SCHAUMBURG, IL -- Sparton Corp.'s EMS sales fell 62% in its fiscal third quarter ended March 31 as the company continued to lose customers in that business. For the quarter, EMS sales were $13.1 million, Sparton reported today, "reflecting," said Sparton president and CEO Cary Wood, "the full disengagement from several significant customer contracts within our EMS business unit" during the past three quarters.

The segment's operating loss was $426,000, down from an operating profit of $87,000. The company began breaking out EMS sales in the September quarter last year.

Overall net sales fell 29% year-over-year to $38.6 million, as an 87% jump in Defense & Security Systems sales was offset in part by lower medical and EMS sales.

The company reported third-quarter net income of $700,000, reversing a net loss of $800,000 in the third quarter of fiscal 2009. It marks the company's third consecutive profitable quarter.

Gross profit was $5.5 million, up $800,000 from 2009. The company completed most of its restructuring activities and took charges of $200,000.

"Our DSS business unit continues to excel, experiencing significant growth over the prior year quarter while continuing to achieve improved margins," Wood said. "Although we experienced an expected drop in sales to foreign governments compared to the first two quarters of fiscal 2010, we continued to experience minimal rework costs resulting from improvements in operating performance leading to successful sonobuoy drop tests.

"Performance within our EMS business unit continues to reflect the effects of the significant changes implemented during the past 18 months while maintaining consistent margin levels with the first two quarters. Through our continued implementation of Lean Enterprise, we are confident that we will ultimately be successful in increasing our EMS gross margins to acceptable levels.”

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