Surge Achieves its Highest Revenue Year in Last Decade with Net Sales of $29.8 million
Named “Supplier of the Year” by Honeywell Corporation, Surge’s Largest Customer
Financial Highlights for the Fiscal Fourth Quarter Ending November 30, 2017
- Net sales of $8.0 million
- Gross profit of $2.1 million driven by sales efficiencies and focus on client profitability
- Gross profit margin of 25.4%
- Net income of $396,069; EPS of $0.08
Financial Highlights for the Fiscal Year Ending November 30, 2017
- Achieves highest revenue year in last decade with net sales of $29.8 million
- Gross profit of $7.5 million, a 0.6% year-over-year increase, driven by sales efficiencies and focus on client profitability
- Gross profit margin of 25.2%, flat with the year-ago period
- Net income of $357,466; EPS of $0.05
Operational Highlights
- Surge awarded “Supplier of the Year” by Honeywell Corporation – the Company’s largest customer
- Continued development of new products driving increased sales in the Company’s Challenge business segment
- Expanding global position in Asia with growing portfolio of new business and customer relationships
- Continuing to build robust, global sales force
DEER PARK, N.Y., Feb. 28, 2018 (GLOBE NEWSWIRE) -- Surge Components, Inc. (“Surge” or “the Company”) (OTC Pink:SPRS) a leading supplier of capacitors, discrete semi-conductors and audible/sounding devices, today announced financial results for the fiscal fourth quarter and fiscal year ended November 30, 2017.
Ira Levy, President and Chief Executive Officer of Surge, said, “We delivered a strong performance in 2017, successfully executing our operational strategies and initiatives, while driving a solid sales pipeline. Our ongoing commitment to high margin customers and the efficient management of the business helped us deliver year-over-year increases in revenue and net income, our fourth consecutive year of annual growth, and solid profit margins of 25.2%.
“While the underlying fundamentals of the business remain strong, we experienced increased lead times in the fourth quarter as the industry faced a shortage of electronic components. However, we successfully leveraged our extensive supply chain to limit the impact on our customers and hold lead times below industry averages. Our continued leadership in this area also resulted in recognition by Honeywell Corporation, the Company’s largest customer, as “Supplier of the Year,” a prestigious award that further underscores our continued commitment to quality product, service and delivery standards.
“We are also making strategic moves to expand our customer base internationally, making strong headway in the quarter growing headcount and customer relationships in emerging markets like Asia. We also continue to invest in our sales rep network, ensuring we have the most effective sales team on the ground to service our growing portfolio of clients with best in class service and product offerings.”
Results of Operations for the Three and Twelve Months Ended November 30, 2017
Net sales for the three months ended November 30, 2017 increased by 0.8% to $8.0 million, as compared to net sales of $7.9 million for the three months ended November 30, 2016. Net sales for the fiscal year ended November 30, 2017 increased by 0.7% to $29.8 million, as compared to net sales of $29.5 million for the fiscal year ended November 30, 2016. The increase in net sales for the three and twelve month periods is primarily attributable to increases in product orders from new and existing customers.
Gross profit for the three months ended November 30, 2017 increased by 1.3% to $2.1 million, as compared to $2.0 million for the three months ended November 30, 2016. Gross profit for the fiscal year ended November 30, 2017 increased by 0.6% to $7.51 million, as compared to $7.46 million for the fiscal year ended November 30, 2016. The increase in gross profit for the three and twelve month periods is primarily attributable to an increase in business with new and existing customers. Gross profit margin as a percentage of net sales remained flat at 25.8% for the three months ended November 30, 2017, as compared to 25.7% for the three months ended November 30, 2016. Gross profit margin as a percentage of net sales remained flat at 25.2% for the fiscal year ended November 30, 2017, as compared to the fiscal year ended November 30, 2016. Gross profit margins in the three and twelve months ended November 30, 2017 were impacted by a more competitive pricing and rebate strategy with our electronics manufacturing subcontractor customers.
Selling and shipping expenses for the three months ended November 30, 2017 decreased 4.1% to $634,822, as compared to $$662,095 in the three months ended November 30, 2016. The decrease in selling and shipping expenses for the three month period was primarily attributable to declines in commissions and travel and entertainment expenses.
Selling and shipping expenses for the fiscal year ended November 30, 2017 increased to $2.5 million, a 1.0% increase year-over-year. The modest increase in selling and shipping expenses is attributable to increased costs related to hiring additional salespeople to support the growth of the business as well as increases in freight, shipping and printing expenses. Offsetting these increases were decreases in commissions, travel, entertainment and advertising expenses.
General and administrative expenses for the three months ended November 30, 2017 decreased 54.4% to $1.0 million, as compared to $2.3 million for the three months ended November 30, 2016. General and administrative expenses for the fiscal year ended November 30, 2017 decreased 14.5% to $4.6 million, as compared to $5.4 million for the fiscal year ended November 30, 2016. The decrease in general and administrative expenses for the three and twelve month periods is primarily attributable to decreases in legal fees incurred by the Company during the proxy contest and related settlement during fiscal year 2016. The Company is in discussions with its insurance carrier regarding reimbursement for some of the costs incurred in connection with the proxy contest and related settlement during fiscal year 2016. Offsetting increases are due to the hiring of additional employees and increased costs for health insurance, computer and rent expenses as well as increases in general insurance expenses and director fees, and partially offset by decreases in temporary help expenses and consulting expenses as well as decreases in dues and utilities.
Net income for the three months ended November 30, 2017 was $396,069, as compared to a net loss of $941,072 for the three months ended November 30, 2016. Net income for the fiscal year ended November 30, 2017 was $357,466, as compared to a net loss of $562,474 for the fiscal year ended November 30, 2016.
This press release should be read in conjunction with the consolidated financial statements included in the Company’s most recent annual report on Form 10-K, which can be found at www.surgecomponents.com and at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, forward-looking statements can be identified by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. These statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that may affect our business, financial condition and results of operations. We discuss many of the risks in greater detail under the heading "Risk Factors" in our Annual Report on Form 10-K. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update any forward-looking statements for events or circumstances occurring after the date of this press release, except as required by law.
Investor Contacts:
Sloane & Company
Erica Bartsch, ebartsch@sloanepr.com
212-486-9500