Boston, MA 09/11/2014 (wallstreetpr) – Independent provider of electronic manufacturing services, Sigma Tron International (NASDAQ:SGMA) Chairman, President and Chief Executive Officer, Gary Fairhead, has blamed volatile customer demand for its disappointing financial results for the first quarter. However, he believes that it was a short-term slowdown in shipments, which was not expected.
CEO Comments
The company CEO said that though there was some seasonality attached to the overall customer demand, the unexpected slowdown reflected the near-term focus of the economy, according to its statement. He said that customers were now in line with their original forecasts since it could witness strong revenue start for the second quarter than the first quarter.
Gary Fairhead said that the company was able to get new programs from the existing customers, which would boost its business with them. He also expects to launch a number of programs with new customers in the second quarter and that it would help setting the stage for future growth in revenue even as the company was facing pricing pressures.
Sigma Tron International (NASDAQ:SGMA) CEO said that the company has also struck an in principle agreement with its bank, Wells Fargo Bank NA, to extend its revolving credit facility to October 2017. The deal would provider larger access to working capital as and when necessary. This is an important aspect to driving revenue uptick.
1Q Results
The Sigma Tron International (NASDAQ:SGMA) reported net income of $16,810 or breakeven per share, which was a sharp drop of 98.3% from $967,464 or 24 cents a share in the year-ago quarter. Net sales dipped 2.2% to $54.95 million from $56.17 million in the previous year quarter.
Sigma Tron International (NASDAQ:SGMA) has faced pricing pressure as their gross margin dipped to 8.64% from 11.2% in the year earlier quarter since cost of products sold rose 0.64% to $50.2 million from $49.88 million. Obviously, the weak demand has forced the company to witness pricing pressure.
However, the company could control its selling and administrative costs as it slipped 7.2% to $4.51 million from $4.86 million in the same quarter last year.
