Espey Mfg. & Electronics Corp Reports Operating Results (10-Q)
Espey Mfg. & Electronics Corp has a market cap of $55.7 million; its shares were traded at around $24 with a P/E ratio of 14.4 and P/S ratio of 1.9. The dividend yield of Espey Mfg. & Electronics Corp stocks is 3.8%. Espey Mfg. & Electronics Corp had an annual average earning growth of 20.6% over the past 10 years. GuruFocus rated Espey Mfg. & Electronics Corp the business predictability rank of 3-star.ESP is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:New orders received in the first three months of fiscal 2011 were approximately $6.8 million, representing a 42.6% increase from the amount of new orders received in the first three months of fiscal 2010. These new orders are in line with the Company s strategy of getting involved in long-term high quantity military and industrial products and are predominately for follow-on production of mature products. The Company's backlog was $31.8 million at September 30, 2010 which includes $20.3 million from three significant customers compared to $37.0 million at September 30, 2009 which included $19.1 million from two significant customers. The backlog for the Company represents the estimated remaining sales value of work to be performed under firm contracts.
Net sales for the three months ended September 30, 2010 were $6,026,330 as compared to $6,874,940 for the same period in 2009, representing a 12.3% decrease. The decrease for the three months ended September 30, 2010 was primarily due to a decrease in engineering design related billings and the overall timing of contract shipments.
For the three months ended September 30, 2010 and 2009 gross profits were $1,650,532 and $2,058,202, respectively. Gross profit as a percentage of sales was 27.4% and 29.9%, for the three months ended September 30, 2010 and 2009, respectively. The primary factors in determining gross profit and net income are overall sales levels and product mix. The gross profits on mature products and build to print contracts are higher as compared to products which are still in the engineering development stage or in the early stages of production. In any given accounting period the mix of product shipments between higher margin mature programs and less mature programs, including loss contracts, has a significant impact on gross profit and net income. The decreased gross profit and gross profit percentage in the three months ended September 30, 2010, as compared to September 30, 2009, was primarily the result of decreased sales and minor cost overruns related to certain products.
Selling, general and administrative expenses were $692,709 for the three months ended September 30, 2010; a decrease of $59,677, compared to the three months ended September 30, 2009. The decrease for the three months ended September 30, 2010 relates primarily to a decrease in salary expense.
Net income for the three months ended September 30, 2010, was $753,539 or $.35 per share, both basic and diluted, compared to $992,763 or $.47 per share, both basic and diluted, for the three months ended September 30, 2009. The decrease in net income per share was mainly due to lower sales offset by lower selling, general and administrative expenses and decreased interest income.
During the three months ended September 30, 2010 and 2009, the Company expended $107,247 and $147,308, respectively, for plant improvements and new equipment. The Company has budgeted approximately $500,000 for new equipment and plant improvements in fiscal 2011. Management anticipates that the funds required will be available from current operations.
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