Annual report pursuant to Section 13 and 15(d)

Note 11 - Segmented Information

v3.20.1
Note 11 - Segmented Information
12 Months Ended
Dec. 29, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
1
1
.
Segmented information
 
General description
 
In
2019
the Company operated and managed by geographic region which are the United States, Mexico and China which are our operating and reportable segments. During the
fourth
quarter of
2019
the Company ceased manufacturing in China and began to relocate the equipment used at our Chinese manufacturing facility 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: 
 
   
Year ended
December 29,
2019
   
Year ended
December 30,
2018
   
Year ended
December 31,
2017
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
  $
118,240
    $
42,994
    $
21,269
 
Mexico
   
237,213
     
155,261
     
99,577
 
China
   
32,580
     
29,257
     
27,349
 
Total
  $
388,033
    $
227,512
    $
148,195
 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
  $
(553
)   $
(1,213
)
  $
(255
)
Mexico
   
(1,407
)    
(2,459
)
   
(13
)
China
   
(13,562
)    
(7,709
)
   
(8,696
)
Total
  $
(15,522
)   $
(11,381
)
  $
(8,964
)
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
  $
117,687
    $
41,781
    $
21,014
 
Mexico
   
235,806
     
152,802
     
99,564
 
China
   
19,018
     
21,548
     
18,653
 
Total segment revenue (which also equals consolidated revenue)
  $
372,511
    $
216,131
    $
139,231
 
                         
Segment contribution
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
  $
8,072
    $
1,434
    $
(1,794
)
Mexico
   
20,356
     
13,851
     
7,515
 
China
   
4,743
     
1,792
     
(1,115
)
Total
  $
33,171
    $
17,077
    $
4,606
 
                         
                         
                         
Corporate expenses
   
23,190
     
13,801
     
10,174
 
Change in fair value of warrant liability
   
(279
)    
111
     
-
 
Change in fair value of contingent consideration
   
(3,050
)    
-
     
-
 
Unrealized foreign exchange gain on unsettled forward exchange contracts
   
-
     
(353
)
   
(918
)
Restructuring charges
   
7,955
     
172
     
1,732
 
Interest expense
   
10,562
     
3,117
     
903
 
(Loss) earnings before income taxes
  $
(5,207
)   $
229
    $
(7,285
)
 
Year ended December 29, 2019
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
77,644
    $
38,550
    $
2,448
    $
118,642
 
Retail and Payment Systems
   
46,070
     
     
     
46,070
 
Telecom, Networking and Communications
   
15,616
     
7,349
     
14,222
     
37,187
 
Medical and Safety
   
32,360
     
12,429
     
736
     
45,525
 
Industrial, Power and Clean Technology
   
41,142
     
34,614
     
1,612
     
77,368
 
Semiconductors
   
22,974
     
16
     
     
22,990
 
Avionics, Aerospace and Defense
   
     
24,729
     
     
24,729
 
Segment Revenue
   
235,806
     
117,687
     
19,018
     
372,511
 
 
 
Revenue by category
 
Mexico
   
U.S.
   
China
   
Total
 
                                 
Point in time
  $
2,374
    $
7,894
    $
1,065
    $
11,333
 
Over time
   
233,432
     
109,793
     
17,953
     
361,178
 
Total Revenue
   
235,806
     
117,687
     
19,018
     
372,511
 
 
Year ended December 30, 2018
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
23,068
    $
22,752
    $
-
    $
45,820
 
Retail and Payment Systems
   
40,987
     
584
     
5
     
41,576
 
Telecom, Networking and Communications
   
13,467
     
5,180
     
18,730
     
37,377
 
Medical and Safety
   
25,977
     
4,126
     
1,278
     
31,381
 
Industrial, Power and Clean Technology
   
22,690
     
4,089
     
1,535
     
28,314
 
Semiconductors
   
26,613
     
9
     
-
     
26,622
 
Avionics, Aerospace and Defense
   
-
     
5,041
     
-
     
5,041
 
Segment Revenue
   
152,802
     
41,781
     
21,548
     
216,131
 
 
Revenue by category
 
Mexico
   
U.S.
   
China
   
Total
 
                                 
Point in time
  $
448
    $
3,530
    $
84
    $
4,062
 
Over time
   
152,354
     
38,251
     
21,464
     
212,069
 
Total Revenue
   
152,802
     
41,781
     
21,548
     
216,131
 
 
Year ended December 31, 2017
 
Mexico
   
U
.
S
.
   
China
   
Total
 
Market Sector:
                               
Test and Measurement
  $
12,095
    $
14,250
    $
-
    $
26,345
 
Retail and Payment Systems
   
33,637
     
-
     
-
     
33,637
 
Telecom, Networking and Communications
   
11,031
     
4,873
     
9,309
     
25,213
 
Medical and Safety
   
15,673
     
615
     
2,557
     
18,845
 
Industrial, Power and Clean Technology
   
5,671
     
1,276
     
6,787
     
13,734
 
Semiconductors
   
21,457
     
-
     
-
     
21,457
 
Segment Revenue
   
99,564
     
21,014
     
18,653
     
139,231
 
 
Revenue by category
 
Mexico
   
U.S.
   
China
   
Total
 
                                 
Point in time
  $
1,515
    $
5,034
    $
116
    $
6,665
 
Over time
   
98,049
     
15,980
     
18,537
     
132,566
 
Total Revenue
   
99,564
     
21,014
     
18,653
     
139,231
 
 
Capital expenditures:
 
The following table contains additions including those acquired through finance leases, to property, plant and equipment for
2019,
2018
and
2017:
 
   
Year ended
December 29,
2019
   
Year ended
December 30,
2018
   
Year ended
December 31,
2017
 
U.S.
  $
1,217
    $
1,049
    $
499
 
Mexico
   
2,461
     
4,328
     
480
 
China
   
155
     
208
     
145
 
Segment total
   
3,833
     
5,585
     
1,124
 
Corporate and other
   
23
     
118
     
123
 
Total
  $
3,856
    $
5,703
    $
1,247
 
 
Segment assets:
 
   
December
29
,
201
9
   
December 30,
2018
 
Property, plant and equipment (a)
 
 
 
 
 
 
 
 
U.S.
  $
16,904
    $
15,013
 
Mexico
   
10,970
     
11,851
 
China
   
670
     
1,153
 
Segment total
   
28,544
     
28,017
 
Corporate and other
   
96
     
143
 
Total
  $
28,640
    $
28,160
 
                 
Other long term segment assets (b)
 
 
 
 
 
 
 
 
U.S.
  $
9,273
    $
11,429
 
Mexico
   
22,179
     
27,051
 
China
   
     
 
Segment total
   
31,452
     
38,480
 
Corporate and other
   
859
     
668
 
Total
  $
32,311
    $
39,148
 
                 
Total segment assets
(a)
 
 
 
 
 
 
 
 
U.S.
  $
112,789
    $
117,322
 
Mexico
   
93,349
     
89,274
 
China
   
6,694
     
13,723
 
Segment total
   
212,832
     
220,319
 
Corporate and other
   
547
     
707
 
Total
  $
213,379
    $
221,226
 
 
(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:
 
   
Year ended
December 29,
2019
   
Year ended
December 30,
2018
   
Year ended
December 31,
2017
 
U.S.
  $
346,757
    $
175,402
    $
108,783
 
Canada
   
17,206
     
27,053
     
19,986
 
China
   
8,548
     
13,676
     
4,961
 
Africa
   
     
     
5,501
 
Total
  $
372,511
    $
216,131
    $
139,231
 
 
Significant customers and concentration of credit risk
 
Sales of the Company’s products are concentrated among specific customers in the same industry. The Company requires collateral only from new customers with insufficient credit until such time as credit insurance can be obtained. The Company is subject to concentrations of credit risk in trade receivables and mitigates this risk through ongoing credit evaluation of customers and maintaining credit insurance. 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 largest customers or any product line manufactured for
one
of its largest customers, it could experience a significant reduction in revenue. Also, the insolvency of
one
or more of its largest customers or the inability of
one
or more of its largest customers to pay for its orders could decrease future revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect business, financial condition and results of operations.
 
During the year ended
December 29, 2019,
one
customer comprised
12.8%
of revenue. 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.
 
During the year ended
December 30, 2018,
one
customer comprised
11%
of revenue from across all geographic segments. 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.
 
During the year ended
December 31, 2017,
two
customers each comprised
12%
of revenue from across all geographic segments. At
December 31, 2017,
three
customers comprised
40%
(
14%,
14%
and
12%,
respectively) of the Company’s trade accounts receivable.
No
other customers individually represented more than
10%
of trade accounts receivable.