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SigmaTron International, Inc. SGMA reported a challenging fourth quarter of fiscal 2024. It incurred a loss per share of 55 cents in the quarter under review against earnings of 87 cents per share in the same period last year.
SigmaTron’s revenues from continuing operations were $81.1 million, a 25% decrease compared to $108.3 million in the same period in 2023. The company incurred a net loss of $3.4 million for the quarter against a net income of $5.3 million in the prior-year period.
Management highlighted several factors that contributed to the company’s weak financial performance. These included a broad industry slowdown and the continued fallout from supply chain disruptions, which reduced customer demand and put pressure on the company’s sales.
SigmaTron International, Inc. Price, Consensus and EPS Surprise
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SGMA’s Quarterly Performance Overview
The quarterly performance of SigmaTron paints a stark picture of the difficulties the company has faced. A revenue drop of $27.1 million in the fiscal fourth quarter was primarily attributed to a broader softness in customer demand, particularly in February 2024, and although customer backlogs remained strong, this softness persisted through the end of the fiscal year. This decline is reflective of larger macroeconomic issues, including an industry slowdown and the lingering impacts of global supply chain disruptions, which have been affecting the electronic manufacturing services sector throughout the fiscal year.
SigmaTron’s cost structure came under significant pressure due to the drop in revenues. To mitigate these pressures, SigmaTron implemented several cost-saving measures, including the sale of its Elgin building and the consolidation of operations into its Elk Grove Village headquarters. Additionally, the company enacted layoffs and retirements, reduced working hours at several facilities and focused on lowering inventory levels to better manage its working capital requirements. These efforts have helped to reduce the company’s operational costs, although they have not fully offset the negative impact of the revenue decline.
SigmaTron’s financial difficulties led to violations of covenants with its secured lenders. However, the company successfully renegotiated its loan agreements, obtaining waivers for these violations and amending the agreements. Additionally, SigmaTron engaged Lincoln International to explore strategic alternatives for reducing its debt, with several initiatives already underway. Management expressed confidence that these measures, combined with ongoing cost-cutting efforts, will allow the company to remain in compliance with its amended loan agreements moving forward.