Arotech Corporation (NASDAQ: ARTX)’s Backlog Shrinks In 1Q2016

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Arotech Corporation (NASDAQ: ARTX) is looking to continued operational controls to improve earnings. For 1Q2016, the company reported that backlog slid relative to a year ago and the previous quarter. But it inked several contracts at the end of the quarter. Arotech is hoping to capitalize on the robust demand for energy efficient military systems.

What transpired in 1Q2016?

Arotech Corporation (NASDAQ: ARTX) generated revenue of $25.4 million in 1Q2016, a slight jump from $24.2 million in the corresponding quarter a year ago, but below $27.4 million in the previous quarter. The YoY topline increase was primarily attributed to the growth in Power Systems Divisions. To put it in perspective, it is that division that Arotech is hoping will yield gains as military buyers shift to energy efficient systems.

Coming to the bottom-line, Arotech posted adjusted EPS of $0.03, just at the same level as a year ago, but only half of the prior quarter’s $0.06.

Backlog shrinks

At the end of 1Q2016, Arotech Corporation (NASDAQ: ARTX)’s backlog orders were only $57.7 million, down from $63.4 million in the like quarter a year ago. Backlog at the end of the previous quarter was $63 million.

Despite the YoY and QoQ decline in backlog orders, management seemed to have calmed investors with revelations that the company was awarded a number of contracts just when the quarter was closing. For example, there was the $40 million contract from the U.S. Department of State that relates to MILO Range Training Systems. There was another $2.6 million contract from the U.S. Marine Corps for MEHPS systems.

Reaping the benefits of cost controls

According to Arotech’s CEO, Steven Esses, the 1Q2016 results somewhat demonstrated that their operational efficiency efforts are on the right track.

Financials

Arotech Corporation (NASDAQ: ARTX) finished 1Q2016 with cash and cash equivalents of $11.5 million, up from $10.7 million in the previous quarter. The company also strengthened its balance sheet during the latest quarter as total debt dropped sharply to $15.3 million from $20.3 million in the prior quarter.

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