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» IEC Electronics CEO Discusses F1Q2011 Results - Earnings Call Transcript
With that out of the way, I will turn the call over to Barry Gilbert. Go ahead, please Barry.Barry Gilbert Thank you for joining us this morning. This was a most challenging quarter for IEC. We thought we might see some softness in this quarter and that is in fact the case. Key sections of the company continues to perform well, revenue did grow 18% with 12% coming from organic growth in line with our guidance. The growth was in the medical and industrial sector. Our business supporting medical equipment sector has nearly doubled compared to the first quarter of last year and represents approximately 28% of our sales in the first quarter. That said, we experienced a decrease in revenue from the military and aerospace market caused by continued delays in military funding. Southern California Braiding has had a difficult quarter with sales remaining below what we expected. They’re a most important acquisition for us strategically. However, lower revenues and higher cost structure at SCB are currently impacting our consolidated results. Importantly during negotiation of the SCB acquisition agreement, we protected ourselves upfront against sales shortfall. As a result we recognized a favorable adjustment of $907,000 in other income for the first quarter. We’re very committed and excited about SCB and some of their opportunities. I’ll provide increased granularity in a few minutes. Normally, Vince Leo, our Interim CFO would review the numbers. As I speak he is flat on his back in bed. I’ll read his material and then I’ll proceed to the balance of my material before opening up for questions. On behalf of Vince Leo, good morning. This morning we issued a press release detailing our first quarter’s results which I hope you’ve had a chance to review. During the first quarter IEC realized revenue of $33.9 million compared to $28.6 million in the first quarter of 2011. Of that 18% increase 12% was attributable to organic growth.
Gross profit margin in the quarter stayed relatively consistent at 16.2% of sales compared to 16.8% sales in the prior year period. Overall, gross profit was impacted by our unfavorable sales volume and product mix.SG&A was $4.5 million or 13.4% of sales in the quarter just ended compared to $2.8 million or 9.9% of sales in the prior year. A substantial portion of this increase is attributable to experiencing of four quarter of expense from SCB. We previously indicated that SCB has a higher cost structure then our other units due to the nature of the product line and markets it serves coupled with that SCB sales were weaker than expected which made SG&A a greater percentage of sales. As a result of the increased borrowing to fund our acquisition, interest expense increased to $353,000 in the first quarter of 2012 compared to $244,000 in the prior year period. We did benefit from a lower weighted average interest rate and a decreasing principal balance which during the first quarter of fiscal 2012 compared to the same period of prior year. IEC’s taxable income has been and is benefitted by Federal net operating loss carry forward. These NOLs substantially offset tax payments which would otherwise would have been or maybe required. The company's Federal NOL carry-forward at the end of fiscal 2011 amounted to approximately $24.5 million and do not start to expire until 2012. Net income for the first quarter was $948,000 or $0.09 per diluted share which included the clawback and this compares with $1 million or a $0.11 per diluted share in the prior period. Our balance sheet remains solid with $17 million in working capital and we’ve reduced our debt by $1.3 million from $35.1 million to $33.8 million. We’re still on track to reduce our debt in the range of $7 million to $9 million as previously mentioned. Read the rest of this transcript for free on seekingalpha.com