American Science & Engineering [ASEI]
2Q16 2Q15
Sales $25.1M $23.1M
Net Inc. $464K, 0.06 $3.9M, 0.49
Net income swung to positive territory on a $594,000 refund of international employment taxes, lower cost of service on fixed price contracts, and improved margins due to a produce mix shift toward higher margin mobile cargo systems. AS&E also reduced its selling, general and administrative expenses on headcount reductions, and lower research and development expenses. Results a year ago were also negatively impacted by a $1.4 million charge for a workforce reduction. Sales were 9% higher due to its MINI Z system and mobile cargo systems. By product line, service revenue was $11.7 million, mobile cargo $9.2 million, parcel and personnel $2.3 million, other product $1.2 million, and cargo $700,000. Cargo revenues were low on delays in deployments in the Middle East. Orders in the quarter were relatively light at $21.7 million although bookings through the first half of the fiscal year are 1.2 times sales and backlog at the end of the second quarter stood at $140.3 million, down 6% from a year ago. Chuck Dougherty, AS&E’s president and CEO, tells investors that improving political stability in the Middle East and Northern Africa is “driving heightened activity in our end markets in the region” with good prospects in the “short-term.” Free cash flow was $8.7 million.
Implant Sciences [IMSC]
1Q16 1Q15
Sales $14.4M $1.9M
Net Inc. ($911K, .01) ($5.4M, .08)
Sales rose to a record on the completion of fulfillment of orders for QS-B220 desktop explosives trace detectors (ETD) for aviation security in Europe. “The production ramp we experienced was unprecedented and the focus necessary to fulfill our customer demand necessitated new processes and procedures that we believe will continue to yielded long-term benefits,” says Bill McGann, Implant’s CEO. QS-B220 revenue totaled $12.5 million, up from $754,000 a year ago. Sales from parts and suppliers accounted for $1.2 million in revenue, up from $129,000, while QS-H150 handheld ETDs brought in $687,000 versus $986,000 a year ago. Losses narrowed on the higher sales and improved margins but were partially offset by increased operating costs and interest expense. Roger Deschenes, Implant’s chief financial officer, says that as the “installed base of the QS-B220 increases, consumable [supply] revenues will become a more prominent component of our total revenues.” Importantly, McGann says Implant has stopped “borrowing expensive money,” meaning it largely self-funded the working capital used to ramp up QS-B220 production and deliver more than 800 of the systems to airports in Europe. He says a priority of the company and its board in the near-future is to fix its capital structure. Operating earnings in the quarter swung to $2.1 million from a $2.3 million loss a year ago. McGann also says there will be another wave of opportunities in Europe but now the company will shift somewhat toward fulfilling its orders for the Transportation Security Administration. He says the agency will be visiting the company’s facility in early December to do factory acceptance testing and expects to deliver on the order in the current fiscal year beginning in December.