Espey(US:ESP)2021-02-15 16:00Financial Performance - Net sales for the three months ended December 31, 2020, were $6,962,065, a decrease of 4.45% from $7,286,674 in the same period of 2019[8] - Gross profit for the three months ended December 31, 2020, was $713,461, down 52.1% from $1,480,148 in the same period of 2019[8] - Operating loss for the three months ended December 31, 2020, was $(232,017), compared to operating income of $230,406 in the same period of 2019[8] - Net loss for the three months ended December 31, 2020, was $(181,006), compared to net income of $228,964 in the same period of 2019[8] - Total comprehensive loss for the three months ended December 31, 2020, was $178,294[9] - Selling, general and administrative expenses for the three months ended December 31, 2020, were $945,478, a decrease of $304,264 or 24% compared to the same period in 2019[77] - Other income for the three months ended December 31, 2020, was $15,487, a decrease of 60% from $38,764 in the same period in 2019[78] - The effective tax rate for the three months ended December 31, 2020, was 16.4%, an increase from 14.9% in the same period in 2019[79] Assets and Liabilities - Total assets as of December 31, 2020, were $36,782,009, a decrease from $38,208,766 as of June 30, 2020[6] - Total liabilities as of December 31, 2020, were $6,665,748, down from $6,981,918 as of June 30, 2020[6] - Total current assets decreased to $33,557,399 as of December 31, 2020, from $34,741,988 as of June 30, 2020[6] - Working capital as of December 31, 2020, was approximately $27.1 million, a decrease from $27.7 million in 2019[81] Stockholders' Equity - Total stockholders' equity decreased to $30,116,261 as of December 31, 2020, from $31,226,848 as of June 30, 2020[6] - Basic net loss per share for the three months ended December 31, 2020, was $(0.08), compared to earnings of $0.10 per share in the same period of 2019[8] - The balance of treasury stock as of December 31, 2020, was $(6,038,691), indicating a strategic approach to share repurchase[10] - The company had outstanding shares of 2,702,633 as of December 31, 2020, an increase from 2,402,633 as of September 30, 2020[9] Cash Flow - Net cash provided by operating activities decreased to $2,929,039 from $6,001,368, a decline of approximately 51.2% year-over-year[15] - The company experienced a net cash used in financing activities of $1,201,316, slightly up from $1,191,646 year-over-year[15] - Cash and cash equivalents increased to $9,040,393 as of December 31, 2020, from $5,402,122 as of June 30, 2020[6] Dividends - Dividends per share remained at $0.25 for both the three months ended December 31, 2020, and 2019[8] - Dividends paid on common stock were $0.25 per share, totaling $600,659 for the three months ended December 31, 2020[9] - The company declared regular cash dividends of $0.50 per share for both the six months ended December 31, 2020, and December 31, 2019, resulting in a dividend yield increase from 4.88% to 5.54%[22] Revenue and Backlog - Total revenue recognized for the six months ended December 31, 2020, was $11,724,584, an increase from $10,820,879 for the same period in fiscal year 2020, representing a growth of approximately 8.3%[30] - The company's backlog at December 31, 2020, totaled $60.1 million, with expected revenue recognition of 27% in 2021, 51% in 2022, 12% in 2023, and 10% thereafter[34] - New orders received in the first six months of fiscal year 2021 were $19.4 million, down from $26 million in the same period of fiscal 2020[61] Stock Options and Compensation - The aggregate intrinsic value of outstanding stock options at December 31, 2020, was $53,962, with 315,337 options outstanding and a weighted average exercise price of $23.30[23] - The company granted 62,025 stock options during the six months ended December 31, 2020, with a weighted average grant date fair value of $1.590 per option[25] - Stock-based compensation for the three months ended December 31, 2020, amounted to $33,707[9] - ESOP compensation expense for the six-month period ended December 31, 2020, was $165,820, compared to $56,274 for the same period in 2019[40] Economic Environment - The company's expected volatility decreased from 27.81% in 2019 to 23.41% in 2020, indicating a reduction in stock price fluctuations[22] - The risk-free interest rate declined from 1.67% in 2019 to 0.36% in 2020, reflecting changes in the economic environment[22] Inventory and Write-offs - The company recorded a write-off of inventory related to a canceled contract during the quarter, impacting gross profit estimates[16] - Gross profit percentage decreased due to a $335,000 inventory write-down, approximately 50% of the inventory balance, related to a cancelled airline industry contract[76]