Solitron Devices Reports 32% Decline in Net Sales, Despite 37% Increase in Net Bookings

Solitron Devices, Inc. reported a significant decline in financial performance for the three months ended May 31, 2025, with net sales decreasing by 32% to $2.7 million, down from $3.97 million in the same period last year. The decrease in revenue was attributed to a lower backlog and delays in fulfilling large orders. Despite the drop in sales, net bookings increased by 37% to $2.8 million, indicating a potential recovery in future sales as backlog rose by 94% to $18.26 million compared to $9.41 million a year earlier.

The company's cost of sales increased slightly to $2.31 million, resulting in a gross profit of $390,000, which is a significant decrease from $1.68 million in the prior year. The gross profit margin fell to 14% from 42%, primarily due to the delays in order fulfillment. Operating income turned into a loss of $378,000, contrasting with an operating income of $792,000 in the same quarter of the previous year. Selling, general, and administrative expenses decreased to $768,000, but represented a higher percentage of net sales at 28%, compared to 22% in the prior year.

In terms of operational developments, Solitron's inventory as of May 31, 2025, totaled $8.55 million, with a net value of $3.59 million after reserves. The company shipped 15,035 units during the quarter, down from 22,777 units in the same period last year. The decrease in unit shipments reflects the challenges faced in meeting customer demand. The company continues to rely heavily on contracts with the U.S. government, which accounted for approximately 53% of sales in both the current and prior year.

Solitron's financial position remains stable, with cash and cash equivalents of approximately $2.57 million as of May 31, 2025, down from $4.1 million at the end of February 2025. The company anticipates that its cash from operations will be sufficient to meet its capital expenditure needs of approximately $250,000 over the next twelve months. Looking ahead, Solitron plans to explore acquisitions and additional product lines while considering share repurchases, contingent on market conditions and corporate liquidity requirements. The company remains cautious about potential risks, including customer concentration and market conditions that could impact future performance.