IEC Electronics building solid manufacturing niche that is exclusively 'US made'

• Provides electronic-manufacturing services to the aerospace, defense, industrial and medical sectors
• Manufactures 100% of its products in the US, unlike many of its competitors
• Fiscal 2Q 2021 revenue was $45.4 million

What IEC Electronics does:

IEC Electronics Inc (NASDAQ: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 100% of its products 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. IEC’s BioWaveHome Neuromodulation Pain Therapy System helps manage pain through electrical stimulus. The Veterans Administration and the National Football League have expressed interest in the product which is seen as a viable alternative to using highly addictive opioid drugs to treat pain. 

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. 

How is it doing:

IEC Electronics has made a strong start to 2021.

In its 2Q 2021 financial results, reported on May 5, the company reported revenue of $45.4 million, a year-over-year increase of 2.7% from $44.2 million at the same stage in 2020. In the three months ended April 30, gross profit was $3.3 million, 7.3% of sales, compared to gross profit of $5.5 million, 12.5% of sales, in the second quarter of fiscal 2020.

The company’s fiscal 2021 first-quarter numbers, posted in the beginning of February, included  a net income jump of 29% year-over-year to $1.5 million, or $0.15 per share. The company noted that its top-line revenue also improved to $47.5 million, a 6% increase from the same period last year, while its gross profit margin for the quarter rose 40 basis points to 12.1% of sales.

The company reported a net loss of $300,000, $0.03 per diluted share, compared to net income of $1.5 million, $0.14 per diluted share, a year earlier. 

In September 2020, IEC revealed that it had entered into an agreement to purchase an 86,000 square-foot facility in Rochester, New York state.  The company said the new facility was expected to provide additional capacity and more importantly, access to a larger pool of qualified resources to support future organic growth. 

Looking ahead to the second half of its fiscal 2021, IEC expects revenue to continue to grow as it brings online a pair of high-value programs and ramps up production.

Inflection points:

• Further top-line revenue growth
• New high-value electronics programs 
• Accelerating production for and incresing its visibility to companies in aerospace, defense and more

What the boss says:

When reporting the firm’s second-quarter fiscal 2021 results in May, IEC Electronics CEO Jeffrey Schlarbaum said: “Second fiscal quarter results came in below expectations due to delays in ramping two high-value programs. We believe we have built an infrastructure to support the conversion of much higher revenue levels that have now shifted into the second half of the fiscal year.”

“These complex programs, which are anticipated to provide considerable long-term revenue opportunity for IEC, experienced unusual technical challenges and supply chain delays that slowed the ramp to steady production, impacting revenue and profitability for the quarter,” he continued. ”We view this as simply a timing issue, as demand for our highly technical and complex manufacturing capabilities remains strong.”

“With our visibility today, we remain confident and believe we are well-positioned to drive double-digit organic growth for the balance of fiscal 2021. As a 100% US-based manufacturer with a full portfolio of vertically integrated production services, IEC is an attractive partner for companies across several regulated industries who are looking for the highest levels of intellectual property protection and supply chain management.”

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Story by ProactiveInvestors