PHOENIX, April 3, 2007 (PRIME NEWSWIRE) -- Suntron Corporation (Nasdaq:SUNN), a leading provider of integrated electronics manufacturing solutions, today reported net sales of $69.3 million and an operating loss of $4.7 million for the fourth quarter of 2006. These results include $1.7 million of restructuring charges for severance, retention and lease exit costs, primarily associated with the Company's previously announced decisions to close two U.S. manufacturing operations and to transfer the related business to other Suntron sites.
Net sales for the year ended December 31, 2006 totaled $320.8 million, a 2% decrease from $328.7 million reported for the previous year. Gross profit as a percentage of net sales improved to 5.6% for 2006 compared to 5.1% for 2005. Gross profit includes restructuring charges of $2.9 million for 2006 and $1.2 million for 2005. Net loss for 2006 was $11.9 million as compared to a net loss of $11.3 million for 2005. Included in the net losses are a write-off of debt issuance costs of $1.4 million for 2006, and restructuring charges of $3.5 million for 2006 and $2.1 million for 2005.
"Although the 2006 financial results do not reflect it, we believe the restructuring actions taken during the year have poised the company for a promising future," stated Paul Singh, Suntron's president and chief executive officer. "While we have significantly reduced our fixed cost structure through our restructuring efforts, we have also enhanced our sales and marketing resources in order to achieve profitable revenue growth in 2007 and beyond. In addition, during 2006 we reduced our total debt by one-third (over $16 million) and we refinanced our bank debt with a new banking partner," continued Mr. Singh.
Gross profit for the fourth quarter of 2006 was a loss of $0.1 million, a decrease of $7.1 million as compared to gross profit of $7.0 million in the fourth quarter of 2005. The gross profit results include restructuring costs of $0.1 million for the fourth quarter of 2005 and $1.6 million for the fourth quarter of 2006. Excluding these restructuring costs, gross profit would have been $1.5 million for the fourth quarter of 2006 on a non-GAAP basis. In addition to higher restructuring costs, the decrease in gross profit for the fourth quarter of 2006 was driven primarily by the reduction in net sales from $83.9 million (including $2.5 million of excess inventory sales to customers) for the fourth quarter of 2005 to $69.3 million (including $12.4 million of excess inventory sales to customers) for the fourth quarter of 2006. Sequentially, fourth quarter of 2006 gross profit decreased $4.1 million from gross profit of $4.0 million reported for the third quarter of 2006.
Selling, general and administrative expense (SG&A) decreased to $4.2 million for the fourth quarter of 2006 compared to $5.4 million for the fourth quarter of 2005 and $6.4 million for the third quarter of 2006. The decrease in SG&A for the fourth quarter of 2006 was primarily attributable to decreases in salaries and benefits, and legal fees related to our previously disclosed settlement agreement with Applied Materials, Inc.
Operating loss for the fourth quarter of 2006 was $4.7 million, an increase of $5.9 million as compared to operating income of $1.2 million for the fourth quarter of 2005. Operating results for the fourth quarter of 2006 were adversely impacted by reduced sales levels and increased restructuring expenses. Sequentially, operating loss increased $2.1 million from a loss of $2.6 million for the third quarter of 2006.
Net loss for the fourth quarter of 2006 was $5.7 million, an increase of $5.8 million as compared to net income of $0.1 million for the fourth quarter of 2005. Consequently, loss per share for the fourth quarter of 2006 was $0.21 per share, as compared to breakeven earnings per share for the fourth quarter of 2005. For the third quarter of 2006, net loss was $3.7 million and loss per share was $0.13 per share.
"We believe that the majority of our restructuring efforts should be complete by the end of the first quarter of 2007. As we execute our 2007 business plan, our focus will be on profitable growth, working capital management, and quality customer service," concluded Mr. Singh.
About Suntron Corporation
Suntron delivers complete manufacturing services and solutions to support the entire life cycle of products in the industrial, semiconductor capital equipment, aerospace and defense, networking and telecommunications, and medical markets. Headquartered in Phoenix, Arizona, Suntron operates five full-service manufacturing facilities and two quick-turn manufacturing facilities in North America. Suntron is involved in product design, engineering services, cable and harness production, printed circuit card assembly, box build, large scale and complex system integration and test.
The Suntron Corporation logo is available at: http://www.primezone.com/newsroom/prs/?pkgid=2268
Non-GAAP Information
In addition to disclosing results determined in accordance with generally accepted accounting principles (GAAP), Suntron also discloses certain non-GAAP results of operations that exclude certain items. These non-GAAP financial data are provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. The primary measure of our operating performance is net income (loss). However, the Company's lenders, management and many investment analysts believe that other measures provide additional information to further analyze the Company's financial performance. Additionally, in evaluating alternative measures of operating performance, it is important to understand that there are no standards for these calculations. Accordingly, the lack of standards can result in subjective determinations by management about which items may be excluded from the calculations, as well as the potential for inconsistencies between different companies that have similarly titled alternative measures. See the tables to this press release for a reconciliation of GAAP amounts to non-GAAP amounts.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This release contains forward-looking statements that relate to future events or performance. These statements reflect Suntron's current expectations, and Suntron does not undertake to update or revise these forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied in this or other Company statements will not be realized. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond Suntron's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, general economic conditions and specific conditions in the electronics industry, including the aerospace and semiconductor capital equipment market segments of the electronics industry; Suntron's dependence upon a small number of customers; the Company's ability to attract new customers and retain existing customers; cash availability/liquidity; changes or cancellations in customer orders; the ability to improve future profitability as a result of past restructuring actions, the ability to achieve profitable growth in the future that results from enhanced sales and marketing resources, the risks inherent with predicting cash flows, revenue and earnings outcomes as well as other factors identified as "Risk Factors" or otherwise described in Suntron's filings with the Securities and Exchange Commission from time to time.
Visit www.suntroncorp.com or call 888-520-3382 for more information.
SUNTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Quarter Ended
-------------
Dec. 31, Oct. 1 Dec. 31, Year Ended
-------- -------- -------- ----------
2005 2006 2006 2005 2006
-------- -------- -------- -------- --------
Net Sales $ 83,853 $ 70,604 $ 69,286 $328,730 $320,786
Cost of Goods Sold 76,878 66,577 69,420 311,894 302,673
-------- -------- -------- -------- --------
Gross profit
(loss) 6,975 4,027 (134) 16,836 18,113
Operating Expenses:
Selling, general
and administrative
expenses 5,352 6,363 4,203 22,758 22,815
Severance,
retention, and
lease exit costs 188 123 152 869 619
Related party
management and
consulting fees 187 188 187 750 750
-------- -------- -------- -------- --------
Total operating
expenses 5,727 6,674 4,542 24,377 24,184
-------- -------- -------- -------- --------
Operating
income (loss) 1,248 (2,647) (4,676) (7,541) (6,071)
Other Income
(Expense):
Interest expense (1,227) (1,075) (1,098) (4,703) (5,936)
Gain (loss) on
sale of assets 40 (6) (15) 695 25
Interest and
other income 65 25 66 207 103
-------- -------- -------- -------- --------
Total other
income
(expense) (1,122) (1,056) (1,047) (3,801) (5,808)
-------- -------- -------- -------- --------
Net income
(loss) $ 126 $ (3,703) $ (5,723) $(11,342) $(11,879)
======== ======== ======== ======== ========
Earnings (Loss)
Per Share (Basic
and Diluted) $ 0.00 $ (0.13) $ (0.21) $ (0.41) $ (0.43)
======== ======== ======== ======== ========
Weighted Average
Shares Outstanding
(Basic and Diluted) 27,415 27,551 27,566 27,415 27,525
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SUNTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
Dec. 31, Oct. 1, Dec. 31,
2005 2006 2006
-------- -------- --------
ASSETS
Current Assets:
Cash and equivalents $ 59 $ 45 $ 46
Trade receivables 51,377 48,705 40,756
Inventories 61,985 60,801 56,038
Land, building and improvements
held for sale, net 18,772 -- --
Prepaid expenses and other 1,430 1,180 1,186
-------- -------- --------
Total Current Assets 133,623 110,731 98,026
Net property and equipment 8,367 6,893 5,184
Goodwill 10,918 10,918 10,918
Debt issuance costs, net 1,586 701 620
Identifiable intangible assets 675 525 475
Deposits and other 180 1,737 1,690
-------- -------- --------
Total Assets $155,349 $131,505 $116,913
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 38,605 $ 30,337 $ 30,285
Outstanding checks in excess
of cash balances 1,039 3,510 804
Borrowings under revolving
credit agreement 47,000 24,038 19,759
Accrued compensation and
benefits 6,181 7,478 4,721
Current portion of accrued
exit costs related to
facility closures 494 435 469
Payable to affiliates 501 493 432
Other accrued liabilities 5,934 3,475 3,783
-------- -------- --------
Total Current Liabilities 99,754 69,766 60,253
Long term Liabilities:
Subordinated debt payable to
affiliate -- 10,858 11,353
Other 1,027 1,791 1,755
-------- -------- --------
Total Liabilities 100,781 82,415 73,361
-------- -------- --------
Stockholders' Equity:
Preferred stock, $.01 par
value. Authorized 10,000
shares, none issued -- -- --
Common stock, $.01 par value.
Authorized 50,000 shares;
issued and outstanding 27,415,
27,563 and 27,577 shares,
respectively 274 275 276
Additional paid in capital 380,744 381,145 381,329
Deferred stock compensation (276) -- --
Accumulated deficit (326,174) (332,330) (338,053)
-------- -------- --------
Total Stockholders' Equity 54,568 49,090 43,552
-------- -------- --------
Total Liabilities and
Stockholders' Equity $155,349 $131,505 $116,913
======== ======== ========
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES
(In Thousands, Except Per Share Data)
Q4 Q3 Q4 Year Ended
2005 2006 2006 2005 2006
-------- -------- -------- -------- --------
Net Loss (GAAP) $ 126 $ (3,703) $ (5,723) $(11,342) $(11,879)
Restructuring
expenses 281 1,129 1,743 2,114 3,537
Professional
fees related
to litigation 368 1,211 491 1,480 2,857
Stock
compensation
(benefit)
expense (94) 291 184 96 861
-------- -------- -------- -------- --------
Net Income
(Loss)
(Non-GAAP) $ 681 $ (1,072) $ (3,305) $ (7,652) $ (4,624)
======== ======== ======== ======== ========
Loss Per Share
(GAAP) $ 0.00 $ (0.13) $ (0.21) $ (0.41) $ (0.43)
======== ======== ======== ======== ========
Earning (Loss)
Per Share
(Non-GAAP) $ 0.02 $ (0.04) $ (0.12) $ (0.28) $ (0.17)
======== ======== ======== ======== ========
OTHER SELECTED FINANCIAL DATA
(In Thousands)
Q4 Q3 Q4 Year Ended
2005 2006 2006 2005 2006
-------- -------- -------- -------- --------
EBITDA $ 3,075 $ (1,654) $ (3,783) $ 1,170 $ (1,346)
Cash Flow
Provided
(Used) by
Operating
Activities 5,552 (1,273) 5,548 16,500 1,089
Restructuring
Charges:
Included in
Cost of
Goods Sold 93 1,006 1,591 1,245 2,918
Other 188 123 152 869 619
Borrowing
Availability
(End of
Period) 16,184 20,861 18,413 16,184 18,413
Working Capital
(End of
Period) 33,869 40,965 37,773 33,869 37,773
CALCULATION OF EBITDA
(In Thousands)
Q4 Q3 Q4 Year Ended
2005 2006 2006 2005 2006
-------- -------- -------- -------- --------
Net Loss $ 126 $ (3,703) $ (5,723) $(11,342) $(11,879)
Interest
Expense 1,227 1,075 1,098 4,703 5,936
Income Tax
Expense -- -- -- -- --
Depreciation
and
Amortization 1,722 974 842 7,809 4,597
-------- -------- -------- -------- --------
EBITDA $ 3,075 $ (1,654) $ (3,783) $ 1,170 $ (1,346)
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