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NEWS RELEASE
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15301 W. 109th Street, Lenexa, KS 66219 Phone: 913-647-0158 Fax: 913-647-0132
investorrelations@elecsyscorp.com
FOR IMMEDIATE RELEASE:
Contact: Karl B. Gemperli
(913) 647-0158, Phone
(913) 647-0132, Fax
investorrelations@elecsyscorp.com
ELECSYS CORPORATION REPORTS SECOND QUARTER FINANCIAL RESULTS
Lenexa, Kansas (December 12, 2003) - Elecsys Corporation (AMEX: ASY), today
announced its financial results for the three months and six months ended
October 31, 2003.
Results for the second quarter ended October 31, 2003:
Sales for the quarter ended October 31, 2003 were $2,739,000, a decrease of
$37,000 or 1%, from sales of $2,776,000 in the comparable period of the prior
year. The decrease was the result of a slowdown in existing customer orders in
the electronics assembly and electronic hybrid product lines. These decreases
were partially offset by increases in LCD production and LCD resale products as
a result of the addition of some former Crystaloid customers and an increase
in our marketing efforts. DCI Inc. ("DCI"), the company's wholly owned
subsidiary, was recently notified by its largest customer of its intent to move
the manufacture of its product from DCI to the off-shore production facility
used by its parent company. That move is expected to occur early in the third
quarter of our fiscal year 2004, when their current production runs with DCI are
completed. We have been advised that this was a corporate decision made by the
customer's parent company, even though DCI was one of their top-rated suppliers.
For fiscal year 2003, this customer accounted for $2,240,000 in sales, which
amounted to approximately 20% of total sales. We are continuing to aggressively
pursue other customer opportunities that include new electronic hybrid and
electronic assembly products, new products at current customers and providing
electronic manufacturing services to the former Crystaloid customers. We believe
that our expanded direct and indirect sales forces will be able to capitalize on
new customer opportunities as they focus on higher margin electronics assembly
business and those opportunities that require our expertise of integrating LCDs
and LEDs with electronics.
Gross margin was $755,000 or 28% of sales for the three-month period ended
October 31, 2003, as compared to $986,000 or 36% of sales for the three-month
period ended October 31, 2002. The gross margin achieved in the current period
reflected the change in product mix as well as fewer strategic pricing
opportunities as compared to the same period a year ago.
Operating expenses were $762,000, an increase of $32,000, or 4%, from the
same period a year ago. The increase was due to costs associated with an
increase in personnel, increased costs of insurance and employee benefits, and
the costs associated with the rental of a second facility used to house the
excess Crystaloid assets.
Operating loss for the three-month period was $7,000, as compared to
operating income of $256,000 for the comparable period in the prior fiscal year.
Interest expense increased to $64,000 for the three-month period ended
October 31, 2003 as compared to $40,000 for the three-month period ended October
31, 2002. The increase of $24,000 was the result of interest expense on
borrowings on the line of credit and line of credit fees during the three-month
period ended October 31, 2003. The line of credit was not utilized during the
corresponding period of the prior year.
As a result of the above, net loss was $69,000, or $(0.02) per share,
for the quarter, as compared to net income of $218,000, or $0.08 per share for
the comparable period of the prior year.
Results for the six-month period ended October 31, 2003:
Sales totaled $5,358,000 for the first half of the Company's fiscal year, a
5% decrease from the comparable period in the prior fiscal year. The decrease
was a result of a slowdown in existing customer orders in the electronics
assembly and electronic hybrids product lines partially offset by increases in
the LCD production and LCD resale product lines as a result of the addition of
some former Crystaloid customers and an increase in our marketing efforts. Due
to the unexpected loss of DCI's largest customer and the amount of time it takes
to advance new marketing opportunities into production orders, we expect to
experience lower sales at least through the third quarter of fiscal year 2004 as
compared to the same period in fiscal year 2003.
Gross margin was 27%, or $1,451,000, as compared to 33%, or $1,858,000
in the first six months of the prior fiscal year. The decrease in gross margin
was the result of a change in product mix as well as the effect of slightly
lower production efficiencies due to decreased sales volumes and fewer strategic
pricing opportunities as compared to the comparable period in the prior fiscal
year. It is anticipated that in the near term gross margins will continue at or
near their present levels as the result of expected product mix and additions to
our customer base.
Operating expenses were $1,550,000. In the six-month period ended
October 31, 2002, these expenses totaled $1,472,000. The increase of $78,000, or
5%, was due to increased costs associated with an increase in personnel, costs
of renting a second facility to house the excess Crystaloid assets, and
increased costs of insurance and employee benefits. We believe that our
continuing operating expenses will be at or near their current levels for the
foreseeable future and we will continue our efforts to minimize corporate
expenditures and manage our operating costs.
Year to date operating loss was $99,000 as compared to an operating
income of $386,000 for the prior year to date period.
Interest expense increased to $123,000 for the six-month period ended
October 31, 2003 as compared to $78,000 for the six-month period ended October
31, 2002. The increase of $45,000 was the result of interest expense on
borrowings and fees on the line of credit during the six-month period ended
October 31, 2003. There were no borrowings on the line of credit during the
six-month period ended October 31, 2002.
The $36,000 income tax benefit for the six-month period ended October
31, 2003 was due to the filing of amended tax returns claiming refunds of income
taxes paid in prior years as a result of carry backs of net operating losses. No
other income tax provision or benefit was recorded for the six-month periods
ended October 31, 2003 or 2002 due primarily to net
operating loss carry forwards available to the Company.
As a result of the above, net loss for the year to date period ended
October 31, 2003, amounted to $183,000, or $(0.07) per share as compared to a
net loss of $1,307,000, or $(0.47) per share, for the six-month period ended
October 31, 2002 which included the $1,618,000 charge for goodwill impairment as
a result of the adoption of Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, on May 1, 2002.
Karl B. Gemperli, Chief Executive Officer, stated, "We continue to focus our
marketing efforts on large opportunities that complement our unique capabilities
of integrating custom displays with electronics. In this way, we expect to
increase our level of sales and return to profitability. Although the loss of a
major customer will be a temporary setback, we expect a positive trend in both
sales and earnings in the long term."
Elecsys Corporation, through its wholly owned subsidiary DCI, Inc., is a
designer, manufacturer, and integrator of custom electronic interface solutions
for original equipment manufacturers ("OEMs") in the medical, aerospace,
communications and industrial product industries. The Company has unique
capabilities to design and efficiently manufacture custom electronic assemblies
which integrate a variety of interface technologies such as custom liquid
crystal displays, light emitting diode displays, and keypads with circuit boards
and other electronic components. The Company becomes an extension of the OEM's
organization by providing key expertise that enables rapid development and
manufacture of electronic products from product conception through volume
production. For more information, visit our websites at www.elecsyscorp.com and
www.dciincorporated.com.
Safe-Harbor statement: The discussions set forth in this press release may
contain forward-looking comments based on current expectations that involve a
number of risks and uncertainties. Actual results could differ materially from
those projected or suggested in the forward-looking comments. The difference
could be caused by a number of factors, including, but not limited to the
factors and conditions that are described in Elecsys Corporation's SEC filings,
including the Form 10-KSB for the year ended April 30, 2003. The reader is
cautioned that Elecsys Corporation does not have a policy of updating or
revising forward-looking statements and thus he or she should not assume that
silence by management of Elecsys Corporation over time means that actual events
are bearing out as estimated in such forward-looking statements.
Elecsys Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31,
2003 2002 2003 2002
---- ---- ---- ----
Sales $2,739 $2,776 $5,358 $5,620
Cost of products sold 1,984 1,790 3,907 3,762
------------- ------------- ------------- --------------
Gross margin 755 986 1,451 1,858
Selling, general and
administrative expenses 762 730 1,550 1,472
------------- ------------- ------------- --------------
Operating income (loss) (7) 256 (99) 386
Other income (expense):
Interest expense (64) (40) (123) (78)
Other income, net 2 2 3 3
------------- ------------- ------------- --------------
Income (loss) before
income taxes and
cumulative effect of
accounting change (69) 218 (219) 311
Income tax benefit -- -- 36 --
------------- ------------- ------------- --------------
Income (loss) before
cumulative effect of
accounting change (69) 218 (183) 311
Cumulative effect of
accounting change -- -- -- (1,618)
------------- ------------- ------------- --------------
Net income (loss) $(69) $218 $(183) $(1,307)
============= ============= ============= ==============
Income (loss) per share
information:
Basic and diluted
Income (loss) per share
before cumulative effect
of accounting change ($0.02) $0.08 ($0.07) $0.11
Cumulative effect of
accounting change -- -- -- (0.58)
------------- ------------- ------------- --------------
Net income (loss) per
share ($0.02) $0.08 ($0.07) ($0.47)
============= ============= ============= ==============
Weighted average common
shares outstanding - basic
and diluted 2,791 2,791 2,791 2,790
