SigmaTron Incurs Q1 Loss on Soft Demand, Revenues Fall Y/Y

Core Insights - SigmaTron International, Inc. reported a challenging first quarter of fiscal 2025, with a loss of 54 cents per share compared to earnings of 4 cents per share in the prior-year quarter, and revenues decreased by 14% to $84.8 million from $98.1 million [1][2] Financial Performance - The gross profit for SigmaTron was $6.4 million, down from $9.7 million year-over-year, resulting in a gross margin of approximately 7.6%, a decline from 9.8% in the prior year [3] - Selling and administrative expenses were stable at $6.6 million, slightly down from $6.8 million in the first quarter of fiscal 2024, but the significant drop in gross profit led to an operating loss of $0.2 million, compared to an operating income of $2.8 million in the prior-year period [4] - The company recorded an "other expense" of $2.3 million, primarily due to interest and debt-related costs, resulting in a pre-tax loss of $2.5 million and a net loss of $3.3 million, contrasting with a net income of $0.3 million a year earlier [5] Management Guidance - Management anticipates a market recovery in the latter part of calendar year 2024, with a sequential quarterly revenue increase of 4.4% from the fourth quarter of fiscal 2024 to the first quarter of fiscal 2025, indicating potential stabilization [6] - The company is actively reducing overhead and operational costs in response to market softness, with additional cost reductions implemented in August 2024, and is focusing on reducing inventory to alleviate working capital constraints [6] Strategic Developments - SigmaTron is collaborating with Lincoln International to improve its financial structure and de-leverage its balance sheet, as part of a broader strategy to navigate current market softness, which is widespread across the industry [7] - The company's strategic cost management and operational adjustments are critical as it prepares for expected improvements in customer activity levels in 2025 [7]