2007 Elecsys News
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December 17, 2007
Olathe, Kansas (December 17, 2007) - Elecsys Corporation (AMEX: ASY), today announced its financial results for its second fiscal quarter ended October 31, 2007, which included the results from its new Radix Corporation subsidiary and the associated costs of that acquisition. Elecsys Corporation also announced today that its Form 10-Q for its second fiscal quarter ended October 31, 2007 will not be filed today, but is currently expected to be filed within the next five business days. The company is deferring filing the 10-Q until it is able to finalize certain pro-forma financial information for the period prior to its acquisition of the assets and assumption of certain of the liabilities of Radix. Elecsys Corporation also announced the filing today of an amended Form 8-K to reflect its conclusion that the acquisition of the Radix assets constitutes an acquisition of a "significant amount" of assets. The company expects to further amend that Form 8-K upon completion of certain financial statements and exhibits relating to the Radix acquisition.
Sales for the quarter were $5,602,000, an increase of $6,000 from the comparable period of fiscal 2007. The increase in sales for the quarter was due to substantial sales growth at NTG. Sales at NTG were $821,000, an increase of 349% from the second quarter of the previous fiscal year. Accelerating demand for new WatchdogCP products and for communication technology upgrades for existing products were the main factors in the surge in NTG sales. Total sales reported at DCI decreased approximately $1,217,000 from the prior year period. The prior period included sales of $1,564,000 to the former Radix International Corporation. Sales reported at DCI no longer include sales made to our new Radix subsidiary. Excluding the Radix products from the comparable periods, sales at DCI increased by approximately 9% over the prior year quarter. Sales at the Company’s newest subsidiary, Radix Corporation, were $584,000 during the six week period between the acquisition and the end of the quarter. For the six months ended October 31, 2007, sales were $10,389,000, an increase of $931,000, or 9.8%, from the six months ended October 31, 2006. Sales to Radix during the six month period of the prior fiscal year were $1,893,000.
Gross margin was approximately 32% of sales, or $1,796,000, for the quarter as compared to 30% of sales, or $1,660,000, for the quarter ended October 31, 2006. Our improvement in consolidated gross margin resulted from the increase in sales volumes of higher margin products at NTG as well as the additional gross margin generated at Radix with its mix of proprietary equipment sales and service contract revenues. For the six-month period ended October 31, 2007, gross margin was 32%, or $3,311,000, compared to 31%, or $2,974,000, for the six-month period ended October 31, 2006.
During the quarter, we undertook the strategic initiative to grow our business by expanding into the specialized niche of rugged mobile computing. The acquisition of the Radix business, products, and technology involved certain one-time expenditures to complete the transaction and ensure a successful integration of the business into Elecsys. As a result, operating income for the quarter was $140,000, a decrease of $350,000 as compared to $490,000 of operating income for the same quarter in the prior year. For the six-month period ended October 31, 2007, operating income was $494,000 as compared to $823,000 for the same period in the prior fiscal year.
As a result of the above, net income was $10,000, or $0.00 per diluted share, for the quarter ended October 31, 2007 as compared to net income of $241,000, or $0.07 per diluted share for the quarter ended October 31, 2006. For the six-month period ended October 31, 2007, net income was $184,000, or $0.05 per fully diluted share as compared to $410,000, or $0.12 per fully diluted share for the six-month period ended October 31, 2006.
Karl B. Gemperli, Chief Executive Officer, stated, “We are extremely pleased with the continuing sales growth and financial success at NTG. We believe our diligent efforts and committed investment in new product development have resulted in a market leading product family with solid prospects for continued growth in the expanding energy infrastructure industries. We believe DCI will continue to exhibit healthy growth as we build further upon our stable foundation of profitable business.” Gemperli continued, “We are excited about our expansion into the rugged mobile computing market with the acquisition of Radix. The intimate knowledge of the Radix product family gained while manufacturing the products at DCI over several years, as well as their quality and service driven customer base, made Radix an ideal fit for Elecsys. Although there were significant transaction expenses related to this initiative incurred during this quarter, we are confident that the future benefit of this acquisition justifies these investments. The timing of shipments from our consolidated backlog, anticipated future bookings, anticipated continued growth in the demand for NTG’s new products, and the addition of Radix Corporation, lead us to expect continued increases in our total consolidated sales over the coming quarters. We are proud of all the dedicated people at Elecsys who make our success possible.”
Elecsys Corporation is a publicly traded holding company with three wholly owned subsidiaries, DCI, Inc., NTG, Inc., and Radix Corporation. DCI provides electronic design and manufacturing services for original equipment manufacturers in the aerospace, transportation, communications, safety, security and other industrial product industries. DCI has specialized expertise and capabilities to integrate custom electronic assemblies with a variety of innovative display and interface technologies. NTG designs, markets, and provides remote monitoring solutions for the gas and oil pipeline industry as well as other industries that require remote monitoring. Radix develops, designs and markets ultra-rugged handheld computers, peripherals and portable printers. The markets served by its products include utilities, transportation logistics, traffic and parking enforcement, route accounting/deliveries, and inspection and maintenance. For more information, visit our website at www.elecsyscorp.com.
Safe-Harbor statement: The discussions set forth in this press release may contain forward-looking comments based on current expectations that involve a number of risks and uncertainties. Actual results could differ materially from those projected or suggested in the forward-looking comments. The difference could be caused by a number of factors, including, but not limited to the factors and conditions that are described in Elecsys Corporation's SEC filings, including the Form 10-KSB for the year ended April 30, 2007. The reader is cautioned that Elecsys Corporation does not have a policy of updating or revising forward-looking statements and thus he or she should not assume that silence by management of Elecsys Corporation over time means that actual events are bearing out as estimated in such forward-looking statements.
Elecsys Corporation and Subsidiaries Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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Three Months
October 31
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Six Months
October 31
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2007 |
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2006 |
2007 |
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2006 |
| Sales |
$5,602 |
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$5,596 |
$10,389 |
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$9,458 |
| Cost of products sold |
3,806 |
|
3,936 |
7,078 |
|
6,484 |
| Gross margin |
1,796 |
|
1,660 |
3,311 |
|
2,974 |
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|
|
|
|
|
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| Selling, general and administrative expenses |
1,656 |
|
1,170 |
2,817 |
|
2,151 |
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| Operating income |
140 |
|
490 |
494 |
|
823 |
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| Financial income (expense): |
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| Interest expense |
(127) |
|
(89) |
(229) |
|
(120) |
| Interest income |
3 |
|
2 |
17 |
|
6 |
|
(124) |
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(87) |
(212) |
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(114) |
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| Income before income taxes |
16 |
|
403 |
282 |
|
709 |
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|
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| Income tax expense |
6 |
|
162 |
98 |
|
299 |
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|
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| Net income |
$10 |
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$241 |
$184 |
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$410 |
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| Net income per share information: |
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| Basic |
$0.00 |
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$0.07 |
$0.06 |
|
$0.13 |
| Diluted |
$0.00 |
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$0.07 |
$0.05 |
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$0.12 |
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| Weighted average common shares outstanding: |
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| Basic |
3,285 |
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3,240 |
3,284 |
|
3,240 |
| Diluted |
3,458 |
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3,417 |
3,467 |
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3,410 |
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