As we approach mid-Nov and the 1st qtr. earnings release I wanted to see what we were up against when the new figures are compared to the previous year's 1st qtr. It is going to be a battle because we are up against a $5 million plus qtr. and an .03 cent profit per share for fiscal '07. I feel confident the entire year will have good results but I have my fingers crossed on those first qtr. comparisons.
At this stage I find it very difficult to make a realistic assumption concerning earnings: Sales, margins and expenses were very volatile for the last quarters. I just can�t find a trend! Tax expenses / profits also have a big impact on the bottomline. They vary a lot. So I follow gross profit now and, with the exception of 07Q2 this is above 1800 for some time now. Expenses were steadily increasing but this reversed in the last quarter. I trust that this is no fluke. We also know that interest expenses have peaked in the last quarter and that they will have some extra expenses by moving from one location to the other. With good management this should have NO influence on sales. (IMO customers should not experience delays because the company is moving...) So I expect gross profits to stay above 1800 and expenses to be flat compared to last quarter. This should give +/- EPS 0.02 JMHO of course
I really don't measure which one is the most important because all those factors are so relevant. But the EPS and Rev figures always make the black ink (headlines) so I just followd suit. Regarding the warranty issue I see little chance of anything surprising since the replacement product just began shipping in late March and it will take some months before the results can be measured. I forget whether Mark said six or nine months for the new product to prove it's efficiency but if it is only six months then we will hear something in the Nov. CC and it should be good news. Regarding margins, don't forget that as the sales from Astromec continue to grow it serves as a drag on margins since their product margins are much lower. Don't forget we earned five cents for all of last year and three cents of that came from the qtr. we will be up against plus the move-in to the new faciity which is occurring right now surely will cause some interruptions. I am very bullish on the full year but most of that enthusiasm is due to what I believe will be a strong second half.