-- Revenue growth expected to continue in the second quarter of 2022 driven by increasing order volume from Servotronics' Advanced Technology Group --

ELMA, N.Y., May 16, 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 first quarter ended March 31, 2022, including significant growth in revenue, gross margin and operating income.

The company reported first quarter 2022 net income of $325,000, or $0.13 per diluted share. First quarter 2021 net income of $541,000, or $0.22 per diluted share, included a $1.4 million or $0.56 per share contribution to earnings from employee retention credits.

"Servotronics' first quarter results reflect the initial benefits of two years of incredible work by our talented workforce, to ensure this company would be ready to rapidly respond to a recovery in customer orders," said Chief Executive Officer William F. Farrell, Jr. "Thanks to their efforts, I'm able to join Servotronics at a time when there is significant upside, which we will pursue with renewed purpose. We intend to execute well on deliveries of existing customer orders, explore new opportunities for our current offerings, accelerate product development activities for new markets and applications, and intensify our focus on operational efficiency and excellence. Our work is only just beginning, and I'm very excited by the opportunities we're well positioned to seize in 2022 and beyond."

Significant revenue growth and gross margin improvement in the first quarter of 2022 were attributed to an increase in units shipped by Servotronics' Advanced Technology Group (ATG) and a shift in product mix toward higher-priced products at both the ATG and the Consumer Products Group (CPG).

First quarter consolidated revenues grew to $11.2 million in 2022, increasing 23.3% from $9.1 million last year. First quarter ATG revenue grew to $9.2 million in 2022, increasing 26.9% from $7.2 million last year. First quarter CPG revenue grew to $2.0 million in 2022, increasing 8.9% from $1.9 million in 2021.

Growth in consolidated revenue is expected to continue in the second quarter and first half of 2022, compared to the same periods last year, driven primarily by anticipated increases in ATG revenue and units shipped under long-term prime contracts and subcontracts.

($000s,
unaudited)

1Q22

4Q21

3Q21

2Q21

1Q21

FY21








Revenue







ATG

$9,168

$8,182

$8,449

$7,823

$7,223

$31,677

CPG

$2,000

2,373

2,466

2,205

1,837

8,881

Consolidated

11,168

10,555

10,915

10,028

9,060

40,558








Gross Margin $







ATG

$2,353

$1,467

$1,687

$1,581

$1,013

$5,748

CPG

285

-116

85

291

-20

240

Consolidated

2,638

1,351

1,772

1,872

993

5,988








Gross Margin %







ATG

25.7%

17.9%

20.0%

20.2%

14.0%

18.1%

CPG

14.3%

-4.9%

3.4%

13.2%

-1.1%

2.7%

Consolidated

23.6%

12.8%

16.2%

18.7%

11.0%

14.8%

First quarter consolidated gross margin grew to $2.6 million, or 23.6% of revenue in 2022, more than doubling from the $993,000 or 11.0% reported in 2021. The company continues to believe that its production resources and maintenance of a highly skilled advanced manufacturing workforce have positioned Servotronics well for recovering orders, which will be critical to reducing per-unit costs and sustainably enhancing gross margin in future periods.

Growth in first quarter 2022 selling, general and administrative expenses (SG&A) and total operating costs and expenses were far outpaced by revenue growth for the period. First quarter SG&A was $2.2 million in 2022, increasing 10.6% from $2.0 million last year. First quarter SG&A as a percentage of revenue improved to 19.5% in 2022, declining 230 basis points from 21.8% last year.

The company's first quarter total operating costs and expenses were $10.7 million in 2022, increasing 6.7% from $10.0 million last year. Operating costs and expenses reflected higher revenues, as well as continued investments in the business including a March 2022 wage increase, designed to support advanced manufacturing employee recruitment and retention.

Servotronics first quarter operating income grew to $456,000, an increase of $1.4 million from an operating loss of $980,000 last year, as double-digit rates of growth in consolidated revenues and gross margin more than offset modest increases in SG&A and total operating costs and expenses. 

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 American

 

SERVOTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000's omitted except share and per share data)










March 31, 


December 31, 



2022


2021



(Unaudited)


(Audited)

Current assets:







  Cash


$

8,855


$

9,546

  Accounts receivable, net



9,304



7,198

  Inventories, net



20,186



20,132

  Prepaid income taxes



593



792

  Other current assets



1,431



647

    Total current assets



40,369



38,315








Property, plant and equipment, net



10,349



10,557








Deferred income taxes



892



900








Other non-current assets



318



321








Total Assets


$

51,928


$

50,093








Liabilities and Shareholders' Equity







Current liabilities:







  Current portion of long-term debt


$

266


$

276

  Accounts payable



2,332



663

  Accrued employee compensation and benefits costs



1,687



1,759

  Current portion of postretirement obligation



136



136

  Other accrued liabilities



1,347



1,414

    Total current liabilities



5,768



4,248

Long-term debt



4,690



4,750

Postretirement obligation



5,732



5,729








Shareholders' equity:







  Common stock, par value $0.20; authorized 4,000,000 shares; issued 2,614,506 shares; outstanding  2,435,032 (2,435,032 - 2021) shares



523



523

  Capital in excess of par value



14,502



14,500

  Retained earnings



26,183



25,858

  Accumulated other comprehensive loss



(3,886)



(3,908)

  Employee stock ownership trust commitment



(258)



(258)

  Treasury stock, at cost 122,839 (122,839 - 2021) shares



(1,326)



(1,349)

    Total shareholders' equity



35,738



35,366








Total Liabilities and Shareholders' Equity


$

51,928


$

50,093

 

SERVOTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($000's omitted except per share data)
(Unaudited)










Three Months Ended



March 31, 



2022


2021








Revenue


$

11,168


$

9,060








Cost of goods sold, inclusive of depreciation and amortization



8,530



8,067

Gross margin



2,638



993








Operating Expenses:







Selling, general and administrative



2,182



1,973

Operating income/(loss)



456



(980)








Other (expense)/income:







Other income: employee retention credit (ERC)





1,730

Interest expense



(70)



(61)

Gain on sale of equipment



26



Total other (expense)/income, net



(44)



1,669








Income before income tax provision



412



689








Income tax provision



87



148








Net income


$

325


$

541








Income per share:







Basic







Net income per share


$

0.13


$

0.23








Diluted







Net income  per share


$

0.13


$

0.22

 

SERVOTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's omitted)
(Unaudited)










Three Months Ended



March 31, 



2022


2021

Cash flows related to operating activities:







  Net Income


$

325


$

541

  Adjustments to reconcile net income to net cash (used) provided by operating activities:







    Depreciation and amortization



313



356

    Stock based compensation



25



31

    Increase in inventory reserve



168



58

    Increase in allowance for doubtful accounts



65



36

    Gain on sale of equipment



(26)



Change in assets and liabilities:







  Accounts receivable



(2,171)



(98)

  Other receivables-ERC





(1,593)

  Inventories



(222)



1,091

  Prepaid income taxes



199



140

  Other current assets



(783)



(420)

  Accounts payable



1,669



146

  Accrued employee compensation and benefit costs



(72)



499

  Post retirement obligation



34



24

  Other accrued liabilities



(68)



25








Net cash (used) provided by operating activities



(544)



836








Cash flows related to investing activities:







  Capital expenditures - property, plant and equipment



(115)



(14)

  Proceeds from sale of assets



38










Net cash used by investing activities



(77)



(14)








Cash flows related to financing activities:







  Principal payments on long-term debt





(637)

  Principal payments on equipment financing lease/note obligations



(70)



(85)

  Proceeds from equipment note and equipment financing lease





384

  Proceeds from line of credit





500

  Purchase of treasury shares





(81)








Net cash (used) provided by financing activities



(70)



81








Net (decrease) increase in cash



(691)



903








Cash at beginning of period



9,546



5,935








Cash at end of period


$

8,855


$

6,838

 

SERVOTRONICS, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS
























($000's omitted except per share data)




ATG


CPG


Consolidated




Three Months Ended


Three Months Ended


Three Months Ended




March 31, 


March 31, 


March 31, 




2022


2021


2022


2021


2022


2021


Revenues from unaffiliated customers


$

9,168


$

7,223


$

2,000


$

1,837


$

11,168


$

9,060






















Cost of goods sold, inclusive of depreciation



(6,815)



(6,210)



(1,715)



(1,857)


$

(8,530)



(8,067)


Gross margin



2,353



1,013



285



(20)



2,638



993


  Gross margin %



25.7

%


14.0

%


14.3

%


(1.1)

%


23.6

%


11.0

%





















Selling, general and administrative



(1,774)



(1,585)



(408)



(388)



(2,182)



(1,973)


Total operating costs and expenses



(8,589)



(7,795)



(2,123)



(2,245)



(10,712)



(10,040)


Operating income/(loss)



579



(572)



(123)



(408)



456



(980)






















Other income: ERC





1,413





317





1,730


Interest expense



(70)



(60)





(1)



(70)



(61)


Gain on sale of equipment



26









26




Total other (expense)/income, net



(44)



1,353





316



(44)



1,669






















Income (loss) before income tax provision



535



781



(123)



(92)



412



689






















Income tax provision (benefit)



113



168



(26)



(20)



87



148


Net income/(loss)


$

422


$

613


$

(97)


$

(72)


$

325


$

541


Capital expenditures, net


$

77


$

10


$


$

4


$

77


$

14


 

   

Cision View original content:https://www.prnewswire.com/news-releases/servotronics-announces-first-quarter-2022-financial-results-including-eps-of-0-13-and-significant-growth-in-revenue-gross-margin-and-operating-income-301548273.html

SOURCE Servotronics, Inc.

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