Elecsys Corporation Reports First Quarter Financial Results

September 10, 2012


Olathe, Kansas (September 10, 2012) - Elecsys Corporation (NASDAQ: ESYS), a provider of innovative machine to machine (M2M) communication technology solutions, data acquisition systems, and custom electronic equipment for critical industrial applications worldwide, today announced its financial results for the first quarter ended July 31, 2012.

 

Sales for the quarter were $4,257,000, a decrease of 25%, or $1,416,000, from $5,673,000 in the first quarter of fiscal 2012.

 

Operating loss for the quarter was $228,000, a decline of $617,000, compared to operating income of $389,000 for the same quarter in the prior year.

 

The Company’s net loss was $161,000, or $0.04 per diluted share, for the quarter ended July 31, 2012.  For the quarter ended July 31, 2011, net income was $213,000, or $0.05 per diluted share.   

 

Sales of proprietary products and services were $1,703,000 for the quarter ended July 31, 2012, a decrease of 28%, or $660,000.    Sales of wireless remote monitoring solutions decreased approximately 41%, or $661,000, from the prior fiscal year.  The decrease in overall sales of remote monitoring equipment and services was driven by a slowdown in customer orders received and shipped during the period.  The Company’s industrial data communication solutions posted a sales increase of $99,000, or 85%, as compared to the previous fiscal year.  This increase was the direct result of increased sales and marketing efforts to the existing customer base and an active pursuit of new customers for the Director series products.  The Company’s mobile data acquisition solutions, encompassing Radix handheld computers and eXtremeTAG RFID solutions, reported a sales decrease of approximately 20% over the prior fiscal year primarily as a result of fewer shipments of Radix computer hardware due to the prolonged weakness of international economic conditions that continue to impact many of the Company’s largest international customers.

Sales for the Company’s Electronic Manufacturing Services (“EMS”) business segment decreased approximately 24% to $2,554,000 for the quarter ended July 31, 2012 from $3,310,000 in the prior fiscal year period.   The decrease of approximately $756,000 in EMS sales resulted from reduced sales to certain existing customers combined with the Company's elimination of certain lower margin customers stemming from its focus on enhancing EMS gross margins.

 

The Company anticipates that as a result of new products in development and investments in sales and marketing, revenues from the Company’s proprietary products including its wireless remote monitoring solutions, industrial data communications, and mobile data acquisition systems, will increase over the next few quarters.  Although EMS sales posted a decline in the current period, additional sales and marketing efforts have been undertaken to focus on customers that can benefit from the Company’s proprietary technology solutions and these efforts should begin to generate growth in the EMS segment over the longer term.    

 

Total backlog at July 31, 2012 was approximately $8,175,000, an increase of $270,000 from a total backlog of $7,905,000 on April 30, 2012. 

 

Gross margin for the three-month period ended July 31, 2012 was approximately 33%, or $1,389,000, versus 35%, or $2,004,000 for the quarter ended July 31, 2011.  The decrease in both gross margin percentage and dollars was a function of the overall decrease in sales of both proprietary products and electronic manufacturing services. 

 

Total selling, general and administrative expenses were approximately $1,617,000 during the three-month period ended July 31, 2012, relatively unchanged from the $1,615,000 in the comparable period of the prior fiscal year.  Decreases in both general and administrative expenses and sales and marketing costs were offset by an increase in research and development expenses.  The decrease in general and administrative costs was primarily the result of reductions in professional fees and personnel expenses.  Research and development investments increased by $64,000 over the prior year as additional investments in engineering and product design resources were engaged in new product development.  Sales and marketing expenses decreased $14,000 during the quarterly period due to the elimination of a sales management position and the hiring of additional salespeople.  This reallocation of personnel resources led to an overall reduction in sales and marketing expenses while expanding the Company’s overall sales force.

 

Karl B. Gemperli, Chief Executive Officer, stated, "Although the level of new orders received was consistent with recent quarters, continued economic weakness in the industrial sectors that contain much of our customer base resulted in a decrease in shipments across all of our product lines relative to the first quarter of last year.  We consider investments in people, systems, and capabilities to be vital for our sustained growth and our ability to acquire new customers.  We believe that the product development, marketing, and sales activities we are currently engaged in will expand applications for our products and technologies into new industry segments and developing international markets.  Although the continuing uncertainty in world markets and the tentative nature of any domestic recovery continue to present challenges, we are optimistic about the future and anticipate positive trends in both revenues and earnings during the coming quarters.”

 

About Elecsys Corporation

Elecsys Corporation provides innovative machine to machine (M2M) communication technology solutions, data acquisition and management systems, and custom electronic equipment for critical industrial applications worldwide.  The Company’s primary markets include energy, agriculture, safety and security systems, water management, and transportation.  Elecsys proprietary equipment and services encompass wireless remote monitoring, industrial data communication, and mobile data acquisition technologies that are deployed wherever high quality and reliability are essential.  Elecsys develops, manufactures, and supports proprietary technology and equipment under several premium brand names.  In addition to its proprietary products, Elecsys designs and manufactures rugged and reliable custom electronic assemblies and integrated display modules for multiple original equipment manufacturers in a variety of industries worldwide.  For more information, visit 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-K for the year ended April 30, 2012. 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 Subsidiary

Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

 

Three Months Ended
July 31,

 

2012

 

2011

Sales

$4,257

 

$5,673

Cost of products sold

2,868

 

3,669

Gross margin

1,389

 

2,004

 

 

 

 

Selling, general and administrative expenses:

 

 

 

  Research and development expense

406

 

342

  Selling and marketing expense

524

 

538

  General and administrative expense

687

 

735

Total selling, general and administrative expenses

1,617

 

1,615

 

 

 

 

Operating income

(228)

 

389

 

 

 

 

Financial income (expense):

 

 

 

  Interest expense

(21)

 

(57)

  Other income (expense), net

--

 

--

 

(21)

 

(57)

 

 

 

 

Net income before income taxes

(249)

 

332

 

 

 

 

Income tax expense

(88)

 

119

 

 

 

 

Net income

$(161)

 

$213

 

 

 

 

Net income per share information:

 

 

 

  Basic

$(0.04)

 

$0.06

  Diluted

$(0.04)

 

$0.05

 

 

 

 

Weighted average common shares outstanding:

 

 

 

   Basic

3,885

 

3,789

   Diluted

3,885

 

3,930


Elecsys Corporation and Subsidiary

Condensed Consolidated Balance Sheets
(In thousands, except share data)

 

 

 

July 31, 2012

 

April 30, 2012

ASSETS

 

(unaudited)

 

 

   Current assets:

 

 

 

 

      Cash and cash equivalents

 

$77

 

$136

      Accounts receivable, net

 

1,700

 

2,631

      Inventories, net

 

5,884

 

5,940

      Other current assets

 

921

 

826

   Total current assets

 

8,582

 

9,533

 

 

 

 

 

   Property and equipment, net

 

5,255

 

5,295

 

 

 

 

 

   Goodwill

 

1,942

 

1,942

   Intangible assets, net

 

1,836

 

1,886

   Other assets, net

 

50

 

51

Total assets

 

$17,665

 

$18,707

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

   Current liabilities:

 

 

 

 

      Accounts payable

 

$871

 

$825

      Accrued expenses

 

1,240

 

1,393

      Income taxes payable

 

--

 

5

      Current maturities of long-term debt

 

183

 

181

   Total current liabilities

 

2,404

 

2,404

 

 

 

 

 

Deferred taxes

 

483

 

485

Long-term debt, less current maturities

 

2,758

 

3,554

 

 

 

 

 

   Stockholders' equity:

 

 

 

 

      Common stock

 

39

 

39

      Additional paid-in capital

 

11,193

 

11,166

      Retained earnings (accumulated deficit)

 

898

 

1,059

   Total stockholders' equity

 

12,130

 

12,264

Total liabilities and stockholders' equity

 

$17,665

 

$18,707