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SigmaTron International, Inc., an electronic manufacturing services company, reported revenues and earnings for the fiscal quarter ended July 31, 2020.
Revenues decreased to $60.5 million in the first quarter of fiscal 2021 from $74.0 million for the same quarter in the prior year. The Company incurred a net loss of $900,666 for the quarter ended July 31, 2020 compared to net income of $361,025 for the same period in the prior year. Basic and diluted loss per share for the quarter ended July 31, 2020, were each $0.21, compared to basic and diluted earnings per share of $0.09 each for the same quarter ended July 31, 2019.
Commenting on SigmaTron’s first quarter fiscal 2021 results, Gary R. Fairhead, President, Chief Executive Officer and Chairman of the Board, said, “As previously reported in our fiscal year 2020 press release and 10-K, SigmaTron is reporting a pre-tax loss for the first quarter of fiscal 2021. Over the past two quarters we have experienced a v-shaped curve in terms of revenue: February was close to forecast, March was a 10% decline, April and May’s decline was 30% or greater, followed by a significant rebound in June and a full recovery in July. The May pre-tax loss was greater than the loss for the entire quarter so we were slightly above breakeven for the last two months of the first quarter of fiscal 2021.
“During the first quarter results were negatively affected by the revenue decline and manufacturing inefficiencies caused by COVID, especially in Mexico. Several of our plants were shut down while we were required to incur continuing labor costs and as they reopened, we experienced significant inefficiencies. None of this is a surprise given the far-reaching effects of the pandemic.
“As disappointing as the first quarter was, the second quarter is as encouraging. The backlog for the second quarter is strong and while several of our major customers continue to be negatively affected by the pandemic, others have benefitted and are compensating for those customers with lower than expected revenue. As stated in our 10-K, the full impact of the pandemic will depend on future developments, which are highly uncertain and cannot be predicted. And there is no doubt that customers are also mindful of the election in November.
“As reported at fiscal 2020 year-end, the Company elected to account for its PPP Loan by using loan accounting. There is no effect from any potential loan forgiveness reflected in our first quarter results. Once the procedure to apply for forgiveness is finalized by the government, the Company currently plans to apply for the forgiveness of the entire loan.
“Also, as previously reported, the Company and Wagz, Inc. entered into a Letter of Intent under which the Company and Wagz would be combined by the end of August 2020. To date that has not happened but both companies are continuing to work towards closing the deal by the end of our second fiscal quarter. We will report on that separately when appropriate.
“In summary, the current trend for the Company is heading in the right direction. Obviously, uncertainty remains regarding the general economy because of the pandemic and the election. In spite of this, we continue to land new customers and are working on several significant new opportunities. We are enthusiastic about our pending deal with Wagz. All of the aforementioned leads us to believe that better times are ahead.”