Espey Mfg. & Electronics Corp. Files 2024 10-K

TL;DR

Espey Mfg. & Electronics Corp. (ESP) filed its 2024 10-K. All systems go.

AI Summary

Espey Mfg. & Electronics Corp. filed its 10-K for the fiscal year ended June 30, 2024, reporting its financial performance and business operations. The company, incorporated in New York, is listed on the NYSE American under the ticker ESP. Its principal executive offices are located at 233 Ballston Avenue, Saratoga Springs, New York.

Why It Matters

This filing provides investors and stakeholders with a comprehensive overview of Espey Mfg. & Electronics Corp.'s financial health and strategic direction for the past fiscal year.

Risk Assessment

Risk Level: low — The filing is a standard annual report and does not contain immediate red flags or significant negative disclosures.

Key Players & Entities

• ESPEY MFG & ELECTRONICS CORP (company) — Registrant
• 20240630 (date) — Fiscal year end
• 20240927 (date) — Filing date
• New York (location) — State of incorporation
• 14-1387171 (dollar_amount) — IRS Number
• 233 Ballston Avenue, Saratoga Springs, New York 12866 (location) — Principal executive offices
• 518-584-4100 (dollar_amount) — Registrant's telephone number
• ESP (company) — Trading Symbol
• NYSE American (company) — Exchange

FAQ

Key Financial Figures

• $18.70 — 89 based upon the closing sale price of $18.70 on the NYSE American on December 31, 20
• $38,736,319 — nd 2023, the Company's total sales were $38,736,319 and $35,592,323, respectively. Sales to
• $35,592,323 — pany's total sales were $38,736,319 and $35,592,323, respectively. Sales to five domestic c
• $2,350,087 — ents in fiscal years 2024 and 2023 were $2,350,087 and $549,510, respectively. The increas
• $549,510 — years 2024 and 2023 were $2,350,087 and $549,510, respectively. The increase is primaril
• $97.2 m — otal sales backlog at June 30, 2024 was $97.2 million, which included approximately $61
• $61 million — 2 million, which included approximately $61 million from four significant customers, compar
• $83.6 million — four significant customers, compared to $83.6 million at June 30, 2023, which included approx
• $66 million — 30, 2023, which included approximately $66 million from six significant customers. The Com
• $94.9 million — klog at June 30, 2024 was approximately $94.9 million. This includes items that have been aut
• $2.3 million — klog at June 30, 2024 was approximately $2.3 million and represents an amount under one firm
• $32 thousand — d backlog at June 30, 2023 approximated $32 thousand. Contracts are subject to modification,
• $44 million — presently anticipated that a minimum of $44 million of orders comprising the June 30, 2024
• $86,714 — h related activities were approximately $86,714 and $65,427 in fiscal year 2024 and 202
• $65,427 — tivities were approximately $86,714 and $65,427 in fiscal year 2024 and 2023, respectiv

Filing Documents

• esp-20240630.htm (10-K) — 735KB
• ex19-1.htm (EX-19.1) — 29KB
• ex23-1.htm (EX-23.1) — 3KB
• ex31-1.htm (EX-31.1) — 10KB
• ex31-2.htm (EX-31.2) — 10KB
• ex32-1.htm (EX-32.1) — 4KB
• ex32-2.htm (EX-32.2) — 4KB
• ex97-1.htm (EX-97.1) — 24KB
• image_001.jpg (GRAPHIC) — 3KB
• 0001174947-24-001099.txt ( ) — 5080KB
• esp-20240630.xsd (EX-101.SCH) — 55KB
• esp-20240630_cal.xml (EX-101.CAL) — 46KB
• esp-20240630_def.xml (EX-101.DEF) — 233KB
• esp-20240630_lab.xml (EX-101.LAB) — 483KB
• esp-20240630_pre.xml (EX-101.PRE) — 243KB
• esp-20240630_htm.xml (XML) — 469KB

Forward-Looking Statements

Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation: Changing priorities or decreases in the U.S. government's defense budget (including changes in priorities in response to terrorist threats, improvement of homeland security and general U.S. Government budgetary issues); Termination of government contracts due to unilateral government action; Differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts within estimated costs, and performance issues with key suppliers and subcontractors; Potential of changing prices for energy and raw materials; General strength of the industry sectors in which our customers transact business All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on the Company's behalf are qualified by the cautionary

Business

Item 1. Business General Espey Mfg. & Electronics Corp. ("Espey") is a power electronics design and original equipment manufacturing (OEM) company with a long history of developing and delivering highly reliable products for use in military and severe environment applications. Design, manufacturing, and testing is performed in our 150,000+ square foot facility located at 233 Ballston Ave., Saratoga Springs, New York. Espey is classified as a "smaller reporting company" for purposes of the reporting requirements under the Securities Exchange Act of 1934, as amended. Espey's common stock is publicly-traded on the NYSE American under the symbol "ESP." Espey began operations after incorporation in New York in 1928. We strive to remain competitive as a leader in high power energy conversion and transformer solutions through the design and manufacture of new and improved products by using advanced and "cutting edge" electronics technologies. Espey is an ISO 9001:2015 and AS9100:2016 certified manufacturer of power conversion, advanced magnetics and build to specifications provided by the customer "build to print" products for the rugged industrial and military marketplace. Our primary products are power supplies, power converters, filters, power transformers, magnetic components, power distribution equipment, UPS systems, and antennas. The applications of these products include AC and DC locomotives, shipboard power, shipboard radar, airborne power, ground-based radar, and ground mobile power. Espey services include design and development to specification, build to specifications provided by the customer "build to print", design services, design studies, environmental testing services, metal fabrication, painting services, and development of automatic testing equipment. Espey is vertically integrated, meaning that the Company produces individual components (including inductors), populates printed circuit boards, fabricates metalwork, paints, wires, qualifies, and fu

Cybersecurity

Item 1C. Cybersecurity Robust cybersecurity is an essential component of our strategic vision. We face a variety of complex cybersecurity threats as a defense contractor. Among the risks are computer malware, ransomware, phishing attacks, Denial of Service attacks and Advanced Persistent Threats. Our security team, comprised of members from senior management, IT, human resources and program management, performs routine risk assessments in accordance with NIST 800-30, using input from observed risks and threats, advisories, federal agencies and local law enforcement. The Audit Committee of the Board of Directors is responsible for oversight of our risk management processes. The Audit Committee is briefed by senior management on cybersecurity posture, initiatives and incidents. We allocate significant resources to mitigate these risks. We are required to adhere to rigorous regulations, such as those outlined in the Defense Federal Acquisition Regulation Supplement (DFARS), which govern the protection of controlled unclassified information (CUI) and the mandatory reporting of cybersecurity incidents to the Department of Defense (DoD). All DFARS requirements are flowed down to our sub-contractors, who are required to self-report their compliance to the U.S. Government. In addition to the processes and systems that we use to identify and mitigate risks, we utilize third party services to conduct valuations of our security controls, including penetration testing and independent audits. Despite our efforts to uphold the highest cybersecurity standards, we may still experience a cybersecurity incident that has a material effect on business strategy, results of operation or financial condition. It is also possible that additional regulations could affect our supply chain and increase costs. Prior cyberattacks directed at us have not had a material impact on our financial results nor restricted us from being awarded contracts from other defense companies or directly from the

Property

Item 2. Property The Company's entire operation, including administrative, manufacturing and engineering facilities, is located in Saratoga Springs, New York. The Saratoga Springs plant, which the Company owns, consists of various adjoining buildings on a 22 acre site, approximately eight acres of which is unimproved. The property is not subject to mortgage indebtedness or any other material encumbrance. The plant has a sprinkler system throughout and contains approximately 151,000 square feet of in-service floor space, of which 90,000 is used for manufacturing, 24,000 for engineering, 33,000 for shipping and climatically secured storage, and 4,000 for offices. The offices, engineering and some manufacturing areas are air-conditioned. In addition to assembly and wiring operations, the plant includes facilities for varnishing, potting, impregnation and spray-painting operations. The manufacturing operation also includes a complete machine shop, with welding and sheet metal fabrication facilities adequate for substantially all of the Company's current operations. Besides normal test equipment, the Company maintains a sophisticated on-site environmental test facility. In addition to meeting all of the Company's in-house needs, the machine shop and environmental facilities are available to other companies on a contract basis.

Legal Proceedings

Item 3. Legal Proceedings We are party to various litigation matters and claims arising from time to time in the ordinary course of business. While the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. Currently, there are no matters pending.

Mine Safety Disclosures

Item 4. Mine Safety Disclosures Not applicable 5 PART II

Market for the Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common Stock The table below shows the range of high and low prices for the Company's common stock on the NYSE American (symbol "ESP"), the principal market for trading in the common stock, for each quarterly period for the last two fiscal years ended June 30: 2024 High Low First Quarter $ 18.00 $ 14.74 Second Quarter 19.29 14.69 Third Quarter 27.32 17.97 Fourth Quarter 26.31 20.20 2023 High Low First Quarter $ 15.54 $ 13.05 Second Quarter 14.49 13.02 Third Quarter 20.59 14.17 Fourth Quarter 22.96 15.81 Holders The approximate number of holders of record of the common stock was 57 on September 24, 2024 according to records of the Company's transfer agent. Included in this number are shares held in "nominee" or "street" name and, therefore, the number of beneficial owners of the common stock is believed to be substantially in excess of the foregoing number. Dividends Effective March 13, 2023, the Company reinstated payment of a quarterly dividend. The Company had suspended dividend payments effective March 9, 2021. The Company paid regular cash dividends on common stock of $0.675 per share for the fiscal year ended June 30, 2024 and paid regular cash dividends on common stock of $0.20 per share for the fiscal year ended June 30, 2023. Our Board of Directors assesses the Company's dividend policy periodically. There is no assurance that the Board of Directors will maintain the amount of the regular cash dividend during any future years. During fiscal year 2024, the Company did not sell any of its common stock to the Trustees of The Espey Mfg. & Electronics Corp. Employee Stock Ownership Plan Trust (the "ESOP"). The Company did not make any open market purchases of equity securities in the fiscal year 2024 fourth quarter. The following table sets forth information as of June 30, 2024

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Business Outlook Management expects revenues in fiscal year 2025 to be higher than revenues recognized during fiscal year 2024 and expects net income per share to exceed fiscal 2023 reported results, however net income per share is anticipated to fall below fiscal 2024 results. This expectation is driven primarily by orders already in our backlog that will be shipped in fiscal year 2025 with higher anticipated aggregate costs than the product mix shipped during fiscal 2024. Gross profit on fiscal 2025 shipments will be reduced by the increase in overhead costs incurred specific to the pension withdrawal obligation recorded in fiscal 2024, explained in greater detail in Financial Statement Note 7. Pension Expense. Overhead costs will be reduced, in future years, from the Company's withdrawal from the plan, as recurring annual contribution payments to the plan will no longer be required. As market factors including competition and product costs impact gross profit margins, management will continue to evaluate our sales strategy, employment levels, and facility costs. Ongoing demand in the power electronics industry across multiple manufacturing sectors continues to create shortages and extended lead times. In some instances, waiting times for certain components approach a year or more. We adequately factor supplier-provided lead times into internal planning schedules and new customer quotations. From time to time, we encounter part obsolescence which requires us to identify an alternate part suitable for use. We continue to work with our customers on strategies to mitigate any adverse impact upon our ability to

View Full Filing

View this 10-K filing on SEC EDGAR