-- Continued market demand and operating performance results in year-over-year revenue and profit growth --
ELMA, N.Y., Aug. 8, 2024 /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, 2024.
Servotronics, Inc. (PRNewsfoto/Servotronics, Inc.)
Highlights for the second quarter financial results include the following:
Consolidated revenues were $12.3 million, up 15.3% from $10.7 million in the second quarter of 2023. Revenue growth resulted from higher volumes driven by strong customer demand and improved pricing, partially offset by unfavorable sales mix.
Gross profit increased to $3.1 million or 25.0% of revenue in the second quarter, up from $1.6 million, or 14.6% of revenue in the second quarter of 2023. The improvement in gross profit was driven primarily by increased volume and operational efficiencies.
Selling, general and administrative (SG&A) expenses decreased $0.9 million to $2.4 million in the second quarter of 2024 compared to $3.3 million in the second quarter of 2023. The decrease in SG&A was primarily driven by lower professional and legal costs resulting from elevated non-recurring costs in the prior year related to bank refinancing, proxy contest and corporate restructuring.
Operating income for the quarter was $0.7 million or 5.4% of revenue compared to an operating loss of $1.7 million in the second quarter of 2023, resulted from the gross profit growth driven by volume and operational improvements combined with lower SG&A costs.
Net income from continuing operations was $0.6 million, or $0.22 per diluted share in the second quarter of 2024, compared to a net loss from continuing operations of ($3.3) million, or ($1.33) per diluted share in the second quarter of 2023.
"I am very pleased with our second quarter results and our rebound from the slow start to the year. I am particularly proud of our continuous improvement efforts that have directly impacted our strong top-line growth, accelerated margins, and favorable operating income as we continue to properly manage our operating costs," said Chief Executive Officer William F. Farrell, Jr.
Second Quarter Business Results
Three Months Ended June 30,
(dollars in thousands)
2024
2023
2024 vs 2023
%
%
$
%
Dollars
Sales
Dollars
Sales
Change
Change
Revenues
$ 12,273
100.0 %
$ 10,649
100.0 %
$ 1,624
15.3 %
Cost of goods sold
9,210
75.0 %
9,092
85.4 %
118
1.3 %
Gross Profit
3,063
25.0 %
1,557
14.6 %
1,506
96.7 %
Selling, general and administrative
2,397
19.5 %
3,269
30.7 %
(872)
(26.7) %
Operating income (loss)
666
5.4 %
(1,712)
(16.1) %
2,378
138.9 %
Other expenses
98
0.8 %
89
0.8 %
9
10.1 %
Income (loss) before income taxes
568
4.6 %
(1,801)
(16.9) %
2,369
131.5 %
Income (loss) from continuing operations
-
0.0 %
1,479
13.9 %
(1,479)
(100.0) %
$ 568
4.6 %
$ (3,280)
(30.8) %
$ 3,848
117.3 %
Servotronics' Chief Financial Officer Robert A. Fraass commented, "The growth in revenues and profitability combined with our effective working capital management resulted in a dramatic improvement in cash flow from operations in the first six months of the year. Increased cash flow and debt reduction provide us the liquidity to continue investing in our growth. As we evaluate our strategic initiatives, we will continue to invest capital where it has the greatest impact for our customers and shareholders."
The Company's operating cash flows increased by approximately $6.6 million compared to the same period in 2023 primarily driven by an increase in net income and reductions in accounts receivable, partially offset by increases in inventory to support volume growth.
Mr. Farrell concluded, "The work we have done to position Servotronics for long-term, sustainable growth is now showing the results we anticipated. Looking at the remainder of the year, we expect strong demand in our key end markets. As we continue to execute on our long-term strategic goals, we believe that our commitment to meeting the needs of customers will result in enhanced shareholder value."
ABOUT SERVOTRONICS
Servotronics designs, develops and manufactures servo controls and other components for various commercial and government applications including aircraft, jet engines, missiles, manufacturing equipment and other aerospace applications at its operating facilities in Elma and Franklinville, New York.
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 report, 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, 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 CONSOLIDATED BALANCE SHEETS ($000's omitted except share and per share data)
June 30,
December 31,
2024
2023
(Unaudited)
(Audited)
Current assets:
Cash
$
119
$
95
Cash, restricted
150
150
Accounts receivable, net
10,706
12,065
Inventories, net
15,830
14,198
Prepaid and other current assets
945
1,507
Assets related to discontinued operation
1,480
1,552
Total current assets
29,230
29,567
Property, plant and equipment, net
7,082
6,978
Other non-current assets
42
42
Total Assets
$
36,354
$
36,587
Liabilities and Shareholders' Equity
Current liabilities:
Line of credit
$
1,473
$
2,103
Current portion of post retirement obligation
97
97
Accounts payable
2,432
2,061
Accrued employee compensation and benefits costs
989
1,003
Accrued warranty
449
542
Other accrued liabilities
1,827
1,909
Liabilities related to discontinued operation
24
213
Total current liabilities
7,291
7,928
Post retirement obligation
4,202
4,165
Shareholders' equity:
Common stock, par value $0.20; authorized 4,000,000 shares; issued 2,629,052 shares; outstanding 2,531,175 (2,514,775 - 2023) shares
525
525
Capital in excess of par value
14,762
14,617
Retained earnings
13,127
12,954
Accumulated other comprehensive loss
(2,350)
(2,389)
Employee stock ownership trust commitment
(56)
(56)
Treasury stock, at cost 71,125 (87,525 - 2023) shares
(1,147)
(1,157)
Total shareholders' equity
24,861
24,494
Total Liabilities and Shareholders' Equity
$
36,354
$
36,587
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($000's omitted except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue
$
12,273
$
10,649
$
22,719
$
19,709
Costs of goods sold, inclusive of depreciation and amortization
9,210
9,092
17,921
17,168
Gross profit
3,063
1,557
4,798
2,541
Operating expenses
Selling, general and administrative
2,397
3,269
4,415
5,444
Operating income (loss)
666
(1,712)
383
(2,903)
Other expense
Interest & other expense, net
98
89
181
142
Total other expense
98
89
181
142
Income (loss) from continuing operations before income taxes
568
(1,801)
202
(3,045)
Income taxes
-
1,479
-
1,063
Income (loss) from continuing operations, net of tax
568
(3,280)
202
(4,108)
Loss from discontinued operation before income taxes
(12)
(6,220)
(29)
(6,940)
Income taxes
-
-
-
-
Loss from discontinued operation, net of tax (Note 2)
(12)
(6,220)
(29)
(6,940)
Net income (loss)
$
556
$
(9,500)
$
173
$
(11,048)
Basic earnings (loss) per share:
Continuing operations
$
0.23
$
(1.33)
$
0.08
$
(1.67)
Discontinued operation
-
(2.53)
(0.01)
(2.82)
Basic earnings (loss) per share
$
0.23
$
(3.86)
$
0.07
$
(4.49)
Diluted earnings (loss) per share:
Continuing operations
$
0.22
$
(1.33)
$
0.08
$
(1.67)
Discontinued operation
-
(2.53)
(0.01)
(2.82)
Diluted earnings (loss) per share
$
0.22
$
(3.86)
$
0.07
$
(4.49)
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ($000's omitted)
Six Months Ended
June 30,
2024
2023
Cash flows related to operating activities:
Income (loss) from continuing operations
$
202
$
(4,108)
Adjustments to reconcile income (loss) from continuing operations to net cash provided (used) by operating activities:
Depreciation and amortization
543
517
Stock based compensation
176
74
Allowance for credit losses
(18)
(25)
Inventory reserve
139
14
Warranty reserve
(93)
(2)
Deferred income taxes
-
1,072
Changes in assets and liabilities providing (using) cash:
Accounts receivable
1,377
(2,663)
Inventories
(1,771)
(826)
Prepaid and other current assets
562
(520)
Accounts payable
371
1,064
Accrued employee compensation and benefit costs
25
301
Post retirement obligations
37
66
Other accrued liabilities
(82)
(105)
Net cash provided (used) by operating activities from continuing operations
1,468
(5,141)
Cash flows related to investing activities:
Purchase of property, plant and equipment
(647)
(403)
Net cash used by investing activities from continuing operations
(647)
(403)
Cash flows related to financing activities:
(Payments on) proceeds from line of credit
(630)
3,697
Purchase of treasury shares
(21)
-
Principal payments on finance lease obligations
-
(501)
Net cash (used) provided by financing activities from continuing operations
(651)
3,196
Discontinued Operation
Cash used by operating activities
(146)
(568)
Net cash used by operating activities from discontinued operation
(146)
(568)
Net increase (decrease) in cash and restricted cash
