Espey Mfg. Reports Strong Earnings and Expanding Backlog in Q3

Shares of Espey Mfg. & Electronics Corp. (ESP) have surged 15.9% since the company released its earnings for the quarter ending March 31, 2025. In comparison, the S&P 500 index saw a 4% increase during the same period. Over the past month, ESP shares have risen 19.8%, outperforming the S&P 500’s 11.3% growth. This trend indicates strong investor confidence, likely linked to Espey’s solid performance and the expanding order pipeline.

Earnings Growth Overview

For the third quarter of fiscal 2025, Espey reported net income of 63 cents per share, an increase from 40 cents per share in the equivalent quarter of the previous year. The company’s net sales reached $10.3 million, marking a 24.8% rise compared to $8.3 million from the same quarter last year. Net income experienced a 65.2% jump to $1.7 million, up from $1 million a year earlier.

In the first nine months of fiscal 2025, net sales totaled $34.4 million, reflecting a 26.7% increase from $27.1 million in the comparable period the previous year. Net income for these nine months rose 32.9% to $5.2 million, or $1.95 per share, compared to $3.9 million, or $1.56 per share, in the prior-year period.

Backlog and Order Expansion

A key highlight from the report is the substantial growth in Espey’s backlog, which reached $138 million as of March 31, 2025. This figure represents a 63.9% increase from $84.2 million a year earlier. The significant rise is supported by new orders totaling $75.1 million during the first nine months of fiscal 2025, more than double the $27.8 million in new orders recorded in the same period of the previous fiscal year.

The order growth includes a previously announced $19.8 million contract, solidifying Espey’s near-term production pipeline. The backlog suggests a sustained demand in the company’s core defense and industrial power supply markets, positioning Espey for continued revenue growth.

Management’s Positive Outlook

President and CEO David O’Neil attributed the year-over-year growth in sales and earnings to strategic margin improvement initiatives and effective operational execution. He emphasized the company’s ability to improve margins on key programs and noted that the backlog growth is a direct consequence of a record number of new orders.

Factors Influencing Earnings Growth

The performance improvements in Espey’s top and bottom lines were primarily driven by an increase in production volume and a favorable pricing mix in its power supply and transformer programs. The earnings boost reflects the scale benefits of higher sales and effective cost management. Although specific margin data was not disclosed in the earnings report, O’Neil’s comments regarding improved gross profits suggest enhanced profitability in key segments.