Doctors were dismayed. Speech therapists tore out their hair. We thought the patient was cured, but this week, it suffered a relapse.
From time immemorial, the folks at American Science & Engineering
But no such luck.
Whereas CEO Anthony Fabiano almost visibly restrained himself from using the "L" word three months ago, this time his self-control lapsed, and we found three separate mentions of just how "lumpy" AS&E's business can be. Then again, if ever a quarter deserved the word, this was it:
- Revenue dropped 16% in comparison with last year's Q3.
- Per-share profits fell 43% to $0.64.
- Operating profit margins shed 660 basis points to end at 16.1%.
Investors reacted with horror to the news. They gave AS&E a few "lumps" of their own, selling off the stock to the tune of 2%. But they were dead wrong to do so. AS&E looks better than ever.
First off, even after its profit margins walked the plank, AS&E is still generating operating profit at a rate that puts X-ray rivals like L-3 Communications
What's more, these are high-quality profits. Free cash flow backs up nearly 90% of reported net income, and at $21.2 million generated year to date, that cash output has grown 18% since last year.
In addition, I have every confidence that AS&E will keep on growing. Consider that even as AS&E pushed $54.9 million in products out the door last quarter, it brought in more than $91.3 million in new orders. Backlog now stands at $223.9 million (a figure that does not even include $22.3 million in new unfunded contracts), so AS&E now has more than one full year's worth of revenue "in the bag."
The more AS&E brings in new orders faster than it fulfills old orders, the more we can expect revenue (and profit) to accelerate. And the more backlog AS&E collects, the more secure its future becomes.
This patient ain't just alive. It's set to thrive.