ELMA, N.Y., Aug. 13, 2021 /PRNewswire/ -- Servotronics,
Inc. (NYSE American – SVT) a designer and manufacturer of
servo-control components and other advanced technology products
announced today the results of its operations for the quarter ended
June 30, 2021.
In the second quarter of 2021, Servotronics reported a net
income of $1,186,000 (or $0.49 per share Basic and Diluted) compared to
net income of $965,000 (or
$0.41 per share Basic and
$0.40 Diluted) for the comparable
period ended June 30, 2020.
Revenues for the quarter were $10,028,000, a 25.7% decrease compared with
$13,504,000 in the second quarter of
2020. The decline in revenue is due to lower sales volume
partially offset by a favorable price and mix of units shipped at
the ATG as customer orders have been delayed to future periods due
to the COVID-19 pandemic. Additionally, a slight decline in
revenue by the CPG is due to lower sales volume offset by a
favorable price and mix of units shipped.
The push-out of orders and reduction in units shipped at the ATG
led to the underutilization of production resources and the weak
absorption of manufacturing overhead during the second quarter of
2021 resulting in a lower gross margin of $1,581,000 or (42.2)% slightly offset by an
increase in gross margin to $291,000
or 2.5% at the CPG due to improving utilization of production
resources. On a consolidated basis the Company had lower
gross margin of $1,872,000 or (38.0)%
as compared to gross margin of $3,020,000 for the same period in 2020.
Selling, general and administrative expenses increased
approximately $461,000 or (26.4)% for
the three-month period ended June 30,
2021 compared to the same period in 2020. This is
primarily due to increased legal fees and professional fees.
As a percentage of revenue, these operating expenses were 22.0%
compared to 12.9% for the same period in 2020.
As permitted under the Coronavirus Aid, Relief, and Economic
Security Act, the Company recognized a $1,914,000 employee retention credit (ERC) during
the quarter ended June 30,
2021. The ERC is a refundable tax credit against certain
employment taxes and is recognized in other income. Operating
income (loss), which does not include the ERC and interest expense,
was ($337,000) for the quarter ended
June 30, 2021 compared to operating
income of $1,272,000 for the
comparable period ended June 20,
2020. Due to the ERC, net income at the ATG and CPG was
higher by approximately $25,000 and
$196,000, respectively or
$221,000 on a consolidated basis.
In April 2020, the Company applied
for and received a loan in the principal amount of $4,000,000 as part of the Paycheck Protection
Program (PPP) administered by the Small Business Administration
(SBA). On August 4, 2021, the Company
submitted a PPP Loan forgiveness application to Bank of America, NA
(the "Lender"). The Lender has 60 days to review and process
the forgiveness application. Upon completion of the Lender's
review, the Lender is required to notify the SBA. The SBA has
90 days from receipt of the forgiveness application to approve or
reject the application. As of the date of our filing, the
Company has not received any determination of its
application. No assurance can be given that we will obtain
forgiveness of the PPP Loan in whole or in part.
"The Company continued to experience reduced economic activity
in the second quarter compared to pre-pandemic levels" said
James C. Takacs, Chief Operating
Officer. "While we recognize we are operating in an ever-changing
environment, we believe we are starting to see encouraging signs of
improvement. I congratulate our entire team for not only responding
to the challenges we faced over the past few quarters but also for
positioning the Company for future growth as the environment
stabilizes."
The Company is composed of two groups – the ATG and the 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
Certain paragraphs of this release contain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
such as those pertaining to the Company's PPP Loan forgiveness
application and the Company's inability to predict the extent to
which the COVID-19 pandemic and related impacts will continue to
adversely impact our business operations. Forward-looking
statements involve numerous risks and uncertainties. The Company
derives a material portion of its revenue from fixed price
contracts with agencies of the U.S. Government or their prime
contractors. The following factors, among others, could cause
actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
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 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
American
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SOURCE Servotronics, Inc.