Elecsys Corporation; Elecsys Corporation Reports Second Quarter Financial Results

2010 JAN 2 - (VerticalNews.com) -- Elecsys Corporation (NASDAQ:ESYS), a provider of electronic design and manufacturing services ("EDMS") and a developer of machine to machine (M2M) communication technology solutions for industries where high quality, reliability, and innovation are critical, announced its financial results for the second fiscal quarter ended October 31, 2009.

Sales for the quarter were $4,001,000, a decrease of 44%, or $3,201,000, from the second quarter of fiscal 2009. Total sales year-to-date decreased 40%, or $5,146,000, to $7,620,000. The decreases were primarily caused by reduced bookings from existing customers and delays in new customer bookings during the preceding quarters in late fiscal 2009 and early in fiscal 2010 due to the lingering effects of the weakened economy.

Sales for the EDMS segment of the Company were approximately $2, 300,000, a decrease of $792,000, or 26%, from $3,092,000 in the comparable quarter in the prior year. Sales of proprietary products and services were $1,701,000 for the three-month period ended October 31, 2009, a $2,409,000, or 59%, decrease from sales of $4,110,000 in the comparable quarter in the prior year. Proprietary product sales from the prior year included record deliveries of rugged hand held computer hardware that included a single order of $2.6 million to a company based in South Africa. Remote monitoring equipment sales and related services increased $212,000 or 25% from the same period in the prior fiscal year as a result of increases in customer orders. Sales for the new eXtremeTAG products totaled approximately $34,000 for the first full quarterly period since the acquisition of MBBS assets in June 2009.

The Company anticipates slightly higher sales in its EDMS segment over the remaining two quarters of the current fiscal year compared to the previous two quarterly periods as a result of both the addition of several new customers and the transition of several projects from the Company's engineering design group into production. The Company also expects its proprietary products and services to contribute to an overall increase in sales during the second half of the fiscal year. This increase will include the Company's WatchdogCP remote monitoring products from continued strong customer demand, the first shipments of the new ultra-rugged Radix FW950 hand held computers, and the additional sales and marketing efforts that are expended with its eXtremeTAG RFID solutions.

Gross margin was approximately 31% of sales, or $1,239,000, for the three-month period ended October 31, 2009, compared to 40% of sales, or $2,888,000, for the prior year period. Gross margin for the six-month period also decreased to 31% of sales, or $2,369,000. The decrease in gross margin was affected by the decrease in sales volumes during the period and was a major contributor a decrease in production efficiency.

Selling, general and administrative expenses were approximately $1,662,000 during the period compared with $2,017,000 in the prior year period. The lower expenses were primarily due to the decrease in commissions related to the $2.6 million of Radix product sales from the prior year period in addition to decreases in personnel and personnel-related expenses. Total SG&A expenses decreased $356,000 for the current six-month period ended October 31, 2009, as compared to the comparable period of the prior year.

As a result, the loss before taxes for the quarter was $523,000, compared to income before taxes of $765,000 for the same quarter in the prior year. For the first six months of fiscal 2010, the loss before taxes grew to $1,160,000 from income before taxes of $944,000 in the first six months of fiscal 2009.

Net loss was $322,000, or $0.09 per diluted share, for the quarter ended October 31, 2009. For the quarter ended October 31, 2008, net income was $424,000, or $0.12 per diluted share. For the six month period ended October 31, 2009, net loss totaled $718,000, or $0.21 per diluted share, while net income for the comparable prior year period was $533,000, or $0.15 per diluted share.

"Although continued economic weaknesses in many industrial sectors of our customer base contributed to this quarter's challenging financial results, we are optimistic about the future as shown by the improvements in bookings of new and existing customer orders and increases in sales for our remote monitoring products which continues to show strong customer interest and demand." said Karl Gemperli, President and Chief Executive Officer. "We are also encouraged by the customer inquiries and interest we have received about our RFID tags and solutions which we are marketing under the eXtremeTAG brand as well as our newest model of rugged hand held computers, the FW950. We have begun production of the FW950 and expect to begin deliveries to customers during the third quarter."

Gemperli continued, "We will continue to focus on our core strengths of providing unique electronic integration capabilities in addition to reliable technologically innovative solutions through applications of our remote monitoring, mobile computing and RFID products. We believe these services and product applications will deliver improvements in our future financial results as we work through this difficult economic environment."

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