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Sparton Corp. has reported sales of $106.7 million for the first quarter of fiscal 2016 ended September 27, 2015, an increase of 39%, from $77 million in the same period last year.
Operating income for 1Q FY 2016 was $4.5 million compared to just $0.8 million in the first quarter of FY 2015. Net income for the first quarter of fiscal 2016 was $2.4 million ($4 million adjusted) or $0.24 ($0.41 adjusted) per share, basic and diluted, compared to net income of $0.2 million ($1.8 million adjusted), or $0.02 ($0.18 adjusted) per share, basic and diluted in the same quarter a year ago.
"We are pleased with the financial results in the first quarter. The $0.41 adjusted earnings per share, as compared to $0.18 adjusted earnings per share in the prior year, shows continued strength after a strong finish in the fourth quarter of fiscal 2015. With the number of acquisitions completed in recent years and the plan to do more as we execute the 2020 Vision, starting with this quarter, we will be excluding acquisition-related amortization in the adjusted earnings per share results going forward. This non-cash line item has had a significant impact on our operating results in recent years and this change presents a clearer picture of the company's earnings power and cash generation capability," said Cary Wood, president and CEO.
"Since the analysts have not made this change to their current estimates, this quarter's consensus would be compared to an adjusted earnings per share result of $0.24 with the acquisition-related amortization included. Gross margins increased to 19.8%, up 3.1% from the prior year and SG&A expense, as a percent of sales, was 12.8%, down approximately 1.0% from 13.7% in the prior year quarter due to cost synergies. We also realized a 39% increase in revenue from the prior year quarter, which includes 7% net growth in our legacy business. Organic growth continues to be strong in our ECP segment, up 55% from the prior year, primarily driven by increased sonobuoy sales to both the U.S. Navy and foreign governments as well as tuck-in acquisitions sales, but is offset by a 13% drop in MDS’s legacy revenue due to fluctuations in customer demand as well as program cancelations. We continue to see momentum from new business development activities and anticipate these new program wins to ramp up starting later this year and into the following fiscal year," Wood added.
Wood noted that due to continuing revenue shortfalls in MDS, the company evaluated their footprint options and recently announced the closure and consolidation of the Lawrenceville facility. This action will increase the capacity utilization and reduce overhead expense, which will result in increasing bottom line earnings once restructuring efforts are complete.