Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v3.20.1
Note 8 - Segmented Information
 3 Months Ended
Mar. 29, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
8
.
Segmented information
 
General description
 
During the
three
months ended
March 29, 2020,
the Company operated and managed by geographic region in the United States, Mexico and China, which are our operating and reportable segments. During the
three
months ended
March 29, 2020,
the Company completed final shipments for customers serviced in our Chinese manufacturing facility and began relocating the equipment to our other North American sites. We utilize each reportable segment’s contribution (revenue minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward foreign exchange contracts, corporate allocations and restructuring expenses) to monitor reportable segment performance. Contribution by country is utilized by the chief operating decision-maker (defined as the Chief Executive Officer) as the indicator of reportable segment performance, as it reflects costs which our operating segment management are 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 29
, 20
20
    
March 31
, 201
9
  
Revenue
  
 
 
 
  
 
 
 
Mexico
   $
63,364
     $
65,760
  
China
    
4,206
      
8,656
  
U.S.
    
33,382
      
29,811
  
Total
   $
100,952
     $
104,227
  
Intersegment revenue
  
 
 
 
  
 
 
 
Mexico
   $
(2,422
 )   $
(34
)
China
    
(3,303
 )    
(1,427
)
U.S.
    
(89
 )    
(117
)
Total
   $
(5,814
 )   $
(1,578
)
Net external revenue
 
 
 
 
  
 
 
 
Mexico
   $
60,942
     $
65,726
  
China
    
903
      
7,229
  
U.S.
    
33,293
      
29,694
  
Total segment revenue (which also equals consolidated revenue)
   $
95,138
     $
102,649
  
                 
Segment contribution
  
 
 
 
  
 
 
 
Mexico
   $
5,874
     $
5,055
  
China
    
(2
 )    
547
  
U.S.
    
2,962
      
1,482
  
Total
   $
8,834
     $
7,084
  
                 
Corporate expenses
    
5,902
      
5,259
  
Restructuring charges (recovery)
    
(221
 )    
624
  
Change in fair value of warrant liability
    
(517
 )    
(101
 )
Change in fair value of contingent consideration
    
—
      
(3,050
 )
Unrealized foreign exchange loss on unsettled forward exchange contracts
    
512
      
—
  
Interest expense
    
2,093
      
2,870
  
Income before income taxes
   $
1,065
     $
1,482
  
 
 
Three months ended March 29, 2020
  
Mexico
    
U
.
S
.
    
China
    
Total
  
Market Sector:
                                
Test and Measurement
   $
21,391
     $
8,048
     $
—
     $
29,439
  
Retail and Payment Systems
    
12,323
      
—
      
—
      
12,323
  
Telecom, Networking and Communications
    
3,034
      
3,791
      
714
      
7,539
  
Medical
    
8,563
      
2,577
      
130
      
11,270
  
Industrial, Power and Clean Technology
    
10,314
      
8,492
      
60
      
18,866
  
Semiconductor
    
5,316
      
—
      
—
      
5,316
  
Aerospace and Defense
    
—
      
10,385
      
—
      
10,385
  
Segment Revenue
    
60,941
      
33,293
      
904
      
95,138
  
 
 
Revenue by category
  
Mexico
    
U.S.
    
China
    
Total
  
                                 
Point in time
   $
499
     $
1,067
     $
452
     $
2,018
  
Over time
    
60,442
      
32,226
      
452
      
93,120
  
Total Revenue
    
60,941
      
33,293
      
904
      
95,138
  
 
 
Three months
ended March 31, 2019
  
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
  
 
 
Revenue by category
  
Mexico
    
U
.
S
.
    
China
    
Total
  
                                 
Point in time
   $
435
     $
1,712
     $
2
     $
2,149
  
Over time
    
65,291
      
27,982
      
7,227
      
100,500
  
Total Revenue
    
65,726
      
29,694
      
7,229
      
102,649
  
 
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
29
,
20
20
    
December 29
,
201
9
  
U.S.
   $
544
     $
1,217
  
Mexico
    
160
      
2,461
  
China
    
2
      
155
  
Segment total
    
706
      
3,833
  
Corporate and other
    
—
      
23
  
Total
   $
706
     $
3,856
  
  
 
Property, plant and equipment (a)
 
   
March
29
,
20
20
    
December 29
,
201
9
  
U.S.
   $
20,088
     $
16,904
  
Mexico
    
10,771
      
10,970
  
China
    
58
      
670
  
Segment total
    
30,917
      
28,544
  
Corporate and other
    
81
      
96
  
Total
   $
30,998
     $
28,640
  
 
 
 
Other long term segment assets (b)
 
   
March 29,
2020
    
December 29,
2019
  
U.S.
   $
9,343
     $
9,273
  
Mexico
    
20,576
      
22,179
  
China
    
—
      
—
  
Segment total
    
29,919
      
31,452
  
Corporate and other
    
804
      
859
  
Total
   $
30,723
     $
32,311
  
 
 
Total segment assets (a)
 
   
March 29,
2020
    
December 29,
2019
  
U.S.
   $
118,685
     $
112,789
  
Mexico
    
91,607
      
93,349
  
China
    
1,610
      
6,694
  
Segment total
    
211,902
      
212,832
  
Corporate and other
    
438
      
547
  
Total
   $
212,341
     $
213,379
  
 
 
(a)
Property, plant and equipment information is based on the principal location of the asset. This includes operating lease right of use assets.
(b)
Includes Goodwill, Intangible assets, deferred income taxes and deferred financing costs
 
Geographic revenue
 
The following table contains geographic revenue based on our customer invoicing location, for the
three
months ended
March 29, 2020
and
March 31, 2019.
 
   
Three months ended
  
   
March
29
, 20
20
    
March
31
, 201
9
  
U.S.
   $
89,509
     $
94,186
  
Canada
    
5,022
      
5,039
  
China
    
607
      
3,424
  
Total
   $
95,138
     $
102,649
  
 
  
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 29, 2020,
one
customer exceeded
10%
of total revenue, comprising of
12.6%
of total revenue across all geographic segments. During the
three
months ended
March 31, 2019,
one
customers exceeded
10%
of total revenue, comprising of
13.1%
of total revenue across all geographic segments.
 
As of
March 29, 2020,
no
customers represented more than
10%
of the trade accounts receivable. At
December 29, 2019,
one
customer comprised
10%
of the Company’s trade accounts receivable.
No
other customers individually represented more than
10%
of total revenue or trade accounts receivable.