SigmaTron International, Inc. (NASDAQ: SGMA), an electronic
manufacturing services company (the “Company”), today reported
revenues and earnings for the fiscal quarter and fiscal year ended
April 30, 2024.
Revenues from continuing operations decreased $40.6 million, or
10 percent, to $373.9 million for fiscal 2024 compared to $414.4
million for fiscal 2023. Net income/(loss) from continuing
operations for fiscal 2024 was a loss of $2.5 million, compared to
net income of $14.2 million for fiscal 2023. Basic and diluted
income/(loss) per share from continuing operations for fiscal 2024
was a loss of $0.41, compared to $2.34 income per share for fiscal
2023.
For the three months ended April 30, 2024, revenues from
continuing operations decreased $27.1 million, or 25 percent, to
$81.1 million compared to $108.3 million for the same period in the
prior year. Net income/(loss) from continuing operations for the
three-month period ended April 30, 2024, was a loss of $3.4 million
compared to income of $5.3 million for the same period in the prior
year. Basic and diluted income/(loss) per share from continuing
operations for the three months ended April 30, 2024 was a loss of
$0.55, compared to income of $0.87 income per share for the same
period last year.
As previously reported, the Company sold a majority position of
its wholly owned subsidiary, Wagz, Inc. (“Wagz”), effective April
1, 2023. As a result, the Company has reported results from Wagz
for fiscal 2023 as discontinued operations. For fiscal 2023, net
loss from discontinued operations was $34.8 million. Net loss per
share from discontinued operations for fiscal 2023 was $5.73. For
the three months ended April 30, 2023, net loss from discontinued
operations was $5.0 million. Net loss per share from discontinued
operations for the three months ended April 30, 2023 was $0.82.
Commenting on SigmaTron’s results for both the 4th quarter and
fiscal year, ended April 30, 2024, Gary R. Fairhead, Chief
Executive Officer and Chairman of the Board said, “The fourth
quarter of fiscal 2024 was one of the most difficult quarters in
SigmaTron’s history, a reflection of an industry-wide slowdown and
the lingering effects of the supply chain crisis. As previously
reported on March 8, 2024, when we released our third quarter
results for fiscal 2024, we saw a general softness from our
customer base which led to a February sales decline that continued
through the balance of the quarter. By the end of our quarter, many
of our competitors who are also public were reporting similar
results for the first calendar quarter of 2024. Our outlook,
however, remains positive as our customers expect this to be a
short-term phenomenon and demand to bounce back in short order.
Backlogs remain strong, and we continue to quote new platforms and
projects.
“Prior to experiencing these pressures, we had already started
decreasing our overall costs. This included the sale of our Elgin
building, which closed in February of 2024, and the consolidation
of the operations in Elgin into our Elk Grove Village headquarters.
In addition, we started taking actions to reduce headcount through
layoffs or retirements, with the people retiring not being
replaced. We had several operations go to shortened weeks and work
schedules. We continue to do this as we react to the continuing
soft demand short term.
“Unfortunately, the lower results for the fourth quarter led to
covenant violations with our two secured lenders. I am pleased to
report that we reached an agreement with both lenders going
forward, under which the covenant violations were waived and the
existing loan agreements were amended. As part of that process,
SigmaTron’s board of directors decided to engage the services of
Lincoln International as an advisor for strategic alternatives to
de-lever the Company. Several of these are underway and others will
be started shortly. At this time, we believe that our plan of
action between the strategic initiatives and the operational cost
reductions will allow us to continue to remain in compliance with
the amended bank covenants. In conjunction with those activities,
we will look at various refinancing alternatives.
“The one thing that has come out of the softness in our market
is the return to normalcy for the component marketplace in terms of
lead times. While there are always exceptions, in general we
continue to successfully reduce our inventory levels and thereby
reduce our working capital requirements. This will continue to be
one of our objectives going forward. Unfortunately, on the revenue
side, the softness has continued through the first quarter of
fiscal 2025. Our customers are indicating that they expect demand
to rebound by the fourth calendar quarter of 2024 and we have seen
several signs with specific customers where that appears to be the
case. However, our focus remains on driving the Company’s cost
structure lower, while continuing to meet our customers’ requests.
If the upside does materialize, then we will be in a position to
service it.
“The general economy remains volatile and the geopolitical
events worldwide remain a potential source of instability. However,
our customer base remains intact and we continue to work with them
on working capital situations, as well as new opportunities. We are
thankful for their business and our long term relationships and we
look forward to continuing to grow them. We also appreciate the
fact that our secured lenders worked with us to restructure our
agreements. Finally, we also thank our supply chain, our board of
directors and most importantly, our dedicated employees who
continue to work with us through these difficult times.”
About SigmaTron International, Inc.
Headquartered in Elk Grove Village, Illinois, SigmaTron
International, Inc. operates in one reportable segment as an
independent provider of electronic manufacturing services (“EMS”).
The EMS segment includes printed circuit board assemblies,
electro-mechanical subassemblies and completely assembled
(box-build) electronic products. The Company and its wholly-owned
subsidiaries operate manufacturing facilities in Elk Grove Village,
Illinois; Acuna, Chihuahua, and Tijuana Mexico; Union City,
California; Suzhou, China; and Biên Hòa City, Vietnam. In addition,
the Company maintains an International Procurement Office and
Compliance and Sustainability Center in Taipei, Taiwan. The Company
also provides design services in Elk Grove Village, Illinois,
U.S.
Forward-Looking Statements
Note: This press release contains forward-looking statements.
Words such as “continue,” “anticipate,” “will,” “expect,”
“believe,” “plan,” and similar expressions identify forward-looking
statements. These forward-looking statements are based on the
current expectations of the Company. Because these forward-looking
statements involve risks and uncertainties, the Company’s plans,
actions and actual results could differ materially. Such statements
should be evaluated in the context of the direct and indirect risks
and uncertainties inherent in the Company’s business including, but
not necessarily limited to, the Company’s continued dependence on
certain significant customers; the continued market acceptance of
products and services offered by the Company and its customers;
pricing pressures from the Company’s customers, suppliers and the
market; the activities of competitors, some of which may have
greater financial or other resources than the Company; the
variability of the Company’s operating results; the results of
long-lived assets and goodwill impairment testing; the risks
inherent in any merger, acquisition or business combination,
including the ability to achieve the expected benefits of
acquisitions as well as the expenses of acquisitions; the
collectability of aged account receivables; the variability of the
Company’s customers’ requirements; the impact of inflation on the
Company’s operating results; the availability and cost of necessary
components and materials; the impact acts of war may have to the
supply chain; the ability of the Company and its customers to keep
current with technological changes within its industries;
regulatory compliance, including conflict minerals; the continued
availability and sufficiency of the Company’s credit arrangements;
the costs of borrowing under the Company’s senior and subordinated
credit facilities, including under the rate indices that replaced
LIBOR; increasing interest rates; the ability to meet the Company’s
financial and restrictive covenants under its loan agreements;
changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese
regulations affecting the Company’s business; the turmoil in the
global economy and financial markets; public health crises,
including COVID-19 and variants; the continued availability of
scarce raw materials, exacerbated by global supply chain
disruptions, necessary for the manufacture of products by the
Company; the stability of the U.S., Mexican, Chinese, Vietnamese
and Taiwanese economic, labor and political systems and conditions;
global business disruption caused by the Russian invasion of
Ukraine and related sanctions and the Israel-Hamas conflict;
currency exchange fluctuations; and the ability of the Company to
manage its growth. These and other factors which may affect the
Company’s future business and results of operations are identified
throughout the Company’s Annual Report on Form 10-K, and as risk
factors, may be detailed from time to time in the Company’s filings
with the Securities and Exchange Commission. These statements speak
as of the date of such filings, and the Company undertakes no
obligation to update such statements in light of future events or
otherwise unless otherwise required by law.
For Further Information Contact:SigmaTron International,
Inc.James J. Reiman1-800-700-9095
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CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
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Three Months |
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Three Months |
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Twelve Months |
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Twelve Months |
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Ended |
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Ended |
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Ended |
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Ended |
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April 30, |
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April 30, |
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April 30, |
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April 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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81,141,893 |
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108,288,074 |
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373,883,821 |
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414,435,845 |
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Cost of products sold |
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76,881,510 |
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92,878,680 |
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340,357,503 |
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362,982,248 |
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Gross profit |
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4,260,383 |
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15,409,394 |
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33,526,318 |
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51,453,597 |
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Selling and administrative expenses |
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6,252,476 |
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7,101,421 |
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26,392,403 |
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26,495,951 |
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Operating (loss) income |
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(1,992,093 |
) |
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8,307,973 |
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7,133,915 |
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24,957,646 |
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Other expense |
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(1,925,960 |
) |
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(3,003,292 |
) |
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(9,895,334 |
) |
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(7,771,681 |
) |
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(Loss) income before income tax |
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(3,918,053 |
) |
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5,304,681 |
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(2,761,419 |
) |
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17,185,965 |
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Income tax benefit (expense) |
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542,529 |
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(43,218 |
) |
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275,262 |
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(2,991,541 |
) |
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Net (loss) income from continuing operations |
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(3,375,524 |
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5,261,463 |
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(2,486,157 |
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14,194,424 |
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Discontinued operations: |
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Loss before tax from discontinued operations |
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- |
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(5,648,092 |
) |
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- |
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(36,629,902 |
) |
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Tax benefit from discontinued operations |
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- |
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640,361 |
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- |
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1,860,093 |
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Net loss from discontinued operations |
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- |
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(5,007,731 |
) |
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- |
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(34,769,809 |
) |
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Net (loss) income |
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($3,375,524 |
) |
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$253,732 |
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($2,486,157 |
) |
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($20,575,385 |
) |
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Net income (loss) per common share - basic |
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Net (loss) income per common share - basic from continuing
operations |
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(0.55 |
) |
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0.87 |
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(0.41 |
) |
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2.34 |
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Net loss per common share - basic from discontinued operations |
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- |
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(0.82 |
) |
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- |
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(5.73 |
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Net (loss) income per common share - basic |
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($0.55 |
) |
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$0.04 |
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($0.41 |
) |
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($3.39 |
) |
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Net income (loss) per common share - diluted |
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Net (loss) income per common share - diluted from continuing
operations |
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(0.55 |
) |
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0.87 |
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(0.41 |
) |
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2.34 |
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Net loss per common share - diluted from discontinued
operations |
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- |
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(0.82 |
) |
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- |
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(5.73 |
) |
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Net (loss) income per common share - diluted |
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($0.55 |
) |
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$0.04 |
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($0.41 |
) |
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($3.39 |
) |
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Weighted average number of common equivalent |
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shares outstanding - assuming dilution |
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6,099,955 |
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6,077,490 |
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6,094,914 |
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6,069,680 |
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CONDENSED CONSOLIDATED BALANCE
SHEETS |
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April 30, |
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April 30, |
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2024 |
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2023 |
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Assets: |
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Current assets |
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175,902,619 |
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220,466,442 |
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Machinery and equipment-net |
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33,755,078 |
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35,788,357 |
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Deferred income taxes |
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4,432,210 |
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2,640,902 |
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Intangibles |
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979,188 |
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1,311,030 |
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Other assets |
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8,724,880 |
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8,420,468 |
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Total assets |
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$ |
223,793,975 |
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$ |
268,627,199 |
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Liabilities and stockholders' equity: |
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Current liabilities |
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145,888,791 |
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152,308,599 |
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Long-term obligations |
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|
11,832,931 |
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48,227,573 |
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Stockholders' equity |
|
|
66,072,253 |
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|
|
68,091,027 |
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Total liabilities and stockholders' equity |
|
$ |
223,793,975 |
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$ |
268,842,199 |
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