-- Revenue expected to increase in the fourth quarter of 2022
driven by increasing order volume from Servotronics' Advanced
Technology Group --
ELMA,
N.Y., Nov. 14, 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
quarter and nine months ended September 30,
2022.
The Company reported third quarter 2022 net loss of $(316,000), or $(0.13) per diluted share as compared to third
quarter 2021 net income of $3.2
million, or $1.34 per diluted
share. In the third quarter of 2021, the Company's net
income included non-recurring other income related to two COVID-19
government assistance programs as well as non-recurring expenses
related to legal settlement awards. See the Condensed Consolidated
Statements of Operations below and the Company's Quarterly Report
on Form 10-Q for additional information regarding these
non-recurring items.
Consolidated revenues were $11.0
million in the third quarter of 2022 compared to
$10.9 million for the same period
last year. The modest revenue growth in the third quarter of
2022 benefited from the recovery of business within the commercial
aircraft market for the Advanced Technology Group (ATG) as well as
a shift in product mix toward higher-priced products in that
segment. That growth was partially offset by reduced volumes
and lower-priced products sold by the Consumer Products Group
(CPG). For the quarter, ATG revenue grew to $8.8 million in 2022, increasing 4.4% from
$8.4 million last year, and CPG
revenue was $2.2 million in 2022,
decreasing 12.1% from $2.5 million in
2021.
Revenues increased $3.4 million,
or 11.3% in the first nine months of 2022 compared to the first
nine months of 2021. Net loss for the nine-month period ended
September 30, 2022 was $(801,000), or $(0.33) per diluted share as compared to net
income of $5.0 million, or
$2.06 per diluted share for the same
period last year.
"Our third quarter continued the improvements in performance in
2022" said Chief Executive Officer William F Farrell, Jr. "We
believe our recently-announced, updated strategy will allow us to
capitalize on increased customer demand and the strength of the
commercial aircraft market as well allow us to enter potential new
markets. As we grow and retain our group of dedicated team members,
we anticipate temporary pressure on margins, however, we believe
these investments are necessary now to support the growth we
anticipate as we head into 2023 and beyond. I am very optimistic
that Servotronics is well positioned for future success."
Growth in consolidated revenue is expected to continue in the
fourth quarter of 2022 and into 2023 as compared to the same
periods in prior years. This will be driven primarily by
anticipated increases in ATG revenue and units shipped under
long-term prime contracts and subcontracts.
($000s,
unaudited)
|
3Q22
|
2Q22
|
1Q22
|
FY22 to
date
|
4Q21
|
3Q21
|
2Q21
|
1Q21
|
FY21
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
ATG
|
$
8,823
|
$
8,748
|
$
9,168
|
$
26,739
|
$
8,182
|
$
8,449
|
$
7,823
|
$
7,223
|
$ 31,677
|
CPG
|
2,168
|
2,482
|
2,000
|
6,650
|
2,373
|
2,466
|
2,205
|
1,837
|
8,881
|
Consolidated
|
$
10,991
|
$
11,230
|
$
11,168
|
$
33,389
|
$
10,555
|
$
10,915
|
$
10,028
|
$
9,060
|
$
40,558
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
ATG
|
$ 850
|
$ 693
|
$
2,353
|
$
3,896
|
$
1,467
|
$
1,687
|
$
1,581
|
$
1,013
|
$
5,748
|
CPG
|
673
|
475
|
285
|
1,433
|
(116)
|
85
|
291
|
(20)
|
240
|
Consolidated
|
$
1,523
|
$
1,168
|
$
2,638
|
$
3,806
|
$
1,351
|
$
1,772
|
$
1,872
|
$
993
|
$
5,988
|
Gross Margin
%
|
|
|
|
|
|
|
|
|
|
ATG
|
9.6 %
|
7.9 %
|
25.7 %
|
14.6 %
|
17.9 %
|
20.0 %
|
20.2 %
|
14.0 %
|
18.1 %
|
CPG
|
31.0 %
|
19.1 %
|
14.3 %
|
21.5 %
|
-4.9 %
|
3.4 %
|
13.2 %
|
-1.1 %
|
2.7 %
|
Consolidated
|
13.9 %
|
10.4 %
|
23.6 %
|
16.0 %
|
12.8 %
|
16.2 %
|
18.7 %
|
11.0 %
|
14.8 %
|
Third quarter consolidated gross profit was $1.5 million in 2022 compared with $1.8 million in 2021. Gross profit as a
percentage of revenue was 13.9% in 2022, declining from 16.2% in
last year's quarter. The primary contributors to the gross
profit reduction were the discontinuation of the Company's
participation in the New York
State Shared Work Program which began in the first quarter
of 2021 and ended in the third quarter of 2021 as well as increased
compensation expense in third quarter 2022 to prepare for the
ramp-up of production at the ATG.
A reduction in third quarter 2022 selling, general and
administrative expenses (SG&A) was driven by lower legal fees
at the ATG and the elimination of non-recurring legal settlements
in 2021 for both segments. Third quarter SG&A was
$1.9 million in 2022, compared to
$4.6 million last year which included
$1.9 million of legal settlements.
Third quarter SG&A as a percentage of revenue improved to
17.7% in 2022 from 42.2% last year.
Servotronics third quarter operating loss was $(420,000) for 2022, an improvement of
$2.4 million from an operating loss
of $(2.8) million last year, as
current year non-recurring expenses and the discontinuation of last
year's non-recurring benefits were 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)
Unaudited
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
|
(Audited)
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
4,261
|
|
$
|
9,546
|
Accounts receivable,
net
|
|
|
11,412
|
|
|
7,198
|
Inventories,
net
|
|
|
18,852
|
|
|
20,132
|
Prepaid income
taxes
|
|
|
265
|
|
|
792
|
Other current
assets
|
|
|
904
|
|
|
647
|
Total current
assets
|
|
|
35,694
|
|
|
38,315
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
10,558
|
|
|
10,557
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
876
|
|
|
900
|
|
|
|
|
|
|
|
Other non-current
assets
|
|
|
316
|
|
|
321
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
47,444
|
|
$
|
50,093
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt and finance leases
|
|
$
|
240
|
|
$
|
276
|
Accounts
payable
|
|
|
3,274
|
|
|
663
|
Accrued employee
compensation and benefits costs
|
|
|
1,645
|
|
|
1,759
|
Current portion of post
retirement obligation
|
|
|
136
|
|
|
136
|
Other accrued
liabilities
|
|
|
1,317
|
|
|
1,414
|
Total current
liabilities
|
|
|
6,612
|
|
|
4,248
|
Long-term
debt
|
|
|
326
|
|
|
4,750
|
Post retirement
obligation
|
|
|
5,749
|
|
|
5,729
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock, par value
$0.20; authorized 4,000,000 shares; issued 2,614,506
shares; outstanding 2,453,406 (2,435,032 - 2021) shares
|
|
|
523
|
|
|
523
|
Capital in excess of
par value
|
|
|
14,535
|
|
|
14,500
|
Retained
earnings
|
|
|
25,057
|
|
|
25,858
|
Accumulated other
comprehensive loss
|
|
|
(3,842)
|
|
|
(3,908)
|
Employee stock
ownership trust commitment
|
|
|
(258)
|
|
|
(258)
|
Treasury stock, at cost
104,464 (122,839 - 2021) shares
|
|
|
(1,258)
|
|
|
(1,349)
|
Total shareholders'
equity
|
|
|
34,757
|
|
|
35,366
|
|
|
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
47,444
|
|
$
|
50,093
|
SERVOTRONICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
($000's omitted except
per share data)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
10,991
|
|
$
|
10,915
|
|
$
|
33,389
|
|
$
|
30,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of goods sold,
inclusive of depreciation and amortization
|
|
|
9,468
|
|
|
9,143
|
|
|
28,060
|
|
|
25,366
|
Gross profit
|
|
|
1,523
|
|
|
1,772
|
|
|
5,329
|
|
|
4,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
1,943
|
|
|
2,721
|
|
|
6,196
|
|
|
6,903
|
Legal settlement
awards
|
|
|
—
|
|
|
1,890
|
|
|
—
|
|
|
1,890
|
Total selling, general
and administrative
|
|
|
1,943
|
|
|
4,611
|
|
|
6,196
|
|
|
8,793
|
Total operating costs
and expenses
|
|
|
11,411
|
|
|
13,754
|
|
|
34,256
|
|
|
34,159
|
Operating loss
|
|
|
(420)
|
|
|
(2,839)
|
|
|
(867)
|
|
|
(4,156)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income: Employee
retention credit (ERC)
|
|
|
—
|
|
|
1,978
|
|
|
—
|
|
|
5,622
|
Other income: Paycheck
Protection Program loan forgiveness
|
|
|
—
|
|
|
4,000
|
|
|
—
|
|
|
4,000
|
Interest
expense
|
|
|
(50)
|
|
|
(5)
|
|
|
(194)
|
|
|
(132)
|
Gain on sale of
equipment
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
Total other (expense)/income,
net
|
|
|
(50)
|
|
|
5,973
|
|
|
(168)
|
|
|
9,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income before income
taxes
|
|
|
(470)
|
|
|
3,134
|
|
|
(1,035)
|
|
|
5,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/provision
|
|
|
(154)
|
|
|
(104)
|
|
|
(234)
|
|
|
369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
|
|
$
|
(316)
|
|
$
|
3,238
|
|
$
|
(801)
|
|
$
|
4,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income per
share
|
|
$
|
(0.13)
|
|
$
|
1.34
|
|
$
|
(0.33)
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income per
share
|
|
$
|
(0.13)
|
|
$
|
1.34
|
|
$
|
(0.33)
|
|
$
|
2.06
|
SERVOTRONICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($000's
omitted)
(Unaudited)
|
|
|
|
|
|
Nine Months Ended
|
|
|
September 30,
|
|
|
2022
|
|
2021
|
Cash flows related to operating
activities:
|
|
|
|
|
|
|
Net
(loss)/income
|
|
$
|
(801)
|
|
$
|
4,965
|
Adjustments to
reconcile net (loss)/income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Paycheck Protection
Program loan forgiveness
|
|
|
—
|
|
|
(4,000)
|
Depreciation and
amortization
|
|
|
916
|
|
|
1,043
|
Gain on disposal of
property
|
|
|
(26)
|
|
|
—
|
Stock based
compensation
|
|
|
126
|
|
|
81
|
Increase (decrease) in
doubtful accounts
|
|
|
9
|
|
|
(34)
|
Decrease in inventory
reserve
|
|
|
(111)
|
|
|
(75)
|
Increase in warranty
reserve
|
|
|
32
|
|
|
14
|
Deferred income
taxes
|
|
|
24
|
|
|
12
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(4,223)
|
|
|
(481)
|
Other receivables:
employee retention credit
|
|
|
—
|
|
|
(1,028)
|
Inventories
|
|
|
1,391
|
|
|
2,861
|
Prepaid income
taxes
|
|
|
527
|
|
|
18
|
Other current
assets
|
|
|
(257)
|
|
|
(242)
|
Accounts
payable
|
|
|
2,611
|
|
|
(43)
|
Accrued employee
compensation and benefit costs
|
|
|
(114)
|
|
|
509
|
Other accrued
liabilities
|
|
|
(128)
|
|
|
2,665
|
Postretirement
benefits
|
|
|
86
|
|
|
73
|
Net cash provided by operating
activities
|
|
|
62
|
|
|
6,338
|
|
|
|
|
|
|
|
Cash flows related to investing
activities:
|
|
|
|
|
|
|
Capital
expenditures - property, plant and equipment
|
|
|
(925)
|
|
|
(68)
|
Proceeds from sale of
assets
|
|
|
38
|
|
|
—
|
Net cash used by investing
activities
|
|
|
(887)
|
|
|
(68)
|
|
|
|
|
|
|
|
Cash flows related to financing
activities:
|
|
|
|
|
|
|
Principal payments on
long-term debt
|
|
|
(4,250)
|
|
|
(911)
|
Principal payments on
equipment financing lease obligations
|
|
|
(210)
|
|
|
(271)
|
Proceeds from equipment
note and equipment financing lease obligations
|
|
|
—
|
|
|
384
|
Proceeds from the line
of credit
|
|
|
—
|
|
|
500
|
Purchase of treasury
shares
|
|
|
—
|
|
|
(81)
|
|
|
|
|
|
|
|
Net cash used by financing
activities
|
|
|
(4,460)
|
|
|
(379)
|
|
|
|
|
|
|
|
Net (decrease)/increase
in cash
|
|
|
(5,285)
|
|
|
5,891
|
|
|
|
|
|
|
|
Cash at beginning of
period
|
|
|
9,546
|
|
|
5,935
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
4,261
|
|
$
|
11,826
|
View original
content:https://www.prnewswire.com/news-releases/servotronics-announces-financial-results-for-third-quarter-2022-301677608.html
SOURCE Servotronics, Inc.