Elamex March 1997 letter to shareholders as found in the 1996 Annual report:
To Shareholders and friends:
We are pleased to report that 1996 proved to be an outstnading year for Elamex. We achieved record revenues and net income, successfully completed our initial public offering, listed on NASDAQ, strengthened our balance sheet by increasing equity and reducing debt with a portion of the porceeds from the offering, and positioned Elamex for strong future growth.
Elamex operates in an accelerated growth industry. During the past decade, the electronics contract manufacturing industry has consistenty outgrown by a wide margin the Gross National Product. Largely this is due to a rising trend towards outsourcing by Original Equipment Manufacturers ("OEMs"). Industry analysts estimate that the North American demand for contract manufacturing will grow from $22 billion in 1995 to $63 billion by 199, with worldwide demand increasing from $46 billion in 1995 to $117 billion by 1999.
Our unique advantages are based in our unquestionable capacity to utilize highly competitive productive labor, our strategic North American location, recognized world class quality and our ability to combine high-tech manufacturing with labor intensive processes.
Sales increased 22 percent from $97.4 million in 1995 to $118.9 million in 1996. Operating income increased by 18 percent to a record $10.4 million in 1996 compared with $8.8 million in 1995. Net income reached $7.9 million in 1996 compared to $6.2 million in the previous year, an increased of 28 percent.
We continue to pursue a balanced sales mix amoung Turnkey and Assembly-only projects. The addition of Nintendo and other new customers in 1996, togehter with increased sales to existing customers, contributed to our overall strategy of customer diversification and growth. During 1996 we opened a new facility in Tijuanna [Mexico] and signed an agreement with a new customer to establish a manufacturing operation in Monterrey, Mexico, scheduled to initiate production during the first quarter of 1997. We added SMT capacity in both fast speed and fine pitch component placement resulting in a substantial increase to our manufacturing capabilities which allowed us more flexibility and increased output for our customers.
In our commitment to quality, we have maintained our ISO 9002 certification in all of our facilities, obtained the "British Approval Board for Telecommunications" for the products of one of our customers, and inititated a program of QS9000 compliance in support of another customer.
Elamex has continued to strengthen its supply chain management, which includes planning functions, financial systems and controls in the area of inventory, working capitial and supplier base. The importance of this effort has grown with the increase in turnkey contracts. We have placed considerable emphasis on enhancing our components procurement operations, have signed an automated replenishment program with a major distributor and will be adding more relationships of this nature in the future.
The hrd work and dedication of our employees, suppliers and clients have been a key element in the achievements of this past year, for this we are deeply thankful. We also greatly appreciate the support and confidence of the shareholders of Elamex.
Eloy S. Vallina
Chairman of the Board |
