Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Segmented Information

v3.19.1
Note 10 - Segmented Information
3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
10
.
Segmented information
 
 
General description
 
The Company is operated and managed geographically and has production facilities in the United States, Mexico and China. The Company utilizes reportable segment’s site contribution (site revenue minus operating expenses, excluding unrealized foreign exchange, corporate allocations and restructuring expenses) to monitor reportable segment performance. Site contribution is utilized by the chief operating decision-maker as the indicator of reportable segment performance, as it reflects costs which our operating site management is directly responsible for. Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions. In assessing the performance of the reportable segments, management attributes site revenue to the reportable segment that ships the product to the customer, irrespective of the product’s destination. Information about the reportable segments is as follows:
 
   
Three months ended
 
   
March 31
, 201
9
   
April
1
, 201
8
 
Revenue
 
 
 
 
 
 
 
 
Mexico
  $
65,760
    $
29,073
 
China
   
8,656
     
5,233
 
U.S.
   
29,811
     
5,255
 
Total
  $
104,227
    $
39,561
 
Intersegment revenue
 
 
 
 
 
 
 
 
Mexico
  $
(34
)   $
(120
)
China
   
(1,427
)    
(2,227
)
U.S.
   
(117
)    
(94
)
Total
  $
(1,578
)   $
(2,441
)
Net external revenue
 
 
 
 
 
 
 
 
Mexico
  $
65,726
    $
28,953
 
China
   
7,229
     
3,006
 
U.S.
   
29,694
     
5,161
 
Total segment revenue (which also equals consolidated revenue)
  $
102,649
    $
37,120
 
Site Contribution
 
 
 
 
 
 
 
 
Mexico
  $
4,806
    $
2,506
 
China
   
855
     
128
 
U.S.
   
1,423
     
23
 
Total
  $
7,084
    $
2,657
 
Corporate allocations
   
2,108
     
2,635
 
Restructuring charges
   
624
     
 
Unrealized foreign exchange gain on unsettled forward exchange contracts
   
     
(319
)
Interest
   
2,870
     
307
 
Income before income taxes
  $
1,482
    $
34
 
 
Three months
ended March 31, 2019
(in thousands)
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
19,917
    $
11,005
    $
1,583
    $
32,505
 
Retail and Payment Systems
   
12,942
     
     
     
12,942
 
Telecom, Networking and Communications
   
4,004
     
2,077
     
4,726
     
10,807
 
Medical
   
8,459
     
3,652
     
394
     
12,505
 
Industrial, Power and Clean Technology
   
13,099
     
5,979
     
526
     
19,604
 
Semiconductor
   
7,305
     
     
     
7,305
 
Aerospace and Defense
   
     
6,981
     
     
6,981
 
Segment Revenue
   
65,726
     
29,694
     
7,229
     
102,649
 
 
 
Three months
ended April 1, 2018
(in thousands)
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
2,640
    $
2,891
    $
    $
5,530
 
Retail and Payment Systems
   
7,260
     
     
     
7,260
 
Telecom, Networking and Communications
   
2,963
     
1,866
     
2,486
     
7,315
 
Medical
   
7,689
     
143
     
     
7,832
 
Industrial, Power and Clean Technology
   
2,802
     
262
     
520
     
3,584
 
Semiconductor
   
5,600
     
     
     
5,600
 
Aerospace and Defense
   
     
     
     
 
Segment Revenue
   
28,953
     
5,161
     
3,006
     
37,120
 
 
Additions to property, plant and equipment
 
The following table contains additions, including those acquired through capital leases, to property, plant and equipment for the
three
months ended:
 
   
Three months ended
 
   
March
3
1
,
201
9
   
December 30
,
201
8
 
Mexico
  $
387
    $
4,328
 
China
   
32
     
208
 
U.S.
   
261
     
1,049
 
Segment total
   
680
     
5,585
 
Corporate and other
   
     
118
 
Total
  $
680
    $
5,703
 
    
Property, plant and equipment
(a)
 
   
March 3
1
,
201
9
   
December 30
,
201
8
 
Mexico
  $
11,414
    $
11,851
 
China
   
1,098
     
1,153
 
U.S
   
14,582
     
15,013
 
Segment total
   
27,094
     
28,017
 
Corporate and other
   
119
     
143
 
Segment assets
  $
27,213
    $
28,160
 
 
 
(a)
Property, plant and equipment information is based on the principal location of the asset.
 
Geographic revenue
 
The following table contains geographic revenue based on the product shipment destination, for the
three
months ended
March 31, 2019
and
April 1, 2018.
 
   
Three months ended
 
   
March
3
1
, 201
9
   
April
1
, 201
8
 
U.S.
  $
94,186
    $
30,130
 
Canada
   
5,039
     
5,161
 
China
   
3,424
     
1,829
 
Total
  $
102,649
    $
37,120
 
 
Significant customers and concentration of credit risk
 
Sales of the Company’s products are concentrated in certain cases among specific customers in the same industry. The Company is subject to concentrations of credit risk in trade receivables. The Company considers concentrations of credit risk in establishing the allowance for doubtful accounts and believes the recorded allowances are adequate.
 
The Company expects to continue to depend upon a relatively small number of customers for a significant percentage of its revenue. In addition to having a limited number of customers, the Company manufactures a limited number of products for each customer. If the Company loses any of its larger customers or any product line manufactured for
one
of its larger customers, it could experience a significant reduction in revenue. Also, the insolvency of
one
or more of its larger customers or the inability of
one
or more of its larger customers to pay for its orders could decrease revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect the business, financial condition and results of operations.
 
During the
three
months ended
March 31, 2019,
one
customer exceeded
10%
of total revenue, comprising of
13.1%
of total revenue across all geographic segments. During the
three
months ended
April 1, 2018,
four
customers exceeded
10%
of total revenue, comprising of
45.8%
of total revenue across all geographic segments.
 
As of
March 31, 2019,
no
customers represented more than
10%
of the trade accounts receivable. At
December 30, 2018,
two
customers comprised
21%
(
11%
and
10%,
respectively) of the Company’s trade accounts receivable.
No
other customers individually represented more than
10%
of trade accounts receivable in either period.