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Elecsys Corp. Reports Operating Results (10-Q)

March 14, 2011 | About:
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10qk

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Elecsys Corp. (ESYS) filed Quarterly Report for the period ended 2011-01-31.

Elecsys Corp. has a market cap of $19.36 million; its shares were traded at around $5.11 with a P/E ratio of 73 and P/S ratio of 1.14.

Highlight of Business Operations:

Sales of our wireless remote monitoring and industrial telemetry solutions were approximately $1,770,000 for the three-month period ended January 31, 2011, which was an increase of $448,000, or 33.9%, from $1,322,000 for the three-month period ended January 31, 2010. The increase in overall sales of remote monitoring equipment and services was the result of increases in customer orders received and shipped as well as an increase in our recurring data management services. We expect that sales of our wireless remote monitoring and industrial telemetry solutions will continue to increase over the next few quarters. Data management services revenue continue to grow as a function of the growing population of monitoring units deployed in the field. Overall, data management services revenue totaled approximately $172,000, an increase of $48,000, or 38.8%, from data management services revenue of $124,000 reported in the comparable period of the prior fiscal year. We are continuing to experience strong interest and demand for WatchdogCP, SensorCast and Director products and services and expect similar potential from new products being developed.

General and administrative expenses increased approximately $53,000 from the comparable period of the prior year. During the previous fiscal year s three-month period ended January 31, 2010, we recognized approximately $77,000 of expenses that were related to the MBBS and SensorCast acquisitions and integration efforts. Overall, for the three-month period ended January 31, 2011, personnel-related expenses increased approximately $104,000. Information technology, legal fees for patents and intellectual property, and other support expenses increased $47,000, which was offset by a $21,000 decrease in corporate insurance expenses and investor relations costs.

Financial expense, including interest, was $73,000 and $84,000 for the three-month periods ended January 31, 2011 and 2010, respectively. The decrease of $11,000 resulted from lower total outstanding borrowings compared to the previous fiscal year period. During the three-month period ended January 31, 2011, there were no additional borrowings on the operating line of credit and the Company made payments of $700,000 that lowered the total amount outstanding to $2,600,000. As of January 31, 2011, there was $3,044,000 outstanding in long-term borrowings compared to $3,304,000 at January 31, 2010. These long-term borrowings represent the Industrial Revenue Bonds related to the Company s headquarters and production facility. We plan to continue making regular payments on our operating line of credit to lower the total amount of outstanding borrowings, but we may utilize the operating line of credit to fund increases in production activity when necessary.

Financial expenses, including interest expense, were $232,000 and $296,000 for the nine-month periods ended January 31, 2011 and 2010, respectively. This decrease of $64,000 resulted from the decrease in the total outstanding borrowings compared to the previous fiscal year period. During the nine-month period ended January 31, 2011, there were no additional borrowings on the operating line of credit and the Company made $1,100,000 in payments that lowered the total amount outstanding to $2,600,000. As of January 31, 2011, there was $3,044,000 outstanding in long-term borrowings compared to $3,304,000 at January 31, 2010. These long-term borrowings represent the Industrial Revenue Bonds related to the Company s headquarters and production facility. We plan to continue making regular payments on our operating line of credit to lower the total amount of outstanding borrowings, but we may utilize the operating line of credit to fund increases in production activity when necessary.

Operating activities. Our consolidated working capital decreased approximately $253,000 for the nine-month period ended January 31, 2011. The decrease was primarily due to a decrease in current assets offset by a slight decrease in current liabilities. Current assets were affected by decreases in income tax refund receivable and deferred taxes along with a decrease in accounts receivable. Current liabilities decreased as a result of a reduction in accounts payable slightly offset by an increase in accrued expenses. Operating cash receipts totaled approximately $16,943,000 and $12,413,000 during the nine-month periods ended January 31, 2011 and 2010, respectively. The increase is primarily the result of the increase in sales and profitability for the current period in combination with a slight reduction in receivables as compared to the prior year. Total cash disbursements for operations, which include purchases of inventory and operating expenses, were approximately $15,696,000 for the nine-month period ended January 31, 2011 and $11,886,000 for the nine-month period ended January 31, 2010.

Financing activities. As of January 31, 2011, the Company had a $6,000,000 operating line of credit that provided the Company and its wholly-owned subsidiary with short-term financing for our working capital requirements. The line of credit s borrowing capacity is calculated as a specified percentage of accounts receivable and inventory on a monthly basis and expires on October 30, 2012. As of January 31, 2011, there were $2,600,000 borrowings outstanding on the operating line of credit. The total amount of borrowing base for the line of credit as of January 31, 2011 was approximately $4,325,000, with $1,725,000 available. It is secured by accounts receivable and inventory and accrues interest at a performance-based rate that is based on the prime rate (3.25% at January 31, 2011) plus/minus 0.5% and has an interest rate floor of 3.50%. The interest rate actually assessed is determined by the Company s debt-to-tangible net worth ratio and was at the interest rate floor of 3.5% on January 31, 2011. The loan agreement has various covenants, including a financial covenant pertaining to the maintenance of total tangible net worth and a required debt service coverage ratio. For the nine-month period ended January 31, 2011 there were no additional borrowings on the operating line of credit. Total payments on the line of credit were $1,100,000 for the period while payments on long-term

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