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Elecsys Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 14, 2009 06:15PM

Elecsys Corp. (ESYS) filed Quarterly Report for the period ended 2009-12-11. Elecsys Corporation, through its subsidiaries DCI, Inc. and Airport Systems International, Inc. is a designer and manufacturer ofelectronic sub-assemblies and systems, and a provider of electronicmanufacturing services and custom liquid crystal displays. Elecsys Corp. has a market cap of $12.5 million; its shares were traded at around $3.6 with a P/E ratio of 12 and P/S ratio of 0.6.

Highlight of Business Operations:

Total consolidated backlog at October 31, 2009 was approximately $4,952,000, an increase of $1,885,000, or 61.5%, from a total backlog of $3,067,000 on April 30, 2009 and an increase of approximately $788,000 from a total backlog of $4,164,000 on July 31, 2009. The increase in the backlog is the result of increases in orders from current and new customers of our electronic design and manufacturing services as well as orders for our proprietary products.

Selling, general and administrative (“SG&A”) expenses totaled approximately $1,662,000 for the three-month period ended October 31, 2009. This was a decrease of $355,000, or 17.6%, from total SG&A expenses of $2,017,000 for the three-month period ended October 31, 2008. SG&A expenses were 41.5% of sales for the fiscal quarter as compared to 28.0% of sales for the comparable period for fiscal 2009 as a result of the decrease in sales between the periods. Corporate expenses increased approximately $35,000 from the comparable period of the prior year mainly due to higher professional fees for accounting services and investor relations efforts during the period. During the three-month period ended October 31, 2009, we recognized approximately $198,000 of expenses that were related to the MBBS integration. These costs include personnel, travel, and operating costs. The costs will decrease in future periods as a result of the completion of the transition of the operations of MBBS from Switzerland to Olathe, Kansas that occurred during the quarter. These increases in SG&A costs were offset by decreases in personnel and personnel-related expenses of approximately $172,000, a $20,000 reduction of office costs as a result of sub-leasing our office space in Sandy, Utah, decreases in support engineering expenses $48,000 and a decrease in travel expenses of $40,000. The largest impact on the decrease in SG&A expenses during the period was the impact of a decrease in commissions of approximately $300,000 that was directly related to the Radix product sales of $2.6 million in the comparable period of the prior year.

Financial expense, including interest expense, was $100,000 and $106,000 for the three-month periods ended October 31, 2009 and 2008, respectively. The slight decrease of $6,000 resulted from the decrease in the total outstanding borrowings compared to the previous fiscal year period. During the three-month period ended October 31, 2009, there were no additional borrowings on the operating line of credit and $50,000 in payments that lowered the total amount outstanding to $3,850,000. There was an additional $3,334,000 in outstanding long-term borrowings at the end of the fiscal quarter. We plan to utilize the operating line of credit when

Selling, general and administrative (“SG&A”) expenses totaled approximately $3,316,000 for the six-month period ended October 31, 2009. This was a decrease of $356,000, or 9.7%, from total SG&A expenses of $3,672,000 for the six-month period ended October 31, 2008. SG&A expenses were 43.5% of sales for the year-to-date period as compared to 28.8% of sales for the comparable period for fiscal 2009 as a result of the decrease in sales between the periods. Corporate expenses increased approximately $83,000 from the comparable period of the prior year mainly due to higher professional fees for accounting services, consulting fees and investor relations efforts during the period. During the six-month period ended October 31, 2009, we recognized approximately $243,000 of expenses that were related to the MBBS integration. These costs include personnel, travel, and operating costs. The costs will decrease in future periods as a result of the completion of the transition of the operations of MBBS from Switzerland to Olathe, Kansas that occurred during the period. These increases in SG&A costs were offset by decreases in personnel and personnel-related expenses of approximately $246,000, a $36,000 reduction of office costs as a result of sub-leasing our office space in Sandy, Utah, decreases in support engineering expenses $60,000 and a decrease in travel expenses of $40,000. The largest impact on the decrease in SG&A expenses during the period was the impact of a decrease in commissions of approximately $300,000 that was directly related to the Radix product sales of $2.6 million in the comparable period of the prior year.

Operating activities. Our consolidated working capital increased approximately $3,625,000 for the six-month period ended October 31, 2009. The increase was primarily due to the change in the classification of the operating line of credit from a current liability to long-term as a result of the refinancing of the line of credit on October 30, 2009. Other current liabilities were also impacted by increases in the balance in accounts payable and accrued expenses. Current assets decreased slightly as a result of reductions in accounts receivable and inventory as a consequence of decreases in sales during the six-month period ended October 31, 2009 that were offset by increases in income taxes receivable and deferred taxes. Operating cash receipts totaled approximately $8,284,000 and $13,883,000 during the six-month periods ended October 31, 2009 and 2008, respectively. The decrease is the result of the decrease in sales for the current period in combination with the reduction in receivables as compared to the prior year. Total cash disbursements for operations which include purchases of inventory and operating expenses, were approximately $7,615,000 for the six-month period ended October 31, 2009 and $12,085,000 for the six-month period ended October 31, 2008. The Company utilizes its line of credit when necessary in order to pay suppliers and meet operating cash requirements.

borrowings on the operating line of credit. Total payments on the line of credit were $150,000 for the period while payments on long-term debt totaled approximately $60,000. During the six-month period ended October 31, 2008, total borrowings on the operating line of credit were $2,252,000 which was primarily used to finance our operations which was offset by principal payments of $3,830,000 on the operating line of credit. Total long-term debt payments during the previous year s period were $151,000. Also included in financing activities for the previous period of the prior year was $41,000 of cash provided by the exercise of stock options. As of October 31, 2009, there were $3,850,000 borrowings outstanding on the operating line of credit.

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