-- 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
|
|
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.