Tel-Instrument Electronics Corp. Reports Financial Results For Second Quarter FY 2023
Tel-Instrument Electronics Corp. (OTCQB: TIKK) reported a net loss of $477K ($0.17/share) and revenues of $2.0 million for Q2 FY2023, down 44% from $3.6 million the previous year. Gross margin fell from 46% to 27%. Operating expenses decreased by 15% to $194K. Backlog grew to $6.2 million, while cash balances dropped to $5.5 million. CEO Jeffrey O'Hara cited ongoing parts shortages affecting production and shipping, yet expressed optimism for improved performance in the second half of the year due to received components and major contracts in the pipeline.
- Backlog increased to $6.2 million, a $2.7 million rise from the prior quarter.
- Anticipated improvement in revenues and profitability for H2 FY2023 due to sufficient component supply.
- New contracts pending, including a significant order for the F-35 program.
- Net loss of $477K compared to net income of $1 million in the prior year.
- Revenues declined 44% year-over-year.
- Gross margin reduced from 46% to 27%.
Insights
Analyzing...
Notes On Second Quarter:
-
Revenues for the second quarter were
$2.0 million 44% decline from$3.6 million -
Gross margin percentage declined to
27% versus46% in the year ago quarter. This decline was mainly volume related. -
Operating expenses decreased by
$194 K15% decline versus the year ago quarter. -
Operating loss was
$535 K$385 K -
Net loss was
$477 K$0.17 $1 million $0.28 -
Backlog increased to
$6.2 million $2.7 million -
Cash balances decreased to
$5.5 million $7 million
Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “This has been the third consecutive quarter that has been negatively impacted by parts shortages. Due to the chip shortage situation, vendor lead times have tripled to as long as nine months in some cases. This prevented us from shipping certain high dollar orders in the last quarter. We have been ordering additional components from our vendors to mitigate the impact of extended lead times and we are now receiving sufficient parts to resume more typical production levels. Despite the disappointing start to the current fiscal year, we expect improvement in both revenues and profitability for the second half of the fiscal year. This is based upon the receipt of needed production components for most of our open orders, and the start-up of SDR/OMNI production in the current quarter. We also have several major contracts pending. including a large AN/USM-708 order for the F-35 program and a follow-on T-4530i order from
We continue to be excited by the positive initial reception we have seen from customers on the SDR/OMNI test set. We continue to conduct product demonstrations with both the major Primes (“major customers”) and airlines. Our international distributors have placed orders for demo units, and we have started to sell production units to customers. We have ordered sufficient parts for the initial six months of production and initial customer deliveries will commence this month. We believe that this will be a strong competitor in both commercial and military avionic and communication test set markets.
The CRAFT ECP contract will be critical for the Company as this is expected to generate millions of dollars of annual production revenues, starting when the engineering work is completed. The CRAFT engineering effort is a funded
The Aeroflex appeal has been dragging on for several years due in part to the closure of the
About
Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com.
This press release includes statements that are not historical in nature and may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits, and synergies of the combined companies, statements concerning the Company’s outlook, pricing trends, and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies, and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ materially. Among the factors which could cause a difference are: changes in the general economy; changes in demand for the Company’s products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances. A number of these factors are discussed in the Company’s previous filings with the
CONDENSED CONSOLIDATED BALANCE SHEETS
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2022 |
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2022 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
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$ |
3,436,366 |
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$ |
4,949,690 |
|
Accounts receivable, net |
|
|
1,436,023 |
|
|
|
1,049,040 |
|
Inventories, net |
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2,934,247 |
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2,820,497 |
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Restricted cash to support appeal bond |
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2,011,050 |
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|
2,011,050 |
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Prepaid expenses and other current assets |
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333,522 |
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|
244,040 |
|
Total current assets |
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10,151,208 |
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|
|
11,074,317 |
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Equipment and leasehold improvements, net |
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96,160 |
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|
115,338 |
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Operating lease right-of-use assets |
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1,624,682 |
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|
|
1,720,921 |
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Deferred tax asset, net |
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2,688,431 |
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2,499,587 |
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Other long-term assets |
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35,109 |
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|
|
35,109 |
|
Total assets |
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$ |
14,595,590 |
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|
$ |
15,445,272 |
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LIABILITIES & STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Operating lease liabilities – current portion |
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$ |
198,191 |
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$ |
194,370 |
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Accounts payable |
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|
481,425 |
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|
|
406,489 |
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Deferred revenues - current portion |
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118,007 |
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|
|
119,835 |
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Accrued expenses ‐vacation pay, payroll and payroll withholdings |
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293,348 |
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|
|
410,538 |
|
Accrued legal damages |
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6,220,209 |
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|
6,097,273 |
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Accrued expenses - other |
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182,390 |
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|
174,145 |
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Total current liabilities |
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7,493,570 |
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7,402,650 |
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Operating lease liabilities – long-term |
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1,426,491 |
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1,526,551 |
|
Deferred revenues – long-term |
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|
226,297 |
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|
|
289,071 |
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|
|
|
|
|
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Total liabilities |
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9,146,358 |
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9,218,272 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock, 1,000,000 shares authorized, par value |
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Preferred stock, 500,000 shares |
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3,755,998 |
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3,695,998 |
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Preferred stock, 166,667 shares |
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|
1,167,367 |
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1,147,367 |
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Common stock, 7,000,000 shares authorized, par value |
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325,586 |
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325,586 |
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Additional paid-in capital |
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6,870,822 |
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7,018,353 |
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Accumulated deficit |
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(6,670,541 |
) |
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(5,960,304 |
) |
Total stockholders’ equity |
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5,449,232 |
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|
6,227,000 |
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Total liabilities and stockholders’ equity |
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$ |
14,595,590 |
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|
$ |
15,445,272 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2022 |
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2021 |
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2022 |
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2021 |
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Net sales |
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$ |
2,012,758 |
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$ |
3,610,863 |
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$ |
4,266,515 |
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$ |
7,743,256 |
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Cost of sales |
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1,459,286 |
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1,942,956 |
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2,877,858 |
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4,060,602 |
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Gross margin |
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553,472 |
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1,667,907 |
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1,388,657 |
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3,682,654 |
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Operating expenses: |
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Selling, general and administrative |
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478,758 |
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596,618 |
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1,034,967 |
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1,150,651 |
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Litigation expenses |
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|
495 |
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3,220 |
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|
|
1,219 |
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|
|
4,400 |
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Engineering, research, and development |
|
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609,636 |
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682,852 |
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1,131,739 |
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1,376,427 |
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Total operating expenses |
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1,088,889 |
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1,282,690 |
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2,167,925 |
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2,531,478 |
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(Loss) income from operations |
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(535,417 |
) |
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|
385,217 |
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|
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(779,268 |
) |
|
|
1,151,176 |
|
Other income (expense): |
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Interest income |
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2,137 |
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|
|
995 |
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|
3,123 |
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|
|
1,980 |
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Other income |
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- |
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22,260 |
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- |
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35,853 |
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Gain on forgiveness of PPP loan |
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- |
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722,577 |
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- |
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|
722,577 |
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Interest expense – judgement |
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|
(71,016 |
) |
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(52,490 |
) |
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(122,936 |
) |
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(104,410 |
) |
Total other net (expense) income |
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(68,879 |
) |
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693,342 |
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(119,813 |
) |
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656,000 |
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(Loss) income before income taxes |
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(604,296 |
) |
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|
1,078,559 |
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|
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(899,081 |
) |
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|
1,807,176 |
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Income tax (benefit) expense |
|
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(126,928 |
) |
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|
78,883 |
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|
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(188,844 |
) |
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|
231,999 |
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Net (loss) income |
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(477,368 |
) |
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|
999,676 |
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|
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(710,237 |
) |
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1,575,177 |
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Preferred dividends |
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(80,000 |
) |
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|
(80,000) |
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|
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(160,000 |
) |
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|
(160,000 |
) |
Net (loss) income attributable to common shareholders |
|
$ |
(557,368 |
) |
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$ |
919,676 |
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|
$ |
(870,237 |
) |
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$ |
1,415,177 |
|
Basic net (loss) income per common share |
|
$ |
(0.17 |
) |
|
$ |
0.28 |
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|
$ |
(0.27 |
) |
|
$ |
0.43 |
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Diluted net (loss) income per common share |
|
$ |
(0.17 |
) |
|
$ |
0.20 |
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|
$ |
(0.27 |
) |
|
$ |
0.31 |
|
Weighted average shares outstanding: |
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|
|
|
|
|
|
Basic |
|
|
3,255,887 |
|
|
|
3,255,887 |
|
|
|
3,255,887 |
|
|
|
3,255,887 |
|
Diluted |
|
|
3,255,887 |
|
|
|
5,095,665 |
|
|
|
3,255,887 |
|
|
|
5,095,665 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221114005849/en/
(201) 933-1600 (Ext 309)
Source:
FAQ
What were Tel-Instrument's revenue results for Q2 FY2023?
What is the impact of parts shortages on Tel-Instrument's performance?
What is the current backlog for Tel-Instrument as of Q2 FY2023?
What future contracts does Tel-Instrument foresee?
How did Tel-Instrument's gross margin perform in Q2 FY2023?
