While distributor Nu Horizons Electronics Corp. posted a 6.7% sales gain in the fourth fiscal quarter, the company said continued margin pressure and higher than desired SGA expenses resulted in lower earnings for the quarter.
"Market conditions continue to be challenging. We are encouraged by our record sales performance, in the face of reduced unit pricing and continued gross margin pressures. The earnings decline in fiscal 1999 as compared to the prior year, is a result of a combination of continued margin pressure and higher than desired selling and general expenses as a percent of sales," said Arthur Nadata, CEO and president of Nu Horizons, Melville, N.Y.
Net income slipped to $904,813 in the fourth fiscal quarter ended February 28, compared with $1.4 million a year ago. However, the company reported sales of $66.6 million for the quarter, up from $62.3 million a year ago.
Based on its current backlog and book to bill ratios, the company is looking forward to a brighter future, according to Nadata. "We continue to remain optimistic about the immediate future."
Nadata said that the company's current backlog and book to bill ratios both at record highs. So, if the company is able to continue its sales growth and stabilize gross margins, it should be able to reduce selling and general expenses as a percent of sales, which would result in improved bottom line performance.
Net sales for fiscal 1999 rose to a record $253.9 million, from $233.3 million for fiscal 1998. Net income for the year was $4.5 million, compared with $5.3 million for the prior period.
Nu Horizons is a distributor of active and passive components and a provider of industrial manufacturing services.