Espey Mfg & Electronics (ESP) Q4 2025 earnings summary

Executive summary

• FY25 sales rose 13.5% YoY to $43.95M; net income increased to $8.14M from $5.82M, with gross margin improving to 28.9%.

• Backlog reached $139.7M at June 30, 2025, while FY26 guidance calls for higher revenue but lower EPS due primarily to higher expected costs in the shipment mix.

Financial highlights

• Net sales were $43.95M vs. $38.74M in FY24; higher sales reflected shipboard transformers and power distribution panels, combat vehicle and aircraft systems, and build-to-print work.

• Gross profit was $12.68M vs. $10.65M; gross margin expanded to 28.9% from 27.5%, aided by shipment mix, milestone sales, non-recurring labor and material savings, and lower overhead rates.

• Operating income increased to $8.13M from $6.54M; SG&A rose $444K to $4.56M, primarily from transition-period compensation, ESOP contributions, facility costs, and travel.

• Net income was $8.14M vs. $5.82M; basic/diluted EPS was $3.14/$3.02 vs. $2.34/$2.29 in FY24.

• Other income increased to $1.60M from $756K, including higher interest income and a one-time $300K capital investment grant.

Outlook and guidance

• FY26 revenue is expected to exceed FY25, while EPS is expected below FY25, primarily due to higher aggregate costs on backlog orders scheduled to ship in FY26.

• FY25 new orders totaled $86.4M, including two multi-year awards worth $49.4M; FY26 new orders are expected to be lower.

• June 2025 backlog was $139.7M: $106.6M funded and $33M unfunded; approximately $49.1M is anticipated to ship in FY26.

• Outstanding opportunities totaled $163M as of August 31, 2025; awards remain uncertain and many depend on competitive bids and defense spending allocations.

• FY26 capital spending is budgeted at no more than $850K; inflationary costs are expected to continue but are not expected to materially affect operating income.