Espey Mfg. & Electronics Corp (ESP, Financial) filed Quarterly Report for the period ended 2011-12-31.
Espey Mfg. & Electronics Corp has a market cap of $57.5 million; its shares were traded at around $24.7 with a P/E ratio of 13.4 and P/S ratio of 2. The dividend yield of Espey Mfg. & Electronics Corp stocks is 3.6%. Espey Mfg. & Electronics Corp had an annual average earning growth of 21.2% over the past 10 years. GuruFocus rated Espey Mfg. & Electronics Corp the business predictability rank of 3.5-star.
Net sales to two significant customers represented 59.5% of the Company’s total sales for the three-month period ended December 31, 2011 and net sales to three significant customers represented 67.2% of the Company’s total sales for the three-month period ended December 31, 2010. Net sales to three significant customers represented 67.9% and 66.4% of the Company’s total sales for the six-month periods ended December 31, 2011 and 2010, respectively. Historically, a small number of customers have accounted for a large percentage of the Company’s total sales in any given fiscal year. Even though our business tends to be concentrated in several customers, the makeup of those customers often changes from year to year. For several years, management has pursued opportunities with current and new customers with an overall objective of lowering the concentration of sales, mitigating excessive reliance upon a single major product of a particular program and minimizing the impact of the loss of a single significant customer. Management continues to evaluate its business development functions and potential revised courses of action in order to diversify its customer base. The defense industry itself tends to be concentrated with a few large tier one defense contractors which limits the amount of diversity the Company can achieve with its customer base.
Net sales for the three months ended December 31, 2011 were $8,265,754 as compared to $6,581,342 for the same period in 2010, representing a 25.6% increase. Net sales for the six months ended December 31, 2011 were $16,259,681 as compared to $12,607,672 for the same period in 2010, representing a 29% increase. The increase for the three months ended December 31, 2011 was primarily the result of increased power supply shipments on existing programs for major customers. The increase for the six months ended December 31, 2011 was primarily due to the shipment of a high power radar system that the Company does not regularly build and an overall increase in power supply shipments on repeat programs.
For the three months ended December 31, 2011 and 2010 gross profits were $2,181,860 and $1,624,799, respectively. Gross profit as a percentage of sales was 26.4% and 24.7%, for the three months ended December 31, 2011 and 2010, respectively. For the six months ended December 31, 2011 and 2010 gross profits were $4,183,668 and $3,275,331, respectively. Gross profit as a percentage of sales was 25.7% and 26.0%, for the six months ended December 31, 2011 and 2010, 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 increased gross profit in the three months ended December 31, 2011, was primarily the result of higher net sales on mature programs with only minor cost overruns related to loss contracts. The slight gross profit percentage decrease in the six months ended December 31, 2011 as compared to December 31, 2010 was primarily the result of one large order shipped during the quarter that had a lower gross profit percentage than the average gross profit percentage from the previous period. This order was for a high power radar system referred to above.
Net income for the three months ended December 31, 2011, was $1,070,863 or $0.49 per share, both basic and diluted compared to $649,747 or $0.30 per share, both basic and diluted, for the three months ended December 31, 2010. Net income for the six months ended December 31, 2011, was $1,997,767 or $0.92 and $0.91 per share, basic and diluted, respectively compared to $1,403,286 or $0.65 per share, both basic and diluted, for the six months ended December 31, 2010. The increase in net income per share for the three and six months ended December 31, 2011 was mainly due to higher sales and gross profit and lower general and administrative expenses.
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Espey Mfg. & Electronics Corp has a market cap of $57.5 million; its shares were traded at around $24.7 with a P/E ratio of 13.4 and P/S ratio of 2. The dividend yield of Espey Mfg. & Electronics Corp stocks is 3.6%. Espey Mfg. & Electronics Corp had an annual average earning growth of 21.2% over the past 10 years. GuruFocus rated Espey Mfg. & Electronics Corp the business predictability rank of 3.5-star.
Highlight of Business Operations:
New orders received in the first six months of fiscal 2012 were approximately $13.8 million, representing a 44% decrease over the amount of new orders received in the first six months of fiscal 2011. These 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 $36.1 million at December 31, 2011 which includes $25.6 million from two customers, compared to $42.9 million at December 31, 2010 which included $32.2 million from three significant customers. The backlog for the Company represents the estimated remaining sales value of work to be performed under firm contracts.Net sales to two significant customers represented 59.5% of the Company’s total sales for the three-month period ended December 31, 2011 and net sales to three significant customers represented 67.2% of the Company’s total sales for the three-month period ended December 31, 2010. Net sales to three significant customers represented 67.9% and 66.4% of the Company’s total sales for the six-month periods ended December 31, 2011 and 2010, respectively. Historically, a small number of customers have accounted for a large percentage of the Company’s total sales in any given fiscal year. Even though our business tends to be concentrated in several customers, the makeup of those customers often changes from year to year. For several years, management has pursued opportunities with current and new customers with an overall objective of lowering the concentration of sales, mitigating excessive reliance upon a single major product of a particular program and minimizing the impact of the loss of a single significant customer. Management continues to evaluate its business development functions and potential revised courses of action in order to diversify its customer base. The defense industry itself tends to be concentrated with a few large tier one defense contractors which limits the amount of diversity the Company can achieve with its customer base.
Net sales for the three months ended December 31, 2011 were $8,265,754 as compared to $6,581,342 for the same period in 2010, representing a 25.6% increase. Net sales for the six months ended December 31, 2011 were $16,259,681 as compared to $12,607,672 for the same period in 2010, representing a 29% increase. The increase for the three months ended December 31, 2011 was primarily the result of increased power supply shipments on existing programs for major customers. The increase for the six months ended December 31, 2011 was primarily due to the shipment of a high power radar system that the Company does not regularly build and an overall increase in power supply shipments on repeat programs.
For the three months ended December 31, 2011 and 2010 gross profits were $2,181,860 and $1,624,799, respectively. Gross profit as a percentage of sales was 26.4% and 24.7%, for the three months ended December 31, 2011 and 2010, respectively. For the six months ended December 31, 2011 and 2010 gross profits were $4,183,668 and $3,275,331, respectively. Gross profit as a percentage of sales was 25.7% and 26.0%, for the six months ended December 31, 2011 and 2010, 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 increased gross profit in the three months ended December 31, 2011, was primarily the result of higher net sales on mature programs with only minor cost overruns related to loss contracts. The slight gross profit percentage decrease in the six months ended December 31, 2011 as compared to December 31, 2010 was primarily the result of one large order shipped during the quarter that had a lower gross profit percentage than the average gross profit percentage from the previous period. This order was for a high power radar system referred to above.
Net income for the three months ended December 31, 2011, was $1,070,863 or $0.49 per share, both basic and diluted compared to $649,747 or $0.30 per share, both basic and diluted, for the three months ended December 31, 2010. Net income for the six months ended December 31, 2011, was $1,997,767 or $0.92 and $0.91 per share, basic and diluted, respectively compared to $1,403,286 or $0.65 per share, both basic and diluted, for the six months ended December 31, 2010. The increase in net income per share for the three and six months ended December 31, 2011 was mainly due to higher sales and gross profit and lower general and administrative expenses.
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