IEC Electronics (NYSE: IEC) reported Q1 2013 earnings on Tuesday, February 5th 2013. Performance during the quarter, which ended December 28th 2012, was less than impressive. Although IEC managed to keep its head above the break-even point, its income and revenue dipped notably when compared with figures from the same quarter in the previous year. The highlights of the disappointing earnings include a 2.25 percent year-over-year decline in revenue. Quarterly net income also dipped to $239 thousand from $948 thousand in fiscal 2012 Q1. To add to the already dismal news, company CEO Barry Gilbert lowered the company's revenue forecast for fiscal 2013 from about 14 percent to around 9 percent.
IEC's services are not offered to the typical consumer but to larger, corporate entities. The company provides circuit cards, system level assemblies and a host of custom cable and wire harness assemblies to its clients. Most of IEC's customers are in the computing, military, medical and industrial sectors. As such, broader market conditions affecting IEC's customers inevitably spill over to IEC's bottom line. That said, some of IEC's key industrial customers who reported strong demand for the company's products in Q1 Fiscal 2012, reported softening demand for the same products in Q1 Fiscal 2013. As a result, demand for IEC's key products was adversely affected.
During the Q1 conference call, Gilbert revealed that IEC had recently garnered several lucrative contracts and was in the final stages of securing more strategic partnerships. According to Gilbert, these are multi-year deals. This news should sit well with long-term investors; particularly after considering the stock's current affordable price and its inherent growth potential. As added incentive, Gilbert also noted that IEC expects increased demand from aerospace and military clients. Given the growing need for advanced technology in these sectors, IEC is positioned to do well.
The lure of future business coupled with the aforementioned long term contracts; greatly enhance the company's long-term prospects. Although not substantially compelling, this, in a small way, reduces the element of risk. At the moment, it is not possible to tell the exact time when broader market conditions will tilt to the advantage of IEC. Nonetheless, the expected strong demand from the military sector, coupled with the company's long term contracts, present options for this emerging growth company. IEC has the tools, under Gilbert's leadership, to get past this minor hiccup.