Herley Industries Inc. is engaged in the design development and manufacture of flight instrumentation components and systems and microwave products sold primarily to the U.S. government foreign governments and aerospace companies. Flight instrumentation products include command and control systems transponders flight termination receivers telemetry transmitters and receivers pulse code modulator encoders and scoring systems. Herley Industries Inc. has a market cap of $169.3 million; its shares were traded at around $13.04 with a P/E ratio of 31.13 and P/S ratio of 1.11. Highlight of Business Operations:- DIVERSE PRODUCT AND CUSTOMER BASE. We have a diverse product and customer
base. The U.S. Government accounted for approximately 12% of our fiscal 2009
revenues. Lockheed Martin Corporation and Northrop Grumman Corporation accounted
for approximately 13% and 16%, respectively in fiscal 2009. No other customer
accounted for 10% or more of consolidated net sales during this period. We are a
first-tier supplier to all of the prime defense contractors, as well as a direct
supplier to all of the service branches of the U.S. military, including products
found on over 120 individual platforms. Foreign customers accounted for
approximately 33% of our revenues in fiscal 2009.
During the fiscal years ended August 2, 2009, August 3, 2008 and July 29, 2007,
approximately 12%, 14% and 12% of our net sales respectively, were attributable
to contracts directly with offices and agencies of the U.S. Government. Lockheed
Martin Corporation and Northrop Grumman Corporation accounted for approximately
13% and 16%, respectively of net sales in fiscal 2009 and each accounted for
approximately 12% and 11% in fiscal years 2008 and 2007, respectively. No other
customer accounted for 10% or more of consolidated net sales during fiscal years
2009, 2008 or 2007.
During fiscal 2009, sales to foreign customers accounted for approximately 33%
of our net sales. Sales to foreign customers from our domestic locations
accounted for 9% of net sales with the remaining sales generated from the United
Kingdom (2%) and Israel (22%). The governments of Israel, Egypt, Japan, South
Korea, Taiwan and the United Kingdom are all significant customers. All of our
domestic contracts with foreign customers are payable in U.S. dollars. Contracts
with customers originating in Israel and England are either in U.S. dollars or
the local functional currency. International sales are subject to numerous
risks, including political and economic instability in foreign markets, currency
and economic difficulties in the Pacific Rim, restrictive trade policies of
foreign governments, inconsistent product regulation by foreign agencies or
governments, imposition of product tariffs and burdens and costs of complying
with a wide variety of international and U.S. export laws and regulatory
requirements. Our international sales are also subject to our obtaining export
licenses for certain products and systems.
Our funded backlog of orders was approximately $182 million on August 2, 2009
which are covered by signed contracts or purchase orders. There was no unfunded
backlog at August 2, 2009. Of our total backlog at August 2, 2009, $118 million
(65%) is attributable to domestic orders and $64 million (35%) is attributable
to foreign orders.
Read the The complete ReportHRLY is in the portfolios of Michael Price of MFP Investors LLC, Third Avenue Management.