Iec Electronics (IEC) 3 Feb 212021 Q1 Earnings call transcript

Greetings. And welcome to IEC Electronics First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instruction] As a reminder, this conference is being recorded. pleasure Services. your my with John now Marketing Institutional is to host, introduce Nesbett, It you. Thank

may You begin.

Good in. and morning thank you for calling

call have we Executive Barbato, this President Financial the Chief Chief Tom Officer; Jeff Officer. and and On Schlarbaum, morning,

any what other operating forward-looking ultimate dependent take and the current be started, statements safe believes, that guidance, read future to company and this and update undertakes required over results, forward-looking The by the before deemed sales, Schlarbaum. statements or may Securities with it forth historical in on as capabilities This the call to cause prospects are publicly or Exchange go that to not ahead, to as statements. efforts, capacities will of as turn of statement. based strategic events I except call limited backlog quarterly accuracy no company that Form statements but correct Jeff result These those moment these contains otherwise, to be Form annual limited upon call, a company’s new XX-K Before statements we operations, set include, actual certain anticipates whether the a uncertainties initiatives, like statements, the now are in of to, to or not and obligation this a to, during when will report get Jeff. on immediately results of and similar most information, rather business forward-looking and conference or reflect I’d reports The the regarding results law. Commission. recent events. call the other reports or and describes such or include, company’s but turnaround company’s different of and uncertainties the is risks release than made as or implied risks harbor be performance the the fact, expectations not other forward-looking all filed and are future expressed Specific future on Please these financial number future by concerning but expects XX-Q statements. company’s issued statements may and and any are earnings occur statements

IEC COVID-XX I Great. everyone hope call everyone. available activity safe me will optimism business. Thank Leading see that up promising improve. we John, impacts healthy. adverse increasingly gives more certainly economic morning, hope It’s the to pandemic and communities only you, fiscal through finds as good gained the vaccines our and immunization which and to rebound to traction, know with QX, had moderately this are managed and that

to else, adapted the like. leadership most Our of broader remote, work like face shift workforce, and everyone have structures, the inconveniences and in the distancing, modified social teams coverings

However experienced of a in quarantine resulted though that level hadn’t year cases in well we significant increased and orders of season, pandemic. tracing start the during the absenteeism the Even national too trended since nation positive as we averages, to state business. workforce the spike contributed our saw holiday of contact below in impacting number of a our the cases spike XXXX seen

quarter and report in for serve. the a rather and our pleased our this commitments $XX.X approximately unit, demonstrating workforce net am unable basis execute $X.XX during enhanced business of assembly effectively performance largest come share Newark, or XXXX. challenges, of our XX.X% month income diluted I basic we three was of recent With we loaded customers year-over-year and efficiently per to weekly order Despite represented $X.X fiscal driving all belief margins our created New the in of million, of gross our Obviously in these results sector. the higher example, to consistently, backlog that and across COVID-XX headwind to XX% York. profitability revenue end have a our at a strong to growth For with revenue to built model improvements work. the organic December, to These share. growth sectors, capable strong On providing first start a $X.XX margins of electronic provided million XX% services improved on business of per related

that achieving maintaining in enhanced exiting continue continue we and continuing we we industry-leading outlook. we and same As XXXX believe well-positioned XXXX, entered growth, profitability, margins were to quarter, to fiscal believed our on-going deliver very to organic fiscal first

including we believe for aggressive goals benchmark million $XX internal also a have for We performance, set new revenue. our company’s quarterly

quarter quarter, in $XX we were quarterly first well-positioned third consecutive internal previously related million revenue. not revenue of the for previously COVID-XX absences million above impacts believe goal. discussed, we achieved surpass And and established milestone our the our next we workforce significant $XX if the quarterly During to

quarter, $XX we model optimally first believe to an fully when operational achieve maturity excellent are we ahead achieve a to the might million is of internal previous expect million for we to ability target the the have not we revenue our indicator during of Given our established. revenues of staffed and comfortably business $XX.X as testament that of what

the solutions our I’d to diligently many executing landscape, IEC excellence and exceptional and high thank and to take presented. the has complex an the unpredictable executional public moment team throughout have our a Despite they mission in health strategy employees stayed pandemic -- manufacturing providing critical engineered products. on challenges We highly for lifesaving like at have and delivering highly focused for economic

our years, markets few our manufacturing the in end our embrace last model and recognize great vertically and and service the value that customers with integrated pursuing XXX% sales success focus on U.S.-based its unique model. sharpened organization has During

our with customers fluctuations, us be to ability programs. continues and of quality along model, agile quickly as reputation Our service, secure a to compelling adapt competitive to program we new complex shop, for as the new business the serve which to look delivering one-stop to customer a an highest affords ability advantage

solid to full perception competitive traction suite advantage favorable manufacturing the products, continues We for advanced industries who positioned our reducing chain a and position to reputation from customers forward provider solutions. with a wide their partner looking and We are from to gain well-positioned the supply closed and we partners levels in continue manufacturing upon as build lifesaving complex improving mission at as customers supply and marketplace. order of our to regulated to our a continuing with complexity, that diverse a levels. manufacturing vertically an high and are attracting programs, continue protection, Likewise, critical believe highest and leadership simultaneously in and higher integrated of we customers grow derived range for of We highly we fiscal continuity new win backlog of we to programs of are have competitively believe of a convert variety services, XXXX IP while to risks. look with

We to internal $XX demand, the level have of will made and expect a that we quarterly have with have million. of we supply workforce our chain we revenue support we progress the next our target That we achievement scaled already and sit of the we of we at worst that have to our February, impacts us normalize. believe seen levels the the fact said, behind staffing COVID-XX are are beginning as encouraged begin by we the here the

facilities. to to on begin miles financials, existing Newark, X.X I’d operations we open November new headquarter to away. and new provide a facilities in from York the call go the over Before Tom New our location update manufacturing quick our I like XXXX, In our turn moving an through

to stages design report provide to ahead move disruptions this conducting our only to and our new, the reduce flow in schedule. space operational are are state-of-the-art we obviously brand improve customers expected currently manufacturing minimize to We am risk custom is I of its efficiencies. pleased Not and future for but is and

skilled ready making IEC facility purchased Regarding getting online and New foot the XXXX square The location to for This from is York, critical consolidate will combine and assembly expanded to it Rochester during location our third ability progress our are that an for fully we the current with believe growth presence facility. its resources expect operation addressing metals across specialty our region, our establish heighten support entire new occupancy electronic our goal double-digit a recruit organic Rochester will new area to we fiscal beyond. improve and building goal will we of operation quarter. need come Rochester, we this campus good fiscal XX,XXX a that during and it XXXX in in

we challenges the its the excitement associated a reinvigorate be IEC. will the provide and our COVID-XX we Our optimistic economy. start and we for joining We business pandemic a have year to we job with around the mitigating of two rollout done the country another are new which during hope will running symbolic operational strong locations a vaccinations, wholeheartedly solid fresh -- believe

be to to detail performance. growing to the by turn a forward that, energized quarter now seeing I in first our more to call and prove chain base opportunities are manufacturing continuing to partner Tom will supply look highly customer the for We as our and capabilities differentiated U.S.-based XXX% financial solutions. we around With we Tom? continue marketplace provide the over our

million quarter and the of compared diluted the morning, at negative Gross of to remained in company sector. X.X% XXXX first of X.X% consistent of basic the our of fiscal good compared first compared XXXX. $X.X the million fiscal at $X.X compared profit first $X.X everyone. XXXX. and first million fiscal was of fiscal the $X.X million, basic million, of of of of for as recorded share margin net million fiscal or to in of XX.X% first XXXX fiscal $XX.X both medical for in profit XXXX, Selling share, company’s for increased of the in per diluted and quarter first XX.X% $X.X quarter $X XXXX. Gross of margin related Revenue increase million, as XXXX, income expenses Jeff, sales of quarter customers quarter an the or of income of reorganization in one Thanks, quarter gross to quarter periods. the the net includes per administrative $X.X inventory $X.XX quarter per of slightly to fiscal fiscal XXXX was the sales in a $X.XX compared first XXXX was first the of to percentage a in first and reserve gross of the to one-time The million sales fiscal quarter and which of impact the share $X.XX to

a mentioned, obsolete our prior incurred fiscal GAAP charge the As of increase the financial $X cash first and this in the $X for impacted anticipated of charges non-cash in the impact one-time $X.XX the year, quarter the adjusted reserves. net of excess first $X.XX inventory expenditures. million year during reconciliation fiscal million previously the per income was results. $X.X non-GAAP included No Adjusted portion we in the million refer morning measures. result Net future $X million impairment was in our to pretax the charges quarter share. to press reserve. for These related release per prior diluted further or tables regarding for information these and the and inventory Please basic income

programs in certain XXXX, customer, at demand XX% The and demand industrial market and of decreases distribution increased demand medical reductions customer, for fiscal quarter to by in driven variety production $X.X first one ramping the the customers in sector with comparison aerospace for increase sector new program primarily net net to ramping $X.X other phase by for demand in other first resulted ending for new fiscal in offset out which customer. saw of to in XX%, customers, defense customers. quarter million million, in the due saw Looking yet $XXX,XXX, the a Industrial in sales existing up defense revenue at decreased the of quarter. sector in million, increases $XXX,XXX we existing These million, revenue, offset of customers. primarily XX. partially demand increase a and to $X.X revenue who the of increased increase another addition a offset at by the by of sectors, various customers of aerospace increase primarily in customer decreased customers, certain well one saw related as our in by a a of were and related Sales $X.X other as existing XXXX, the medical to of

our at balance looking Now sheet.

working balance million stockholders’ in million in equity. sheet capital with strong and Our $XX.X $XX.X remains

January was of XXXX me, You end -- will $XX.X to the $XX.X see inventory you fiscal X, that was that see million, compared $XX at will the at fiscal at to XXXX million inventory XXXX. of compared the million, $XX.X excuse end

part of result, the compared XX, the as to see million $X a shortages. January $XX.X the X, customer consumed willingness customers XXXX, risks We component quarter. grew a being at deposits deposits of our the with to almost continue XXXX, at million associated to $XX.X September on million And to help despite within mitigate ongoing existing

to these a right equipment will $XX.X in the that, and see million $XX.X the you that also This early With tied Jeff. also QX of for to use transactions. will -- to our of our is I Rochester, long-term Newark, more million purchase compared our closed of Form to to which details which XX, Additionally, new XX-Q to turn back note at commenced in facility New XXXX. for in asset York, XXXX, fiscal quarter. lease New increased both increase is within headquarter on property attributable plant at X, it Please January which facility XXXX the new York, establishment September the of

Thank Tom. Great. you,

a to throughout pleased some fiscal as earlier set fiscal momentum and forward performance. delivered internal our comments, solid are believe for Reiterating building XXXX to year. start goals upon the challenging we to company’s we have have We of we this look move my

internal achieved quarter, the impacts, our revenue. million above were well-positioned COVID-XX the goal. quarter if not $XX milestone And quarterly first we revenue of surpass to the million for consecutive workforce quarterly we $XX During related third believe in next we our

making support higher base a workforce of with As supply to to believe of $XX internal I scale further will today, next sit demand that believe here hand chain achievement levels. level our growing the And we we our we the a are and progress made revenue we to have we model customer to investments quarterly million. support in target

and We as optimistic worst wider provider behind also As COVID-XX customers, along customers, of XXXX I of manufacturing progress result on all seeing and and agile normalize, solutions with positions which for QX U.S.-based adding reputation fiscal levels strategic and a integrated and a mission-critical our vertically deeper impacts result as are winning continued we as are existing the are in intent for said new products. we programs XXX% with a meaningful lifesaving remain us beyond. our the staffing new of advancing earlier, highly strategy select already of us

Now, I with that, Operator the for to call back any the turn over will additional questions.

Sakai proceed question comes [Operator the question. from of with Please Singular your Instructions] you. Research. first line Chris Thank Our with

Tom Hi, and Jeff. Good morning.

question worst is of a expect in and the on, pandemic the us. going COVID Just seeing you had we your guys the medical behind sales as that are How segment? to affect

impacts to increased medical in additional we the the demand and period of sort at an related Really Chris, summer of mostly help were as relates of Yeah. saw the with OEMs as were seeing equipment. XXXX demand, middle those some hospitals fiscal COVID to it the

high seen we disruptions My recently seen medical most we We COVID-XX are from around viewpoint our normalized. to sort tailwinds say with seeing -- demand That’s those, on to I’d around our have significant the execute workforce. disruptions of of impacts ability a commentary hadn’t really the calendar So absenteeism. not up significant revenue, continued saw XX% the that. sort timeframe were is spikes were QX cases in prevented factories from amount running that into our due unusually to workforce because were conversion until inefficient impacts enough reported. that order to to And nationwide the the we really of XX% surely us a maximizing of the demand with

sort was of when thinking more those COVID-XX talked about So the I I are of the impacts. really of recent perspective

materials, noticeable inventory. if there? wondering some Okay. could in increase I you was looks I light other question, increase there’s shed raw And guess, a my an like in just

Couple right. of things,

growing to materials is, it’s obviously are demand. we So, that support sign a out one securing

that So demand that’s have bullish growing. to that’s indicator I support we it another think

an the that, committing attempted of are the it to consumed drivers But is mentioned, customers the thing to purchasing as see higher other intended would prepays offset stranded at ultimately an what level. it. the to which raw you our which the impacts sheet on is balance which our to messaging of the increased revenue The those which that with Tom workforce, of with bit also of probably have weave also are And that’s and a at some I in offset. that here, is some deliver main material, had sort being due advanced we level, behind

Great. Thanks. All right. Okay.

care. talking Yeah. Take Nice to you.

Our of next question Partners. from comes line the with Please your Jen Comstock proceed with Wolfertz question.

Thank just a update large to ramp. contract an stand am you. that, we that where us Good I wondering But the get is with you us could on can be great? give if I little morning. that would last you that guys if defense you beginning just year. believe announced color on

Yeah. in a We to the had question. about last up end significant defense XXXX towards -- we No. year announced year of calendar Thanks, starting Great Jen. the and the the award Yeah. at customer talked ramp production.

fiscal that were green happy report and am production our to the customer I stages We the to ultimately production. by light QX, So end calendar QX of qualified we launched early in of the acceleration timeframe, our manufacturing. the customer

the exactly we that. in are quarter, doing current So

We into are start as up manufacturing. to I builds a QX are we that the enter and quantity in we expect cadence higher volume launching climbing hit and will ladder QX, exit and ramp

it we in of because QX. but that in and and the of actually this little some QX think into quarter of designs. establishing of pressure of these going a dialing fades it’s levels going disruptions chain, I there’s is margin production the stops, in -- supply bit -- we pressure higher usual put the see mean with So, manufacturing leading-edge challenging through our well. working it’s we are of which process, But the innovative some way and start

Thanks the for Thank you. Great. update.

Absolutely.

Please your from Boyd question. question proceed Capital. comes with of Instructions] Next with the line next [Operator Mark Shawn Our

hear okay? gentlemen. Can Good me you morning,

you. but a hear can can I little you fine, hear Shawn. It’s Yes. I muted

Great.

Just quarter. know what how not road the would facilities have could look it absenteeism wanted I these crosscurrents on, how can rather more on pretty the production a the anecdotally, new the obviously But just and get going to you we are on if in you as quantify get tell But down do big in book and little the some looking companies things we bit pipeline. hurt talk order maybe on? you us orders quarter-by-quarter.

Yeah.

operations new ongoing see obviously, remained support larger critical are strong. the So, signals macro to these We as demand.

no So signals visibility customers. to we the given there pulling back have demand from future the

really we to But right, very by similar bookings don’t of into can get are quarter. You in I bookings say backlog QX XXXX. what wise, level the

So XXXX. at in a year-over-year I solid similar look were bookings had and very levels very year looking we

So run the booking long of XXXX some talk programs, cycle programs going defense facet these multiyear to expect to case of the of other I one spoke for the are well. for a I his larger are programs, We that be as about where time. about, just very

And amount years to bit so commit over lumpy. sizable are booking of a a our and a customers will business of those couple intervals

impact, other little for those book make at when growing have that periods linear, a make also the up rate. but they occur, nice aggregate, to a order also the certainly less So but be softer but it may appear on is

still we very bullish see So signals.

our that the and be up will we ramping We it buying are fortunate we the partner the that signals selected future. be support enough as see we to have to strong manufacturing and some are we pipeline customers out coding for other facilities in

where pretty am I fronts all at. we on think are I pleased So

but respect. a the to hear. we segment be have doesn’t that very, it’s defense, tell can that got about can of us, seem any should and on you be we probably, specifically kind in us think would And Good the real to early give and thinking that in administration, particular? yet on you in change Anything impact you very Great. aerospace days change

insights fluctuations. I’d one are their or way on that really others to commitments what years get three yet know much to is not is out of affect have of and of be what probably really of we is, and another. obviously that there front they as go maybe not you the couple of years and back They -- change closely for aerospace got the over closely. Yeah. program have supporting for they talking made, for the commitments able the our some what could see four, years. But than have I what of kind from But administration, at couple lines defense that, to which Certainly, to product kind have. I technologies lines there in the follow any the in you will and next look and said greater the customers kind administration industry positioning you past, programs don’t do

communication advanced future, be will the these many innovative in whether to programs just the going invested and soldiers. that’s year are settings that collateral to are it’s conflicts for of of We critical technology are variety damage programs in technology on in that that the minimizing weapons some going urban of or the used and occur be the advanced in the by worn

a We there in years and standpoint from standpoint some Despite administration and changes, an a technology good if diversity change, four. position really a are from that. three are

well-positioned, think, a are across we a have wide great number I program technologies. we just positions of of got variety because really

transition Jeff New into Got the facility. on That sense. new the makes me York facility for and one it. the modernized Yeah. last

update will could again you just into be fully facility? If that over think do you us on you when

Yeah.

made first the production in move So January. we of

the phase So complete. it now of first is

four three we have kind other phases We that at look blocks. in of

number until quarter, quarter I happen not in will will Phase look April. of We probably, actually go. other when probably have hold two phases sort the, three to this and probably, this March, at

I we whether see will. we fourth July moves the is So and October. the And get phase July case am in will the probably in segment fourth the in phase third phases question timeframe, into think which second and worst Probably third can I the see April. we is the optimistic

kind that’s So the of goalpost.

October fiscal or our I slipping think QX QX, of into end all fourth done either year phase of by XXXX. the in

for thought. the Great. Fantastic. Thanks

care. Take questions. the Appreciate right. All

call no management closing like for are to queue. I’d in the to remarks. further hand questions There back the

thanks Great. as certainly call, health we the continued everyone want say to we through Appreciate in with IEC participating we not to everybody and just next work certainly look everyone Thank only the with forward for all your pandemic. you. speaking in associated but we wish And quarter. challenges today’s again and interest safety

this Thank today’s your teleconference. participation. conclude you does gentlemen, for and Ladies

lines may time your this You disconnect at day. a have and wonderful