PHOENIX, Aug. 15, 2007 (PRIME NEWSWIRE) -- Suntron Corporation (Nasdaq:SUNN), a leading provider of integrated electronics manufacturing solutions, today reported net income of $0.3 million and net sales of $64.2 million for the second quarter of 2007. Suntron's rightsizing activities that were completed in the first quarter of 2007 enabled the Company to return to profitability.
Gross margin as a percent of net sales for the second quarter of 2007 increased to 9.2% as compared to 7.3% for the second quarter of 2006 and 5.3% for the first quarter of 2007. This increase was driven primarily by improved operating efficiencies and the Company's reduced fixed cost structure. Gross profit for the second quarter of 2007 was $5.9 million as compared to $6.2 million for the second quarter of 2006 on net sales of $85.1 million and $3.5 million for the first quarter of 2007 on net sales of $65.2 million.
Selling, general and administrative expense (SG&A) for the second quarter of 2007 decreased $1.8 million from the second quarter of 2006 to $4.4 million. The decrease in SG&A for the second quarter of 2007 was primarily attributable to a reduction in legal fees related to previously settled litigation. Sequentially, SG&A for the second quarter of 2007 remained flat at $4.4 million as compared to the first quarter of 2007.
Net income for the second quarter of 2007 was $0.3 million, an increase of $1.6 million as compared to a net loss of $1.3 million for the second quarter of 2006. Similarly, earnings per share for the second quarter of 2007 was $0.01 per share, as compared to a $0.05 loss per share for the second quarter of 2006 and a $0.06 loss per share for the first quarter of 2007. Sequentially, net income for the second quarter of 2007 improved $2.0 million from the net loss reported for the first quarter of 2007 of $1.7 million.
Cash flow from operating activities was $8.3 million for the second quarter of 2007, an improvement of $10.3 million as compared to negative operating cash flow of $2.0 million for the second quarter of 2006. Sequentially, cash flow from operating activities increased by $15.0 million as compared to negative operating cash flow of $6.7 million for the first quarter of 2007. The positive operating cash flow generated in the second quarter of 2007 was utilized primarily for the repayment of debt. At the end of the second quarter of 2007, borrowings under the Company's revolving credit agreement amounted to $15.2 million, reflecting a reduction of over $5 million during the quarter.
"During the second quarter we achieved net income driven by the results of our rightsizing activities and improved operating efficiencies, and our continued focus on working capital management also played a key role in strengthening our balance sheet," stated Paul Singh, Suntron's president and chief executive officer. "As we continue to execute our business plan, our focus is on increasing revenue in each of our target markets by growing with current and new customers. Our management team remains committed to providing superior 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, commercial off-the-shelf 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 and benefits. 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
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Quarter Ended
-------------
July 2, April 1, July 1,
2006 2007 2007
-------- -------- --------
Net Sales $ 85,101 $ 65,165 $ 64,163
Cost of Goods Sold 78,895 61,697 58,232
-------- -------- --------
Gross profit 6,206 3,468 5,931
Operating Expenses:
Selling, general and
administrative expenses 6,198 4,405 4,389
Severance, retention, and
lease exit costs 222 46 68
Related party management and
consulting fees 187 188 187
-------- -------- --------
Total operating expenses 6,607 4,639 4,644
-------- -------- --------
Operating income (loss) (401) (1,171) 1,287
Other Income (Expense):
Interest expense (938) (1,063) (1,055)
Gain on sale of business -- 448 --
Gain on sale of assets 26 87 8
Interest and other, net (3) 29 26
-------- -------- --------
Total other income (expense) (915) (499) (1,021)
-------- -------- --------
Net income (loss) $ (1,316) $ (1,670) $ 266
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Earnings (Loss) Per Share
(Basic and Diluted) $ (0.05) $ (0.06) $ 0.01
======== ======== ========
Weighed Average Shares Outstanding:
Basic 27,526 27,581 27,595
======== ======== ========
Diluted 27,526 27,581 27,650
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SUNTRON CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
December 31, April 1, July 2,
2006 2007 2007
-------- -------- --------
ASSETS
Current Assets:
Cash and equivalents $ 46 $ 48 $ 50
Trade receivables, net 40,756 46,559 39,795
Inventories 56,038 49,854 41,803
Prepaid expenses and other 1,186 1,427 1,350
-------- -------- --------
Total Current Assets 98,026 97,888 82,998
Property and equipment, net 5,184 4,422 4,468
Goodwill 10,918 10,702 10,702
Other assets, net 2,785 2,650 2,595
-------- -------- --------
Total Assets $116,913 $115,662 $100,763
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 30,285 $ 27,711 $ 19,715
Outstanding checks in excess
of cash balances 804 3,301 1,657
Borrowings under revolving
credit agreement 19,759 20,523 15,182
Accrued compensation and
benefits 4,721 5,344 5,132
Payable to affiliates 432 365 280
Other accrued liabilities 4,252 2,859 2,294
-------- -------- --------
Total Current Liabilities 60,253 60,103 44,260
Long-term subordinated debt
payable to affiliate 11,353 11,828 12,327
Other long-term liabilities 1,755 1,641 1,656
-------- -------- --------
Total Liabilities 73,361 73,572 58,243
-------- -------- --------
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
27,577, 27,592 and 27,606
shares, respectively 276 276 276
Additional paid in capital 381,329 381,537 381,701
Accumulated deficit (338,053) (339,723) (339,457)
-------- -------- --------
Total Stockholders' Equity 43,552 42,090 42,520
-------- -------- --------
Total Liabilities and
Stockholders' Equity $116,913 $115,662 $100,763
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RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES-
UNAUDITED
(In Thousands, except per share data)
Q2 Q1 Q2
2006 2007 2007
-------- -------- --------
Net Income (Loss) (GAAP) $ (1,316) $ (1,670) $ 266
Restructuring Expenses 467 1,093 255
Professional fees related to
litigation 643 -- --
Stock Compensation Expense 179 208 164
-------- -------- --------
Net Income (Loss) (Non-GAAP) $ (27) $ (369) $ 685
======== ======== ========
Earnings (Loss) Per Share
(GAAP) $ (0.05) $ (0.06) $ 0.01
======== ======== ========
Earnings (Loss) Per Share
(Non-GAAP) $ (0.00) $ ( 0.01) $ 0.02
======== ======== ========
OTHER SELECTED FINANCIAL DATA- UNAUDITED
(In Thousands)
Q2 Q1 Q2
2006 2007 2007
-------- -------- --------
EBITDA $ 749 $ 137 $ 2,015
Cash Flow Provided by (Used in)
Operating Activities (2,049) (6,698) 8,349
Restructuring Charges:
Included in Cost of Goods Sold 245 1,047 187
Other 222 46 68
Borrowing Availability (End of
Period) 21,681 19,841 21,578
Working Capital (End of Period) 44,034 37,785 38,738
CALCULATION OF EBITDA- UNAUDITED
(In Thousands)
Q2 Q1 Q2
2006 2007 2007
-------- -------- --------
Net Income (Loss) $ (1,316) $ (1,670) $ 266
Interest Expense 938 1,063 1,055
Income Tax Expense -- -- --
Depreciation and Amortization 1,127 744 694
-------- -------- --------
EBITDA $ 749 $ 137 $ 2,015
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