Herley Industries Inc. (HRLY, Financial) filed Quarterly Report for the period ended 2009-11-01.
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 $166.7 million; its shares were traded at around $12.17 with a P/E ratio of 15.2 and P/S ratio of 1.
Net sales $47,679 $35,344 35 %
Gross profit $13,287 $6,603 101 %
Gross profit percentage 27.9% 18.7%
Operating income (loss) $5,066 ($660)
Bookings $34,973 $61,051 (43)%
Backlog (end of period) $170,734 $164,241 4 %
Last year, during the first quarter of fiscal 2009, we completed the acquisition
of Eyal Microwave in Israel and its operating results are included within the
results from continuing operations beginning in September 2008. In addition,
during the second quarter of fiscal 2009, we completed the divestiture of
Innovative Concepts, Inc. ("ICI") which is reported as discontinued operations.
The table above and discussion that follows excludes the results of ICI.
Domestic and foreign sales were 65% and 35%, respectively, of net sales for the
quarter compared to 67% and 33%, respectively, in the prior-year quarter.
Bookings were approximately $35.0 million, of which 66% were domestic and 34%
were foreign. This compares to bookings of approximately $61.1 million in the
prior-year quarter, of which 76% were domestic and 24% were foreign. Bookings in
the current quarter were down $26.1 million, or 42.7%, primarily due to
significant bookings last year that included approximately $12.1 million related
to two (2) Trident lots booked for which none were planned in the current
quarter, as well lower-than-planned bookings this quarter of approximately $12.3
million, primarily due to the delayed timing of those orders that, for the most
part, are still expected in fiscal 2010.
Gross profit in the quarter was $13.3 million (27.9% gross profit margin)
compared to $6.6 million (18.7% gross profit margin) last year, an increase of
$6.7 million. Contributing to the increase in gross profit and gross profit
percentage during fiscal 2010 is principally a result of the sales increase and
anticipated improvements in margins related to manufacturing efficiencies and a
favorable program mix. The prior-year quarter was adversely impacted by the
lower volume of sales that reduced overhead absorption and by the transition
(and related technical difficulties) of the Herley Farmingdale programs.
Selling and administrative (S&A) expenses for the quarter were $7.7 million, or
16.1% of sales, compared to $7.3 million, or 20.7% of sales, in the prior-year
quarter. The $.4 million increase in S&A expenses is primarily attributable to
an increase of approximately $.9 million in commissions and related sales
expenses associated with the increase in sales and approximately $.2 million due
to the inclusion of a full quarter of Eyal's expenses since its acquisition in
the first quarter of fiscal 2009, partially offset by approximately $.7 million
related to cost reductions, including payroll-related expenses. S&A expenses as
a percent of sales decreased 460 basis points due to leveraging our fixed cost
structure.
The provision for income taxes from continuing operations in the quarter was
$1.3 million, representing an effective income tax rate of 27.1% compared to an
effective income tax benefit rate of 31.7% last year. The current quarter rate
is less than the statutory rate of 35% primarily due to the favorable mix of
foreign earnings which are taxed at lower rates.
A small number of customers have accounted for a substantial portion of
historical net sales and we expect that a limited number of customers will
continue to represent a substantial portion of sales for the foreseeable future.
Approximately 16.5% and 12.3% of total net sales from continuing operations for
the first quarter of fiscal 2010 were made to Northrop Grumman Corporation and
to Lockheed Martin Corporation, respectively. Future operating results will
continue to substantially depend on the success of our largest customers and our
relationship with them. Orders from these customers are subject to fluctuation
and may be reduced materially. The loss of all or a portion of the sales volume
from any one of these customers would have an adverse affect on our liquidity
and operations.
Read the The complete ReportHRLY is in the portfolios of Michael Price of MFP Investors LLC, Third Avenue Management.
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 $166.7 million; its shares were traded at around $12.17 with a P/E ratio of 15.2 and P/S ratio of 1.
Highlight of Business Operations:
Net sales $47,679 $35,344 35 %
Gross profit $13,287 $6,603 101 %
Gross profit percentage 27.9% 18.7%
Operating income (loss) $5,066 ($660)
Bookings $34,973 $61,051 (43)%
Backlog (end of period) $170,734 $164,241 4 %
Last year, during the first quarter of fiscal 2009, we completed the acquisition
of Eyal Microwave in Israel and its operating results are included within the
results from continuing operations beginning in September 2008. In addition,
during the second quarter of fiscal 2009, we completed the divestiture of
Innovative Concepts, Inc. ("ICI") which is reported as discontinued operations.
The table above and discussion that follows excludes the results of ICI.
Domestic and foreign sales were 65% and 35%, respectively, of net sales for the
quarter compared to 67% and 33%, respectively, in the prior-year quarter.
Bookings were approximately $35.0 million, of which 66% were domestic and 34%
were foreign. This compares to bookings of approximately $61.1 million in the
prior-year quarter, of which 76% were domestic and 24% were foreign. Bookings in
the current quarter were down $26.1 million, or 42.7%, primarily due to
significant bookings last year that included approximately $12.1 million related
to two (2) Trident lots booked for which none were planned in the current
quarter, as well lower-than-planned bookings this quarter of approximately $12.3
million, primarily due to the delayed timing of those orders that, for the most
part, are still expected in fiscal 2010.
Gross profit in the quarter was $13.3 million (27.9% gross profit margin)
compared to $6.6 million (18.7% gross profit margin) last year, an increase of
$6.7 million. Contributing to the increase in gross profit and gross profit
percentage during fiscal 2010 is principally a result of the sales increase and
anticipated improvements in margins related to manufacturing efficiencies and a
favorable program mix. The prior-year quarter was adversely impacted by the
lower volume of sales that reduced overhead absorption and by the transition
(and related technical difficulties) of the Herley Farmingdale programs.
Selling and administrative (S&A) expenses for the quarter were $7.7 million, or
16.1% of sales, compared to $7.3 million, or 20.7% of sales, in the prior-year
quarter. The $.4 million increase in S&A expenses is primarily attributable to
an increase of approximately $.9 million in commissions and related sales
expenses associated with the increase in sales and approximately $.2 million due
to the inclusion of a full quarter of Eyal's expenses since its acquisition in
the first quarter of fiscal 2009, partially offset by approximately $.7 million
related to cost reductions, including payroll-related expenses. S&A expenses as
a percent of sales decreased 460 basis points due to leveraging our fixed cost
structure.
The provision for income taxes from continuing operations in the quarter was
$1.3 million, representing an effective income tax rate of 27.1% compared to an
effective income tax benefit rate of 31.7% last year. The current quarter rate
is less than the statutory rate of 35% primarily due to the favorable mix of
foreign earnings which are taxed at lower rates.
A small number of customers have accounted for a substantial portion of
historical net sales and we expect that a limited number of customers will
continue to represent a substantial portion of sales for the foreseeable future.
Approximately 16.5% and 12.3% of total net sales from continuing operations for
the first quarter of fiscal 2010 were made to Northrop Grumman Corporation and
to Lockheed Martin Corporation, respectively. Future operating results will
continue to substantially depend on the success of our largest customers and our
relationship with them. Orders from these customers are subject to fluctuation
and may be reduced materially. The loss of all or a portion of the sales volume
from any one of these customers would have an adverse affect on our liquidity
and operations.
Read the The complete ReportHRLY is in the portfolios of Michael Price of MFP Investors LLC, Third Avenue Management.
