SigmaTron Ties Financial Results for Fiscal Year 2020 to Impact of COVID-19

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SigmaTron International, Inc., an electronic manufacturing services company, reported revenues and earnings for the fiscal year ended April 30, 2020.  Revenues decreased to $281.0 million in fiscal year 2020 from $290.5 million in the prior fiscal year. Net income increased to $443,102 in fiscal year 2020 compared to a net loss of $865,114 in fiscal year 2019.  Basic and diluted earnings per share for the fiscal year ended April 30, 2020 were each $0.10 compared to a loss per share of $0.20 each in fiscal year 2019.

For the fourth quarter of fiscal year 2020, revenues decreased to $64.8 million compared to $73.3 million for the same quarter in the prior fiscal year.  Basic and diluted loss per share for the fiscal year 2020 fourth quarter were $0.09, respectively, compared to basic and diluted earnings per share of $0.23 each for the same period of fiscal year 2019.

Commenting on SigmaTron’s results for both the fourth quarter and fiscal year ending April 30, 2020, Gary R. Fairhead, President, Chief Executive Officer and Chairman of the Board, said, “SigmaTron posted a pre-tax loss of $172,525 for the fourth quarter of fiscal 2020. This led to a pre-tax profit of $1,093,134 for the fiscal year. While it is always disappointing to report a quarterly loss, the results were impacted by operational interruptions and extraordinary expenses related to the COVID pandemic at all of our operations. In some locations the interruptions and expenses were worse than others. In addition to those problems we saw a dramatic drop in revenue of approximately 30% in the month of April as the pandemic and its effects grew rapidly in North America.

“As previously reported, during the fourth quarter the Company received a $6.3M PPP Loan under the CARES Act. If part or all of the loan is forgiven under the program, that benefit will be recorded in the quarter in which the forgiveness occurs. The PPP Loan provided assistance to the Company as intended by the government, and we are grateful that such a program was made available to the Company. During this period, we were able to avoid significant lay-offs or compensation reductions to our employees.

“The first quarter of fiscal 2021 started the same as fiscal 2020 ended.  May’s revenue drop was similar to April’s and May’s results alone will result in a first quarter pre-tax loss. However, the revenue trend was positive from month to month during the quarter and revenue is definitely trending in the right direction. This, of course, is primarily based on our customers’ orders and backlog and while the economic recovery seems fragile at this time, the positive trend continues with current customers.  We are also seeing potential new opportunities with new and existing customers.

“One of several disappointments tied to the COVID pandemic is that we were approaching the fourth quarter with significant momentum and a strong backlog. We fully expected that it would be a strong quarter on its own and that we would be heading into fiscal 2021 with continued growth. During the pandemic, we have seen several customers with an unexpected and un-forecasted uptick in demand while we’ve seen others have a precipitous drop in demand.  It’s hard to predict how these various markets will sort themselves out over the next several quarters. We continue to believe that the trade war with China is a negative for the general economy as well as the Company. It’s hard to see any progress in that area until after the election so it will remain a reality for the Company, our customers and our suppliers for several more quarters, at a minimum.

“The one positive item to come out of the pandemic for the Company was the incredible performance by each of the operations during the quarter. They had to deal with various governmental orders in five different countries, all of which had different requirements and regulations.  They had to deal with sick employees, some of whom were ultimately determined to have been infected by COVID-19.  In addition to dealing with disrupted supply chains in terms of component availability and uncertain transportation, all locations had to deal with customers that had businesses that were uncertain from day to day. In spite of all these obstacles, all of the operations and Corporate departments found a way to get the job done and support our customers’ needs.  It was amazing to see the dedication to the Company and their jobs that the entire team performed in the wake of such uncertainty.  Many of our customers thanked us for our exceptional support and service and the entire team should be proud of what we have accomplished during this unprecedented time.

“As always, I want to thank our customers, supply chain, our bank, our Board of Directors in addition to our employees for their continued support of the Company during a difficult period. I am pleased that we are able to report positive results for the entire fiscal year.”