Q3 revenue rose 9.2% to $7.7 million and pretax income increased 16% to $1.8 million, as Defense Engineering Services and Acoustic Sensors offset weaker Marine Technology sales. Defense Engineering revenue surged 68.3% to $2.7 million, supported by U.S. sustainment, repair and spare-parts activity; year-to-date spare-parts orders exceeded $2.4 million. Marine Technology revenue fell 15.2% amid Middle East and Asian market disruptions, though rental revenue more than doubled.
The company also advanced DAVD and Nano programs, ended the quarter with $31.7 million in cash and no debt, and moved to positive retained earnings. Coda Octopus Group (NASDAQ:CODA) reported higher fiscal third-quarter revenue and pretax income, as growth in its defense engineering and acoustic businesses offset a decline in marine technology sales tied to geopolitical disruption in the Middle East and parts of Asia. Total revenue for the quarter ended July 31 was $7.7 million, up 9.2% from $7.1 million a year earlier.
Pretax income rose 16% to $1.8 million, while net income was $1.4 million, or $0.12 per diluted share, compared with $1.3 million, or $0.11 per diluted share, in the prior-year quarter. → Kroger's Textbook Entry for Buy-and-Hold Investors "While geopolitical instability in the Middle East adversely affected customer activity in certain international markets and resulted in lower revenue within our Marine Technology business, the strength of our Defense Engineering Services and Acoustic Sensors and Materials businesses enabled us to deliver growth in both revenue and pre-tax income," Chair and CEO Annmarie Gayle said. Marine Technology, which accounted for 43.8% of consolidated revenue in the quarter, generated $3.4 million in revenue, down 15.2% from $4 million a year earlier. Hardware revenue fell 17.8% to $2.3 million, which Gayle attributed primarily to reduced customer activity in the Middle East and parts of Asia. → AST SpaceMobile Looks to Extend Its 30-Day FCC Satellite Testing Window Rental revenue partly offset the hardware decline, rising 131.1% to about $700,000 from about $300,000 in the prior-year period as rental asset utilization improved.
The higher rental contribution and lower commission costs associated with changes in sales geography helped Marine Technology gross margin increase to 78.5% from 77%. During the question-and-answer session, Gayle said the company did not see structural changes in its Middle East and Asian marine markets, but rather deferred opportunities amid uncertainty. She cited offshore project disruption, security concerns, personnel safety issues and customer supply-chain challenges. → MarketBeat Week in Review – 09/07 - 09/11 "We continue to see opportunities, we continue to have visibility of what customers are doing," Gayle said.
"But the fact still remains that it is very challenging offshore to really run a project." Defense Engineering Services revenue increased 68.3% to $2.7 million, from $1.6 million in the prior-year quarter. The business benefited from greater activity and funding across established defense programs, including higher activity at the company's U.K. defense operations. In the U.S., the company reported stronger demand for repairs and spare parts supporting long-running sustainment programs.
Gayle said one of Coda Octopus's prime contractor customers received a multiyear U.S. government repair and sustainment award during the quarter, leading to increased repair activity and additional subcontract opportunities for the company. Year-to-date orders for spare parts supporting sustainment systems exceeded $2.4 million, according to management. Defense Engineering Services also is supporting several prime contractors developing rugged, deployable radio-frequency electronic-warfare systems for unmanned systems, helicopters, airborne pods and ground vehicles.
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