Espey Mfg. & Electronics Corp (ESP, Financial) filed Quarterly Report for the period ended 2008-12-31.
ESPEY MFG. & ELECTRONICS is engaged principally in the development design production and sales of specialized electronic power conditioning apparatus (electronic power supplies) a wide variety of transformers and other types of iron-core components and electronic systems. In some cases the Company manufactures such products in accordance with pre-developed mechanical and electrical requirements not requiring environmental testing. The Company does not generally manufacture standardized components. Espey Mfg. & Electronics Corp has a market cap of $39.25 million; its shares were traded at around $17.75 with a P/E ratio of 10.4 and P/S ratio of 1.53. The dividend yield of Espey Mfg. & Electronics Corp stocks is 5.33%. Espey Mfg. & Electronics Corp had an annual average earning growth of 29.7% over the past 5 years.
$11.5 million, representing a 40.4% increase over the amount of new orders
received in the first six months of fiscal 2008. These orders are predominately
follow-on production quantities for mature products. These orders are in line
with the Company's strategy of getting involved in long-term high quantity
military and industrial products. The Company's backlog was $44.0 million at
December 31, 2008 and is $43.6 million at February 10, 2009, which includes
$23.8 million from two significant customers. The backlog for the Company
represents the estimated remaining sales value of work to be performed under
firm contracts. These contracts include significant orders for military and
industrial power supplies, and contracts to manufacture certain customer
products in accordance with pre-engineered requirements.
Net sales for the three months ended December 31, 2008 were $6,194,177 as
compared to $6,732,144 for the same period in 2007, representing an 8% decrease.
Net sales for the six months ended December 31, 2008 were $12,247,696 as
compared to $13,033,930 for the same period in 2007, representing a 6% decrease.
Generally, these decreases can be attributed to the contract specific nature of
the Company's business. Management expected sales to be higher for the three and
six months ended December 31, 2008, however, anticipated shipments of products
under two engineering development contracts were delayed for reasons described
below.
For the three months ended December 31, 2008 and 2007 gross profits were
$625,930 and $1,682,585, respectively. Gross profit as a percentage of sales was
10.1% and 25.0%, for the three months ended December 31, 2008 and 2007,
respectively. For the six months ended December 31, 2008 and 2007 gross profits
were $1,777,205 and $3,031,695, respectively. Gross profit as a percentage of
sales was 14.5% and 23.3%, for the six months ended December 31, 2008 and 2007,
respectively. The primary factor in determining gross profit and net income is
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 and six months ended December 31, 2008, was primarily
the result of unexpected losses incurred on two programs with significant
engineering and production time required for design efforts. These two programs
experienced significant cost overruns in the current quarter due to extended
product qualification testing and difficulties moving the products from
engineering design into full production. Currently, one program has completed
qualification testing and has moved into full production. The other program is
still in qualification testing and has made significant progress towards
completion. Management is not anticipating any more losses on these two
contracts. Management continues to evaluate the Company's workforce to ensure
that production and overall execution of the backlog orders and additional
anticipated orders are successfully obtained and executed. Employment of full
time equivalents at December 31, 2008 was 171 compared to 175 people at December
31, 2007.
Net (loss) income for the three months ended December 31, 2008, was $(42,412) or
$(.02) per share, both basic and diluted, compared to $797,086 or $.38 and $.37
per share, basic and diluted, respectively, for the three months ended December
31, 2007. Net income for the six months ended December 31, 2008, was $355,884 or
$.17 per share, both basic and diluted, compared to $1,388,669 or $.67 and $.65
per share, basic and diluted, for the six months ended December 31, 2007. The
decrease in net income per share was primarily due to the loss programs
explained above and decreased interest income.
The Company's working capital as of December 31, 2008 and 2007 was approximately
$23.8 million and $28.7 million, respectively. During the three months ended
December 31, 2008 and 2007 the Company repurchased 2,805 and 8,977 shares,
respectively, of its common stock for a total purchase price of $50,471 and
$200,905, respectively. Of the total purchases, 800 shares and 8,977 shares,
respectively, were purchased from the Company's Employee Retirement Plan and
Trust ("ESOP") for a purchase price of $14,400 and $200,905, respectively. All
remaining shares were purchased on the open market. During the six months ended
December 31, 2008 and 2007 the Company repurchased 5,549 and 25,720 shares,
respectively, of its common stock for a total purchase price of $102,510 and
$571,763, respectively. Of the total purchases, 800 shares and 25,720 shares,
respectively, were purchased from the Company's Employee Retirement Plan and
Trust ("ESOP") for a purchase price of $14,400 and $571,763, respectively. All
remaining shares were purchased on the open market. Under existing
authorizations from the Company's Board of Directors, as of December 31, 2008,
management is authorized to purchase an additional $1,897,489 million of Company
stock.
Six Months Ended December 31,
2008 2007
- -
Net cash provided by operating activities $ 929,576 $ 1,331,627
Net cash used in investing activities (2,402,735) (2,899,436)
Net cash used in financing activities (4,078,993) (964,821)
During the six months ended December 31, 2008 and 2007, the Company expended
$185,801 and $292,436, respectively, for plant improvements and new equipment.
The Company has budgeted approximately $350,000 for new equipment and plant
improvements in fiscal 2009. Management anticipates that the funds required will
be available from current operations.
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ESPEY MFG. & ELECTRONICS is engaged principally in the development design production and sales of specialized electronic power conditioning apparatus (electronic power supplies) a wide variety of transformers and other types of iron-core components and electronic systems. In some cases the Company manufactures such products in accordance with pre-developed mechanical and electrical requirements not requiring environmental testing. The Company does not generally manufacture standardized components. Espey Mfg. & Electronics Corp has a market cap of $39.25 million; its shares were traded at around $17.75 with a P/E ratio of 10.4 and P/S ratio of 1.53. The dividend yield of Espey Mfg. & Electronics Corp stocks is 5.33%. Espey Mfg. & Electronics Corp had an annual average earning growth of 29.7% over the past 5 years.
Highlight of Business Operations:
New orders received in the first six months of fiscal 2009 were approximately$11.5 million, representing a 40.4% increase over the amount of new orders
received in the first six months of fiscal 2008. These orders are predominately
follow-on production quantities for mature products. These orders are in line
with the Company's strategy of getting involved in long-term high quantity
military and industrial products. The Company's backlog was $44.0 million at
December 31, 2008 and is $43.6 million at February 10, 2009, which includes
$23.8 million from two significant customers. The backlog for the Company
represents the estimated remaining sales value of work to be performed under
firm contracts. These contracts include significant orders for military and
industrial power supplies, and contracts to manufacture certain customer
products in accordance with pre-engineered requirements.
Net sales for the three months ended December 31, 2008 were $6,194,177 as
compared to $6,732,144 for the same period in 2007, representing an 8% decrease.
Net sales for the six months ended December 31, 2008 were $12,247,696 as
compared to $13,033,930 for the same period in 2007, representing a 6% decrease.
Generally, these decreases can be attributed to the contract specific nature of
the Company's business. Management expected sales to be higher for the three and
six months ended December 31, 2008, however, anticipated shipments of products
under two engineering development contracts were delayed for reasons described
below.
For the three months ended December 31, 2008 and 2007 gross profits were
$625,930 and $1,682,585, respectively. Gross profit as a percentage of sales was
10.1% and 25.0%, for the three months ended December 31, 2008 and 2007,
respectively. For the six months ended December 31, 2008 and 2007 gross profits
were $1,777,205 and $3,031,695, respectively. Gross profit as a percentage of
sales was 14.5% and 23.3%, for the six months ended December 31, 2008 and 2007,
respectively. The primary factor in determining gross profit and net income is
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 and six months ended December 31, 2008, was primarily
the result of unexpected losses incurred on two programs with significant
engineering and production time required for design efforts. These two programs
experienced significant cost overruns in the current quarter due to extended
product qualification testing and difficulties moving the products from
engineering design into full production. Currently, one program has completed
qualification testing and has moved into full production. The other program is
still in qualification testing and has made significant progress towards
completion. Management is not anticipating any more losses on these two
contracts. Management continues to evaluate the Company's workforce to ensure
that production and overall execution of the backlog orders and additional
anticipated orders are successfully obtained and executed. Employment of full
time equivalents at December 31, 2008 was 171 compared to 175 people at December
31, 2007.
Net (loss) income for the three months ended December 31, 2008, was $(42,412) or
$(.02) per share, both basic and diluted, compared to $797,086 or $.38 and $.37
per share, basic and diluted, respectively, for the three months ended December
31, 2007. Net income for the six months ended December 31, 2008, was $355,884 or
$.17 per share, both basic and diluted, compared to $1,388,669 or $.67 and $.65
per share, basic and diluted, for the six months ended December 31, 2007. The
decrease in net income per share was primarily due to the loss programs
explained above and decreased interest income.
The Company's working capital as of December 31, 2008 and 2007 was approximately
$23.8 million and $28.7 million, respectively. During the three months ended
December 31, 2008 and 2007 the Company repurchased 2,805 and 8,977 shares,
respectively, of its common stock for a total purchase price of $50,471 and
$200,905, respectively. Of the total purchases, 800 shares and 8,977 shares,
respectively, were purchased from the Company's Employee Retirement Plan and
Trust ("ESOP") for a purchase price of $14,400 and $200,905, respectively. All
remaining shares were purchased on the open market. During the six months ended
December 31, 2008 and 2007 the Company repurchased 5,549 and 25,720 shares,
respectively, of its common stock for a total purchase price of $102,510 and
$571,763, respectively. Of the total purchases, 800 shares and 25,720 shares,
respectively, were purchased from the Company's Employee Retirement Plan and
Trust ("ESOP") for a purchase price of $14,400 and $571,763, respectively. All
remaining shares were purchased on the open market. Under existing
authorizations from the Company's Board of Directors, as of December 31, 2008,
management is authorized to purchase an additional $1,897,489 million of Company
stock.
Six Months Ended December 31,
2008 2007
- -
Net cash provided by operating activities $ 929,576 $ 1,331,627
Net cash used in investing activities (2,402,735) (2,899,436)
Net cash used in financing activities (4,078,993) (964,821)
During the six months ended December 31, 2008 and 2007, the Company expended
$185,801 and $292,436, respectively, for plant improvements and new equipment.
The Company has budgeted approximately $350,000 for new equipment and plant
improvements in fiscal 2009. Management anticipates that the funds required will
be available from current operations.
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