Executive Summary
Espey Mfg Electronics Corp posted QQ3 2025 results that reflect a solid year-over-year revenue expansion and strong cash-generation, even as quarterly revenue declined meaningfully versus the immediately preceding quarter. Revenue for QQ3 2025 was $10.30 million, up 24.8% from the QQ3 2024 period, underpinned by a robust gross margin of 28.6% (gross profit of $2.95 million). Operating income reached $1.75 million with an EBITDAR of $1.75 million and net income of $1.70 million, translating to an EPS of $0.66 (GAAP) and $0.63 for diluted EPS. The company generated substantial operating cash flow of $11.45 million in the quarter, driving free cash flow to ~$10.49 million and lifting cash at period-end to about $13.86 million. These figures contributed to a healthy liquidity profile (current ratio 2.54; quick ratio ~1.92) and a balance sheet characterized by meaningful cash and short-term investments (~$38.5 million) against total assets of ~$72.8 million, with stockholders’ equity of ~$46.3 million.
However, QoQ performance was softer, with revenue down ~24.3% vs. Q2 2025 and net income down modestly from the prior quarter. The QQ3 2025 results benefited from favorable mix and volume versus the prior year and improved operating efficiency, but the quarter’s revenue volatility underscores ongoing exposure to project timing and defense-related procurement cycles. The company also reports a meaningful current portion of deferred revenue (~$21.0 million), indicating revenue recognition timing that may influence near-term top-line cadence. The combination of solid YoY growth, strong cash generation, modest leverage, and a conservative balance sheet supports a constructive long-term view, particularly given defense and industrial demand tailwinds, though investors should monitor order cadence, government budget cycles, and the sustainability of quarterly revenue volatility.
Key Performance Indicators
QoQ: -24.29% | YoY:24.81%
QoQ: -13.50% | YoY:60.22%
QoQ: -10.69% | YoY:65.17%
QoQ: -10.81% | YoY:60.98%
Key Insights
Revenue: $10.3027 million (+24.81% YoY; -24.29% QoQ). Gross Profit: $2.948 million; Gross Margin: 28.62% (vs. 28.52% prior year). Operating Income: $1.751 million; Operating Margin: 16.997%. Net Income: $1.705 million; Net Margin: 16.54%. EPS: $0.66 (GAAP); Diluted EPS: $0.63. EBITDA: $1.751 million; EBITDA Margin: 16.997%. Cash Flow: Operating cash flow $11.453 million; Free cash flow $10.492 million. Cash position: End of period cash $13.860 million; Cash & equivalents plus short-term inve...
Financial Highlights
Revenue: $10.3027 million (+24.81% YoY; -24.29% QoQ). Gross Profit: $2.948 million; Gross Margin: 28.62% (vs. 28.52% prior year). Operating Income: $1.751 million; Operating Margin: 16.997%. Net Income: $1.705 million; Net Margin: 16.54%. EPS: $0.66 (GAAP); Diluted EPS: $0.63. EBITDA: $1.751 million; EBITDA Margin: 16.997%. Cash Flow: Operating cash flow $11.453 million; Free cash flow $10.492 million. Cash position: End of period cash $13.860 million; Cash & equivalents plus short-term investments ~$38.495 million. Current ratio: 2.54; Quick ratio: 1.92; Cash conversion cycle: ~234 days. Deferred revenue (current): ~$21.018 million. Payout ratio (dividends): 38.1%; Dividend yield: ~0.92%. Market metrics (peer context): P/E ~10.35; P/B ~1.52; P/S ~6.85; Debt/Equity near zero; Company equity approximately $46.3 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
10.30M |
24.81% |
-24.29% |
| Gross Profit |
2.95M |
42.83% |
-6.81% |
| Operating Income |
1.75M |
60.22% |
-13.50% |
| Net Income |
1.70M |
65.17% |
-10.69% |
| EPS |
0.66 |
60.98% |
-10.81% |
Key Financial Ratios
operatingProfitMargin
17%
operatingCashFlowPerShare
$4.41
freeCashFlowPerShare
$4.04
dividendPayoutRatio
38.1%
Management Commentary
No earnings call transcript data provided in the dataset. Consequently, there are no management quotes or thematically grouped transcript insights available within the supplied material.
Forward Guidance
Management did not publish formal forward guidance within the provided QQ3 2025 materials. In absence of explicit guidance, the analysis focuses on observable trajectory from the quarter: a lean cost structure with meaningful free cash flow generation and a robust cash position. Investors should monitor: (1) defense budget cycles and timing of orders, (2) the pace of revenue recognition given the sizable current deferred revenue (~$21.0 million), (3) any changes in working capital dynamics that could impact quarterly cash flow cadence, and (4) potential changes in International and domestic demand for power electronics and related subsystems. If defense demand remains stable and project execution accelerates, a modest YoY revenue uptick could be supported by continued margin discipline and strong cash flow. Conversely, continued QoQ revenue volatility could pressure near-term top-line visibility and investor confidence. A prudent approach is to view ESP as a defensible, high-cash-generating micro-cap in the industrials/defense electronics space, with upside tied to execution and contract awards rather than broad market cycles.