ELMA, N.Y., Nov. 15, 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
September 30, 2021.
In the third quarter of 2021, Servotronics reported a net income
of $3,238,000 (or $1.34 per share Basic and Diluted) compared to a
net loss of $1,782,000 (or
($0.75) per share Basic and Diluted)
for the comparable period ended September
30, 2020.
Revenues for the quarter were $10,915,000, a 6.0% increase compared with
$10,297,000 in the third quarter of
2020. The increase in revenue is due to higher sales volume
and higher prices, equally split on a consolidated basis.
Although the ATG shipments were lower in the third quarter of 2021,
a more financially favorable mix of product with higher prices were
shipped. The CPG shipments were higher in the third quarter
of 2021 and additionally the CPG shipped a more financially
favorable mix of product with higher prices.
Gross margin for the third quarter of 2021 on a consolidated
basis increased to $1,772,000, as
compared to a negative gross margin of $165,000 for the same period in 2020. The
ATG increase in gross margin is due to lower costs per unit shipped
offset by the underutilization of production resources and the
continued weak absorption of manufacturing overhead. The CPG
decrease in gross margins is due an increase in the number of units
shipped offset by higher costs per unit shipped, including the
underutilization of production resources as compared to the same
period in 2020.
Selling, general and administrative (SG&A) expenses
increased approximately $625,000 or
29.8% for the three-month period ended September 30, 2021 compared to the same period in
2020. This is due to the increased expenditures for legal and
professional fees. There were also legal charges for pending
litigation reflected in SG&A on a consolidated basis, of
approximately $1,890,000.
As permitted under the Coronavirus Aid, Relief, and Economic
Security Act, the Company recognized a $1,978,000 employee retention credit (ERC) during
the quarter ended September 30,
2021. The ERC is a refundable tax credit against certain
employment taxes and is recognized in other income. 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 and the entire loan
amount was forgiven by the SBA. Accordingly, during the third
quarter a gain of $4,000,000 was
recognized in other income.
Operating loss, which does not include the ERC, PPP loan
forgiveness and interest expense, was $2,839,000 for the quarter ended September 30, 2021 compared to an operating loss
of $2,261,000 for the comparable
period ended September 30,
2020. Due to the ERC and PPP loan forgiveness, net income at
the ATG was higher by approximately $5,015,000 as compared to the same period in
2020. The net loss at the CPG improved by approximately
$5,000 as compared to the same period
in 2020.
"We continue to be impacted by the COVID-19 pandemic as we
adjust our operations to meet both short and long-term customer
demand" said James C. Takacs, Chief
Operating Officer. "While our sales at both the ATG and CPG have
increased each of the last two quarters sequentially, we have not
yet rebounded to pre-pandemic levels. We continue to be
optimistic regarding our expectation for growth in future periods
and have committed to making investments in our team, facilities,
and product development efforts to position the Company for
success. As we look ahead, we will remain focused on delivering
benefits to all of our stakeholders."
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 capital resources and
profitability 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.