Espey Mfg & Electronics (ESP) Q4 2024 earnings summary

Executive summary

• FY24 revenue and net income advanced on higher shipments, stronger gross margin, and greater interest income; backlog rose to $97.2M at year-end.

• FY25 revenue is expected to exceed FY24, while EPS is forecast below FY24 but above FY23, reflecting product mix and pension withdrawal costs.

Financial highlights

• FY24 net sales were $38.7M, up 8.8% YoY, led by transformer, power distribution panel, and power supply shipments; lower build-to-print sales partly offset growth.

• Gross profit was $10.7M versus $8.1M; operating income was $6.5M versus $4.3M; net income was $5.8M versus $3.7M.

• Basic and diluted EPS were $2.34 and $2.29, versus $1.50 and $1.49 in FY23; other income rose to $756K from $406K, mainly on higher interest income.

• One-time sales to certain customers carried higher-than-average margins; excluding those sales, the FY24 gross-profit improvement also reflected shipments on follow-on panel orders and FY23 contract cost overruns.

Outlook and guidance

• FY25 revenue is expected to exceed FY24; EPS is expected to exceed FY23 but remain below FY24, primarily due to higher anticipated aggregate costs in the FY25 shipment mix.

• At least $44M of FY24 year-end backlog is expected to ship in FY25; backlog recognition is estimated at 45% in FY25, 33% in FY26, 10% in FY27, and 12% thereafter.

• FY25 new orders are expected to exceed FY24 bookings of $52.4M; outstanding opportunities exceeded $130M as of Aug. 31, 2024, including a large multi-year purchase expected to be formalized before Dec. 31, 2024.

• FY25 capital expenditures are budgeted at up to $500K, excluding Navy-award-funded upgrades; inflationary costs are expected to continue but not materially affect FY25 operating income.