Espey(ESP) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2025, were $9,092,876, a decrease of 13.0% compared to $10,443,218 for the same period in 2024[9] - Gross profit increased to $3,217,002, representing a gross margin of 35.4%, up from $2,800,882 and a gross margin of 26.8% in the prior year[9] - Operating income rose to $2,065,736, an increase of 20.1% from $1,719,213 in the same quarter last year[9] - Net income for the quarter was $2,169,836, a 35.7% increase compared to $1,598,317 in the prior year[9] - Basic net income per share increased to $0.80, up from $0.63 in the same quarter of 2024[9] - Total revenue for the three months ended September 30, 2025 was $7,339,223, a decrease of 11.1% from $8,262,496 in the same period of fiscal year 2024[41] - Revenue recognized based on milestones achieved for the three months ended September 30, 2025 was $1,753,653, down from $2,180,722 in the same period of fiscal year 2024[41] Assets and Liabilities - Total assets as of September 30, 2025, were $84,846,731, an increase of 7.0% from $79,116,564 as of June 30, 2025[7] - Total current assets increased to $80,730,705 as of September 30, 2025, compared to $75,156,408 as of June 30, 2025[7] - Total liabilities remained stable at $33,868,970 as of September 30, 2025, compared to $28,267,564 as of June 30, 2025[7] - The company experienced a decrease in trade accounts receivable by $1,241,032, contrasting with an increase of $383,333 in the previous year[15] - The company’s total liabilities included an increase in accounts payable by $750,263, compared to an increase of $170,683 in the prior year[15] Cash and Investments - Cash and cash equivalents rose to $22,220,227, up from $18,862,645 at the end of the previous quarter[7] - Cash and cash equivalents at the end of the period were $22,220,227, a significant increase from $4,813,898 at the end of September 2024[15] - Total investment securities as of September 30, 2025, amounted to $24,688,473, with certificates of deposit valued at $23,583,000 and municipal bonds at $1,105,473[19] - The company’s investment securities portfolio is diversified and primarily consists of investment-grade fixed income instruments[21] Dividends and Shareholder Equity - The company declared dividends of $1.00 per share, significantly higher than $0.25 per share in the same quarter last year[9] - Total stockholders' equity increased to $50,977,761, compared to $50,849,000 as of June 30, 2025[7] - The Company paid regular cash dividends of $0.25 per share and a special dividend of $0.75 per share in the three months ended September 30, 2025[32] Stock Options and Compensation - The company reported a stock-based compensation expense of $74,440 for the three months ended September 30, 2025, down from $101,492 in the same period of 2024[26] - ESOP compensation expense for the three-month period ended September 30, 2025 was $247,344, compared to $123,194 for the same period in 2024[48] - The aggregate intrinsic value of outstanding options at September 30, 2025 was $3,790,995[33] - The intrinsic value of options exercised during the three months ended September 30, 2025 was $640,228, compared to $93,512 for the same period in 2024[33] - As of September 30, 2025, there was $158,654 of unrecognized compensation cost related to stock option awards expected to be recognized over the next 1.25 years[27] Backlog and Future Commitments - The Company's backlog as of September 30, 2025 totaled approximately $141.1 million, with 27.6% expected to be recognized in 2026[44] - Contract liabilities increased to $27,974,103, up from $22,886,404 as of June 30, 2025, indicating growth in future revenue commitments[7] - The company experienced a significant increase in contract liabilities, with a rise of $5,087,699 compared to a decrease of $327,812 in the previous year[15] Segment Reporting and Management - The Company adopted FASB's ASU 2023-07 for segment reporting as of June 30, 2025, enhancing qualitative and quantitative disclosures for reportable segments[51] - The Chief Operating Decision Maker (CODM) is the Chief Executive Officer, overseeing a single operating segment and evaluating performance based on financial data[51] - Significant expenses reviewed by the CODM include Cost of Sales and Selling, General and Administrative costs, which are separately presented in the financial statements[51]