Espey Mfg. & Electronics reports that its sales, profitability and order backlog are all up and cash position is solid, but its recent experience illustrates how the global pandemic and supply chain disruption can cause unprecedented upheaval for a company. A long-established provider of magnetic components, Espey’s primary business is the development, design and production of specialized military and industrial power supplies and transformers.
Net sales for the first quarter of fiscal year 2022, July 1 to September 30, 2021, were $7.5 million, compared with last year’s first quarter net sales of $7.2 million. Net income for the quarter increased to $306,061 as compared to net income of $189,824 for the same quarter a year ago.
The backlog for the Company was approximately $75.2 million at September 30, 2021, compared with last year’s backlog of $62 million at September 30, 2020. New orders in the first three months of fiscal year 2022 were approximately $17.1 million, compared with new orders in the first three months of fiscal year 2021 of $14.3 million.
“A strong start of $17 million in new orders during the first quarter of fiscal year 2022 provides the company with a stable base of over $75 million in backlog, with contracted delivery dates spanning the next few years,” said Patrick Enright, CEO. “These results indicate that although the effects of the COVID pandemic remain a key driver in revenue recognition moving into future quarters, the company and our supply base are working to stabilize operations in this challenging environment.”
“The company’s ability to turn work-in-process and inventory into revenue will continue to follow the ebbs and flows of the pandemic’s impact on our extended community,” he added. “As an example, the surge attributed to the Delta variant of COVID 19 slowed the acceleration of improvement seen in the last month of fiscal year 2021 and the first month of this fiscal year. A similar surge as winter hits our region could further slow the improvement we are seeing in the performance of our suppliers as well as our in-house operations. Regardless of the impacts levied by the pandemic, the Espey team will continue to find innovative ways to execute on our backlog and strive to increase our sales revenue in the coming quarters.“
Earlier, the company reported on September 24 that in its most recent fiscal year, which ended June 30, sales declined 12% from $31.5 million to $27.7 million resulting in a loss of $181,543 for the year compared to the previous year’s profits of $1.1 million. Order backlog was up to $65.6 million, however, compared to $54.9 million a year earlier. New orders still showed to be robust at $38.5 million, albeit slightly below the level of $40.9 million a year earlier.
“In fiscal year 2021, impacts from the global pandemic challenged the Espey team in unprecedented ways,” commented Enright. “The effects of the global shortage of electronic components, the retraction of the commercial airline industry, and the continued decline in the transportation market we serve all contributed to our loss for the year.”
Among woes the company has encountered are a pandemic-caused shutdown, significant write-down in inventory for a commercial airline contract that was cancelled and supply chain pressure. Nearly a year into the pandemic, Espey suffered a COVID 19 outbreak in its facility and, following governmental guidelines, closed it for ten days to allow the outbreak to run its course. When a commercial airline industry contact was cancelled, it had to write-off inventory for the program. It also incurred an unplanned investment in a new development program for submarines. When a major subcontractor increased its cost to supply a critical component for the first production deliveries, Espey ended up absorbing the one-time increase in order to remain a supplier for the submarine class over the coming decade. Shortages in the electronic supply chain have also been felt.
“Our increase in backlog of over $10 million in fiscal 2021 indicates our commitment to our customers is paying off,” he noted. “The fact that our loss for the year was just shy of $200,000, during a year in which we wrote down our commercial airline contract and absorbed cost growth from suppliers on a few major programs, demonstrates the continuing strength of other markets we serve and the more diverse lines of business we have achieved over the past few years.”
Founded in 1928 and headquartered in Sarasota Springs, New York, Espey employs about 150 people. For more info, see www.espey.com.