PHOENIX, Aug. 10, 2006 (PRIMEZONE) -- Suntron Corporation (Nasdaq:SUNN), a leading provider of integrated electronics manufacturing solutions, today reported net sales of $85.1 million and an operating loss of $0.4 million for the second quarter of 2006. These results include $0.5 million of restructuring charges related to severance, retention and lease exit costs primarily associated with the Company's previously announced decision to transfer its Northeast contract manufacturing business unit located in Lawrence, Massachusetts to other Suntron sites.
Gross profit for the second quarter of 2006 improved to $6.2 million, compared to $3.9 million in the second quarter of 2005. As a percentage of net sales, gross profit improved to 7.3% for the second quarter of 2006, compared to 4.7% on net sales of $81.8 million in the second quarter of 2005. This improvement in gross profit for the second quarter of 2006 was primarily attributable to the cumulative impact of restructuring and cost containment actions that were initiated throughout 2005 and supplemented by a 4% increase in net sales. Sequentially, gross profit as a percentage of sales decreased from 8.4% on net sales of $95.8 million in the first quarter of 2006. Net sales for the first quarter of 2006 included a one-time spike in sales to a customer in the industrial market sector.
Operating loss for the second quarter of 2006 improved by $2.7 million to $0.4 million, compared to an operating loss of $3.1 million for the second quarter of 2005. For the first quarter of 2006, operating income was $1.7 million, which was primarily attributable to incremental gross profit associated with higher net sales.
Net loss for the second quarter of 2006 was $1.3 million, an improvement of $2.4 million compared to the second quarter of 2005. Consequently, loss per share improved by $0.09 per share to a loss of $0.05 per share for the second quarter of 2006. For the first quarter of 2006, net loss was $1.1 million and loss per share was $0.04 per share.
"Though we continue to see positive results from the cost reduction initiatives we took in 2005 we remain focused on right-sizing the business and improving the utilization of our assets," stated Paul Singh, Suntron's president and chief executive officer. "In the first six months of 2006, we have refinanced our credit facility, obtained a secured subordinated loan from an affiliate of our majority stockholder, sold a building and land in Sugar Land, Texas and initiated the right-sizing of our operations in the Northeast. These actions have helped reduce the Company's outstanding debt by approximately $15 million since the beginning of 2006 and enhanced our borrowing availability to support profitable future growth," added Mr. Singh.
"Additionally, our refocused sales and marketing efforts have resulted in increased new product introduction and new customer activity that provides us with several opportunities for future growth, including the addition of four new customers during the quarter. However, as we look ahead to the third quarter of 2006, we expect net sales will be in the range of $71 million to $75 million reflecting the delay in the ramp-up of certain new programs and the seasonality with certain customers. While we remain focused on right-sizing our fixed cost structure, our management team is committed to continuing to exceed customer expectations and improve operating performance," concluded Mr. Singh.
About Suntron Corporation
Suntron delivers complete manufacturing services and solutions to support the entire life cycle of complex products in the aerospace and defense, industrial, semiconductor capital equipment, networking and telecommunications, and medical markets. Headquartered in Phoenix, Arizona, Suntron operates seven 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 Company has approximately 1,680 employees and contract workers.
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, internal 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 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 3, April 2, July 2,
2005 2006 2006
---- ---- ----
Net Sales $ 81,758 $ 95,795 $ 85,101
Cost of Goods Sold 77,884 87,781 78,895
--------- --------- ---------
Gross profit 3,874 8,014 6,206
Operating Expenses:
Selling, general and
administrative expenses 6,136 6,051 6,198
Severance, retention,
and lease exit costs 611 122 222
Related party management
and consulting fees 187 188 187
--------- --------- ---------
Total operating
expenses 6,934 6,361 6,607
--------- --------- ---------
Operating income
(loss) (3,060) 1,653 (401)
Other Income (Expense):
Interest expense (1,187) (2,825) (938)
Gain on sale of assets 397 20 26
Interest and other
income (expense) 105 15 (3)
--------- --------- ---------
Total other income
(expense) (685) (2,790) (915)
--------- --------- ---------
Net loss $ (3,745) $ (1,137) $ (1,316)
========= ========= =========
Loss Per Share (Basic and
Diluted) $ (0.14) $ (0.04) $ (0.05)
========= ========= =========
Weighed Average Shares
Outstanding (Basic and
diluted) 27,415 27,456 27,526
========= ========= =========
SUNTRON CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
December 31, April 2, July 2,
2005 2006 2006
---- ---- ----
ASSETS
Current Assets:
Cash and equivalents $ 59 $ 90 $ 109
Trade receivables 51,377 53,789 49,224
Inventories 61,985 62,752 61,120
Land, building and
improvements held for
sale, net 18,772 1,198 --
Prepaid expenses and other 1,430 1,541 1,341
--------- --------- ---------
Total Current Assets 133,623 119,370 111,794
Net property and equipment 8,367 7,272 6,483
Goodwill 10,918 10,918 10,918
Debt issuance costs, net 1,586 860 791
Identifiable intangible
assets 675 625 575
Deposits and other 180 1,719 1,764
--------- --------- ---------
Total Assets $ 155,349 $ 140,764 $ 132,325
========= ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 38,605 $ 40,717 $ 32,345
Outstanding checks in
excess of cash balances 1,039 1,021 4,143
Borrowings under
revolving credit
agreement 47,000 23,106 21,312
Accrued compensation and
benefits 6,181 7,213 6,250
Current portion of accrued
exit costs related to
facility closures 494 402 540
Payable to affiliates 501 218 410
Other accrued liabilities 5,934 2,867 2,760
--------- --------- ---------
Total Current
Liabilities 99,754 75,544 67,760
Long-term Liabilities:
Subordinated debt payable
to affiliate -- 10,000 10,421
Accrued exit costs related
to facility closures 122 62 --
Other 905 1,519 1,642
--------- --------- ---------
Total Liabilities 100,781 87,125 79,823
--------- --------- ---------
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,
27,490 and 27,548 shares,
respectively 274 275 275
Additional paid-in capital 380,744 380,675 380,854
Deferred stock
compensation (276) -- --
Accumulated deficit (326,174) (327,311) (328,627)
--------- --------- ---------
Total Stockholders'
Equity 54,568 53,639 52,502
--------- --------- ---------
Total Liabilities
and Stockholders'
Equity $ 155,349 $ 140,764 $ 132,325
========= ========= =========
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES
(In Thousands, Except Per Share Data)
Q2 Q1 Q2
2005 2006 2006
---- ---- ----
Net Loss (GAAP) $ (3,745) $ (1,137) $ (1,316)
Restructuring Expenses 1,086 198 467
Stock Compensation Expense 40 207 179
Write-off of Debt Issuance
Costs -- 1,447 --
-------- -------- --------
Net Income (Loss) (Non-GAAP) $ (2,619) $ 715 $ (670)
======== ======== ========
Loss Per Share (GAAP) $ (0.14) $ (0.04) $ (0.05)
======== ======== ========
Earnings (Loss) Per Share
(Non-GAAP) $ (0.10) $ 0.03 $ (0.02)
======== ======== ========
OTHER SELECTED FINANCIAL DATA
(In Thousands)
Q2 Q1 Q2
2005 2006 2006
---- ---- ----
EBITDA $ (538) $ 3,342 $ 749
Cash Flow Provided (Used)
by Operating Activities 4,234 (1,137) (2,049)
Restructuring Charges:
Included in Cost of
Goods Sold 475 76 245
Other 611 122 222
Borrowing Availability (End
of Period) 5,830 24,874 21,681
Working Capital (End of
Period) 12,341 43,826 44,034
CALCULATION OF EBITDA
(In Thousands)
Q2 Q1 Q2
2005 2006 2006
---- ---- ----
Net Loss $ (3,745) $ (1,137) $ (1,316)
Interest Expense 1,187 2,825 938
Income Tax Expense -- -- --
Depreciation and
Amortization 2,020 1,654 1,127
-------- -------- --------
EBITDA $ (538) $ 3,342 $ 749
======== ======== ========