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

March 12, 2009 | About:
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SigmaTron International Inc. (SGMA) filed Quarterly Report for the period ended 2009-01-31.

Sigmatron International Inc. is an independent provider of electronic manufacturing services which includes printed circuit board assemblies and completely assembled electronic products. Included among the wide range of services the company offers its customers are automatic and manual assembly and testing of products material sourcing and procurement design manufacturing and test engineering support warehousing and shipment services and assistance in obtaining product approvals from governmental and other regulatory bodies. SigmaTron International Inc. has a market cap of $5.4 million; its shares were traded at around $1.425 with a P/E ratio of 1.8.

Highlight of Business Operations:

Net sales decreased for the three month period ended January 31, 2009 to $26,970,927 from $41,131,744 for the three month period ended January 31, 2008. Net sales decreased for the nine months ended January 31, 2009 to $106,581,773 from $123,790,664 for the same period in the prior fiscal year. Sales volume decreased for the three and nine month periods ended January 31, 2009 as compared to the same period in the prior year in the industrial electronics, fitness, gaming and life sciences marketplaces. The decrease in revenue for the three and nine month periods ended January 31, 2009 is a result of our customers decreased demand for product based on their forecast, which we believe is attributable to a slowing economy.

Gross profit decreased during the three month period ended January 31, 2009 to $2,752,231 or 10.2% of net sales, compared to $4,463,596 or 10.9% of net sales for the same period in the prior fiscal year. Gross profit decreased for the nine month period ended January 31, 2009 to $13,312,808 or 12.5% of net sales compared to $14,138,392 or 11.4% of net sales for the same period in the prior fiscal year. The decrease in gross margin in total dollars for the three month period ended January 31, 2009 compared to the prior period is due to decreased revenue levels and decreased plant capacity utilization. The increase as a percent of net sales in the Companys gross margin for the nine month period ended January 31, 2009 compared to the prior period is due to the mix of product shipped to various customers and continuing efforts to control costs. There can be no assurance that gross margins will not decrease in future quarters. Pricing pressures continue at all locations.

Interest expense for bank debt and capital lease obligations for the three month period ended January 31, 2009 was $431,169 compared to $730,529 for the same period in the prior year. Interest expense for the nine month period ended January 31, 2009 was $1,438,644 compared to $2,152,016 for the same period in the prior year. These changes were attributable to the Companys decreased borrowings under its revolving credit facility, term loan and capital leases, and decreasing interest rates.

The Company recorded a net loss from operations of $265,458 for the three month period ended January 31, 2009 compared to a net income of $312,464 for the same period in the prior year. Net income from operations decreased to $1,819,182 for the nine months ended January 31, 2009 compared to $1,832,722 in the same period last year. Basic and diluted loss per share for the third fiscal quarter of 2009 were $0.07, compared to basic and diluted earnings per share of $0.08 for the same period in the prior year. Basic and dilutive earnings per share were $0.48 and $0.47 for the nine months ended January 31, 2009 and 2008, respectively.

On November 19, 2003, the Company purchased the property that serves as the Companys corporate headquarters and its Midwestern manufacturing facility. The Company executed a note and mortgage with LaSalle Bank N.A. in the amount of $3,600,000. The Company refinanced the property on April 30, 2008. The new note bears a fixed interest rate of 5.59% and is payable in sixty monthly installments. A final payment of approximately $2,115,438 is due on or before April 30, 2013. At January 31, 2009, $2,696,500 and at January 31, 2008, $2,850,000 was outstanding on this note.

The Company paid $750,000 under its term loan obligation and borrowed an additional $355,629 under its revolving credit facility during the first nine months of fiscal year 2009. The balance as of January 31, 2009 under the term loan obligation and revolving credit facility was $2,250,000 and $26,231,884, respectively. The balance at January 31, 2008 under the term loan obligation and revolving credit facility was $3,250,000 and $26,607,768, respectively.

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Rating: 2.7/5 (3 votes)

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