PECO II Inc. (PIII) filed Quarterly Report for the period ended 2009-09-30.
Peco II Inc. designs, manufactures and markets communications power systems and equipment and offer systems integration products and related services to the communications industry. The company's products offer include power systems, power distribution equipment, systems integration products and related support products and services, which the companysells to communications service providers including local exchange carriers, long distance carriers, wireless service providers, and Internet service providers. Peco Ii Inc. has a market cap of $11.9 million; its shares were traded at around $4.1716 with and P/S ratio of 0.3.
Highlight of Business Operations:
Product net sales were $6.3 million for the third quarter of 2009, a decrease of $2.5 million, or 28.7%, compared to the third quarter of 2008. Product net sales were $18.2 million for the nine months ending September 30, 2009, a decrease of $6.5 million, or 26.3%, compared to the corresponding period in 2008. We believe that the reduction in product sales was primarily the result of the merger and acquisition activity occurring in the industry among our customers resulting in a slowing of spending as the customers integrate the acquired organizations.
As of September 30, 2009, our sales backlog, which represents total dollar volume of firm sales orders not yet recognized as revenue, was $9.3 million, a $3.6 million, or 63.8%, increase from the comparable prior year period, and was a 264.9% increase of $6.7 million from December 31, 2008, and a 28.9% increase of $2.1 million from June 30, 2009. Product backlog of $2.3 million was a $0.4 million, or 20.5% increase from December 31, 2008, and was a $1.1 million, or a 32.0% decrease from June 30, 2009, while services backlog was $7.0 million, a $6.4 million, or 998.7%, increase from December 31, 2008, and was a $3.2 million, or an 82.9% increase from June 30, 2009. Dramatic growth in our services business, particularly engineering and installation activities, has offset a slowing in the product business, which we believe is the result of the various mergers and acquisitions that have occurred in 2009 among our customers, resulting in a delay in purchases. Third quarter 2009 bookings were 31.8% better than third quarter 2008.
Gross margin dollars were $2.6 million and $6.0 million, respectively, for the three and nine months ended September 30, 2009, as compared to $1.8 million and $5.1 million, respectively, for the three and nine months ended September 30, 2008. Gross margin as a percentage of net sales was 20.1% and 19.9% for the three and nine months ended September 30, 2009, compared to 14.9% and 15.8%, respectively, for the comparable prior year periods.
Research, development and engineering expense incurred was $0.4 million and $1.4 million respectively, for the three and nine months ended September 30, 2009, down from $0.6 million and $1.9 million, respectively for the three and nine months ended September 30, 2008. As a percentage of net product sales, research, development and engineering expense was 6.6% for the quarter ended September 30, 2009, which was a decrease of 31.8% from the third quarter of 2008. Our new product introduction cycles include, at times, significant out-of-pocket costs to bring
Selling, general and administrative expense was $1.5 million and $5.2 million for the three and nine months ended September 30, 2009, as compared to $2.0 million and $6.0 million, respectively, for the comparable prior year period. As a percentages of net sales, selling, general and administrative decreased to 11.9% for the quarter ended September 30, 2009, as compared to 17.1% in the comparable prior year period. In the event that we have a profitable fourth quarter, selling general and administrative expenses may increase as a result of us incurring additional expense for 2009 management bonuses earned.
As of September 30, 2009, available cash and cash equivalents approximated $4.2 million. We believe that cash and cash equivalents, anticipated cash flow from operations, and our credit facilities will be sufficient to fund our working capital and capital expenditure requirements for the next 12 months. Working capital at September 30, 2009 was $11.9 million, which represented a working capital ratio of 2.5 to 1, compared to $12.4 million at December 31, 2008, which represented a working capital ratio of 2.5 to 1. Capital expenditures for the nine months ended September 30, 2009, totaled $185 thousand. We continue our efforts to conserve cash.
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