Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Mar. 31, 2023 | May 11, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | ESPEY MFG. & ELECTRONICS CORP. | |
Trading Symbol | ESP | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 2,702,633 | |
Amendment Flag | false | |
Entity Central Index Key | 0000033533 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 1-4383 | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 14-1387171 | |
Entity Address, Address Line One | 233 Ballston Avenue | |
Entity Address, City or Town | Saratoga Springs | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 12866 | |
City Area Code | (518) | |
Local Phone Number | 245-4400 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common stock, $.33-1/3 par value |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 4,578,846 | $ 8,104,060 |
Investment securities | 13,879,337 | 3,708,779 |
Trade accounts receivable, net of allowance of $3,000 | 4,330,385 | 5,733,174 |
Inventories: | ||
Raw materials | 1,964,258 | 2,037,483 |
Work-in-process | 262,875 | 315,547 |
Costs related to contracts in process | 16,461,404 | 16,207,419 |
Total inventories | 18,688,537 | 18,560,449 |
Prepaid expenses and other current assets | 2,475,723 | 992,774 |
Total current assets | 43,952,828 | 37,099,236 |
Property, plant and equipment, net | 2,612,561 | 2,797,993 |
Total assets | 46,565,389 | 39,897,229 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 2,898,852 | 2,079,177 |
Accrued expenses: | ||
Salaries and wages | 542,180 | 627,187 |
Vacation | 751,888 | 666,380 |
ESOP payable | 230,403 | |
Other | 276,362 | 752,554 |
Payroll and other taxes withheld | 57,248 | 55,292 |
Contract liabilities | 6,566,188 | 3,384,474 |
Income taxes payable | 292,742 | 54,722 |
Total current liabilities | 11,615,863 | 7,619,786 |
Deferred tax liabilities | 146,644 | 177,829 |
Total liabilities | 11,762,507 | 7,797,615 |
Commitments and contingencies (See Note 5) | ||
Common stock, par value $.33-1/3 per share Authorized 10,000,000 shares; Issued 3,129,874 shares as of March 31, 2023 and June 30, 2022. Outstanding 2,702,633 shares as of March 31, 2023 and June 30, 2022 (includes 239,427 and 256,293 Unearned ESOP shares, respectively) | 1,043,291 | 1,043,291 |
Capital in excess of par value | 23,269,445 | 23,104,693 |
Accumulated other comprehensive loss | (377) | (1,932) |
Retained earnings | 21,216,818 | 18,679,857 |
Total stockholders equity before ESOP | 45,529,177 | 42,825,909 |
Less: Unearned ESOP shares | (4,687,604) | (4,687,604) |
Cost of 427,241 shares of common stock in treasury as of March 31, 2023 and June 30, 2022 | (6,038,691) | (6,038,691) |
Total stockholders’ equity | 34,802,882 | 32,099,614 |
Total liabilities and stockholders' equity | $ 46,565,389 | $ 39,897,229 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parentheticals) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance (in Dollars) | $ 3,000 | $ 3,000 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,129,874 | 3,129,874 |
Common stock, shares outstanding | 2,702,633 | 2,702,633 |
Unearned ESOP shares | 239,427 | 256,293 |
Common stock, par value (in Dollars per share) | $ 0.33 | $ 0.33 |
Treasury stock, shares | 427,241 | 427,241 |
Statements of Comprehensive Inc
Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 9,809,616 | $ 8,620,049 | $ 27,249,520 | $ 23,623,531 |
Cost of sales | 7,836,187 | 6,885,169 | 21,203,227 | 19,328,736 |
Gross profit | 1,973,429 | 1,734,880 | 6,046,293 | 4,294,795 |
Selling, general and administrative expenses | 1,014,739 | 933,725 | 2,728,700 | 3,114,715 |
Operating income | 958,690 | 801,155 | 3,317,593 | 1,180,080 |
Other income | ||||
Interest income | 133,145 | 2,987 | 206,577 | 6,299 |
Other | 12,665 | 2,674 | 25,349 | 30,750 |
Total other income | 145,810 | 5,661 | 231,926 | 37,049 |
Income before provision for income taxes | 1,104,500 | 806,816 | 3,549,519 | 1,217,129 |
Provision for income taxes | 237,212 | 145,457 | 767,923 | 228,508 |
Net income | 867,288 | 661,359 | 2,781,596 | 988,621 |
Other comprehensive income, net of tax: | ||||
Unrealized gain on investment securities | 640 | 838 | 1,555 | 838 |
Total comprehensive income | $ 867,928 | $ 662,197 | $ 2,783,151 | $ 989,459 |
Basic (in Dollars per share) | $ 0.35 | $ 0.27 | $ 1.13 | $ 0.41 |
Diluted (in Dollars per share) | $ 0.35 | $ 0.27 | $ 1.13 | $ 0.41 |
Basic (in Shares) | 2,457,727 | 2,434,836 | 2,452,023 | 2,429,009 |
Diluted (in Shares) | 2,484,218 | 2,434,836 | 2,461,099 | 2,429,059 |
Dividends per share: (in Dollars per share) | $ 0.1 | $ 0 | $ 0.1 | $ 0 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Capital in Excess of Par Value | Accumulated Other Comprehensive (Loss) Gain | Retained Earnings | Treasury Stock | Unearned ESOP Shares | Total |
Balance at Jun. 30, 2021 | $ 1,043,291 | $ 23,026,096 | $ (2,361) | $ 17,414,730 | $ (6,038,691) | $ (5,110,770) | $ 30,332,295 |
Balance (in Shares) at Jun. 30, 2021 | 2,702,633 | 427,241 | |||||
Comprehensive income: | |||||||
Net income | 988,621 | 988,621 | |||||
Other comprehensive income, net of tax | 838 | 838 | |||||
Total comprehensive income | 989,459 | ||||||
Stock-based compensation | 134,266 | 134,266 | |||||
Balance at Mar. 31, 2022 | $ 1,043,291 | 23,160,362 | (1,523) | 18,403,351 | $ (6,038,691) | (5,110,770) | 31,456,020 |
Balance (in Shares) at Mar. 31, 2022 | 2,702,633 | 427,241 | |||||
Balance at Dec. 31, 2021 | $ 1,043,291 | 23,120,663 | (2,361) | 17,741,992 | $ (6,038,691) | (5,110,770) | 30,754,124 |
Balance (in Shares) at Dec. 31, 2021 | 2,702,633 | 427,241 | |||||
Comprehensive income: | |||||||
Net income | 661,359 | 661,359 | |||||
Other comprehensive income, net of tax | 838 | 838 | |||||
Total comprehensive income | 662,197 | ||||||
Stock-based compensation | 39,699 | 39,699 | |||||
Balance at Mar. 31, 2022 | $ 1,043,291 | 23,160,362 | (1,523) | 18,403,351 | $ (6,038,691) | (5,110,770) | 31,456,020 |
Balance (in Shares) at Mar. 31, 2022 | 2,702,633 | 427,241 | |||||
Balance at Jun. 30, 2022 | $ 1,043,291 | 23,104,693 | (1,932) | 18,679,857 | $ (6,038,691) | (4,687,604) | 32,099,614 |
Balance (in Shares) at Jun. 30, 2022 | 2,702,633 | 427,241 | |||||
Comprehensive income: | |||||||
Net income | 2,781,596 | 2,781,596 | |||||
Other comprehensive income, net of tax | 1,555 | 1,555 | |||||
Total comprehensive income | 2,783,151 | ||||||
Stock-based compensation | 164,752 | 164,752 | |||||
Dividends paid on common stock $0.10 per share | (244,635) | (244,635) | |||||
Balance at Mar. 31, 2023 | $ 1,043,291 | 23,269,445 | (377) | 21,216,818 | $ (6,038,691) | (4,687,604) | 34,802,882 |
Balance (in Shares) at Mar. 31, 2023 | 2,702,633 | 427,241 | |||||
Balance at Dec. 31, 2022 | $ 1,043,291 | 23,207,870 | (1,017) | 20,594,165 | $ (6,038,691) | (4,687,604) | 34,118,014 |
Balance (in Shares) at Dec. 31, 2022 | 2,702,633 | 427,241 | |||||
Comprehensive income: | |||||||
Net income | 867,288 | 867,288 | |||||
Other comprehensive income, net of tax | 640 | 640 | |||||
Total comprehensive income | 867,928 | ||||||
Stock-based compensation | 61,575 | 61,575 | |||||
Dividends paid on common stock $0.10 per share | (244,635) | (244,635) | |||||
Balance at Mar. 31, 2023 | $ 1,043,291 | $ 23,269,445 | $ (377) | $ 21,216,818 | $ (6,038,691) | $ (4,687,604) | $ 34,802,882 |
Balance (in Shares) at Mar. 31, 2023 | 2,702,633 | 427,241 |
Statements of Changes in Stoc_2
Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Other comprehensive income, net of tax | $ 134 | $ 176 | $ 327 | $ 176 |
Dividends declared per share (in Dollars per share) | $ 0.1 | $ 0.1 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows from Operating Activities: | ||
Net income | $ 2,781,596 | $ 988,621 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation | 164,752 | 134,266 |
Depreciation | 363,945 | 373,830 |
ESOP compensation expense | 256,032 | 245,362 |
Deferred income tax benefit | (31,185) | (50,336) |
Gain on disposal of assets | (2,500) | (2,000) |
Changes in assets and liabilities: | ||
Decrease (increase) in trade accounts receivable | 1,402,789 | (289,088) |
Decrease in income taxes receivable | 158,439 | |
Increase in inventories | (128,088) | (152,211) |
Increase in prepaid expenses and other current assets | (1,482,949) | (228,539) |
Increase (decrease) in accounts payable | 819,675 | (619,925) |
(Decrease) increase in accrued salaries and wages | (85,007) | 101,487 |
Increase in vacation accrual | 85,508 | 79,846 |
Decrease in ESOP payable | (25,629) | |
(Decrease) increase in other accrued expenses | (476,192) | 145,789 |
Increase (decrease) in payroll and other taxes withheld | 1,956 | (350,924) |
Increase in contract liabilities | 3,181,714 | 276,461 |
Increase in income taxes payable | 238,020 | |
Net cash provided by operating activities | 7,064,437 | 811,078 |
Cash Flows from Investing Activities: | ||
Additions to property, plant and equipment | (178,513) | (216,500) |
Proceeds from sale of fixed assets | 2,500 | 2,000 |
Purchase of investment securities | (14,335,777) | (3,692,458) |
Proceeds from sale/maturity of investment securities | 4,166,774 | 3,576,000 |
Net cash used in investing activities | (10,345,016) | (330,958) |
Cash Flows from Financing Activities: | ||
Dividends on common stock | (244,635) | |
Net cash used in financing activities | (244,635) | |
(Decrease) increase in cash and cash equivalents | (3,525,214) | 480,120 |
Cash and cash equivalents, beginning of period | 8,104,060 | 6,802,712 |
Cash and cash equivalents, end of period | 4,578,846 | 7,282,832 |
Supplemental Schedule of Cash Flow Information: | ||
Income taxes paid | $ 561,500 | $ 120,000 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes, and stock-based compensation. Specific to inventories, including work-in-process and contracts in process, management evaluates, quarterly, those estimates used in determining the cost to complete for each contract on Espey Mfg. & Electronics Corp.’s (the “Company”) sales backlog. The change in estimates may affect the reported amount of inventories and gross profit in the current or a future period. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its report on Form 10-K for the year ended June 30, 2022. Certain reclassifications may have been made to the prior year financial statements to conform to the current year presentation. |
Investment Securities
Investment Securities | 9 Months Ended |
Mar. 31, 2023 | |
Investment Securities [Abstract] | |
Investment Securities | Note 2. Investment Securities Accounting Standards Codification (“ASC”) 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ◾ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ◾ Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ◾ Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The carrying amounts of financial instruments, including cash and cash equivalents, short term investments, accounts receivable, accounts payable and accrued expenses, approximated fair value as of March 31, 2023 and June 30, 2022 because of the immediate or short-term maturity of these financial instruments. Investment securities at March 31, 2023 consists of certificates of deposit, municipal bonds and U.S. treasury bills and at June 30, 2022 consisted of certificates of deposit and municipal bonds. The Company classifies investment securities as available-for-sale which have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale debt securities by major security type at March 31, 2023 and June 30, 2022 are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value March 31, 2023 Certificates of deposit $ 13,195,000 $ — $ — $ 13,195,000 Municipal bonds $ 260,475 $ — $ (3,752 ) $ 256,723 U.S. Treasury Bills $ 424,340 $ 3,274 $ — $ 427,614 Total investment securities $ 13,879,815 $ 3,274 $ (3,752 ) $ 13,879,337 June 30, 2022 Certificates of deposit $ 3,639,000 $ — $ — $ 3,639,000 Municipal bonds $ 72,225 $ — $ (2,446 ) $ 69,779 Total investment securities $ 3,711,225 $ — $ (2,446 ) $ 3,708,779 The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At March 31, 2023, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary. As of March 31, 2023 and June 30, 2022, the remaining contractual maturities of available-for-sale debt securities were as follows: Years to Maturity Less than One to One Year Five Years Total March 31, 2023 Available-for-sale $ 13,622,615 $ 256,722 $ 13,879,337 June 30, 2022 Available-for-sale $ 3,639,000 $ 69,779 $ 3,708,779 |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Note 3. Net Income per Share Basic net income per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. The computation of diluted net income per share, excluded options to purchase 164,231 shares of our common stock for the three and nine months ended March 31, 2023 and 264,978 shares for the three and nine months ended March 31, 2022, as the effect of including them would be anti-dilutive. As unearned shares owned by the Company’s sponsored leveraged employee stock ownership plan (the “ESOP”) are released or committed-to-be-released, the shares become outstanding for earnings-per-share computations. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Mar. 31, 2023 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | Note 4. Stock Based Compensation The Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. Total stock-based compensation expense recognized in the statements of comprehensive income for the three-month periods ended March 31, 2023 and 2022 was $61,575 and $39,699, respectively, before income taxes. The amount of this stock-based compensation expense related to non-qualified stock options (“NQSOs”) for the three-month periods ended March 31, 2023 and 2022, was $8,580 and $6,582, respectively. The deferred tax benefit related to the NQSOs as of March 31, 2023 and 2022 was approximately $1,802 and $1,382, respectively. Total stock-based compensation expense recognized in the statements of comprehensive income for the nine-month periods ended March 31, 2023 and 2022, was $164,752 and $134,266, respectively, before income taxes. The amount of this stock-based compensation expense related to NQSOs for the nine-month periods ended March 31, 2023 and 2022, was $22,061 and $22,705, respectively. The deferred tax benefit related to the NQSOs’ as of March 31, 2023 and 2022 was approximately $4,633 and $4,768, respectively. The remaining stock option expense in each year related to incentive stock options (“ISOs”) which are not deductible by the corporation when exercised, assuming a qualifying disposition and as such no deferred tax benefit was established related to these amounts. As of March 31, 2023, there was approximately $210,042 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the next 2 years, of which $175,074 relates to ISOs and $34,968 relates to NQSOs. The total deferred tax benefit related to these awards is expected to be $7,343. The Company has one employee stock option plan under which options or stock awards may be granted, the 2017 Stock Option and Restricted Stock Plan (the "2017 Plan"). The Board of Directors may grant options to acquire shares of common stock to employees and non-employee directors of the Company at the fair market value of the common stock on the date of grant. The maximum aggregate number of shares of Common Stock subject to options or awards to non-employee directors is 133,000 and the maximum aggregate number of shares of Common Stock subject to options or awards granted to non-employee directors during any single fiscal year is the lesser of 13,300 and 33 1/3% of the total number of shares subject to options or awards granted in such fiscal year. The maximum number of shares subject to options or awards granted to any individual employee may not exceed 15,000 in a fiscal year. Generally, options granted have a two-year vesting period based on two years of continuous service and have a ten-year contractual life. Option grants provide for accelerated vesting if there is a change in control. Shares issued upon the exercise of options are from those held in Treasury. Options covering 400,000 shares are authorized for issuance under the 2017 Plan. As of March 31, 2023, options covering 381,104 shares have been granted, of which 245,381 are outstanding, and options covering 135,723 shares have been cancelled. As of March 31, 2023, options covering 154,619 shares remain available for grant, after factoring in the cancelled options which are eligible to be re-granted. While no further grants of options may be made under the Company’s 2007 Stock Option and Restricted Stock Plan, as of March 31, 2023, 50,750 options were outstanding under such plan of which all are vested and exercisable. ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including those for dividend yield, volatility, expected life and interest rates. The table below outlines the weighted average assumptions that the Company used to calculate the fair value of each option award for the nine months ended March 31, 2023 and 2022. March 31, 2023 March 31, 2022 Company’s expected volatility 27.16% 25.56% Risk-free interest rate 2.69% 0.93% Expected term 5.4 yrs 5.4 yrs Weighted average fair value per share of options granted during the period $4.16 $3.72 Expected stock price volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options. The expected option term (in years) represents the estimated period of time until exercise and is based on actual historical experience. The following table summarizes stock option activity during the nine months ended March 31, 2023: Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic to Option Price Term Value Balance at July 1, 2022 246,273 $ 20.89 6.73 Granted 73,200 $ 13.71 9.36 Exercised — — — Forfeited or expired (23,342 ) $ 20.46 — Outstanding at March 31, 2023 296,131 $ 19.15 6.73 $ 874,322 Vested or expected to vest at March 31, 2023 271,591 $ 19.60 6.53 $ 726,483 Exercisable at March 31, 2023 164,231 $ 23.13 4.99 $ 74,965 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing sale price of the Company’s common stock as reported on the NYSE American on March 31, 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all option holders had exercised their options on March 31, 2023. This amount changes based on the fair market value of the Company’s common stock. The intrinsic value of options exercised during the nine months ended March 31, 2023 and 2022 was $0, resulting from no option exercise activity during those periods. The following table summarizes changes in non-vested stock options during the nine months ended March 31, 2023: Weighted Number Average of Shares Grant Date Subject Fair Value to Option (per Option) Non-vested at July 1, 2022 104,175 $ 2.92 Granted 73,200 $ 4.16 Vested (34,075 ) $ 1.59 Forfeited or expired (11,400 ) $ 2.73 Non-vested at March 31, 2023 131,900 $ 3.97 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 5. Commitments and Contingencies The Company from time to time, enters into standby letters of credit agreements with financial institutions primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at March 31, 2023 and June 30, 2022. The Company, as a U.S. Government contractor, is subject to audits, reviews, and investigations by the U.S. Government related to its negotiation and performance of government contracts and its accounting for such contracts. Failure to comply with applicable U.S. Government standards by a contractor may result in suspension from eligibility for award of any new government contract and a guilty plea or conviction may result in debarment from eligibility for awards. The government may, in certain cases, also terminate existing contracts, recover damages, and impose other sanctions and penalties. As a result of contract audits the Company will determine a range of possible outcomes and in accordance with ASC 450 “Contingencies” the Company will accrue amounts within a range that appears to be its best estimate of a possible outcome. Adjustments are made to accruals, if any, periodically based on current information. We are party to various litigation matters and claims arising from time to time in the ordinary course of business. There are no such pending matters which we believe will have a material adverse effect on our business, financial condition, results of operations or cash flows. The Company was awarded $7.4 million in funding during the second quarter of fiscal year 2023 in support of facility and capital equipment upgrades for testing and qualification for the United States Navy. The funding is part of the Navy’s investment to improve and sustain the Surface Combatant Industrial Base. The work will be conducted on Espey’s property in Saratoga Springs, NY, with completion slated for 2024. The Company expects to be paid within 30 days after the submission of invoices, but will not be paid for expenses incurred in excess of the specified milestone payment limits. |
Revenue
Revenue | 9 Months Ended |
Mar. 31, 2023 | |
Revenue [Abstract] | |
Revenue | Note 6. Revenue The Company follows ASC 606 “Revenue from Contracts with Customers” to determine the recognition of revenue. This standard requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenues. Revenue is recognized when control of the promised products or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those products or services. Significant judgment is required in determining the satisfaction of performance obligations. Revenues from our performance obligations are satisfied over time using the output method which considers the appraisal of results achieved and milestones reached or units delivered based on contractual shipment terms, typically shipping point. Revenue is recognized when, or as, the customer takes control of the product or services. The output method best depicts the transfer of control to the customer as the output method represents work completed. Control is typically transferred to the customer at the shipping point as the Company has a present right to payment, the customer has legal title to the asset, the customer has the significant risks and rewards of ownership of the asset, and in most instances the customer has accepted the asset. Total revenue recognized for the three and nine months ended March 31, 2023 based on units delivered was $6,957,142 and $20,674,371, respectively, compared to $7,291,109 and $19,883,573 for the same period in fiscal year 2022. Total revenue recognized for the three and nine months ended March 31, 2023 based on milestones achieved was $2,852,474 and $6,575,149, respectively, compared to $1,328,940 and $3,739,958 for the same period in fiscal year 2022. The Company offers a standard one-year product warranty. Product warranties offered by the Company are classified as assurance-type warranties, which means, the warranty only guarantees that the good or service functions as promised. Based on this, the provided warranty is not considered to be a distinct performance obligation. The impact of variable consideration has been considered but none identified which would be required to be allocated to the transaction price as of March 31, 2023. Our payment terms are generally 30-60 days. Contract liabilities were $6,566,188 and $3,384,474 as of March 31, 2023 and June 30, 2022, respectively. The increase in contract liabilities is primarily due to the advance collection of cash on specific contracts, offset in part, by revenue recognized. Revenue recognized, that was in contract liabilities in the beginning of the fiscal year, was $3,051,528 for the nine months ended March 31, 2023. The Company used the practical expedient to expense incremental costs incurred to obtain a contract when the contract term is less than one year. The Company’s backlog at March 31, 2023 totaling approximately $82.1 million is projected, based on expected due dates, to be recognized in the following fiscal years: 11% in 2023; 47% in 2024; 27% in 2025, and 15% thereafter. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Mar. 31, 2023 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | Note 7. Recently Issued Accounting Standards Recent Accounting Pronouncements Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 amends ASC 740 to simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in the accounting standard under the FASB’s simplification initiative. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. The Company adopted the new guidance under ASU 2019-12 in the first quarter of fiscal year 2022 and removed the exception for intraperiod allocations from its interim period tax provision calculation, accordingly. The removal of the exception for intraperiod allocations did not have a material impact on the Company. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently. For trade receivables, loans and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. |
Employee Stock Ownership Plan
Employee Stock Ownership Plan | 9 Months Ended |
Mar. 31, 2023 | |
Employee Stock Ownership Plan [Abstract] | |
Employee Stock Ownership Plan | Note 8. Employee Stock Ownership Plan The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30. The Company makes annual contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated shares received by the ESOP. All dividends on unallocated shares received by the ESOP are used to pay debt service. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. As the debt is repaid, shares are released and allocated to active employees, based on the proportion of debt service paid in the year. The Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly, the shares purchased by the ESOP are reported as Unearned ESOP shares in the balance sheets and the statements of changes in stockholders’ equity. As shares are released or committed-to-be-released, the Company reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings-per-share (EPS) computations. ESOP compensation expense was $100,555 and $77,045 for the three-month periods ended March 31, 2023 and 2022, respectively. ESOP compensation expense was $256,032 and $245,362 for the nine-month periods ended March 31, 2023 and 2022, respectively. The ESOP shares as of March 31, 2023 and 2022 were as follows: March 31, 2023 March 31, 2022 Allocated shares 462,311 472,955 Committed-to-be-released shares 16,866 17,352 Unreleased shares 239,427 262,077 Total shares held by the ESOP 718,604 752,384 Fair value of unreleased shares $ 4,848,397 $ 3,642,870 The Company may at times be required to repurchase shares at the ESOP participants’ request at the shares’ fair market value. During the three and nine months ended March 31, 2023 and 2022, the Company did not repurchase shares previously held by the ESOP. The ESOP allows for eligible participants to take whole share distributions from the Plan on specific dates in accordance with the provisions of the Plan. Share distributions from the ESOP during the nine months ended March 31, 2023 and 2022 totaled 33,780 and 14,265 shares, respectively. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Investment Securities [Abstract] | |
Schedule of available-for-sale securities | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value March 31, 2023 Certificates of deposit $ 13,195,000 $ — $ — $ 13,195,000 Municipal bonds $ 260,475 $ — $ (3,752 ) $ 256,723 U.S. Treasury Bills $ 424,340 $ 3,274 $ — $ 427,614 Total investment securities $ 13,879,815 $ 3,274 $ (3,752 ) $ 13,879,337 June 30, 2022 Certificates of deposit $ 3,639,000 $ — $ — $ 3,639,000 Municipal bonds $ 72,225 $ — $ (2,446 ) $ 69,779 Total investment securities $ 3,711,225 $ — $ (2,446 ) $ 3,708,779 |
Schedule of contractual maturities | Years to Maturity Less than One to One Year Five Years Total March 31, 2023 Available-for-sale $ 13,622,615 $ 256,722 $ 13,879,337 June 30, 2022 Available-for-sale $ 3,639,000 $ 69,779 $ 3,708,779 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Stock Based Compensation [Abstract] | |
Schedule of fair value assumptions | March 31, 2023 March 31, 2022 Company’s expected volatility 27.16% 25.56% Risk-free interest rate 2.69% 0.93% Expected term 5.4 yrs 5.4 yrs Weighted average fair value per share of options granted during the period $4.16 $3.72 |
Schedule of stock option activity | Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic to Option Price Term Value Balance at July 1, 2022 246,273 $ 20.89 6.73 Granted 73,200 $ 13.71 9.36 Exercised — — — Forfeited or expired (23,342 ) $ 20.46 — Outstanding at March 31, 2023 296,131 $ 19.15 6.73 $ 874,322 Vested or expected to vest at March 31, 2023 271,591 $ 19.60 6.53 $ 726,483 Exercisable at March 31, 2023 164,231 $ 23.13 4.99 $ 74,965 |
Schedule of changes in non-vested stock options | Weighted Number Average of Shares Grant Date Subject Fair Value to Option (per Option) Non-vested at July 1, 2022 104,175 $ 2.92 Granted 73,200 $ 4.16 Vested (34,075 ) $ 1.59 Forfeited or expired (11,400 ) $ 2.73 Non-vested at March 31, 2023 131,900 $ 3.97 |
Employee Stock Ownership Plan (
Employee Stock Ownership Plan (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Employee Stock Ownership Plan [Abstract] | |
Schedule of ESOP shares | March 31, 2023 March 31, 2022 Allocated shares 462,311 472,955 Committed-to-be-released shares 16,866 17,352 Unreleased shares 239,427 262,077 Total shares held by the ESOP 718,604 752,384 Fair value of unreleased shares $ 4,848,397 $ 3,642,870 |
Investment Securities (Details)
Investment Securities (Details) - Schedule of available-for-sale securities - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Schedule of Available-for-Sale Securities [Abstract] | ||
Amortized cost | $ 13,879,815 | $ 3,711,225 |
Gross Unrealized Gains | 3,274 | |
Gross Unrealized Losses | (3,752) | (2,446) |
Fair Value | 13,879,337 | 3,708,779 |
Certificates of Deposit [Member] | ||
Schedule of Available-for-Sale Securities [Abstract] | ||
Amortized cost | 13,195,000 | 3,639,000 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | 13,195,000 | 3,639,000 |
Municipal Bonds [Member] | ||
Schedule of Available-for-Sale Securities [Abstract] | ||
Amortized cost | 260,475 | 72,225 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | (3,752) | (2,446) |
Fair Value | 256,723 | $ 69,779 |
U.S. Treasury Bills [Member] | ||
Schedule of Available-for-Sale Securities [Abstract] | ||
Amortized cost | 424,340 | |
Gross Unrealized Gains | 3,274 | |
Fair Value | $ 427,614 |
Investment Securities (Detail_2
Investment Securities (Details) - Schedule of contractual maturities - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Schedule of Contractual Maturities [Abstract] | ||
Less than One Year | $ 13,622,615 | $ 3,639,000 |
One to Five Years | 256,722 | 69,779 |
Fair Value | $ 13,879,337 | $ 3,708,779 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive securities | 164,231 | 264,978 | 164,231 | 264,978 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Stock Based Compensation (Details) [Line Items] | ||||
Stock based compensation expense | $ 61,575 | $ 39,699 | $ 164,752 | $ 134,266 |
Deferred tax benefit related to stock based compensation | 1,802 | 1,382 | 4,633 | 4,768 |
Unrecognized compensation costs | 210,042 | $ 210,042 | ||
Unrecognized compensation year | 2 years | |||
Deferred tax benefit related to unrecognized compensation costs | $ 7,343 | $ 7,343 | ||
Vesting period description | Generally, options granted have a two-year vesting period based on two years of continuous service and have a ten-year contractual life. | |||
Shares cancelled (in Shares) | 23,342 | |||
Shares remain available for grant (in Shares) | 154,619 | 154,619 | ||
Aggregate intrinsic value of options exercised | $ 0 | 0 | ||
Non employee directors [Member] | Maximum [Member] | 2017 Plan [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Authorized shares under plan (in Shares) | 133,000 | 133,000 | ||
Number of shares subject to option or award, single fiscal year (in Shares) | 13,300 | 13,300 | ||
Percentage of total number of shares subject to options or awards, single fiscal year | 33% | |||
Individual Employee [Member] | Maximum [Member] | 2017 Plan [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Number of shares subject to option or award, single fiscal year (in Shares) | 15,000 | 15,000 | ||
Non-qualified stock options [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Stock based compensation expense | $ 8,580 | $ 6,582 | $ 22,061 | $ 22,705 |
Unrecognized compensation costs | 34,968 | 34,968 | ||
Incentive Stock Options [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Unrecognized compensation costs | $ 175,074 | $ 175,074 | ||
Incentive Stock Options [Member] | 2017 Plan [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Outstanding (in Shares) | 245,381 | |||
Shares cancelled (in Shares) | 135,723 | |||
Share-Based Payment Arrangement, Option [Member] | 2017 Plan [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Authorized shares under plan (in Shares) | 400,000 | 400,000 | ||
Granted (in Shares) | 381,104 | |||
Restricted Stock Plan [Member] | 2007 Plan [Member] | ||||
Stock Based Compensation (Details) [Line Items] | ||||
Outstanding (in Shares) | 50,750 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details) - Schedule of fair value assumptions - $ / shares | 9 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Schedule of Fair Value Assumptions [Abstract] | ||
Company’s expected volatility | 27.16% | 25.56% |
Risk-free interest rate | 2.69% | 0.93% |
Expected term | 5 years 4 months 24 days | 5 years 4 months 24 days |
Weighted average fair value per share of options granted during the period (in Dollars per share) | $ 4.16 | $ 3.72 |
Stock Based Compensation (Det_3
Stock Based Compensation (Details) - Schedule of stock option activity | 9 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Schedule of Stock Option Activity [Abstract] | |
Number of Shares Subject to Option, Beginning | shares | 246,273 |
Weighted Average Exercise Price, Beginning | $ / shares | $ 20.89 |
Weighted Average Remaining Contractual Term, Beginning | 6 years 8 months 23 days |
Number of Shares Subject to Option, Granted | shares | 73,200 |
Weighted Average Exercise Price, Granted | $ / shares | $ 13.71 |
Weighted Average Remaining Contractual Term, Granted | 9 years 4 months 9 days |
Number of Shares Subject to Option, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Remaining Contractual Term, Exercised | |
Number of Shares Subject to Option, Forfeited or expired | shares | (23,342) |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | $ 20.46 |
Weighted Average Remaining Contractual Term, Forfeited or expired | |
Number of Shares Subject to Option, Ending | shares | 296,131 |
Weighted Average Exercise Price, Ending | $ / shares | $ 19.15 |
Weighted Average Remaining Contractual Term, Ending | 6 years 8 months 23 days |
Aggregate Intrinsic Value, Ending | $ | $ 874,322 |
Number of Shares Subject to Option, Vested or expected to vest | shares | 271,591 |
Weighted Average Exercise Price, Vested or expected to vest | $ / shares | $ 19.6 |
Weighted Average Remaining Contractual Term, Vested or expected to vest | 6 years 6 months 10 days |
Aggregate Intrinsic Value, Vested or expected to vest | $ | $ 726,483 |
Number of Shares Subject to Option, Exercisable | shares | 164,231 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 23.13 |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 11 months 26 days |
Aggregate Intrinsic Value, Exercisable | $ | $ 74,965 |
Stock Based Compensation (Det_4
Stock Based Compensation (Details) - Schedule of changes in non-vested stock options | 9 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Schedule of Changes in Non-Vested Stock Options [Abstract] | |
Weighted Number of Shares Subject to Option, Non-vested Beginning | shares | 104,175 |
Average Grant Date Fair Value (per Option), Non-vested Beginning | $ / shares | $ 2.92 |
Weighted Number of Shares Subject to Option, Granted | shares | 73,200 |
Average Grant Date Fair Value (per Option), Granted | $ / shares | $ 4.16 |
Weighted Number of Shares Subject to Option, Vested | shares | (34,075) |
Average Grant Date Fair Value (per Option), Vested | $ / shares | $ 1.59 |
Weighted Number of Shares Subject to Option, Forfeited or expired | shares | (11,400) |
Average Grant Date Fair Value (per Option), Forfeited or expired | $ / shares | $ 2.73 |
Weighted Number of Shares Subject to Option, Non-vested Ending | shares | 131,900 |
Average Grant Date Fair Value (per Option), Non-vested Ending | $ / shares | $ 3.97 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Commitments and Contingencies (Details) [Line Items] | ||
Funding amount | $ 7,400,000 | |
Standby Letters of Credit [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Contingent liabilities | $ 0 | $ 0 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2022 | |
Revenue (Details) [Line Items] | |||||
Revenue | $ 9,809,616 | $ 8,620,049 | $ 27,249,520 | $ 23,623,531 | |
Revenue recognized | 3,051,528 | ||||
ASC 606 [Member] | |||||
Revenue (Details) [Line Items] | |||||
Contract liabilities | 6,566,188 | 6,566,188 | $ 3,384,474 | ||
Units Delivered [Member] | ASC 606 [Member] | |||||
Revenue (Details) [Line Items] | |||||
Revenue | 6,957,142 | 7,291,109 | 20,674,371 | 19,883,573 | |
Milestones Achieved [Member] | ASC 606 [Member] | |||||
Revenue (Details) [Line Items] | |||||
Revenue | 2,852,474 | $ 1,328,940 | 6,575,149 | $ 3,739,958 | |
Order or Production Backlog [Member] | ASC 606 [Member] | |||||
Revenue (Details) [Line Items] | |||||
Intangible assets | $ 82,100,000 | $ 82,100,000 | |||
Percentage of estimated shipments | 11% in 2023; 47% in 2024; 27% in 2025, and 15% thereafter. |
Employee Stock Ownership Plan_2
Employee Stock Ownership Plan (Details) - Employee Stock Ownership Plan [Member] | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) shares | Mar. 31, 2022 USD ($) shares | |
Employee Stock Ownership Plan (Details) [Line Items] | ||||
Number of hours worked per year to quality for the plan | 1,000 | |||
ESOP compensation expense | $ | $ 100,555 | $ 77,045 | $ 256,032 | $ 245,362 |
Shares distributed (in Shares) | shares | 33,780 | 14,265 |
Employee Stock Ownership Plan_3
Employee Stock Ownership Plan (Details) - Schedule of ESOP shares - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
Schedule of ESOP Shares [Abstract] | ||
Allocated shares | 462,311 | 472,955 |
Committed-to-be-released shares | 16,866 | 17,352 |
Unreleased shares | 239,427 | 262,077 |
Total shares held by the ESOP | 718,604 | 752,384 |
Fair value of unreleased shares (in Dollars) | $ 4,848,397 | $ 3,642,870 |