Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Segmented Information

v3.19.3
Note 10 - Segmented Information
9 Months Ended
Sep. 29, 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
   
Nine
months ended
 
   
September 29
,
201
9
   
September 30
,
201
8
   
September 29
,
201
9
   
September 30
,
201
8
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
57,328
    $
40,485
    $
182,424
    $
105,139
 
China
   
8,092
     
8,073
     
22,541
     
19,092
 
U.S.
   
27,426
     
8,581
     
86,448
     
19,167
 
Total
  $
92,846
    $
57,139
    $
291,413
    $
143,398
 
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
(550
)   $
(1,206
)
  $
(1,293
)   $
(1,944
)
China
   
(3,580
)    
(2,183
)
   
(7,687
)    
(5,962
)
U.S.
   
(34
)    
(73
)
   
(166
)    
(216
)
Total
  $
(4,164
)   $
(3,462
)
  $
(9,146
)   $
(8,122
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
56,778
    $
39,279
    $
181,131
    $
103,195
 
China
   
4,512
     
5,890
     
14,854
     
13,130
 
U.S.
   
27,392
     
8,508
     
86,282
     
18,951
 
Total segment revenue (which also equals consolidated revenue)
  $
88,682
    $
53,677
    $
282,267
    $
135,276
 
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
4,815
    $
3,552
    $
15,456
    $
9,267
 
China
   
1,313
     
556
     
3,012
     
998
 
U.S.
   
2,191
     
214
     
5,378
     
175
 
Total
  $
8,319
    $
4,322
    $
23,846
    $
10,440
 
                                 
Corporate costs
   
5,962
     
2,878
     
17,227
     
8,249
 
Change in fair value of warrant liability
   
(858
)    
     
(919
)    
 
Change in fair value of contingent consideration
   
     
     
(3,050
)    
 
Unrealized foreign exchange gain on unsettled forward exchange contracts
   
     
(108
)
   
     
(338
)
Interest
   
2,679
     
485
     
8,349
     
1,195
 
Restructuring and closure charges
   
6,454
     
58
     
8,624
     
154
 
Earnings (loss) before income taxes
  $
(5,918
)   $
1,009
    $
(6,385
)   $
1,180
 
 
 
Three months
ended
September 29
, 2019
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
19,188
    $
8,287
    $
    $
27,475
 
Retail and Payment Systems
   
10,460
     
     
     
10,460
 
Telecom, Networking and Communications
   
3,986
     
1,393
     
4,192
     
9,571
 
Medical
   
7,861
     
2,637
     
40
     
10,538
 
Industrial, Power and Clean Technology
   
10,154
     
9,851
     
280
     
20,285
 
Semiconductor
   
5,129
     
     
     
5,129
 
Aerospace and Defense
   
     
5,224
     
     
5,224
 
Segment Revenue
   
56,778
     
27,392
     
4,512
     
88,682
 
 
 
 
Three months
ended
September 30
, 2018
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
3,277
    $
7,181
    $
    $
10,458
 
Retail and Payment Systems
   
10,815
     
     
     
10,815
 
Telecom, Networking and Communications
   
3,596
     
833
     
5,613
     
10,042
 
Medical
   
7,400
     
91
     
37
     
7,528
 
Industrial, Power and Clean Technology
   
6,495
     
403
     
240
     
7,138
 
Semiconductor
   
7,696
     
     
     
7,696
 
                                 
Segment Revenue
   
39,279
     
8,508
     
5,890
     
53,677
 
 
 
 
Nine months
ended
September 29
, 2019
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
59,054
    $
29,054
    $
2,447
    $
90,555
 
Retail and Payment Systems
   
35,537
     
     
     
35,537
 
Telecom, Networking and Communications
   
11,495
     
5,783
     
11,078
     
28,356
 
Medical
   
24,362
     
9,393
     
482
     
34,237
 
Industrial, Power and Clean Technology
   
32,502
     
25,008
     
847
     
58,357
 
Semiconductor
   
18,181
     
16
     
     
18,197
 
Aerospace and Defense
   
     
17,028
     
     
17,028
 
Segment Revenue
   
181,131
     
86,282
     
14,854
     
282,267
 
 
 
 
Nine months
ended
September 30
, 2018
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
10,772
    $
14,039
    $
    $
24,811
 
Retail and Payment Systems
   
27,215
     
     
     
27,215
 
Telecom, Networking and Communications
   
9,053
     
3,672
     
12,022
     
24,747
 
Medical
   
21,788
     
270
     
44
     
22,102
 
Industrial, Power and Clean Technology
   
13,561
     
970
     
1,064
     
15,595
 
Semiconductor
   
20,806
     
     
     
20,806
 
                                 
Segment Revenue
   
103,195
     
18,951
     
13,130
     
135,276
 
 
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
nine
months ended
September 29, 2019
and
September 30, 2018:
 
   
Three months ended
   
Nine
months ended
 
   
September 29
,
2019
   
September 30
,
2018
   
September 29
,
2019
   
September 30
,
2018
 
Mexico
  $
859
    $
1,287
    $
2,212
    $
3,663
 
China
   
98
     
190
     
152
     
198
 
U.S.
   
446
     
21
     
963
     
579
 
Segment total
   
1,403
     
1,498
     
3,327
     
4,440
 
Corporate and other
   
     
7
     
24
     
117
 
Total
  $
1,403
    $
1,505
    $
3,351
    $
4,557
 
 
 
    
Property, plant and equipment
(a)
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Mexico
  $
11,560
    $
11,851
 
China
   
630
     
1,153
 
U.S
   
14,047
     
15,013
 
Segment total
   
26,237
     
28,017
 
Corporate and other
   
111
     
143
 
Segment assets
  $
26,3489
    $
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
nine
months ended
September 29, 2019
and
September 30, 2018:
 
   
Three months ended
   
Nine
months ended
 
   
September 29
,
2019
   
September 30
,
2018
   
September 29
,
2019
   
September 30
,
2018
 
U.S.
  $
83,276
    $
43,324
    $
260,210
    $
108,153
 
Canada
   
3,916
     
7,413
     
13,686
     
20,431
 
China
   
1,490
     
2,940
     
8,371
     
6,692
 
Total
  $
88,682
    $
53,677
    $
282,267
    $
135,276
 
 
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
September 29, 2019,
one
customer exceeded
10%
of total revenue, comprising
12.3%
of total revenue across all geographic segments. During the
three
months ended
September 30, 2018,
three
customers exceeded
10%
of total revenues comprising
35.7%
(
12.8%,
12.0%,
and
10.9%,
respectively) of total revenues. During the
nine
months ended
September 29, 2019,
one
customer exceeded
10%
of total revenue, comprising
13.0%
of total revenue across all geographic segments. During the
nine
months ended
September 30, 2018,
two
customers comprised
23.9%
(
13.5%
and
10.4%,
respectively) of total revenues.
 
As of
September 29, 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.