Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Segmented Information

v3.19.2
Note 10 - Segmented Information
6 Months Ended
Jun. 30, 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
   
Six months ended
 
   
June 30
,
201
9
   
July
1
,
201
8
   
June 30
,
201
9
   
July
1
,
201
8
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
59,336
    $
35,581
    $
125,096
    $
64,654
 
China
   
5,793
     
5,786
     
14,449
     
11,019
 
U.S.
   
29,211
     
5,331
     
59,022
     
10,586
 
Total
  $
94,340
    $
46,698
    $
198,567
    $
86,259
 
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
(594
)   $
(618
)
  $
(743
)   $
(738
)
China
   
(2,681
)    
(1,552
)
   
(4,107
)    
(3,779
)
U.S.
   
(129
)    
(49
)
   
(132
)    
(143
)
Total
  $
(3,404
)   $
(2,219
)
  $
(4,982
)   $
(4,660
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
58,742
    $
34,963
    $
124,353
    $
63,916
 
China
   
3,112
     
4,234
     
10,342
     
7,240
 
U.S.
   
29,082
     
5,282
     
58,890
     
10,443
 
Total segment revenue (which also equals consolidated revenue)
  $
90,936
    $
44,479
    $
193,585
    $
81,599
 
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
5,835
    $
3,209
    $
10,641
    $
5,715
 
China
   
844
     
314
     
1,699
     
442
 
U.S.
   
1,764
     
(62
)
   
3,187
     
(39
)
Total
  $
8,443
    $
3,461
    $
15,527
    $
6,118
 
                                 
Corporate allocations
   
6,046
     
2,736
     
8,154
     
5,371
 
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts
   
     
89
     
     
(230
)
Interest
   
2,800
     
403
     
5,670
     
710
 
Restructuring charges
   
1,546
     
96
     
2,170
     
96
 
Earnings (loss) before income taxes
  $
(1,949
)   $
137
    $
(467
)   $
171
 
 
 
Three months
ended
June 30
, 2019
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
19,949
    $
9,705
    $
865
    $
30,519
 
Retail and Payment Systems
   
12,149
     
     
     
12,149
 
Telecom, Networking and Communications
   
3,503
     
2,314
     
2,200
     
8,017
 
Medical
   
8,093
     
3,104
     
47
     
11,244
 
Industrial, Power and Clean Technology
   
9,299
     
9,122
     
     
18,421
 
Semiconductor
   
5,749
     
16
     
     
5,765
 
Aerospace and Defense
   
     
4,821
     
     
4,821
 
Segment Revenue
   
58,742
     
29,082
     
3,112
     
90,936
 
 
 
 
Three months
ended
July
1, 2018
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
4,750
    $
3,548
    $
    $
8,298
 
Retail and Payment Systems
   
9,450
     
     
     
9,450
 
Telecom, Networking and Communications
   
2,449
     
1,393
     
3,836
     
7,678
 
Medical
   
6,650
     
36
     
49
     
6,735
 
Industrial, Power and Clean Technology
   
4,154
     
305
     
349
     
4,808
 
Semiconductor
   
7,510
     
     
     
7,510
 
Segment Revenue
   
34,963
     
5,282
     
4,234
     
44,479
 
 
 
 
Six months
ended
June 30
, 2019
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
39,865
    $
20,765
    $
2,450
    $
63,080
 
Retail and Payment Systems
   
25,078
     
     
     
25,078
 
Telecom, Networking and Communications
   
7,507
     
4,391
     
6,884
     
18,782
 
Medical
   
16,501
     
6,756
     
440
     
23,697
 
Industrial, Power and Clean Technology
   
22,348
     
15,159
     
568
     
38,075
 
Semiconductor
   
13,054
     
16
     
     
13,070
 
Aerospace and Defense
   
     
11,803
     
     
11,803
 
Segment Revenue
   
124,353
     
58,890
     
10,342
     
193,585
 
 
 
Six
months
ended
July
1, 2018
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
7,450
    $
6,478
    $
    $
13,928
 
Retail and Payment Systems
   
16,650
     
     
     
16,650
 
Telecom, Networking and Communications
   
5,350
     
2,977
     
6,422
     
14,749
 
Medical
   
14,339
     
283
     
49
     
14,671
 
Industrial, Power and Clean Technology
   
7,017
     
705
     
769
     
8,491
 
Semiconductor
   
13,110
     
     
     
13,110
 
Segment Revenue
   
63,916
     
10,443
     
7,384
     
81,599
 
 
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
and
six
months ended
June 30, 2019
and
July 1, 2018:
 
   
Three months ended
   
Six months ended
 
   
June 30
,
2019
   
July
1
,
2018
   
June 30
,
2019
   
July
1
,
2018
 
Mexico
  $
965
    $
2,288
    $
1,353
    $
2,376
 
China
   
23
     
8
     
54
     
8
 
U.S.
   
256
     
552
     
517
     
558
 
Segment total
   
1,244
     
2,848
     
1,924
     
2,942
 
Corporate and other
   
24
     
107
     
24
     
110
 
Total
  $
1,268
    $
2,955
    $
1,948
    $
3,052
 
 
 
    
Property, plant and equipment
(a)
 
   
June 30
,
201
9
   
December 30
,
201
8
 
Mexico
  $
11,550
    $
11,851
 
China
   
872
     
1,153
 
U.S
   
14,308
     
15,013
 
Segment total
   
26,730
     
28,017
 
Corporate and other
   
125
     
143
 
Segment assets
  $
26,855
    $
28,160
 
 
 
(a)
Property, plant and equipment information is based on the principal location of the asset.
 
Geographic revenue
 
The following table contains geographic revenues based on the product shipment destination, for the
three
and
six
months ended
June 30, 2019
and
July 1, 2018:
 
   
Three months ended
   
Six months ended
 
   
June 30
,
2019
   
July
1
,
2018
   
June 30
,
2019
   
July
1
,
2018
 
U.S.
  $
82,593
    $
34,699
    $
176,934
    $
64,829
 
Canada
   
4,860
     
7,857
     
9,770
     
13,018
 
China
   
3,483
     
1,923
     
6,881
     
3,752
 
Total
  $
90,936
    $
44,479
    $
193,585
    $
81,599
 
 
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
June 30, 2019,
one
customer exceeded
10%
of total revenue, comprising
13.5%
of total revenue across all geographic segments. During the
three
months ended
July 1, 2018,
three
customers exceeded
10%
of total revenues comprising
34.8%
(
14.4%,
10.4%,
and
10.0%,
respectively) of total revenues. During the
six
months ended
June 30, 2019,
one
customer exceeded
10%
of total revenue, comprising
13.3%
of total revenue across all geographic segments. During the
six
months ended
July 1, 2018,
three
customers comprised
34.4%
(
13.9%,
10.4%
and
10.1%,
respectively) of total revenues.
 
As of
June 30, 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.