Shares of SigmaTron International, Inc. (SGMA Quick QuoteSGMA - Free Report) have gained 11.4% since the company reported its earnings for the quarter ended Jan. 31, 2025. This compares to the S&P 500 index’s 1.5% growth over the same time frame. Over the past month, the stock has declined 19.3% compared with the S&P 500’s 6.9% fall.

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For the fiscal third quarter ended Jan. 31, 2025, the company’s earnings per share (EPS) rose to 63 cents compared with 10 cents a year earlier. 

SigmaTron reported revenues of $71.1 million, marking a decline of 26% from the $95.9 million recorded in the same period a year ago.

Despite this revenue contraction, net income improved significantly to $3.9 million from $0.6 million in the prior-year quarter. The quarterly profit was boosted by a one-time gain of approximately $7.2 million from a sale-leaseback transaction for the company’s facility in Elk Grove Village, IL.

Cost Structure and Operational Adjustments

SigmaTron continued its cost-reduction efforts amid the ongoing revenue downturn. Gross profit for the quarter fell to $5.6 million from $9.9 million in the prior-year period. Selling and administrative expenses declined slightly to $6.4 million from $6.7 million, reflecting the company’s focus on expense management. It incurred an operating loss of $0.8 million, a reversal from an operating income of $3.2 million in the same period last year.

CEO Gary Fairhead emphasized that while the company’s revenue levels remained depressed, cost-cutting initiatives have started to yield benefits. He noted that SigmaTron posted an operating profit in January 2025 and expressed confidence in the company’s ability to navigate the downturn and capitalize on a potential recovery.

Market Conditions and Demand Trends

SigmaTron acknowledged that the electronic component marketplace has started to normalize, with shorter lead times and more stable pricing. The company observed modest demand increases from several customers, though it remains cautious about calling it a full recovery. Management believes that excess customer inventory has been significantly reduced, which could stabilize revenue volatility in the coming quarters.

Despite macroeconomic uncertainties, SigmaTron expects fiscal fourth-quarter revenues to be higher than the fiscal third quarter, based on its current backlog. The company also continued its efforts to reduce inventory, which contributed to its financial stability.

External Challenges and Strategic Initiatives

SigmaTron remains exposed to geopolitical risks, trade policies and tariff uncertainties, which could impact operations. The company highlighted ongoing trade issues and potential new tariff policies as sources of volatility. Management stated that it is working closely with customers and supply chain partners to mitigate potential disruptions.

Additionally, SigmaTron continues to explore strategic opportunities with Lincoln International. While no specific details were provided, the company reiterated its commitment to pursuing initiatives that enhance long-term shareholder value.

Other Developments

A notable development during the quarter was the sale-leaseback of the company’s Elk Grove Village facility, which contributed a $7.2 million gain to earnings. This transaction provided a short-term boost to the company’s financials but also underscored efforts to optimize its asset base and improve liquidity.