- Defence company Electro Optic Systems (EOS) has adjusted its profit guidance for FY20 as $20 million worth of deliveries miss December revenue cutoffs
- EOS had projected earnings before interest and taxes (EBIT) of $20 million to $30 million for the year
- However, international delivery issues mean 12 shipments will not make due dates and revenue will now be shifted to FY21
- The company says the heavy skew towards December shipments has made profits unusually dependent on the final weeks of the year
- EOS says cash flow for FY20 and FY21 is unaffected by these events
- Electro Optic Systems shares have taken a hit on the back of the announcement, dropping 5.05 per cent and trading at $6.01 cents each
Electro Optic Systems (EOS) has adjusted its profit guidance for FY20 as $20 million worth of deliveries miss December revenue cutoffs.
EOS’ $20 million to $30 million of forecasted earnings before interest and taxes (EBIT) will be heavily impacted by the delayed deliveries, with the company estimating $20 million worth of revenue will be omitted from this year’s earnings.
The disruption was allegedly caused by international air freight bottlenecks and import license issues among foreign government customers.
The company had reaffirmed its initial EBIT via a half-yearly company update and despite a tumultuous COVID-19 period, advised product delivery had recovered in October and would resume at an accelerated rate.
A company announcement indicates this event would be “unremarkable” any other year and that earnings are unusually dependent on Q4 revenue for the financial year ended December 2020.
A fluctuating USD and AUD currency exchange have also contributed to the adjustment according to EOS.
A company statement indicates the delays and associated revenue deferral does not affect any prior cash flow assumptions.
Delivery costs have already been incurred however the anticipated profits will be shifted into Q1 2021 earnings.
EOS securities have taken a hit on the back of the announcement, dropping 5.05 per cent and trading at $6.01 cents each at 10:51 AEDT.