Espey Mfg. & Electronics Corp. reports third quarter results

Rhea-AI Summary

Espey Mfg. & Electronics Corp. (NYSE American: ESP) reported their third-quarter results for fiscal year 2024. Net sales for Q3 2024 were $8.25 million, down from $9.81 million in Q3 2023. However, net income rose to $1.03 million, or $0.40 per diluted share, compared to $0.87 million, or $0.35 per diluted share, in the same period last year. For the first nine months of fiscal year 2024, net sales were $27.1 million, almost flat compared to $27.2 million in the same period of fiscal year 2023. Net income for this period increased to $3.92 million, or $1.56 per diluted share, from $2.78 million, or $1.13 per diluted share, last year. The backlog grew to $84.2 million, up from $82.1 million, despite new orders decreasing to $27.8 million from $32.6 million. CEO David O'Neil noted soft Q3 sales but highlighted improvements in gross profit and investment income, along with strong new sales orders and backlog. The company specializes in military and industrial power supplies/transformers.

Positive

• Net income for Q3 2024 increased to $1.03 million from $0.87 million in Q3 2023.
• Earnings per diluted share for Q3 2024 improved to $0.40 from $0.35 in Q3 2023.
• Net income for the first nine months of fiscal year 2024 rose to $3.92 million from $2.78 million in the same period of fiscal year 2023.
• Earnings per diluted share for the first nine months of fiscal year 2024 increased to $1.56 from $1.13 last year.
• The backlog as of March 31, 2024, increased to $84.2 million from $82.1 million last year.
• Gross profit and investment income showed improvement.
• Effective control over fixed costs contributed positively to bottom-line results.

Negative

• Net sales for Q3 2024 declined to $8.25 million from $9.81 million in Q3 2023.
• Net sales for the first nine months of fiscal year 2024 were flat at $27.1 million compared to $27.2 million in the same period of fiscal year 2023.
• New orders for the first nine months of fiscal year 2024 decreased to $27.8 million from $32.6 million last year.

Insights

Financial Analyst

Financial Performance: Espey Mfg. & Electronics Corp. reported a slight drop in net sales for the third quarter from $9.81 million last year to $8.25 million this year. Despite lower sales, net income grew to $1.03 million from $867,288, illustrating improved cost control and higher profitability per unit sold. For the first nine months, net sales remained relatively stable at $27.1 million, with a significant jump in net income from $2.78 million to $3.92 million. This suggests efficient management of expenses and potentially higher margins.

Key Data Insights: The sales backlog increased slightly from $82.1 million last year to $84.2 million, indicating continued demand. However, new orders decreased to $27.8 million from $32.6 million, which could be a concern if this trend continues as it may affect future revenues.

Short-term vs Long-term Implications: In the short term, Espey's improved net income and cost management are positive for investors. However, the drop in new orders could pose a risk for future growth. Investors should monitor how the company converts its backlog into sales and whether it secures new contracts to sustain long-term growth.

Industry Context: Espey operates in the specialized military and industrial power supplies sector, which is typically project-based and can experience fluctuations in order volumes. The slight decline in new orders might be cyclical, but continued backlog growth is a positive sign.

Market Research Analyst

Market Position and Demand: Espey's continued strong sales backlog and ongoing large engineering development programs indicate solid demand for its niche products in the military and industrial sectors. The company's ability to maintain a stable backlog even with a slight reduction in new orders suggests it has a robust market position.

Competitor Analysis: It's important to compare Espey's performance with industry peers. If competitors are also experiencing a decline in new orders, it could imply broader market trends rather than company-specific issues. Conversely, if competitors show an increase, Espey might need to reassess its market strategy.

Long-term Prospects: The mention of several large opportunities potentially converting into orders is noteworthy. Successful conversion of these opportunities is important for long-term growth and maintaining investor confidence. Investors should watch for future updates on these projects.

Industry Dynamics: The specialized nature of Espey's products means it likely faces limited direct competition but high customer expectations. Maintaining innovation and reliability is key to preserving its market share.

SARATOGA SPRINGS, N.Y., May 13, 2024 (GLOBE NEWSWIRE) -- Espey Mfg. & Electronics Corp. (NYSE American: ESP) announces results for the third quarter and the first nine months of fiscal year 2024.

Net sales for the third quarter of fiscal year 2024, January 1 to March 31, 2024, were $8,254,653 compared with last year's third quarter net sales of $9,809,616. Net income for the quarter was $1,031,930, $0.40 per diluted share, as compared to net income of $867,288, $0.35 per diluted share for the same quarter last year.

For the first nine months of fiscal year 2024, July 1 to March 31, 2024, net sales were $27.1 million, compared with $27.2 million for the first nine months of fiscal year 2023. Net income for the period was $3,921,844, $1.56 per diluted share, compared with net income of $2,781,596, $1.13 per diluted share, for the same period last year.

The backlog for the Company was $84.2 million at March 31, 2024, compared with last year's backlog of $82.1 million at March 31, 2023. New orders in the first nine months of fiscal year 2024 were approximately $27.8 million, compared with new orders in the first nine months of fiscal year 2023 of $32.6 million.

Mr. David O’Neil, President and CEO, commented,

With another quarter behind us, we are on track for an excellent year. Sales for the quarter proved a bit soft, comparative to last year, however on par with internal expectations. Gross profit, investment income, and control over fixed costs continued to deliver improvement to bottom-line results. Our larger engineering development programs remain financially healthy and in general our development programs have had less of a dilutive effect on gross profit reported when compared to prior years. New sales orders and our sales backlog remain strong. We are currently working on several large opportunities which could potentially become orders in the near future.

Espey's primary business is the development, design, and production of specialized military and industrial power supplies/transformers. The Company can be found on the internet at www.espey.com.

For further information, contact Ms. Katrina Sparano at invest@espey.com.

This press release may contain certain statements that are "forward-looking statements" and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

FAQ

What were Espey Mfg. & Electronics Corp.'s net sales for Q3 2024?

Espey Mfg. & Electronics Corp.'s net sales for Q3 2024 were $8.25 million, compared to $9.81 million in Q3 2023.

How much was Espey Mfg. & Electronics Corp.'s net income for Q3 2024?

Net income for Q3 2024 was $1.03 million, or $0.40 per diluted share, up from $0.87 million, or $0.35 per diluted share, in Q3 2023.

What were Espey Mfg. & Electronics Corp.'s net sales for the first nine months of fiscal year 2024?

Net sales for the first nine months of fiscal year 2024 were $27.1 million, compared to $27.2 million for the same period in fiscal year 2023.

How much did Espey Mfg. & Electronics Corp.'s net income increase in the first nine months of fiscal year 2024?

Net income for the first nine months of fiscal year 2024 increased to $3.92 million from $2.78 million in the same period of fiscal year 2023.

What is the current backlog for Espey Mfg. & Electronics Corp. as of March 31, 2024?

The current backlog for Espey Mfg. & Electronics Corp. as of March 31, 2024, is $84.2 million, up from $82.1 million last year.

What were the new orders for Espey Mfg. & Electronics Corp. in the first nine months of fiscal year 2024?

New orders for the first nine months of fiscal year 2024 were approximately $27.8 million, compared to $32.6 million in the same period of fiscal year 2023.