Reading time ( words)
IEC Electronics Corp. has reported revenues of $21 million for the first quarter of fiscal 2017, a decrease of 36.3% as compared with revenues of $32.9 million in the first quarter of fiscal 2016.
Gross profit margin for the first quarter was 8.6% as compared to 17.7% in the same quarter last year. Selling and administrative expenses decreased to $2.4 million or 11.6% of sales as compared to $4 million or 12.1% of sales in the first quarter of fiscal 2016. The company recorded a net loss of $0.9 million, compared to net income of $1.5 million, in the same prior year period. IEC reduced debt, net of cash, by $7.2 million in the first quarter of fiscal 2017, which includes the pay down of debt from the proceeds of the sale-leaseback transaction for the company’s Albuquerque facility, previously disclosed in the fourth quarter of fiscal 2016.
"As we expected and previously announced, our first quarter revenues and profitability were negatively impacted by reduced volume from two key customers. Importantly, the softness is not the result of lost programs and these customers are long-term partners who we believe remain committed to working with IEC. We expect this revenue decrease will persist through the second quarter of fiscal 2017, but we are optimistic that volume should ramp up in the second half of fiscal 2017, enabling us to exit fiscal 2017 similar to the levels achieved in fiscal 2016," Jeffrey T. Schlarbaum, president and CEO of IEC Electronics, commented. "We took proactive steps early in the first quarter to better align our cost structure at our Newark, New York facility while retaining the key skilled labor and expertise to support the expected volume increase in the second half of fiscal 2017. The revenue contraction and related margin decrease was isolated to our Newark facility, while our other facilities achieved solid gross profit performance. We believe that we are well positioned to return to our industry leading margins and profitability as volume returns.
"At this phase of the turnaround, a key strategic focus is re-establishing organic growth by broadening and improving the quality of our new business pipeline. To that end, we have made changes to our sales infrastructure to extend our reach in core markets and better qualify customers who are best suited to our capabilities and expertise. The sales cycle is long in our industry, but we have seen encouraging initial success from these efforts, with backlog up from our fiscal year-end and an improved pipeline.
Schlarbaum concluded, "Our continued debt reduction and ongoing focus on managing our assets more efficiently continues to strengthen the balance sheet, providing a solid platform supporting our initiatives to win new customers and programs. We are making steady progress with our turnaround efforts and we are continuing to build on our strong reputation in the marketplace as a leading provider of unique design and manufacturing solutions for the production of life-saving and mission critical products. We are energized by the successful operating improvements we have made so far and encouraged by our prospects moving forward."