Based on the provided financial report articles, I generated the title for the article: **"Consolidated Balance Sheets and Statements of Stockholders' Equity for [Company Name] as of December 31, 2022, 2023, and 2024, and for the years then ended"** Please note that the title may not be exact, as the provided text does not contain the company name.
The financial report presents the financial statements of the company for the fiscal year 2024, as well as the comparative financial statements for 2023 and 2022. The company reported total revenues of $X, with net income of $Y. The balance sheet shows total assets of $Z, total liabilities of $W, and total equity of $V. The company’s cash flow statement shows a net cash flow from operating activities of $X, a net cash flow from investing activities of $Y, and a net cash flow from financing activities of $Z. The company’s stock option and restricted stock unit plans were active during the year, with X options and Y restricted stock units outstanding as of December 31, 2024. The company also adopted Accounting Standards Update 2016-13, which resulted in a cumulative effect adjustment of $X to retained earnings as of January 1, 2023.
Overview
We are a Minnesota, United States based full-service global EMS contract manufacturer in the Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets. We offer a full range of value-added engineering, technical, and manufacturing services including project management, design, testing, prototyping, manufacturing, supply chain management, and post-market services. Our products are complex electromedical and electromechanical products including medical devices, wire and cable assemblies, printed circuit board assemblies, and other box builds.
As of December 31, 2024, we have facilities in Minnesota, Monterrey, Mexico, and Suzhou, China. We closed our facility in Blue Earth, Minnesota in December 2024 and are currently seeking to sell this facility.
Our net sales are derived from complex designed products built to customers’ specifications. Quality, on-time delivery, and reliability are of utmost importance. We continue to focus on lean manufacturing, quality, and on-time delivery improvements to increase asset utilization, reduce lead times, and provide competitive pricing.
Our strategic investments have positioned us to capitalize on growth opportunities in the medical markets and improve our competitiveness by expanding our global footprint. Our industrial and defense markets are focused on improving asset utilization and profitability while transforming to a value-added, solution-sell business model.
Operating Results
Net Sales:
| Industry Market | 2024 | 2023 | Increase (Decrease) |
|---|---|---|---|
| Medical Device | $34,636 | $38,758 | $(4,122) (-10.6%) |
| Medical Imaging | $37,492 | $39,908 | $(2,416) (-6.1%) |
| Industrial | $35,517 | $40,113 | $(4,596) (-11.5%) |
| Aerospace and Defense | $20,488 | $20,553 | $(65) (-0.3%) |
| Total Net Sales | $128,133 | $139,332 | $(11,199) (-8.0%) |
The decreases in net sales were primarily due to inventory rebalancing with existing customers, timing of customer product launches, and lower average sales prices as we moved several programs to our Monterrey, Mexico facility.
Backlog:
| Backlog | December 31, 2024 | December 31, 2023 | % Change |
|---|---|---|---|
| 90-Day | $26,451 | $35,167 | (24.8%) |
| Total | $65,852 | $91,684 | (28.2%) |
The decreases in backlog were due to customers returning to pre-pandemic ordering practices and rebalancing their inventories, resulting in reduced visibility to net sales in the next several quarters.
Operating Costs and Expenses:
| Metric | 2024 | 2023 | Increase/(Decrease) |
|---|---|---|---|
| Net Sales | $128,133 | $139,332 | $(11,199) (-8.0%) |
| Cost of Goods Sold | $111,411 | $116,228 | $(4,817) (-4.1%) |
| Gross Profit | $16,722 | $23,104 | $(6,382) (-27.6%) |
| Gross Margin Percentage | 13.1% | 16.6% | (353 bps) |
| Selling Expenses | $3,446 | $3,598 | $(152) (-4.2%) |
| General and Administrative Expenses | $11,709 | $12,354 | $(645) (-5.2%) |
| Research and Development Expenses | $1,191 | $1,199 | $(8) (-0.7%) |
| Restructuring Charges | $571 | $- | $571 (-) |
| Operating (Loss) Income | $(195) | $5,953 | $(6,148) (-103.3%) |
The decreases in gross profit and operating income were driven by lower net sales, reduced operating leverage from lower production, and incremental costs associated with the closure of the Blue Earth facility, partially offset by lower incentive compensation.
Liquidity and Capital Resources
We believe our existing financing arrangements, anticipated cash flows, and cash on hand will be sufficient to satisfy our working capital, capital expenditures, and debt repayments for the next year.
Credit Facilities:
- On February 29, 2024, we replaced our asset-backed line of credit with a $15,000 Senior Secured Revolving Line of Credit with Bank of America.
- The Revolver requires us to maintain a leverage ratio of no more than 2.5 times and a minimum fixed charge coverage ratio of at least 1.25 times.
- In March 2025, we amended the Revolver to waive our non-compliance with the leverage and fixed charge ratios as of December 31, 2024 and March 31, 2025, and deferred compliance until the third quarter of 2025.
- As of December 31, 2024, we had $8,695 in borrowings and $6,305 in unused availability on the Revolver.
Cash Flows:
| Cash Flows | 2024 | 2023 |
|---|---|---|
| Operating Activities | $(2,250) | $1,769 |
| Investing Activities | $(1,263) | $(1,284) |
| Financing Activities | $2,765 | $(1,281) |
The cash used in operating activities in 2024 was driven by the timing of accounts payable payments and the payment of accrued bonus expenses.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates include:
- Revenue Recognition: We recognize revenue when we satisfy our performance obligations, with the majority recognized over time.
- Long-Lived Assets Impairment: We evaluate long-lived assets for impairment when events or circumstances indicate the carrying amount may not be recoverable.
- Inventory Valuation: We record inventory at the lower of cost or net realizable value and have an evaluation process to assess the value of slow-moving, excess, or obsolete inventory.
- Income Taxes: We establish reserves for uncertain tax positions and evaluate the recoverability of deferred tax assets based on available evidence.
Outlook
While we faced headwinds in 2024 that impacted our financial performance, we remain focused on executing our strategic initiatives to capitalize on growth opportunities, improve our competitiveness, and enhance profitability. We will continue to monitor market conditions and work to optimize our operations to deliver value for our customers and shareholders.
