IEC Announces Fourth Quarter and Fiscal 2013 Results

IEC Announces Fourth Quarter and Fiscal 2013 Results 
NEWARK, NY -- (Marketwired) -- 12/19/13 --  IEC Electronics Corp.
(NYSE MKT: IEC) announced its results for the fiscal fourth quarter
and fiscal year ending September 30, 2013.  
During the fourth quarter of fiscal 2013, the Company recorded an
impairment charge of $14,217,000 related to its Southern California
Braiding (SCB) operation, which significantly impacted earnings. The
charge was largely related to goodwill impairment at SCB.  
In the quarter ended September 30, 2013, the Company reported revenue
of $39,122,000 and a net loss of $8,667,000 or ($0.89) per diluted
share. This compares to revenue of $37,062,000 and net income of
$1,586,000 or $0.16 per diluted share, for the fourth quarter in the
prior year. 
For fiscal year 2013, IEC reported revenue of $140,946,000 and a net
loss of $9,530,000 or ($0.98) per diluted share as compared to
revenue of $144,963,000 and net income of $6,694,000 or $0.67 per
diluted share, for fiscal 2012. The year end results include the
impairment charge of $14.2 million, or ($0.93) after tax per diluted
share in fiscal 2013, and the year end results for fiscal 2012
included $1,096,000 from the SCB clawback or $0.07 after tax per
diluted share in fiscal 2012.  
W. Barry Gilbert, Chairman of the Board and CEO, stated, "IEC took
non-cash impairments of goodwill and intangible assets at SCB after
analyzing and reconfiguring the operations of SCB. We also took into
account market challenges for our customers during periods of
government uncertainty. The SCB acquisition has not met our
expectations and has been a disappointment from a profitability,
growth and cash flow perspective. We have made a number of changes at
SCB, including a reduction in personnel and in other expenses.
Additionally, we have moved some of the military and aerospace work
from SCB to our Albuquerque business unit. We will continue
evaluating our SCB operation and make the changes necessary to
improve its prospects and capture the promise we anticipated when we
made the acquisition. We are confident of the future; however, it
remains difficult to forecast the current political environment." 
"This quarter's results, absent the non-cash impairment, did improve
over the third quarter. Our fourth quarter sales were $39,122,000
compared with sales of $35,154,000 for the prior quarter. The revenue
for the fourth quarter was our highest quarterly revenue in over 10
years. Our operating loss was $13,149,000, but excluding the
impairment our operating income would have been $1,068,000. This
compares to operating income of $607,000 in the third quarter. I am
pleased with our sales results given all that has transpired. We
continue attracting new customers; solid, reputable companies." 
"During the first half of fiscal 2013 we added few new customers.
Customer activity had fallen below our comfort level, so changes were
made to the organization. Our core capabilities were not at risk;
however, our execution was weak. The financial results for the first
half of the year were sales of $66,671,000 and an operating loss of
$1,292,000. In the second half of the year we added numerous new
customers or additional locations for existing customers. These
additions were spread across our various businesses and our key
targeted markets. A number of our new customers are marquee names in
their respective industries. As a result, we saw improved performance
in the second half of our fiscal year with sales of $74,275,000 and
an operating loss of $12,543,000, but after excluding the impairment
charge operating income would have been $1,674,000. We have not
completely turned the corner. The key question is when will these new
accounts be monetized? As with all new customers, the benefit to the
company will take time to develop and, in some cases longer than a
year to reach full production." 
"Going forward, we expect the first six months of fiscal 2014 to show
relatively flat sales as compared to the first six months of fiscal
2013. By the end of the first quarter of fiscal 2014 we will have a
clearer picture as to the impact of the operational changes we have
made; however, net income is difficult to estimate due to the
difficulty of forecasting additional legal and accounting costs and
other factors. Complicating our thoughts is the fact that one of our
large medical customers is on an FDA hold. Though the issues seem to
be getting resolved this will have some effect in Q1 and Q2 of fiscal
2014. We have adjusted our workforce accordingly. We believe the
issue our medical customer is facing will mitigate itself during the
second half of our fiscal year." 
"We have grown quickly over the previous eight years, and aspects of
our organizational structure did not keep pace. This year, we made
changes which we believe will help us not only resolve our current
challenges, but most importantly, position us for the future and our
next stage of growth. I would like to flip a switch. This will take
time. I am confident that this long run perspective is the right path
to create future value for our customers and shareholders, as well as
opportunities for our employees." 
Non-GAAP measures are reconciled to the most closely comparable GAAP
measures in the attachment to this release. 
Conference Call
 IEC will host a conference call on Thursday,
December 19, 2013 at 10:00 a.m. Eastern Time, to discuss its
financial results for the fourth quarter and year ended September 30,
2013. The conference call may be accessed in the U.S. and Canada by
dialing toll-free (877) 407-9210. International callers may access
the call by dialing (201) 689-8049. 
A replay of the teleconference will be available for 30 days after
the call and may be accessed domestically by dialing (877) 660-6853
and international callers may dial (201) 612-7415. Callers must enter
conference i.d. number 13573509. To access the live webcast, log onto
the IEC website at http://www.iec-electronics.com. The webcast can
also be accessed at http://www.InvestorCalendar.com. An online replay
will be available on IEC's website shortly after the call. 
About IEC Electronics
 IEC Electronics Corporation is a premier
provider of electronic manufacturing services ("EMS") to advanced
technology companies primarily in the military and aerospace,
medical, industrial and communications sectors. The Company
specializes in the custom manufacture of high reliability, complex
circuit cards, system level assemblies, a wide array of custom cable
and wire harness assemblies, precision sheet metal products, and
advanced research and testing services. As a full service EMS
provider, IEC is a world-class ISO 9001:2008, AS9100 and ISO13485
certified company. The AS9100 certification enables IEC to serve the
military and commercial aerospace markets. The ISO13485 certification
supports the quality requirements of medical device markets. The
Company is also AC7120 Nadcap accredited for electronics
manufacturing to support the most stringent quality requirements of
the aerospace industry, as well as ITAR registered and NSA approved
under the COMSEC standard. Dynamic Research and Testing Laboratories
(DRTL), the Company's newest business unit, is an ISO 17025
accredited laboratory specializing in the testing and detection of
counterfeit electronic parts, as well as component risk mitigation
and advanced failure analysis. IEC Electronics is headquartered in
Newark, NY (outside of Rochester) and also has operations in
Rochester, NY, Albuquerque, NM and Bell Gardens, CA. Additional
information about IEC can be found on its web site at
www.iec-electronics.com.  
This release contains certain statements that are, or may be deemed
to be, forward-looking statements within the meaning of section 27A
of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934, and are made in reliance upon the protections
provided by such Acts for forward-looking statements. These
forward-looking statements (such as when the Company describes what
it "believes", "expects", or "anticipates" will occur, and other
similar statements) include, but are not limited to, statements
regarding future sales and operating results, future prospects, the
capabilities and capacities of business operations, any financial or
other guidance and all statements that are not based on historical
fact, but rather reflect the Company's current expectations
concerning future results and events. The ultimate correctness of
these forward-looking statements is dependent upon a number of known
and unknown risks and events and is subject to various uncertainties
and other factors that may cause the Company's actual results,
performance or achievements to be different from any future results,
performance or achievements expressed or implied by these statements. 
Specific risks and uncertainties include, but are not limited to,
those set forth in the "Risk Factors" section of the Company's latest
Annual Report on Form 10-K/A and subsequent Quarterly Reports on Form
10-Q/A and Form 10-Q. The following important factors, among others,
could affect future results and events, causing those results and
events to differ materially from those views expressed or implied in
the Company's forward-looking statements: business conditions and
growth or contraction in the Company's customers' industries, the
electronic manufacturing services industry and the general economy;
variability of the Company's operating results; the Company's ability
to control its material, labor and other costs; the Company's
dependence on a limited number of major customers; the potential
consolidation of the Company's customer base; availability of
component supplies; dependence on certain industries; variability and
timing of customer requirements; uncertainties as to availability and
timing of governmental funding for the Company's customers; the types
and mix of sales to the Company's customers; the Company's ability to
assimilate acquired businesses and to achieve the anticipated
benefits of such acquisitions; unforeseen product failures and the
potential product liability claims that may be associated with such
failures; the availability of capital and other economic, business
and competitive factors affecting the Company's customers, the
Company's industry and business generally; failure or breach of the
Company's information technology systems; natural disasters; and
other factors that the Company may not have currently identified or
quantified. Additional risks and uncertainties resulting from the
restatement of the Company's financial statements included in the
Company's Annual Report on Form 10-K/A filed with the Securities and
Exchange Commission ("SEC") on July 3, 2013 ("2013 Form 10-K/A") and
in the Company's Form 10-Q/A filed on the same date could, among
others, (i) cause the Company to incur substantial additional legal,
accounting and other expenses, (ii) result in additional shareholder,
governmental or other actions, or adverse consequences from the now
consolidated shareholder action or the now formal investigation being
conducted by the SEC, (iii) cause the Company's customers, including
the government contractors with which the Company deals, to lose
confidence in the Company or cause a default under its contractual
arrangements, (iv) cause a default under the Company's arrangements
with M&T Bank with respect to which, if the Bank chooses to exercise
its remedies, the Company may not be able to obtain replacement
financing or continue its operations, (v) result in delisting of the
Company's stock from NYSE MKT (the "Exchange") if the Company fails
to meet any Exchange listing standard, or fails to comply with its
listing agreement with the Exchange, during the twelve months ending
July 9, 2014, or (vi) result in additional failures of the Company's
internal controls if the Company's remediation efforts are not
effective. Any one or more of such risks and uncertainties could have
a material adverse effect on the Company or the value of its common
stock. For a further list and description of various risks, relevant
factors and uncertainties that could cause future results or events
to differ materially from those expressed or implied in our
forward-looking statements, see the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections in the 2013 Form 10-K/A and the Company's
subsequent Quarterly Reports on Forms 10-Q/A and 10-Q. 
The Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events, or otherwise. 


 
                                                                            
                                                                            
                   IEC ELECTRONICS CORP. AND SUBSIDIARIES                   
                         CONSOLIDATED BALANCE SHEET                         
                 SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012                  
              (in thousands, except share and per share data)               
                                                                            
                                                                            
                                              September 30,   September 30, 
                                                       2013            2012 
                                             --------------  -------------- 
                                                                 (restated) 
ASSETS                                                                      
Current assets                                                              
  Cash                                       $        2,499  $        2,662 
  Accounts receivable, net of allowance              27,945          23,193 
  Inventories, net                                   21,904          17,697 
  Deferred income taxes                               1,382           1,365 
  Other current assets                                  610             401 
                                             --------------  -------------- 
Total current assets                                 54,340          45,318 
                                             --------------  -------------- 
                                                                            
Fixed assets, net                                    17,946          17,120 
Intangible assets, net                                2,647           5,511 
Goodwill                                              2,005          13,810 
Deferred income taxes                                11,652           6,018 
Other assets                                            345             121 
                                             --------------  -------------- 
                                                                            
Total assets                                 $       88,935  $       87,898 
                                             ==============  ============== 
                                                                            
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Current liabilities                                                         
  Current portion of long-term debt          $        2,778  $        6,533 
  Accounts payable                                   16,508          15,697 
  Accrued payroll and related expenses                2,464           2,676 
  Other accrued expenses                                811             946 
  Customer deposits                                     187             146 
                                             --------------  -------------- 
Total current liabilities                            22,748          25,998 
                                                                            
Long-term debt                                       34,026          21,104 
Other long-term liabilities                             167               - 
                                             --------------  -------------- 
                                                                            
Total liabilities                                    56,941          47,102 
                                                                            
STOCKHOLDERS' EQUITY                                                        
Preferred stock, $0.01 par value:                                           
  500,000 shares authorized; none issued or                                 
   outstanding                                                              
Common stock, $0.01 par value:                          110             109 
  Authorized: 50,000,000 shares                                             
  Issued: 11,006,749 and 10,943,185 shares,                                 
   respectively                                                             
  Outstanding: 9,991,291 and 9,927,727                                      
   shares, respectively                                                     
Additional paid-in capital                           43,802          43,075 
Retained earnings                                   (10,483)           (953)
Treasury shares at cost - 1,015,458 shares           (1,435)         (1,435)
                                             --------------  -------------- 
Total stockholders' equity                           31,994          40,796 
                                             --------------  -------------- 
                                                                            
Total liabilities & stockholders' equity     $       88,935  $       87,898 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            
                                                                            
                   IEC ELECTRONICS CORP. AND SUBSIDIARIES                   
                       CONSOLIDATED INCOME STATEMENTS                       
 THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30,  
                                    2012                                    
              (in thousands, except share and per share data)               
                                                                            
                                                                            
                                Three Months Ended     Twelve Months Ended  
                              ---------------------- ---------------------- 
                                Sept 30,    Sept 30,   Sept 30,    Sept 30, 
                                    2013        2012       2013        2012 
                              ----------  ---------- ----------  ---------- 
                                          (restated)             (restated) 
                                                                            
Sales                         $   39,122  $   37,062 $  140,946  $  144,963 
Cost of sales                     33,668      30,888    123,269     118,657 
                              ----------  ---------- ----------  ---------- 
  Gross profit                     5,454       6,174     17,677      26,306 
                                                                            
Operating expenses                                                          
Selling and administrative                                                  
 expenses                          3,761       3,579     15,453      15,765 
Impairment of goodwill and                                                  
 other intangibles                14,217                 14,217             
Restatement and related                                                     
 expenses                            625           -      1,842           - 
                              ----------  ---------- ----------  ---------- 
  Operating profit/(loss)        (13,149)      2,595    (13,835)     10,541 
                                                                            
Interest and financing                                                      
 expense                             522         297      1,170       1,227 
Other (income)/expense                 -           1         47      (1,050)
                              ----------  ---------- ----------  ---------- 
  Income/(loss) before                                                      
   provision for income taxes    (13,671)      2,297    (15,052)     10,364 
                                                                            
Provision for/ (benefit from)                                               
 income tax                       (5,004)        711     (5,522)      3,670 
                              ----------  ---------- ----------  ---------- 
Net income/(loss)             $   (8,667) $    1,586 $   (9,530) $    6,694 
                              ==========  ========== ==========  ========== 
                                                                            
                                                                            
                                                                            
Net income/(loss) per common and common equivalent share:                   
  Basic earnings per share    $    (0.89) $     0.16 $    (0.98) $     0.69 
  Diluted earnings per share       (0.89)       0.16      (0.98)       0.67 
                                                                            
Weighted average number of common and common equivalent shares outstanding: 
  Basic                        9,739,601   9,660,253  9,711,549   9,663,865 
  Diluted                      9,739,601   9,982,368  9,711,549   9,969,071 
                                                                            
                                                                            

 
                                                                            
                                                                            
                   IEC ELECTRONICS CORP. AND SUBSIDIARIES                   
   RECONCILIATION OF OPERATING PROFIT/(LOSS) TO OPERATING PROFIT EXCLUDING  
                                  IMPAIRMENT                                
  THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30, 
                                     2012                                   
               (in thousands, except share and per share data)              
                                                                            
                                                                            
                                 Three Months Ended     Twelve Months Ended 
                               ---------------------- ----------------------
                                 Sept 30,    Sept 30,   Sept 30,    Sept 30,
                                     2013        2012       2013        2012
                               ----------  ---------- ----------  ----------
                                           (restated)             (restated)
                                                                            
Operating profit/(loss)        $  (13,149) $    2,595 $  (13,835) $   10,541
                                                                            
Impairment of goodwill and                                                  
 other intangibles                 14,217           -     14,217           -
                                                                            
                               ----------  ---------- ----------  ----------
Operating profit excluding                                                  
 impairment                    $    1,068  $    2,595 $      382  $   10,541
                                                                            
                                                                            
                                                                            
                                                                            
                   IEC ELECTRONICS CORP. AND SUBSIDIARIES                   
  RECONCILIATION OF EARNINGS PER SHARE TO IMPAIRMENT AFTER TAX, PER SHARE   
 THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30,  
                                    2012                                    
              (in thousands, except share and per share data)               
                                                                            
                                                                            
                               Three Months Ended      Twelve Months Ended  
                             ----------------------  ---------------------- 
                               Sept 30,    Sept 30,   Sept 30,     Sept 30, 
                                   2013        2012        2013        2012 
                             ----------  ----------  ----------  ---------- 
                                         (restated)              (restated) 
                                                                            
Impairment of goodwill and                                                  
 other intangibles           $   14,217  $        -  $   14,217  $        - 
                                                                            
Effective tax rate                 36.6%       31.0%       36.7%       35.4%
                                                                            
Tax effect of impairment of                                                 
 goodwill and other                                                         
 intangibles                      5,204           -       5,216           - 
                                                                            
                             ----------  ----------  ----------  ---------- 
  Impairment of goodwill and                                                
   other intangibles, net of                                                
   tax                       $    9,013  $        -  $    9,001  $        - 
                                                                            
                                                                            
  Basic earnings per share   $    (0.89) $     0.16  $    (0.98) $     0.69 
  Basic Impairment per share      (0.93)          -       (0.93)          - 
                                                                            
  Diluted earnings per share      (0.89)       0.16       (0.98)       0.67 
  Diluted Impairment per                                                    
   share                          (0.93)          -       (0.93)          - 
                                                                            
                                                                            
                                                                            
Earnings per share weighted average number of common and common equivalent  
 shares outstanding:                                                        
  Basic                       9,739,601   9,660,253   9,711,549   9,663,865 
  Diluted                     9,739,601   9,982,368   9,711,549   9,969,071 
                                                                            
Impairment charge per share weighted average number of common and common    
 equivalent shares outstanding:                                             
  Basic                       9,739,601   9,660,253   9,711,549   9,663,865 
  Diluted                     9,739,601   9,982,368   9,711,549   9,969,071 
                                                                            
                                                                            

 
                                                                            
                                                                            
                   IEC ELECTRONICS CORP. AND SUBSIDIARIES                   
 RECONCILIATION OF EARNINGS PER SHARE TO SCB CLAWBACK AFTER TAX, PER SHARE  
 THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30,  
                                    2012                                    
              (in thousands, except share and per share data)               
                                                                            
                                                                            
                               Three Months Ended      Twelve Months Ended  
                             ----------------------  ---------------------- 
                               Sept 30,    Sept 30,    Sept 30,    Sept 30, 
                                   2013        2012        2013        2012 
                             ----------  ----------  ----------  ---------- 
                                         (restated)              (restated) 
                                                                            
Other (expense)/income       $        -  $       (1) $      (47) $    1,050 
                                                                            
Other (expense)/income                                                      
 excluding SCB clawback                                                     
 income                               -          (1)        (47)        (46)
                                                                            
                             ----------  ----------  ----------  ---------- 
  SCB Clawback income                 -                       -       1,096 
                                                                            
  Effective tax rate               36.6%       31.0%       36.7%       35.4%
                                                                            
  Tax effect of SCB clawback                                                
   income                             -           -           -         388 
                                                                            
                             ----------  ----------  ----------  ---------- 
SCB clawback income, net of                                                 
 tax                         $        -  $        -  $        -  $      708 
                                                                            
                                                                            
  Basic earnings per share   $    (0.89) $     0.16  $    (0.98) $     0.69 
  Basic SCB clawback income                                                 
   per share                          -           -           -       (0.07)
                                                                            
  Diluted earnings per share      (0.89)       0.16       (0.98)       0.67 
  Diluted SCB clawback                                                      
   income per share                   -           -           -       (0.07)
                                                                            
                                                                            
                                                                            
Earnings per share weighted average number of common and common equivalent  
 shares outstanding:                                                        
  Basic                       9,739,601   9,660,253   9,711,549   9,663,865 
  Diluted                     9,739,601   9,982,368   9,711,549   9,969,071 
                                                                            
SCB clawback income per share weighted average number of common and common  
 equivalent shares outstanding:                                             
  Basic                       9,739,601   9,660,253   9,711,549   9,663,865 
  Diluted                     9,739,601   9,982,368   9,711,549   9,969,071 

  
Contact:
Vincent Leo
CFO
IEC Electronics Corp.
(315)332-4308
VLeo@iec-electronics.com 
John Nesbett or Jennifer Belodeau
Institutional Marketing Services
(203)972-9200
jnesbett@institutionalms.com
jbelodeau@institutionalms.com 
 
 
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