Espey Mfg. & Electronics Corp. Announces Additional New $19.8 Million Contract Award Supporting U.S. Navy’s Virginia and Columbia Class Submarine Programs

Rhea-AI Summary

Espey Mfg. & Electronics Corp. (NYSE American: ESP) has secured an additional $19.8 million contract to manufacture electrical power transformers for the U.S. Navy's Virginia and Columbia class submarines. The contract, awarded by General Dynamics Electric Boat and the U.S. Navy, involves components previously designed and supplied by Espey for both submarine classes.

The Columbia class submarine program, a top priority for the Department of Defense, aims to replace the existing Ohio class ballistic missile submarines. The company's primary business focuses on developing specialized military and industrial power supplies/transformers.

Positive

• Secured new $19.8 million contract for U.S. Navy submarine programs
• Continuation of existing successful relationship with General Dynamics Electric Boat
• Strategic alignment with high-priority Department of Defense programs

Negative

• None.

Insights

Defense Industry Analyst

The $19.8 million contract award for submarine power transformers represents a substantial business win for Espey, constituting roughly 27% of the company's current $72.8 million market capitalization. This follow-on contract validates Espey's continued technical competence and reliability as a supplier to General Dynamics Electric Boat and the U.S. Navy.

The award's significance extends beyond its dollar value. Being selected as a supplier for both the Virginia-class and Columbia-class submarine programs positions Espey within two critical naval defense initiatives. The Columbia-class program is particularly noteworthy as it replaces the aging Ohio-class ballistic missile submarines and represents one of the Navy's highest procurement priorities with expected long-term funding stability.

Naval submarine programs typically span decades in production, suggesting this contract could lead to additional follow-on work as more vessels are commissioned. The Virginia-class program has already demonstrated program longevity with multiple procurement blocks, while the Columbia-class is still in its early production stages with significant future potential.

For a specialized defense contractor like Espey, securing positions on major platforms like these submarines establishes revenue visibility and program stability that's exceptionally valuable. Unlike commercial markets, defense contracting typically offers more predictable long-term business once a supplier has been qualified on a platform, particularly for mission-critical electrical components where requalification of alternative suppliers introduces substantial program risk.

Financial Analyst

The $19.8 million contract award significantly strengthens Espey's order book relative to its size. With the company's market capitalization at just $72.8 million, this single contract represents approximately 27% of the firm's entire market value, a substantial proportion that materially improves revenue visibility.

While the announcement specifies the contract will be awarded "when fully funded," suggesting a potential staged funding approach rather than immediate revenue recognition, this nevertheless represents a meaningful backlog enhancement. For small-cap defense contractors like Espey, contract predictability is a valuable commodity that can reduce earnings volatility.

The contract's focus on submarine power transformers aligns with Espey's core competencies in specialized military power supplies and transformers. This represents continuation of existing business rather than expansion into new, unproven areas, which reduces execution risk and typically allows for more predictable margins.

Naval submarine electrical systems require exceptional reliability and typically undergo rigorous qualification processes. Having already supplied components for both submarine classes, Espey has overcome these qualification barriers, creating a competitive moat and positioning for potential follow-on orders as these submarine programs progress. The Columbia-class program is particularly noteworthy as a generational replacement platform with substantial long-term procurement value across multiple vessels.

SARATOGA SPRINGS, N.Y., April 10, 2025 (GLOBE NEWSWIRE) -- Espey Mfg. & Electronics Corp. (NYSE American: ESP) announces an additional new contract.

The Company has been awarded an additional contract valued at $19.8 million, when fully funded, to provide electrical power transformers for the U.S. Navy’s Virginia and Columbia class submarines. Espey was chosen by General Dynamics Electric Boat and the U.S. Navy to manufacture components previously designed and supplied by Espey for both the Virginia class as well as the initial Columbia class vessels. The Columbia class submarine is a top priority for the Department of Defense and was designed to replace the fleet of Ohio class, ballistic missile submarines.

Mr. David O’Neil, President and CEO, commented,

We continue to be a proud supplier to General Dynamics Electric Boat and the Department of Defense on this essential program. This award and the established relationship with our customer wouldn’t be possible without the hard work and dedication of our employees. Our strategy remains focused on supporting programs which continue to enable the US military and this award aligns perfectly with that goal. Congratulations to our team on another job well done.

Espey's primary business is the development, design, and production of specialized military and industrial power supplies/transformers. The Company can be found on the internet at www.espey.com.

For further information, contact Ms. Kaitlyn O’Neil at invest@espey.com.

This press release may contain certain statements that are "forward-looking statements" and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

FAQ

What is the value of Espey's new contract for U.S. Navy submarine programs?

Espey (ESP) secured a $19.8 million contract to provide electrical power transformers for the U.S. Navy's Virginia and Columbia class submarines.

What components will Espey (ESP) manufacture under the new submarine contract?

Espey will manufacture electrical power transformers for the Virginia and Columbia class submarines, based on components previously designed and supplied by the company.

Which submarine class is this contract intended to support?

The contract supports both the Virginia class and Columbia class submarines, with the Columbia class designed to replace the Ohio class ballistic missile submarines.

Who awarded the $19.8 million contract to Espey (ESP)?

The contract was awarded jointly by General Dynamics Electric Boat and the U.S. Navy.

What is the strategic importance of the Columbia class submarine program?

The Columbia class submarine program is a top priority for the Department of Defense, designed to replace the fleet of Ohio class ballistic missile submarines.