Quarterly report pursuant to Section 13 or 15(d)

Note 9 - Segmented Information

v3.10.0.1
Note 9 - Segmented Information
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
9.
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 revenues minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward exchange contracts, 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 30
,
201
8
   
October 1
,
201
7
   
September 30
,
201
8
   
October 1
,
201
7
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
40,485
    $
23,907
    $
105,139
    $
70,394
 
China
   
8,073
     
6,934
     
19,092
     
23,031
 
U.S.
   
8,581
     
6,319
     
19,167
     
15,229
 
Total
  $
57,139
    $
37,160
    $
143,398
    $
108,654
 
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
(1,206
)   $
    $
(1,944
)   $
(12
)
China
   
(2,183
)    
(2,640
)
   
(5,962
)    
(7,810
)
U.S.
   
(73
)    
(103
)
   
(216
)    
(242
)
Total
  $
(3,462
)   $
(2,743
)
  $
(8,122
)   $
(8,064
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
39,279
    $
23,907
    $
103,195
    $
70,382
 
China
   
5,890
     
4,294
     
13,130
     
15,221
 
U.S.
   
8,508
     
6,216
     
18,951
     
14,987
 
Total segment revenue (which also equals consolidated revenue)
  $
53,677
    $
34,417
    $
135,276
    $
100,590
 
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
  $
3,552
    $
2,346
    $
9,267
    $
5,031
 
China
   
556
     
146
     
998
     
(1,028
)
U.S.
   
214
     
(55
)
   
175
     
(2,169
)
Total
  $
4,322
    $
2,437
    $
10,440
    $
1,834
 
                                 
Corporate allocations
   
2,878
     
2,237
     
8,249
     
7,686
 
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts
   
(108
)    
118
     
(338
)    
(1,438
)
Interest
   
485
     
229
     
1,195
     
625
 
Restructuring charges
   
58
     
326
     
154
     
1,677
 
Earnings (loss) before income tax expense
  $
1,009
    $
(473
)
  $
1,180
    $
(6,716
)
 
Additions to property, plant and equipment
 
The following table contains additions to property, plant and equipment including those acquired through capital leases for the
three
and
nine
months ended
September 30, 2018
and
October 1, 2017:
 
   
Three months ended
   
Nine
months ended
 
   
September 30
,
2018
   
October 1
,
2017
   
September 30
,
2018
   
October 1
,
2017
 
Mexico
  $
1,287
    $
220
    $
3,663
    $
400
 
China
   
190
     
59
     
198
     
134
 
U.S.
   
21
     
171
     
579
     
480
 
Segment total
   
1,498
     
450
     
4,440
     
1,014
 
Corporate and other
   
7
     
     
117
     
124
 
Total
  $
1,505
    $
450
    $
4,557
    $
1,138
 
 
Property, plant and equipment
(a)
 
   
September 30
,
201
8
   
December
3
1,
2017
 
Mexico
  $
9,469
    $
7,518
 
China
   
1,242
     
1,380
 
U.S
   
1,472
     
1,188
 
Segment total
   
12,183
     
10,086
 
Corporate and other
   
168
     
183
 
Segment assets
  $
12,351
    $
10,269
 
 
 
(a)
Property, plant and equipment information is based on the principal location of the asset.
 
Geographic revenues
 
The following table contains geographic revenues based on the product shipment destination, for the
three
and
nine
months ended
September 30, 2018
and
October 1, 2017:
 
   
Three months ended
   
Nine
months ended
 
   
September 30
,
2018
   
October 1
,
2017
   
September 30
,
2018
   
October 1
,
2017
 
U.S.
  $
43,324
    $
27,044
    $
108,153
    $
77,219
 
Canada
   
7,413
     
4,390
     
20,431
     
14,894
 
China
   
2,940
     
1,488
     
6,692
     
3,844
 
Africa
   
     
1,495
     
     
4,633
 
Total
  $
53,677
    $
34,417
    $
135,276
    $
100,590
 
 
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.
 
As of
September 30, 2018,
three
customers exceeded
10%
of total revenues representing
12.8%,
12.0%,
and
10.9%
respectively (
October 1, 2017 –
two
customers represented
14.0%
and
12.8%
) of total revenue for the
third
quarter of
2018.
During the
nine
months ended
September 30, 2018,
two
customers individually comprised
13.5%
and
10.4%
(
October 1, 2017 –
two
customers individually comprised
12.3%
and
11.5%
) of total revenue for the period.
No
other customers exceeded
10%
of the Company’s revenue in either period.
 
As of
September 30, 2018,
three
customers represented
14.7%,
10.3%
and
10.3%
(
December 31, 2017,
three
customers represented
14.0%,
14.0%
and
12.0%
), respectively of the Company’s trade accounts receivable.
No
other customers exceeded
10%
of the Company’s trade accounts receivable.