Revenue
Sales for the three months ended March 31, 2023, were $2.8 million, an increase of 15.2%, or $0.4 million, compared to $2.4 million for the three months ended March 31, 2022.
Sales to the defense/aerospace market decreased by $0.4 million or 47.5% to $0.4 million in the three months ended March 31, 2023, compared to $0.8 million for the three months ended March 31, 2022. The decrease in sales in the defense/aerospace market was due to timing of deliveries.
Process control and metrology (“PC&M”) sales were $2.2 million for the three months ended March 31, 2023, an increase of $0.8 million, or 59.0%, from $1.4 million for the three months ended March 31, 2022. The increase in demand, particularly in the semi-conductor industry, has contributed to the increase in sales in the PC&M market for the three months ended March 31, 2023, compared to the three months ended March 31, 2022.
Sales to customers in the laser systems market were $43,000 for the three months ended March 31, 2023, compared to $65,000 for the three months ended March 31, 2022. Products sold into this market segment largely consist of legacy materials for replacement units and small volume buys.
Sales to customers in the Scientific/R&D market were $0.1 million for each of the three months ended March 31, 2023 and 2022.
In each three-month period ended March 31, 2023 and 2022, three customers represented 10% or more of revenues.
The Company’s top five customers represented 79.8% of sales in the three-month period ended March 31, 2023, compared to 64.7% in the same period in 2022.
Orders booked during the first three months of 2023, totaled $1.8 million, compared to $7.4 million for the same period last year, a decrease of 75.7%. The decrease in bookings is due to extraordinary demand from several key customers in the period ended March 31, 2022, seeking to secure capacity through 2023. Order backlog at March 31, 2023 and 2022, was $19.5 million and $17.4 million, respectively. We anticipate shipping a significant portion of the present backlog during fiscal year 2023. However, our current backlog consists of orders with delivery schedules that extend beyond 12 months into the future.
Cost of Goods Sold
For the three months ended March 31, 2023 and 2022, cost of goods sold were $1.9 million and $1.7 million, or 68.6% and 68.8% of total revenues, respectively. Cost of goods sold increased as a result of increased sales.
Gross profit for each of the three months ended March 31, 2023 and 2022, was $0.9 million and $0.8 million. Gross profit was 31.4% of sales in the three months ended March 31, 2023, and 31.2% of sales in the three months ended March 31, 2022.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A” expenses) in the three months ended March 31, 2023, amounted to $0.8 million, or 26.7% of sales compared to $0.7 million, or 27.8% of sales, for the same period a year ago. The increase in SG&A expenses reflects an increase in personnel related costs, legal fees, travel, and sales related expenses.
Income from Operations
The Company had operating income of $0.1 million in each of the three months ended March 31, 2023 and 2022. Operating income reflects the increase in sales in the three months ended March 30, 2023, offset by an increase in cost of goods sold and SG&A expenses, compared to the same period last year.
Other Income (Expense)
Other income reflects the interest expense on the Company’s related party convertible notes and the financing of certain equipment purchases.