October 31, 2011 to $78,794,664 from $76,256,566 for the same period in the prior fiscal year. Sales volume increased for the three and six month periods ended October 31, 2011 as compared to the same period in the prior fiscal year in the industrial and consumer electronics, medical/life sciences, and semiconductor equipment marketplaces. The increase in sales for these marketplaces was partially offset by a decrease in sales in the fitness, telecommunications and gaming marketplaces. The increase in revenue for the three and six month periods ended October 31, 2011 is a result of our existing customers increased demand for product and the addition of some new customer programs ramping up compared to the previous fiscal year.

Gross profit decreased during the three month period ended October 31, 2011 to $3,571,407 or 9.0% of net sales, compared to $4,226,020 or 11.1.% of net sales for the same period in the prior fiscal year. Gross profit decreased for the six month period ended October 31, 2011 to $7,113,915 or 9.0% of net sales, compared to $8,884,174 or 11.7% of net sales for the same period in the prior fiscal year. The Company continues to experience pricing pressures from both its customers and vendors, which has negatively affected its margins. The Company has taken steps to reduce both fixed and variable expenses, along with addressing its pricing structures with various customers and implementing inventory programs. The decrease in gross profit for the six month period ended October 31, 2011 was partially offset by a foreign currency gain of $144,865, compared to a foreign currency loss of $11,865 for the same period in the prior fiscal year.

Selling and administrative expenses increased to $3,032,310 for the three month period ended October 31, 2011, compared to $2,989,832 for the same period in the prior fiscal year; however , the percentage of net sales represented by such expenses dropped to 7.6% of net sales from 7.8% of net sales, during those respective periods. The increase in total dollars of such expenses for the three month period ended October 31, 2011 was $412,663 and is primarily due to commissions, office salaries and legal and professional fees. The increase in selling and administrative expenses in total dollars for the three month period ended October 31, 2011 was partially offset by a decrease of $370,184 in bonus expense, insurance, miscellaneous taxes and other selling and administrative expenses compared to the same period in the prior year, resulting in a net increase in the amount of $42,479. Selling and administrative expenses decreased to $5,941,446, or 7.5% of net sales for the six month period ended October 31, 2011 compared to $6,043,018, or 7.9% of net sales for the same period in the prior fiscal year. The decrease in total dollars in specific categories of expenses for the six month period ended October 31, 2011, was $619,092 and is primarily due to bonus expense, travel, insurance amortization expense and other selling and administrative expenses decreasing. The decreases in the foregoing selling and administrative expenses was partially offset by an increase of $517,521 in commissions, professional fees and office salaries, resulting in selling and administrative expenses decreasing by a net amount of $101,572 for the six month period, compared to the same period in the prior fiscal year.

Net income from operations decreased to $158,267 for the three month period ended October 31, 2011 compared to $586,050 for the same period in the prior fiscal year. Net income from operations decreased to $399,228 for the six month period ended October 31, 2011 compared to $1,444,039 for the same period in the prior fiscal year. Basic and diluted earnings per share for the second fiscal quarter of 2012 were both $0.04 compared to basic and diluted earnings per share of $0.15 for the same period in the prior fiscal year. Basic and diluted earnings per share for the six month period ended October 31, 2011 were both $0.10 compared to basic and diluted earnings per share of $0.37 for the same period in the prior fiscal year.

Cash flow used in operating activities was $3,237,533 for the six months ended October 31, 2011, compared to cash flow used in operating activities of $9,456,440 for the same period in the prior fiscal year. During the first six months of fiscal year 2012, cash flow used in operating activities was primarily the result of an increase in accounts receivable and a decrease in accounts payable. The increase in accounts receivable of $4,147,764 is due to increased sales volume and timing of cash receipts from a significant customer. The decrease in accounts payable of $6,209,216 is due to timing of payments in the ordinary course of business. Net cash used in operating activities was partially offset by net income, the non-cash effect of depreciation and amortization and a decrease in inventory. The decrease in inventory of $4,347,162 was the result of improving inventory management practices.

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