Supply Chain and Inventory Challenges - Raw material price increases and supply shortages could adversely affect the company's results, with upward pricing pressure currently being experienced[49] - The company's inventory levels have decreased significantly during fiscal year 2024, but certain components remain difficult to obtain on a timely basis[54] - The company's inability to forecast customer orders with certainty can make it difficult to schedule production and manage inventory levels[53] - The company relies on third-party suppliers for components, with some components available only from single or limited sources, which could impact operations if lost[127] - The company expects supply chain disruptions to continue improving in fiscal 2025, with potential declines in raw material pricing due to softening customer demand in certain markets[218] - Inventory obsolescence reserve recorded as of April 30, 2024 is $2,323,689[249] - Raw materials inventory as of April 30, 2024 is $107,155,093[249] - A substantial portion of raw materials inventory is for committed future orders with cost recovery from customers[249] - Provisions for excess and obsolete inventories are recorded for value over stock raw material inventory based on future demand and market conditions[249] Financial Performance and Results - Net sales decreased by $40,552,024 (9.8%) to $373,883,821 in fiscal 2024 compared to $414,435,845 in fiscal 2023, primarily due to declining customer demand in consumer electronics, industrial electronics, and medical/life science markets[156][167] - Gross profit margin declined to 9.0% of net sales in fiscal 2024 from 12.4% in fiscal 2023, driven by higher labor and fixed manufacturing costs[158][169] - Operating income decreased by $17,823,731 (71.4%) to $7,133,915 (1.9% of net sales) in fiscal 2024, compared to $24,957,646 (6.0% of net sales) in fiscal 2023, due to lower sales and higher costs[171] - Net loss from continuing operations was $2,486,157 in fiscal 2024, compared to net income of $14,194,424 in fiscal 2023, primarily due to lower sales, higher wages, and increased interest expenses[163] - Selling and administrative expenses decreased by $103,548 (0.4%) to $26,392,403 (7.1% of net sales) in fiscal 2024, primarily due to a decrease in bonus expense[159][170] - Interest expense, net, increased to $10,362,038 in fiscal 2024 from $8,403,904 in fiscal 2023, driven by higher average interest rates[161] - Income tax expense decreased by $3,266,803 to a benefit of $275,262 in fiscal 2024, with an effective tax rate of 10.0%, compared to 17.4% in fiscal 2023[162] - Operating cash flow for fiscal year 2024 was $27,760,048, a significant improvement from the $13,256,804 used in fiscal year 2023[181] - Inventory decreased by $36,122,113 in fiscal year 2024, contributing to the positive operating cash flow[181] - Accounts receivable decreased by $14,240,833 in fiscal year 2024, partially offset by a decrease in accounts payable of $18,470,463[181] - Cash used in financing activities was $26,278,929 for fiscal year 2024, primarily due to payments under line of credit and term loan agreements[186] - Total debt decreased from $93,300,700 in fiscal year 2023 to $69,583,387 in fiscal year 2024[188] - The Company's revolving loan facility had $28,598,719 outstanding and $13,443,766 of unused availability as of April 30, 2024[190] - The TCW Term Loan outstanding balance was $37,503,301 as of April 30, 2024, down from $39,833,301 in fiscal year 2023[194] - The Company purchased $1,799,148 in machinery and equipment in fiscal year 2024, with future purchases anticipated to be funded by lease transactions[183] - The Company's liquidity position is sufficient to fund existing operations and current commitments for at least the next twelve months[180] - The company anticipates that its credit facilities, expected future cash flow, and leasing resources will meet its working capital requirements for the next 12 months[216] Customer and Market Risks - Sales to the company's five largest customers accounted for 49.2% and 47.4% of net sales for the fiscal years ended April 30, 2024, and April 30, 2023, respectively[69] - The company's largest customer accounted for 13.1% of net sales and 4.6% of accounts receivable for the fiscal year ended April 30, 2024[69] - The company faces intense industry competition and downward pricing pressures, which could adversely affect its business and financial condition[70] - Changes in U.S. trade policy, including tariffs, could increase the cost of raw materials and reduce demand for the company's products, adversely affecting revenues and profitability[86][87] - The company's quarterly and annual results may vary significantly due to factors such as changes in component costs, sales mix, and market demand[50] Environmental and Regulatory Compliance - The company's manufacturing facilities and real property are subject to extensive and changing environmental laws and regulations, which may require additional expenditures[61] - The company is subject to various regulations, including environmental and chemical regulations, and failure to comply could result in liabilities, increased costs, or reputational harm[93] Cybersecurity and IT Risks - The company faces risks related to cyber incidents, which could disrupt operations, result in financial losses, and cause reputational damage, despite established risk management systems[97] - The company's IT systems store confidential information, including financial data, customer proprietary information, and supplier information, making security breaches a significant risk[98] - The company's cybersecurity program is based on the ISO 27001 framework and includes a formal Risk Management Strategy and Incident Response Plan[110] - The company's cybersecurity governance includes regular reviews by the Board of Directors and Audit Committee, with a focus on risk mitigation and incident response[114][115] Debt and Credit Facility Risks - The company negotiated amendments and waivers with J.P. Morgan Chase and TCW Asset Management Company in August 2024 due to failure to maintain certain covenants as of April 30, 2024, and during the first quarter of fiscal year 2025[80] - The company's credit facilities may become unavailable, and the cessation of these facilities could have a material adverse effect on its business, results of operations, and financial condition[81] - The company may seek to raise additional capital by issuing equity or modifying existing credit facilities if current credit facilities are inadequate, but this could be hampered by stock price volatility[82] - The company's borrowing costs have increased due to rising interest rates, and future borrowing costs may rise further, potentially adversely affecting its financial condition and results of operations[84] - The company failed to maintain a Fixed Charge Cover Ratio of at least 1.10x for the twelve-month period ended January 31, 2023, resulting in JPM 2023 Covenant Defaults[198] - The company's Total Debt to EBITDA Ratio exceeded 5.00:1.00 for the twelve-month period ended January 31, 2023, leading to TCW 2023 Covenant Defaults[198] - The company entered into the JPM 2023 Waiver and TCW 2023 Waiver, which waived certain events of default and amended terms of the Credit Agreements[199] - The company agreed to maintain a minimum of $2.5 million in revolver availability under the JPM Credit Agreement[202] - The Total Debt to EBITDA Ratio was modified to range from 4.50:1.0 for the twelve months ended October 31, 2023, to 4.00:1.0 for the twelve months ending October 31, 2024[202] - The company's Revolving Commitment under the JPM Credit Agreement was reduced from $70 million to $55 million as of the Third Amendment Effective Date[208] - The company's Total Debt to EBITDA Ratio is required to range from 6.50:1.0 for the twelve months ending July 31, 2024, to 3.50:1.0 for the twelve months ending April 30, 2027[207] - The company's minimum required Availability under the JPM Credit Agreement was increased to $3.5 million starting on the Third Amendment Effective Date[207] - Fifth Amendment to Credit Agreement entered into on March 17, 2022, between SigmaTron International, Inc. and JPMorgan Chase Bank, N.A.[235] - Sixth Amendment to Credit Agreement entered into on April 25, 2022, between SigmaTron International, Inc. and JPMorgan Chase Bank, N.A.[235] - Amended and Restated Credit Agreement dated July 18, 2022, involving SigmaTron International, Inc., Wagz, Inc., and JPMorgan Chase Bank, N.A.[235] - Credit Agreement dated July 18, 2022, involving SigmaTron International, Inc., Wagz, Inc., TCW Asset Management Company LLC, and other Lenders[235] - Waiver, Consent, and Amendment No. 1 to the Credit Agreement dated April 28, 2023, involving SigmaTron International, Inc., Wagz, Inc., and JPMorgan Chase Bank, N.A.[235] - Amendment No. 2 to the Credit Agreement dated June 15, 2023, involving SigmaTron International, Inc. and JPMorgan Chase Bank, N.A.[235] - Waiver and Amendment No. 3 to Credit Agreement dated August 19, 2024, between SigmaTron International, Inc. and JPMorgan Chase Bank, N.A.[236] - Third Amendment Fee Letter dated August 19, 2024, involving SigmaTron International, Inc. and TCW Asset Management Company LLC[236] International Operations and Currency Risks - Approximately 43% of the company's total assets are located in foreign jurisdictions outside the United States as of April 30, 2024, with 31% in Mexico and 10% in China[74] - The company experienced net currency translation losses of $796,315 and $892,642 for the fiscal years ended April 30, 2024, and April 30, 2023, respectively, due to the weakening of the U.S. Dollar against the Mexican Peso and Chinese Renminbi[75] - The company's manufacturing facilities are located in the U.S., Mexico, Vietnam, and China, with a total of 13 facilities offering electronic and electromechanical manufacturing solutions[118][121] - The company's lease agreements for key facilities in Mexico, Vietnam, and the U.S. expire between 2025 and 2034[121] - The company's unremitted earnings for which U.S. income taxes have not been recorded amounted to $17,144,000 as of April 30, 2024[216] Workforce and Labor Risks - The company's future growth depends on its ability to recruit and retain high-quality employees, particularly in a competitive labor market[101] - Approximately 46% and 48% of the company's workforce is covered by labor union contracts for fiscal years 2024 and 2023, respectively[102] Impairment and Asset Risks - The company recorded asset impairment charges totaling $23,096,771 for goodwill and long-lived assets as of April 30, 2023[103] - The company recorded an impairment charge of $23,096,771 related to the Wagz acquisition in the third quarter of fiscal 2023[133] - The company recorded an intangible asset impairment charge of $9,527,773 during the three months ended January 31, 2023, due to lower market acceptance of Wagz products[147] - The company determined its goodwill was fully impaired in the third quarter of fiscal 2023, recording an impairment charge of $13,320,534[151] - The company sold the majority ownership interest in Wagz on April 28, 2023, retaining a 19% passive investment, which was fully reserved due to financial uncertainty[172] - The Company holds a minority 19% ownership in Wagz, which was fully reserved due to financial uncertainty as of April 30, 2023[184] Internal Controls and Financial Reporting - The company's internal controls over financial reporting were not effective as of April 30, 2024, due to a material weakness in revenue recognition controls for non-standard transactions[222] - Remediation measures have been implemented, including strengthening the review process for revenue contracts with multiple levels of review and supporting evidence[224] - The company is still in the process of implementing remediation steps and cannot assure investors that the material weakness will be fully resolved[225] - No significant changes in internal controls over financial reporting occurred during the quarter ended April 30, 2024, except for the remediation efforts[227] Legal and Contractual Agreements - First Amendment to Agreement and Plan of Merger dated December 7, 2021, involving SigmaTron International, Inc., Remy Pom, Inc., Wagz, Inc., and Terry B. Anderton[235] - Stock Purchase Agreement dated April 28, 2023, involving SigmaTron International, Inc., Wagz, Inc., Vynetic LLC, and Terry B. Anderton[235] Inflation and Economic Risks - Persistent inflation could have a material adverse impact on the company's business, operating results, and financial condition[64] Stock Market and Equity Risks - The company's stock price is volatile due to fluctuations in revenue, earnings, and market conditions, and this volatility is expected to continue[85] - The company's common stock is traded on the Nasdaq Capital Market under the symbol SGMA, with approximately 60 holders of record and 3,200 beneficial owners as of August 9, 2024[123] PPP Loan and Government Assistance - The company received a $6,282,973 PPP Loan under the CARES Act, which was forgiven on July 9, 2021, but remains subject to audit by the SBA for up to six years[78] Business Segment and Operations - The company operates in one reportable segment as an independent provider of electronic manufacturing services (EMS), offering services ranging from component assembly to box-build electronic products[126] - The company provides manufacturing services through an international network of facilities in the United States, Mexico, China, Vietnam, and Taiwan[128] - The company sold a majority of its Pet Tech segment on April 28, 2023, and now operates solely in the EMS segment[129] - Consignment orders accounted for less than 1% of the company's revenues for the fiscal years ended April 30, 2024, and April 30, 2023[130] - The Pet Tech segment recorded an operating loss of $32,887,193 in fiscal 2023, primarily due to goodwill and long-lived asset impairments of $23,096,771[173][177] Cost Reduction and Restructuring Efforts - The company is taking steps to reduce its debt and cost structure, including property sales, headcount reductions, and inventory reductions[139] - The company established a valuation allowance of $7,302,639 on its U.S. capital loss and foreign tax credit carryforwards as of April 30, 2024[153]

Zacks Investment Research has recently initiated coverage of SigmaTron International, Inc. (SGMA) with an Underperform recommendation, citing several critical risk factors that could impede the company's future performance. Illinois-based SigmaTron carries a substantial long-term debt of $79.8 million as of Jan 31, 2024. This heavy debt load is a critical risk, as the company must meet strict financial covenants. Any non-compliance could result in defaults, accelerated debt repayments and increased interest ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2024 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-23248 SIGMATRON INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 36-3918470 (State or other jurisdiction of (I.R.S ...

EXHIBIT 99.1 For the nine months ended January 31, 2024, revenues from continuing operations decreased $13.4 million, or 4 percent, to $292.7 million, compared to $306.1 million for the same period in the prior year. Net income from continuing operations for the nine months ended January 31, 2024, was $0.9 million, compared to net income of $8.9 million for the same period in the prior year. Diluted income per share from continuing operations for the nine months ended January 31, 2024 was $0.14, compared to ...

Commission File Number 0-23248 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SIGMATRON INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 36-3918470 (State or other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ Form 10-Q __________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-23248 SIGMATRON INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) D ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) X Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the fiscal year ended April 30, 2023. Or Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from ___________to___________. Commission file number 0-23248 SIGMATRON INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 36-3918470 (St ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ Form 10-Q __________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-23248 SIGMATRON INTERNATIONAL, INC. (Exact name of registrant as specified in its charter ...