Tuesday, April 21, 2015 8:43:11 PM
The change is attributable to an increase in sales in the Machine Sales Group. Sales increased by 48.73% in the Machine Sales Group and decreased by 6.47% in the Precision Manufacturing Group.
Our Machine Sales Group primarily sells pre-owned CNC machinery manufactured by Mori Seiki. The average sale price of the machinery changes based on the equipment that is available to purchase in the market place and the prevailing market conditions that affect the price that equipment can be sold for. The average sale price of the 105 pieces of equipment sold in the nine months ended March 31, 2014 was $51,373 compared to the comparable period in fiscal 2013 of 58 pieces of equipment sold at an average sale price of $62,347. In addition, service work for the nine months ended March 31, 2014 was $232,709 compared to the comparable period in fiscal 2013 of $48,131.
Market conditions reflect not only the price that equipment can be purchased for but also the price at which that equipment may be sold. During good economic times when the business climate is improving, particularly in areas such as aerospace, the demand for equipment can result in a change in the purchase price. However, the need for that equipment by customers is generally reflected in the sale price. Therefore, as a general rule margins are reasonably consistent even though average sale prices may change. As a result, we do not expect future results to be materially impacted by these conditions.
The decrease in sales in the Precision Manufacturing Group is the result of a net decrease of $184,545 in sales of precision metal component parts from Goodrich Aerostructures in the nine months ended March 31, 2014.
Gross Margin
Gross profit increased by 73.66% in fiscal period ended March 31, 2014 compared to the comparable period in fiscal 2013. The gross profit for the Machine Sales Group increased by 107.54% due to an increase in the volume of machines sold during this nine month period. The increase within the Precision Manufacturing Group of 45.46% resulted from lower costs of goods sold as a result of an improvement in work flow in the scheduling of work in the factory. Management had recognized this weakness previously and has corrected it, thereby achieving greater productivity in the production area.
Selling, General & Administrative
Selling, general and administrative costs decreased by $836,218 to $1,875,106 for the nine month period ended March 31, 2014 compared to $2,711,324 for the nine months ended March 31, 2013. The change is primarily due to the write back of the overprovision for rent expense and a reduction of legal and professional expenses due to lower costs for investor relations and financing costs.
AIMO GLTA
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