Sparton Corp. (SPA, Financial) filed Quarterly Report for the period ended 2010-03-31.
Sparton Corp. has a market cap of $53.4 million; its shares were traded at around $5.35 with a P/E ratio of 67 and P/S ratio of 0.2.
EMS sales for the three months ended March 31, 2010 decreased approximately $21.0 million as compared with the same quarter last year. This decrease primarily reflects decreased sales to three customers, whose combined decrease totaled approximately $19.6 million from the prior year quarter. Sparton disengaged with one of these customers as of June 30, 2009 and completed its disengagement with another customer, Honeywell, during the three months ended December 31, 2009. Honeywell contributed 19% of consolidated company net sales during the three months ended March 31, 2009. The decrease in sales to the third customer reflects the quarter over quarter loss of certain programs with this customer. Partially offsetting these decreases, sales to another customer, Goodrich, increased by approximately $1.5 million. Goodrich contributed 15% and 8% of consolidated company net sales during the three months ended March 31, 2010 and 2009, respectively. EMS sales include intercompany sales resulting primarily from the production of circuit boards that are then utilized in DSS product sales. These intercompany sales are eliminated in consolidation. EMS backlog was approximately $28.8 million at March 31, 2010. Commercial orders, in general, may be rescheduled or cancelled without significant penalty, and, as a result, may not be a meaningful measure of future sales. A majority of the March 31, 2010 EMS backlog is currently expected to be realized in the next 12 months.
DSS sales for the three months ended March 31, 2010 were significantly above the third quarter of last year, showing an increase of $6.6 million, reflecting higher U.S. Navy product volume due to successful sonobuoy lot acceptance testing in the current fiscal year as well as an increase in the awarded annual Navy contracts in production. Increased engineering sales revenue also contributed to the increase. Total sales to the U.S. Navy in the three months ended March 31, 2010 and 2009 was approximately $11.9 million and $4.6 million, or 31% and 8%, respectively, of consolidated company net sales for those periods. Sonobuoy sales to foreign governments were $2.0 million and $2.9 million in the three months ended March 31, 2010 and 2009, respectively. DSS backlog was approximately $57.9 million at March 31, 2010. A majority of the March 31, 2010 DSS backlog is currently expected to be realized within the next 12-15 months.
Restructuring/impairment charges were $0.2 million and $0.4 million for the three months ended March 31, 2010 and 2009, respectively, of which $0.2 million and $0.3 million were included in the EMS operating results for those periods. For a further discussion of the restructuring activity see Note 11 to the Unaudited Condensed Consolidated Financial Statements.
The fiscal 2010 three month period reflects a gain on sale of investment of $0.2 million from the sale of part of the Companys interest in Cybernet Systems Corporation (Cybernet). See Note 2 to the Unaudited Condensed Consolidated Financial Statements for a further discussion of this sale. Translation adjustments, not related to costs of goods sold, along with gains and losses from foreign currency transactions, in the aggregate, amounted to losses of $2,000 and $0.2 million for the three months ended March 31, 2010 and 2009, respectively. The Canadian dollar experienced volatility against the U.S. dollar during the three months ended March 31, 2009. With the closure of the Canadian facility, however, the impact in fiscal 2010 has not been significant and it is anticipated that future periods will not be significant. Other income for the three months ended March 31, 2010 was $0.2 million, versus $4,000 in the third quarter of fiscal 2009.
Due to the factors described above, the Company reported net income of $0.7 million ($0.07 per share, basic and diluted) for the three months ended March 31, 2010, compared to a net loss of $0.8 million ($(0.08) per share, basic and diluted) for the corresponding period last year.
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Sparton Corp. has a market cap of $53.4 million; its shares were traded at around $5.35 with a P/E ratio of 67 and P/S ratio of 0.2.
Highlight of Business Operations:
Medical sales decreased approximately $3.4 million in the three months ended March 31, 2010 as compared with the same quarter last year. This decrease in sales was primarily due to $3.0 million of reduced sales to one customer, as it paused production of one of its lines to make product enhancement modifications. Additionally, this customer exhibited elevated purchasing in the 2009 quarter as it ended a worldwide inventory reduction program at the end of calendar 2008. Medical sales are dependent on a small number of key strategic customers. Siemens Diagnostics contributed 22% and 21% of consolidated company net sales during the three months ended March 31, 2010 and 2009, respectively. Medical backlog was approximately $13.0 million at March 31, 2010. Commercial orders, in general, may be rescheduled or cancelled without significant penalty, and, as a result, may not be a meaningful measure of future sales. A majority of the March 31, 2010 Medical backlog is currently expected to be realized in the next 12 months.EMS sales for the three months ended March 31, 2010 decreased approximately $21.0 million as compared with the same quarter last year. This decrease primarily reflects decreased sales to three customers, whose combined decrease totaled approximately $19.6 million from the prior year quarter. Sparton disengaged with one of these customers as of June 30, 2009 and completed its disengagement with another customer, Honeywell, during the three months ended December 31, 2009. Honeywell contributed 19% of consolidated company net sales during the three months ended March 31, 2009. The decrease in sales to the third customer reflects the quarter over quarter loss of certain programs with this customer. Partially offsetting these decreases, sales to another customer, Goodrich, increased by approximately $1.5 million. Goodrich contributed 15% and 8% of consolidated company net sales during the three months ended March 31, 2010 and 2009, respectively. EMS sales include intercompany sales resulting primarily from the production of circuit boards that are then utilized in DSS product sales. These intercompany sales are eliminated in consolidation. EMS backlog was approximately $28.8 million at March 31, 2010. Commercial orders, in general, may be rescheduled or cancelled without significant penalty, and, as a result, may not be a meaningful measure of future sales. A majority of the March 31, 2010 EMS backlog is currently expected to be realized in the next 12 months.
DSS sales for the three months ended March 31, 2010 were significantly above the third quarter of last year, showing an increase of $6.6 million, reflecting higher U.S. Navy product volume due to successful sonobuoy lot acceptance testing in the current fiscal year as well as an increase in the awarded annual Navy contracts in production. Increased engineering sales revenue also contributed to the increase. Total sales to the U.S. Navy in the three months ended March 31, 2010 and 2009 was approximately $11.9 million and $4.6 million, or 31% and 8%, respectively, of consolidated company net sales for those periods. Sonobuoy sales to foreign governments were $2.0 million and $2.9 million in the three months ended March 31, 2010 and 2009, respectively. DSS backlog was approximately $57.9 million at March 31, 2010. A majority of the March 31, 2010 DSS backlog is currently expected to be realized within the next 12-15 months.
Restructuring/impairment charges were $0.2 million and $0.4 million for the three months ended March 31, 2010 and 2009, respectively, of which $0.2 million and $0.3 million were included in the EMS operating results for those periods. For a further discussion of the restructuring activity see Note 11 to the Unaudited Condensed Consolidated Financial Statements.
The fiscal 2010 three month period reflects a gain on sale of investment of $0.2 million from the sale of part of the Companys interest in Cybernet Systems Corporation (Cybernet). See Note 2 to the Unaudited Condensed Consolidated Financial Statements for a further discussion of this sale. Translation adjustments, not related to costs of goods sold, along with gains and losses from foreign currency transactions, in the aggregate, amounted to losses of $2,000 and $0.2 million for the three months ended March 31, 2010 and 2009, respectively. The Canadian dollar experienced volatility against the U.S. dollar during the three months ended March 31, 2009. With the closure of the Canadian facility, however, the impact in fiscal 2010 has not been significant and it is anticipated that future periods will not be significant. Other income for the three months ended March 31, 2010 was $0.2 million, versus $4,000 in the third quarter of fiscal 2009.
Due to the factors described above, the Company reported net income of $0.7 million ($0.07 per share, basic and diluted) for the three months ended March 31, 2010, compared to a net loss of $0.8 million ($(0.08) per share, basic and diluted) for the corresponding period last year.
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