PHOENIX, Nov. 14, 2007 (PRIME NEWSWIRE) -- Suntron Corporation (Nasdaq:SUNN), a leading provider of integrated electronics manufacturing solutions, today reported net sales of $52.5 million and a net loss of $0.4 million for the third quarter of 2007. The third quarter results included charges of $0.2 million for stock-based compensation and $0.1 million for restructuring expenses.
Gross profit for the third quarter of 2007 was $4.0 million on net sales of $52.5 million, as compared to $4.0 million on net sales of $70.6 million for the third quarter of 2006, and $5.9 million on net sales of $64.2 million for the second quarter of 2007. Gross margin as a percent of net sales for the third quarter of 2007 was 7.6% as compared to 5.7% for the third quarter of 2006 and 9.2% for the second quarter of 2007. The decrease in gross margin compared to the second quarter of 2007 was impacted by lower net sales in the third quarter of 2007. The improvement in gross margin compared to the third quarter of 2006 was primarily attributable to our recent restructuring activities that reduced our fixed cost structure and a $1.0 million reduction in restructuring costs in the third quarter of 2007 as compared to the third quarter of 2006.
Selling, general and administrative expense (SG&A) for the third quarter of 2007 decreased $2.8 million from the third quarter of 2006 to $3.6 million. The decrease in SG&A for the third quarter of 2007 was attributable to a reduction in legal fees related to previously settled litigation and a reduction in compensation and benefits. Sequentially, SG&A for the third quarter of 2007 decreased by $0.8 million as compared to the second quarter of 2007 primarily due to a reduction in compensation and benefits.
The net loss of $0.4 million for the third quarter of 2007 improved by $3.3 million as compared to a net loss of $3.7 million for the third quarter of 2006. Similarly, earnings per share for the third quarter of 2007 was a loss of $0.02 per share, as compared to a loss of $0.13 for the third quarter of 2006. Sequentially, net loss for the third quarter of 2007 decreased by $0.7 million from net income reported for the second quarter of 2007 of $0.3 million primarily due to reduced net sales.
Cash flow from operating activities improved by $11.8 million to $10.5 million for the third quarter of 2007, as compared to negative operating cash flow of $1.3 million for the third quarter of 2006. Sequentially, cash flow from operating activities improved by $2.1 million as compared to operating cash flow of $8.4 million for the second quarter of 2007. The positive operating cash flow generated in the third quarter of 2007 was utilized primarily for the repayment of debt. At the end of the third quarter of 2007, borrowings under the Company's revolving credit agreement amounted to $6.4 million, reflecting a net repayment of debt of $8.8 million during the quarter.
"Our focus on working capital management has helped us significantly reduce our bank debt to $6.4 million at the end of the third quarter of 2007", stated Paul Singh, Suntron's president and chief executive officer. "With our stronger balance sheet in place, we are providing additional focus on quality and increasing sales," 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.primenewswire.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
-------------
Oct. 1, July 1, Sept. 30,
2006 2007 2007
---- ---- ----
Net Sales $ 70,604 $ 64,163 $ 52,549
Cost of Goods Sold 66,577 58,232 48,537
--------- --------- ---------
Gross profit 4,027 5,931 4,012
Operating Expenses:
Selling, general and
administrative expenses 6,363 4,389 3,605
Severance, retention,
and lease exit costs 123 68 9
Related party management
and consulting fees 188 187 188
--------- --------- ---------
Total operating expenses 6,674 4,644 3,802
--------- --------- ---------
Operating income (loss) (2,647) 1,287 210
Other Income (Expense):
Interest expense (1,075) (1,055) (859)
Gain on sale of assets (6) 8 (6)
Interest and other, net 25 26 230
--------- --------- ---------
Total other income (expense) (1,056) (1,021) (635)
--------- --------- ---------
Net income (loss) $ (3,703) $ 266 $ (425)
========= ========= =========
Earnings (Loss) Per Share
(Basic and Diluted) $ (0.13) $ 0.01 $ 0.02
========= ========= =========
Weighed Average Shares Outstanding:
Basic 27,551 27,595 27,608
========= ========= =========
Diluted 27,551 27,650 27,608
========= ========= =========
SUNTRON CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
Dec. 31, July 2, Sept. 30,
2006 2007 2007
---- ---- ----
ASSETS
------
Current Assets:
Cash and equivalents $ 46 $ 50 $ 47
Trade receivables, net 40,756 39,795 34,514
Inventories 56,038 41,803 37,222
Prepaid expenses and other 1,186 1,350 1,100
---------- ---------- ----------
Total Current Assets 98,026 82,998 72,883
Property and equipment, net 5,184 4,468 4,236
Goodwill 10,918 10,702 10,702
Other assets, net 2,785 2,595 2,674
---------- ---------- ----------
Total Assets $ 116,913 $ 100,763 $ 90,495
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 30,285 $ 19,715 $ 19,327
Outstanding checks in excess
of cash balances 804 1,657 876
Borrowings under revolving
credit agreement 19,759 15,182 6,354
Accrued compensation and benefits 4,721 5,132 5,295
Payable to affiliates 432 280 205
Other accrued liabilities 4,252 2,294 1,960
---------- ---------- ----------
Total Current Liabilities 60,253 44,260 34,017
Long-term subordinated
debt payable to affiliate 11,353 12,327 12,852
Other long-term liabilities 1,755 1,656 1,370
---------- ---------- ----------
Total Liabilities 73,361 58,243 48,239
---------- ---------- ----------
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,
27,606 and 27,619 shares,
respectively 276 276 276
Additional paid-in capital 381,329 381,701 381,862
Accumulated deficit (338,053) (339,457) (339,882)
---------- ---------- ----------
Total Stockholders' Equity 43,552 42,520 42,256
---------- ---------- ----------
Total Liabilities and
Stockholders' Equity $ 116,913 $ 100,763 $ 90,495
========== ========== ==========
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES-
UNAUDITED
(In Thousands, except per share data)
Q3 Q2 Q3
2006 2007 2007
---- ---- ----
Net Income (Loss) (GAAP) $ (3,703) $ 266 $ (425)
Restructuring Expenses 1,129 255 50
Professional fees
related to litigation 1,211 -- --
Stock Compensation Expense 291 164 161
Other -- -- 98
---------- ---------- ----------
Net Income (Loss) (Non-GAAP) $ (1,072) $ 685 $ (116)
========== ========== ==========
Earnings (Loss) Per Share (GAAP) $ (0.13) $ 0.01 $ (0.02)
========== ========== ==========
Earnings (Loss) Per Share
(Non-GAAP) $ (0.04) $ 0.02 $ (0.00)
========== ========== ==========
OTHER SELECTED FINANCIAL DATA- UNAUDITED
(In Thousands)
Q3 Q2 Q3
2006 2007 2007
---- ---- ----
EBITDA $ (1,654) $ 2,015 $ 1,109
Cash Flow Provided by (Used in)
Operating Activities (1,273) 8,349 10,462
Restructuring Charges:
Included in Cost of Goods Sold 1,006 187 41
Other 123 68 9
Borrowing Availability (End of
Period) 20,861 21,578 20,205
Working Capital (End of Period) 40,965 38,738 38,866
CALCULATION OF EBITDA- UNAUDITED
(In Thousands)
Q3 Q2 Q3
2006 2007 2007
---- ---- ----
Net Income (Loss) $ (3,703) $ 266 $ (425)
Interest Expense 1,075 1,055 859
Income Tax Expense -- -- --
Depreciation and Amortization 974 694 675
---------- ---------- ----------
EBITDA $ (1,654) $ 2,015 $ 1,109
========== ========== ==========