IEC Electronics has a manufacturing niche that is exclusively 'US made'

• Provides electronic-manufacturing services to the aerospace, defense, industrial and medical sectors
• Scored recently a multi-year contract valued at more than $50 million with Tier 2 US defense contractor
• Expects to achieve more than 25% in organic revenue growth for fiscal year 2019

What IEC Electronics does:

IEC Electronics Inc (NYSEAMERICAN:IEC) is a provider of electronic-manufacturing services to advanced technology companies that produce life-saving and mission-critical products in the aerospace, defense, industrial and medical sectors. 

Founded in 1966, the Newark, New York-based company breaks its business down into six key areas: full-system assemblies, design & test development, analysis & testing lab, electronics manufacturing, interconnect solutions and precision metalworking. 

The company specializes in delivering technical solutions via the custom manufacture of complex full-system assemblies (such as circuit boards) and by providing on-site analytical-testing laboratories, custom-design and test-engineering services. 

IEC manufactures its products exclusively in the US, unlike many of its competitors.

For the medical industry, the company’s products include infusion pumps, resuscitation and imaging systems, and diagnostic equipment. 

It also makes ruggedized industrial controls, remote-inspection equipment, and weather-detection instruments for the industrial sector. 

In the aerospace and defense areas, the company produces encrypted satellite-communication, weapons and flight-control systems as well as handheld tactical radios for US troops in war zones. 

IEC’s most recent product is the BioWaveHome Neuromodulation Pain Therapy System, which helps manage pain through electrical stimulus. The Veterans Administration and the National Football League have expressed interest in the product and the company touts it as a viable alternative to using highly addictive opioid drugs to treat pain. 

How’s the company doing:

IEC recently scored a multi-year contract valued at more than $50 million with a Tier 2 US defense contractor. The company’s role began with a single service line, but under the new contract, it now supports the entire outsourcing of the program associated with secured communications equipment for US aircraft, ground vehicles and surface warships.

And the company’s Analysis and Testing Lab is expanding its services to the US Department of Defense’s Defense Logistics Agency as part of the agency’s Qualified Testing Supplier List. In fact, IEC is the only electronics-manufacturing company to receive such a certification. 

Customers turn to the lab for failure analysis and counterfeit-component detection to ensure, for example, that bogus or inferior parts made by adversarial countries like China stay out of products crucial to US defense. After testing, the company can transfer parts into its manufacturing facility, saving time and money for customers.

Illustrating the company’s growth, IEC is building a $22 million state-of-the-art advanced technology center in Newark, New York. Construction of the 150,000 square-foot facility is expected to be completed by early next year. In exchange for state and local incentives, the company committed to create up to 360 new jobs over five years. The company also has facilities in nearby Rochester, New York and Albuquerque, New Mexico.

As for the company’s finances, CEO Jeffrey Schlarbaum called the company’s fiscal 2019 third quarter a “breakthrough quarter.”

IEC reported revenue of $40.3 million for the quarter, an increase of 35% year-over-year as well as an 8% increase sequentially compared to the second quarter of fiscal 2019.

Gross margin was 13.9%, compared to 11.3% in the same quarter last year; net income improved year-over-year to $1.2 million from $200,000. 

Sales growth continues to be strong, as evidenced by an order backlog of more than 64% since the end of fiscal 2018 and a book-to-bill ratio of 2.5:1.

Inflection points:

Going forward, IEC expects to achieve more than 25% in organic revenue growth for fiscal year 2019, based in part on its growing order backlog.

The company is also confident that demand for its products and services will increase as overseas manufacturers relocate their operations to the US. 

As part of its strategic initiatives, in order to increase even more sustained growth, the company is focusing on existing customers to drive more opportunities while leveraging its vertical manufacturing services — with an emphasis on targeting fewer yet more capable supply-chain partners.

IEC is also pursuing other strategies. As well as increasing headcount, the company is also investing more in automation to improve cycle times and product quality. And the company is strategically pre-buying materials to build in advance of customers’ needs. 

What the boss says:

“For IEC the focus on US manufacturing allows us to protect the intellectual property for the products we manufacture for our customers,” IEC CEO Jeffrey Schlarbaum told Proactive Investors in a recent interview. 

“Secondarily, vertical manufacturing allows us to control costs, the lead-time, and quality for the components that we integrate into the products, which is unique to us. Lastly, we have a very sharp focus on a highly regulated market. So we are not spread thin trying to build high-volume consumer products and low-volume defense products.”

Story by ProactiveInvestors