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IEC Electronics Corp. has reported revenues of $127 million for the year ended September 30, 2016 (fiscal 2016), consistent with revenues for the year ended September 30, 2015 (fiscal 2015). Gross profit margin for fiscal 2016 grew to 16% as compared to 12.8% in the previous fiscal year. Selling and administrative expenses (excluding restatement and related expenses), decreased to $14 million or 11% of sales as compared to $16.6 million or 13.1% of sales in fiscal 2015.
Net income for fiscal 2016 was $4.8 million, or $0.47 per share, compared to a net loss of $10.2 million, or a loss of $1.01 per share, in the same prior year period. During fiscal 2015, the company incurred a loss on discontinued operations of $6.4 million or ($0.64 per share) related to its divestiture of Southern California Braiding (SCB) and corresponding impairment charges. IEC reduced debt, net of cash, by $2 million in the fourth quarter of fiscal 2016 and by $11.8 million for the fiscal year. Fiscal year 2016 cash flow was driven by improved operational performance as well as a reduction of net inventory of $10.4 million compared to inventory levels at year end 2015.
For the fourth quarter of fiscal 2016, the company recorded net sales of $28.4 million, a 16.3% decrease as compared to net sales of $33.9 million in the fourth quarter of the last fiscal year. Gross profit margin for the fourth quarter was 11.5% compared to 15.3% in the same quarter last year. Selling and administrative expenses (excluding restatement and related expenses), decreased to $2.8 million as compared to $3.4 million in the fourth quarter of fiscal 2015. The Company recorded net income of $0.2 million, or $0.02 per share, consistent with the same quarter last year. During the fourth quarter of fiscal 2015 the Company incurred a loss on discontinued operations of $0.7 million or ($0.07 per share) related to its divestiture of its subsidiary SCB.
“2016 was a solid year for us as we continued to drive operational improvements and demonstrate measurable progress with our ongoing turnaround efforts. During the course of the year, we saw a return to profitability and significant reductions in debt and inventory. However, in the fourth quarter we began to experience a reduction in volume from certain key customers, which negatively impacted near term backlog and resulted in our decision to take proactive steps to align our cost structure with a workforce reduction at our Newark, New York facility,” Jeffrey T. Schlarbaum, president and CEO of IEC Electronics, commented. “With the visibility we have today, we anticipate that the backlog softness will continue through the first half of fiscal 2017 and strengthen in the second half of fiscal 2017. This softness is not a result of any lost customers or programs, but rather is related to slowdowns for two of our key strategic customers, who are committed to IEC and are working through their own end market dynamics. We believe this backlog reduction will result in approximately $20 to $25 million in lower revenue primarily impacting the first half of 2017. While we anticipate a ramp up with existing and new customers in the second half of 2017, we do not expect to be profitable in the first half of 2017 given the need to retain key skilled labor and expertise to support the life-saving and mission critical products we manufacture. We believe our business is fundamentally strong and our customer base is among the best in our industry. We are prepared to manage through what we anticipate will be a relatively short term downturn and we expect to exit fiscal 2017 at levels similar to the performance achieved in the first three quarters of 2016, as volume returns to our existing customer programs and as we add new customers.
“Importantly, our focus on driving down our debt and more effectively managing our assets has strengthened our balance sheet, providing us with the needed foundation for future growth and a key element to enable us to compete for new customers and programs. We believe our existing customer relationships have continued to strengthen over the past year and our proven ability to provide unique design and manufacturing solutions that contribute to the production of life-saving and mission critical products is broadening our marketplace recognition and exposing us to new opportunities in the segments in which we operate. As we continue to navigate our turnaround, we believe we are well positioned to broaden our customer base and drive future growth.”
IEC will host a conference call, today, Wednesday, December 14, 2016 at 10:00 a.m. Eastern Time, to discuss its financial results for the fiscal fourth quarter and year ended September 30, 2016.
The conference call may be accessed in the U.S. and Canada by dialing toll-free (877) 407-9210. International callers may access the call by dialing (201) 689-8049.
A replay of the teleconference will be available for 30 days after the call and may be accessed domestically by dialing (877) 481-4010 and international callers may dial (919) 882-2331. Callers must enter conference i.d. number 10161.
About IEC Electronics
IEC Electronics provides electronic manufacturing services ("EMS") to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485, Nadcap and IPC QML. IEC Electronics is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM. Additional information about IEC can be found on its web site at www.iec-electronics.com.