News

Cherokee Reports First Quarter 2008 Financial Results

May 18, 2008 by Jeff Shepard

Cherokee International Corp. announced its financial results for the first quarter ended March 30, 2008. Net sales for the first quarter of 2008 were $34.7 million, up over 16% compared to $30.0 million for the first quarter of 2007. Net sales increases quarter over quarter were across all market sectors, led by what is described as a significant increase in the company’s telecom market.

The company’s backlog at March 30, 2008 was $55.1 million compared with $45.0 million at April 1 2007. The book to bill for the first quarter of 2008 was 1.25 to 1.00 compared to 1.00 to 1.00 for the first quarter of 2007.

Net income for the first quarter of 2008 was $12 thousand, or $0.00 per diluted share, compared to a net loss of $2.0 million, or $0.10 per diluted share, for the first quarter a year ago.

Gross profit for the first quarter was $8.6 million, up 51% compared to $5.7 million for the same period in 2007. Gross margin of 25% for the first quarter of 2008 was up from the 19% realized in the first quarter of 2007. Improvements in gross profit and gross margin are said to have stemmed principally from lower material costs in North America and Asia due to activity in China and to a lesser extent from higher net sales in Europe.

"Last year we stated that we expected significantly improved gross margins as a result of several initiatives. Two of those initiatives included migrating production from Mexico to China, and sourcing a larger percentage of raw materials from Asian vendors. Execution of this dual strategy has successfully resulted in a 51% improvement in gross profit and the highest percentage of overall gross margin for Cherokee in three years," said Jeffrey M. Frank, Cherokee’s President and Chief Executive Officer. "We are confident that we will sustain momentum throughout 2008 from the high energy efficient programs introduced in the second half of 2007, a 50% production increase at our wholly owned subsidiary in China, and a laser focus on improving operating metrics. We remain committed to providing our customers with the best products and services, while we continue to reduce costs and improve performance."