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.