ST. LOUIS -- Top 35 EMS company LaBarge Inc. reported third-quarter net sales of $72.2 million, down 4% year-over-year. Not including the $13.6 million contributed by the Pensar acquisition, sales were down 21%.

Net earnings were $3.8 million, down from $4.3 million last year. The Pensar acquisition operated at breakeven in the period ended March 29, the company said.

The company reported strength in the defense and medical market sectors. 

Gross margin was 20.3%, up from 19.9% a year ago and 15% sequentially.  The company attributed the increase to improved operating efficiencies, internal cost reductions and favorable product mix.

Net cash flow from operating activities was $12.2 million, versus a loss of $46,000 in the fiscal 2008 third quarter.

Shipments to customers in the defense, natural resources, industrial and medical market sectors comprised 91% of LaBarge’s third-quarter revenues. Defense made up 45% of net sales, natural resources 20%, industrial 16%, medical 11%, and commercial aerospace 3%.

“The [Pensar] acquisition added significant new customers and greatly expands LaBarge's presence in the medical and industrial market sectors," said Craig LaBarge, chief executive and president.

Backlogs at quarter's end were $185.6 million, down from $238 million a year ago.

The company said it has "adjusted" its manufacturing workforce to be in line with lower production requirements and has implemented a 5% reduction in base salary for executive officers and a wage freeze for all other positions, among other compensation measures.

“We anticipate that shipments on defense and medical programs will remain strong during the fiscal 2009 fourth quarter, but we are continuing to see further weakness in the industrial and natural resources market sectors," LaBarge said. "Based on the visibility we have today, we expect fiscal 2009 fourth-quarter net sales, gross margin and earnings will be lower than those in the current-year third quarter,”

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