Astrotech Releases Terrible Earnings, Faces Delisting

| About: Astrotech Corporation (ASTC)

Astrotech Corp. (NASDAQ:ASTC) released earnings today, Nov. 14, that highlight the serious financial situation in which the company finds itself. Unless you believe that it will be able to gain significant traction with its Spacetech division over the next six quarters, I would not own shares in Astrotech.

Three Months Ended

Sept. 30,







Cost of revenue



Gross profit



Gross Profit Margin



Operating expenses:

Selling, general and administrative



Research and development



Total operating expenses



Loss from operations



Interest and other expense, net



Loss before income taxes



Income tax expense



Net loss



Less: Net loss attributable to noncontrolling interest*



Net loss attributable to Astrotech Corporation



Net loss per share attributable to Astrotech Corporation, basic



Weighted average common shares outstanding, basic



Net loss per share attributable to Astrotech Corporation, diluted



Weighted average common shares outstanding, diluted



Over the last year, gross margins have decreased from 40% to 20%. This means that even though the company increased sales by ~25%, its profit decreased by nearly 40%. The company's net losses more than doubled from a year ago.

If that wasn't bad enough, the company's diluted share count also increased by nearly 5%. (Since Sept. 30, the company has continued to increase its shares outstanding and as of Nov. 9 had 19,486,727 shares outstanding.)

It's important to note that Astrotech has been investing in its Spacetech division in order to fuel further growth, while its primary ASO division has remained fairly stagnant. If Astrotech had closed its Spacetech division it would have saved ~$1 million this last quarter.

The question Astrotech investors need to ask themselves is if they truly believe that the Spacetech product developments will be successful and whether Astrotech will be able to successfully market them before running out of cash. Currently, the company has $5 million as of quarter end. At the current burn rate the company has five to six quarters before it runs out of cash. It will likely run into covenant issues on its term loan even sooner. As of the end of the quarter the company no longer has a revolving credit facility on which to draw.

To make matters worse, the company may face further difficulty raising additional equity too due to a delisting notification it received on Nov. 13 from Nasdaq. It indicated that the minimum bid price of its common stock had fallen below $1.00 for 30 consecutive trading days and that Astrotech is therefore not in compliance with Nasdaq Listing Rule 5550(a)(2).

In my opinion, shareholders should be prepared for the potential of further dilution and/or a bankruptcy filing in the not-so-distant future.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: As with all investing, micro-cap investing involves risks. Please do your own due diligence and do not solely rely on articles like this.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Tagged: , , , Aerospace/Defense Products & Services
Problem with this article? Please tell us. Disagree with this article? .