-- Revenue expected to increase in the third
quarter of 2022 driven by increasing order volume from
Servotronics' Advanced Technology Group --
ELMA,
N.Y., Aug. 15, 2022 /PRNewswire/ --
Servotronics, Inc. (NYSE American – SVT) a designer and
manufacturer of servo-control components and other advanced
technology products today reported financial results for the second
quarter ended June 30, 2022,
including 12% growth in revenue.
The company reported second quarter 2022 net loss of
$(810,000), or $(0.33) per diluted share. Second quarter 2021
net income of $1,186,000, or
$0.49 per diluted share, included a
$1.9 million or $0.62 per share contribution to earnings from
government-provided employee retention credits (ERC) related to the
Covid-19 pandemic.
"Following deep market declines resulting from the pandemic, we
believe we are in the early stages of a strong recovery in our
business related to the commercial aircraft market. This
resulted in another quarter of revenue growth, which we expect to
continue in the upcoming quarters," said Chief Executive Officer
William F. Farrell, Jr. "The
Servotronics team is focused on delivering on our growth and
improving processes while we explore new opportunities for current
products and new offerings. Servotronics is positioned very
well for expected top and bottom line growth in existing and new
markets. It is a great time to be part of the
team!"
The 12% revenue growth in the second quarter of 2022 was
attributed to the recovery of business within the commercial
aircraft market for the Advanced Technology Group (ATG) and a shift
in product mix toward higher-priced products at both the ATG and
the Consumer Products Group (CPG). Consolidated revenues grew
to $11.2 million in 2022 from
$10.0 million as compared to the
second quarter last year. ATG revenue grew to $8.7 million in 2022, increasing 11.8% from
$7.8 million last year, and CPG
revenue grew to $2.5 million in 2022,
increasing 12.6% from $2.2 million in
2021.
Growth in consolidated revenue is expected to continue in the
third quarter and second half of 2022 as compared to the same
periods last year. This will be driven primarily by
anticipated increases in ATG revenue and units shipped under
long-term prime contracts and subcontracts.
($000s,
unaudited)
|
2Q22
|
1Q22
|
FY22 to
date
|
4Q21
|
3Q21
|
2Q21
|
1Q21
|
FY21
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
ATG
|
$
8,748
|
$
9,168
|
$
17,916
|
$
8,182
|
$
8,449
|
$
7,823
|
$
7,223
|
$ 31,677
|
CPG
|
2,482
|
2,000
|
4,482
|
2,373
|
2,466
|
2,205
|
1,837
|
8,881
|
Consolidated
|
$
11,230
|
$
11,168
|
$
22,398
|
$
10,555
|
$
10,915
|
$
10,028
|
$
9,060
|
$
40,558
|
Gross Margin
$
|
|
|
|
|
|
|
|
|
ATG
|
$ 693
|
$
2,353
|
$
3,046
|
$
1,467
|
$
1,687
|
$
1,581
|
$
1,013
|
$
5,748
|
CPG
|
475
|
285
|
760
|
(116)
|
85
|
291
|
(20)
|
240
|
Consolidated
|
$
1,168
|
$
2,638
|
$
3,806
|
$
1,351
|
$
1,772
|
$
1,872
|
$
993
|
$
5,988
|
Gross Margin
%
|
|
|
|
|
|
|
|
|
ATG
|
7.9 %
|
25.7 %
|
17.0 %
|
17.9 %
|
20.0 %
|
20.2 %
|
14.0 %
|
18.1 %
|
CPG
|
19.1 %
|
14.3 %
|
17.0 %
|
-4.9 %
|
3.4 %
|
13.2 %
|
-1.1 %
|
2.7 %
|
Consolidated
|
10.4 %
|
23.6 %
|
17.0 %
|
12.8 %
|
16.2 %
|
18.7 %
|
11.0 %
|
14.8 %
|
Second quarter consolidated gross margin dropped to $1.2 million in 2022 from $1.9 in 2021. Gross margin as a percentage
of revenue dropped to 10.4% in 2022, declining from 18.7% in last
year's quarter. The primary contributors to the margin
reduction were the discontinuation of the New York State Shared Work Program in the
second half of 2021 and non-recurring expenses at the ATG which
included the acceleration of obsoleting inventory due to market
changes and a customer driven process change.
Lower second quarter 2022 selling, general and administrative
expenses (SG&A) were driven by lower legal and professional
fees at the ATG. Second quarter SG&A was $2.1 million in 2022, decreasing 6.2% from
$2.2 million last year. Second
quarter SG&A as a percentage of revenue improved to 18.4% in
2022 from 22.0% last year.
Servotronics second quarter operating loss was $0.9 million, an increase of $0.6 million from an operating loss of
$0.3 million last year, as current
year non-recurring expenses and the discontinuation of last year's
non-recurring benefits were not fully offset by an increase in
sales and a decrease in SG&A.
ABOUT SERVOTRONICS
The Company is composed of two groups – the Advanced Technology
Group (ATG) and the Consumer Products Group (CPG). The ATG
primarily designs, develops and manufactures servo controls and
other components for various commercial and government applications
(i.e., aircraft, jet engines, missiles, manufacturing equipment,
etc.). The CPG designs and manufactures cutlery, bayonets, pocket
knives, machetes and combat knives, survival, sporting,
agricultural knives and other edged products for both commercial
and government applications.
FORWARD-LOOKING STATEMENTS
This news release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. When used in this release, the words "project,"
"believe," "plan," "anticipate," "expect" and similar expressions
are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words.
Forward-looking statements involve numerous risks and uncertainties
which may cause the actual results of the Company to be materially
different from future results expressed or implied by such
forward-looking statements. There are a number of factors that will
influence the Company's future operations, including: uncertainties
in today's global economy, including political risks, adverse
changes in legal and regulatory environments, and difficulty in
predicting defense appropriations, the introduction of new
technologies and the impact of competitive products, the vitality
of the commercial aviation industry and its ability to purchase new
aircraft, the willingness and ability of the Company's customers to
fund long-term purchase programs, and market demand and acceptance
both for the Company's products and its customers' products which
incorporate Company-made components, the Company's ability to
accurately align capacity with demand, the availability of
financing and changes in interest rates, the outcome of pending and
potential litigation, the severity, magnitude and duration of the
COVID-19 pandemic, including impacts of the pandemic and of
businesses' and governments' responses to the pandemic on our
operations and personnel, and on commercial activity and demand
across our and our customers' businesses, and on global supply
chains, the ability of the Company to obtain and retain key
executives and employees and the additional risks discussed in the
Company's filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management's analysis
only as of the date hereof. The Company assumes no obligation to
update forward-looking statements, whether as a result of new
information, future events or otherwise.
SERVOTRONICS, INC. (SVT) IS LISTED ON NYSE
America
SERVOTRONICS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
($000's omitted except
share and per share data)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
|
(Audited)
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
5,108
|
|
$
|
9,546
|
Accounts receivable,
net
|
|
|
10,139
|
|
|
7,198
|
Inventories,
net
|
|
|
18,940
|
|
|
20,132
|
Prepaid income
taxes
|
|
|
112
|
|
|
792
|
Other current
assets
|
|
|
1,168
|
|
|
647
|
Total current
assets
|
|
|
35,467
|
|
|
38,315
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
10,355
|
|
|
10,557
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
884
|
|
|
900
|
|
|
|
|
|
|
|
Other non-current
assets
|
|
|
316
|
|
|
321
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
47,022
|
|
$
|
50,093
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt and finance leases
|
|
|
255
|
|
|
276
|
Accounts
payable
|
|
|
2,717
|
|
|
663
|
Accrued employee
compensation and benefits costs
|
|
|
1,586
|
|
|
1,759
|
Current portion of post
retirement obligation
|
|
|
136
|
|
|
136
|
Other accrued
liabilities
|
|
|
1,225
|
|
|
1,414
|
Total current
liabilities
|
|
|
5,919
|
|
|
4,248
|
Long-term
debt
|
|
|
381
|
|
|
4,750
|
Post retirement
obligation
|
|
|
5,730
|
|
|
5,729
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock, par value
$0.20; authorized 4,000,000 shares; issued 2,614,506
shares; outstanding 2,498,697 (2,491,667 - 2021) shares
|
|
|
523
|
|
|
523
|
Capital in excess of
par value
|
|
|
14,509
|
|
|
14,500
|
Retained
earnings
|
|
|
25,373
|
|
|
25,858
|
Accumulated other
comprehensive loss
|
|
|
(3,864)
|
|
|
(3,908)
|
Employee stock
ownership trust commitment
|
|
|
(258)
|
|
|
(258)
|
Treasury stock, at cost
115,809 (122,839 - 2021) shares
|
|
|
(1,291)
|
|
|
(1,349)
|
Total shareholders'
equity
|
|
|
34,992
|
|
|
35,366
|
|
|
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
47,022
|
|
$
|
50,093
|
SERVOTRONICS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
($000's omitted except
per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
11,230
|
|
$
|
10,028
|
|
$
|
22,398
|
|
$
|
19,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of goods sold,
inclusive of depreciation and amortization
|
|
|
10,062
|
|
|
8,156
|
|
|
18,592
|
|
|
16,223
|
Gross
margin
|
|
|
1,168
|
|
|
1,872
|
|
|
3,806
|
|
|
2,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
2,071
|
|
|
2,209
|
|
|
4,253
|
|
|
4,182
|
Total operating costs
and expenses
|
|
|
12,133
|
|
|
10,365
|
|
|
22,845
|
|
|
20,405
|
Operating
loss
|
|
|
(903)
|
|
|
(337)
|
|
|
(447)
|
|
|
(1,317)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expense)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income: employee
retention credit (ERC)
|
|
|
—
|
|
|
1,914
|
|
|
—
|
|
|
3,644
|
Interest
expense
|
|
|
(74)
|
|
|
(66)
|
|
|
(144)
|
|
|
(127)
|
Gain on sale of
equipment
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
Total other
(expense)/income, net
|
|
|
(74)
|
|
|
1,848
|
|
|
(118)
|
|
|
3,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income before
income taxes
|
|
|
(977)
|
|
|
1,511
|
|
|
(565)
|
|
|
2,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/provision
|
|
|
(167)
|
|
|
325
|
|
|
(80)
|
|
|
473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
|
$
|
(810)
|
|
$
|
1,186
|
|
$
|
(485)
|
|
$
|
1,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income per
share
|
|
$
|
(0.33)
|
|
$
|
0.49
|
|
$
|
(0.20)
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income per
share
|
|
$
|
(0.33)
|
|
$
|
0.49
|
|
$
|
(0.20)
|
|
$
|
0.72
|
SERVOTRONICS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's
omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
Cash flows related
to operating activities:
|
|
|
|
|
|
|
Net
(loss)/income
|
|
$
|
(485)
|
|
$
|
1,727
|
Adjustments to
reconcile net (loss)/income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
622
|
|
|
714
|
Stock based
compensation
|
|
|
67
|
|
|
56
|
Increase in allowance
doubtful accounts
|
|
|
—
|
|
|
9
|
Decrease in inventory
reserve
|
|
|
(79)
|
|
|
(19)
|
(Decrease)/increase in
warranty reserve
|
|
|
(15)
|
|
|
10
|
Gain on sale of
equipment
|
|
|
(26)
|
|
|
—
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(2,941)
|
|
|
(272)
|
Other receivables -
ERC
|
|
|
—
|
|
|
(999)
|
Inventories
|
|
|
1,271
|
|
|
2,118
|
Prepaid income
taxes
|
|
|
680
|
|
|
285
|
Other current
assets
|
|
|
(521)
|
|
|
(361)
|
Accounts
payable
|
|
|
2,054
|
|
|
(264)
|
Accrued employee
compensation and benefit costs
|
|
|
(173)
|
|
|
559
|
Post retirement
obligations
|
|
|
61
|
|
|
57
|
Other accrued
liabilities
|
|
|
(173)
|
|
|
246
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
|
342
|
|
|
3,866
|
|
|
|
|
|
|
|
Cash flows related
to investing activities:
|
|
|
|
|
|
|
Capital
expenditures - property, plant and equipment
|
|
|
(428)
|
|
|
(13)
|
Proceeds from sale of
assets
|
|
|
38
|
|
|
—
|
|
|
|
|
|
|
|
Net cash used by
investing activities
|
|
|
(390)
|
|
|
(13)
|
|
|
|
|
|
|
|
Cash flows related
to financing activities:
|
|
|
|
|
|
|
Principal payments on
long-term debt
|
|
|
(4,250)
|
|
|
(774)
|
Principal payments on
equipment financing lease obligations
|
|
|
(140)
|
|
|
(177)
|
Proceeds from equipment
note and equipment financing lease obligations
|
|
|
—
|
|
|
384
|
Proceeds from line of
credit
|
|
|
—
|
|
|
500
|
Purchase of treasury
shares
|
|
|
—
|
|
|
(81)
|
|
|
|
|
|
|
|
Net cash used by
financing activities
|
|
|
(4,390)
|
|
|
(148)
|
|
|
|
|
|
|
|
Net (decrease)/increase
in cash
|
|
|
(4,438)
|
|
|
3,705
|
|
|
|
|
|
|
|
Cash at beginning of
period
|
|
|
9,546
|
|
|
5,935
|
|
|
|
|
|
|
|
Cash at end of
period
|
|
$
|
5,108
|
|
$
|
9,640
|
SERVOTRONICS, INC. AND
SUBSIDIARIES
BUSINESS
SEGMENTS
($000's
omitted)
(Unaudited)
|
|
|
|
($000's omitted except per share data)
|
|
|
|
ATG
|
|
CPG
|
|
Consolidated
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
June
|
|
June
|
|
June
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Revenues from
unaffiliated customers
|
|
$
|
8,748
|
|
$
|
7,823
|
|
$
|
2,482
|
|
$
|
2,205
|
|
$
|
11,230
|
|
$
|
10,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold,
inclusive of depreciation and
amortization
|
|
|
(8,055)
|
|
|
(6,242)
|
|
|
(2,007)
|
|
|
(1,914)
|
|
|
(10,062)
|
|
|
(8,156)
|
|
Gross margin
|
|
|
693
|
|
|
1,581
|
|
|
475
|
|
|
291
|
|
|
1,168
|
|
|
1,872
|
|
Gross margin
%
|
|
|
7.9
|
%
|
|
20.2
|
%
|
|
19.1
|
%
|
|
13.2
|
%
|
|
10.4
|
%
|
|
18.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
(1,575)
|
|
|
(1,761)
|
|
|
(496)
|
|
|
(448)
|
|
|
(2,071)
|
|
|
(2,209)
|
|
Total operating costs
and expenses
|
|
|
(9,630)
|
|
|
(8,003)
|
|
|
(2,503)
|
|
|
(2,362)
|
|
|
(12,133)
|
|
|
(10,365)
|
|
Operating
loss
|
|
|
(882)
|
|
|
(180)
|
|
|
(21)
|
|
|
(157)
|
|
|
(903)
|
|
|
(337)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
employee retention credit (ERC)
|
|
|
—
|
|
|
1,573
|
|
|
—
|
|
|
341
|
|
|
—
|
|
|
1,914
|
|
Interest
expense
|
|
|
(74)
|
|
|
(65)
|
|
|
—
|
|
|
(1)
|
|
|
(74)
|
|
|
(66)
|
|
Total other
(expense)/income, net
|
|
|
(74)
|
|
|
1,508
|
|
|
—
|
|
|
340
|
|
|
(74)
|
|
|
1,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income before
income taxes
|
|
|
(956)
|
|
|
1,328
|
|
|
(21)
|
|
|
183
|
|
|
(977)
|
|
|
1,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/provision
|
|
|
(173)
|
|
|
285
|
|
|
6
|
|
|
40
|
|
|
(167)
|
|
|
325
|
|
Net
(loss)/income
|
|
$
|
(783)
|
|
$
|
1,043
|
|
$
|
(27)
|
|
$
|
143
|
|
$
|
(810)
|
|
$
|
1,186
|
|
Capital expenditures,
net
|
|
$
|
313
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(1)
|
|
$
|
313
|
|
$
|
(1)
|
|
View original
content:https://www.prnewswire.com/news-releases/servotronics-announces-financial-results-for-second-quarter-2022-including-12-growth-in-revenue-301605944.html
SOURCE Servotronics, Inc.