Bright Outlook for Merrimac Industries

On August 18, 2009, the GeoTeam® participated in Merrimac's (MRM) 2009 second quarter conference call. The Company reported solid financial results:

• Sales increased 8.0% to $8.1 million
• GAAP EPS from continuing operations increased to$0.23 from $0.01
• Geo calculated Fully-taxed adjusted non-GAAP EPS increased to $0.21 from $0.04

The GeoTeam® had two minor concerns going into the call:

1. Why the slight sequential decease in 2009 GAAP EPS from the first quarter?

Answer Per Conference Call: "We had certain non-recurring charges in the second quarter that will probably bring us down to a running rate on SG&A about $180,000 (close to $0.06 a share)."

2. Although Merrimac commentary in the press release was positive, the following comment leaves the door open to a wide degree of interpretation:

First half of fiscal year 2009 was very strong and with new orders meeting or exceeding our internal targets. We are well positioned to finish the second half of 2009 with profitable results."

A more specific outlook would have been ideal

Answer Per Conference Call: We are in pricing negotiations on large pieces of business that we expect to be booking in Q3 and Q4 respectively. If this timing holds up in the third quarter it will set a new quarterly booking record. For the year 2009 we expect that the book to bill ratio will exceed 1-to-1.

We are pleased with our six months 2009 operating results. We are clearly executing our new strategy well, as reflected in our financial highlights. As mentioned earlier, we anticipate our Q3 bookings will be a record and we also anticipate a strong Q3 operating performance.

Investors may start to take notice of Merimac's stock once this commentary filters through to the masses.

Disclosure: Long MRM