Servotronics Announces Third Quarter 2024 Financial Results
Servotronics (SVT) reported Q3 2024 financial results with revenues of $12.4 million, up 7.3% year-over-year, driven by higher volumes and improved pricing. Gross profit decreased 9.2% to $2.3 million, with margins declining to 18.2% due to unfavorable product mix and higher overhead costs. The company incurred $0.6 million in legal costs for a pending settlement with its former CEO. Adjusted operating income remained stable at $0.3 million. Despite industry-wide supply chain, quality, and labor force challenges impacting customer production, the company reported strong demand and backlog, with operating cash flows improving by $4.9 million compared to 2023.
Servotronics (SVT) ha riportato i risultati finanziari del terzo trimestre 2024 con ricavi di $12,4 milioni, in aumento del 7,3% rispetto all'anno precedente, grazie a volumi più elevati e prezzi migliorati. L'utile lordo è diminuito del 9,2% a $2,3 milioni, con i margini che sono scesi al 18,2% a causa di un mix di prodotti sfavorevole e di costi generali più elevati. L'azienda ha sostenuto $0,6 milioni in spese legali per un accordo in sospeso con il suo ex CEO. L'utile operativo rettificato è rimasto stabile a $0,3 milioni. Nonostante le sfide nel settore relative alla catena di approvvigionamento, alla qualità e alla forza lavoro che influenzano la produzione dei clienti, l'azienda ha riportato una forte domanda e un portafoglio ordini, con flussi di cassa operativi in aumento di $4,9 milioni rispetto al 2023.
Servotronics (SVT) reportó los resultados financieros del tercer trimestre de 2024 con ingresos de $12.4 millones, un aumento del 7.3% interanual, impulsado por mayores volúmenes y precios mejorados. La utilidad bruta disminuyó un 9.2% a $2.3 millones, con márgenes en descenso al 18.2% debido a una mezcla de productos desfavorable y mayores costos generales. La compañía incurrió en $0.6 millones en costos legales por un acuerdo pendiente con su ex CEO. El ingreso operativo ajustado se mantuvo estable en $0.3 millones. A pesar de los desafíos en la cadena de suministro, calidad y fuerza laboral que impactan la producción del cliente, la empresa informó una fuerte demanda y una carga de trabajo, con flujos de efectivo operativos mejorando en $4.9 millones en comparación con 2023.
Servotronics (SVT)는 2024년 3분기 재무 결과를 보고하며 수익이 $12.4백만에 달해 전년 대비 7.3% 증가했다고 발표했습니다. 이는 증가된 판매량과 개선된 가격 덕분입니다. 총 이익은 $2.3백만으로 9.2% 감소했으며, 불리한 제품 조합과 증가한 간접비로 인해 마진은 18.2%로 떨어졌습니다. 회사는 전 CEO와의 미결정 합의로 인해 $0.6백만의 법률 비용을 소요했습니다. 조정된 영업 소득은 $0.3백만으로 안정세를 유지했습니다. 고객 생산에 영향을 주는 공급망, 품질 및 인력 문제에도 불구하고 이 회사는 강한 수요와 적체를 보고했으며, 운영 현금 흐름은 2023년 대비 $4.9백만 증가했습니다.
Servotronics (SVT) a rapporté les résultats financiers du troisième trimestre 2024 avec des revenus de $12,4 millions, en hausse de 7,3 % par rapport à l'année précédente, grâce à des volumes plus élevés et à des prix améliorés. Le bénéfice brut a diminué de 9,2 % pour s'établir à $2,3 millions, les marges ayant baissé à 18,2 % en raison d'un mélange de produits défavorable et de coûts fixes plus élevés. L'entreprise a engagé $0,6 million de frais juridiques pour un règlement en attente avec son ancien directeur général. Le bénéfice d'exploitation ajusté est resté stable à $0,3 millions. En dépit des défis rencontrés par l'industrie en matière de chaîne d'approvisionnement, de qualité et de main-d'œuvre affectant la production des clients, l'entreprise a signalé une forte demande et un carnet de commandes, avec des flux de trésorerie d'exploitation en hausse de $4,9 millions par rapport à 2023.
Servotronics (SVT) berichtete über die finanziellen Ergebnisse des dritten Quartals 2024 mit einem Umsatz von $12,4 Millionen, was einem Anstieg von 7,3% im Jahresvergleich entspricht, angetrieben durch höhere Volumina und verbesserte Preise. Der Bruttogewinn sank um 9,2% auf $2,3 Millionen, wobei die Margen aufgrund einer ungünstigen Produktmischung und höherer Gemeinkosten auf 18,2% fielen. Das Unternehmen hatte $0,6 Millionen an Rechtskosten für einen anhängigen Vergleich mit seinem ehemaligen CEO. Der bereinigte Betriebsgewinn blieb stabil bei $0,3 Millionen. Trotz der branchenweiten Herausforderungen in der Lieferkette, Qualität und Arbeitskräfte, die die Produktion der Kunden beeinträchtigen, berichtete das Unternehmen von starker Nachfrage und Auftragsbestand, wobei sich die operativen Cashflows im Vergleich zu 2023 um $4,9 Millionen verbesserten.
- Revenue increased 7.3% YoY to $12.4 million in Q3 2024
- SG&A costs reduced by 10.8% compared to Q3 2023
- Operating cash flows improved by $4.9 million year-over-year
- Strong customer demand and backlog reported
- Gross profit declined 9.2% to $2.3 million in Q3 2024
- Gross margin decreased to 18.2% from 21.6% in Q3 2023
- $0.6 million legal settlement costs impacting profitability
- Net loss of $453,000 compared to net income of $182,000 in Q3 2023
- Ongoing supply chain, quality, and labor force challenges affecting production
Insights
The Q3 results show mixed performance with notable concerns. While revenue grew
The company faces significant headwinds including supply chain disruptions, quality issues and labor challenges affecting production. Working capital management remains important given industry volatility. While the
-- Strong revenue growth despite industry-wide challenges --
Highlights of the third-quarter financial results are as follows:
- Revenues were
$12.4 million 7.3% from$11.6 million - Gross profit of
$2.3 million 18.2% of sales, down9.2% from$2.5 million 21.6% in the third quarter of 2023, due to unfavorable product mix and higher overhead costs driven primarily by fewer research & development (R&D) projects. - Selling, general & administrative (SG&A) costs down
10.8% , or 323 basis points (as a % of revenue), compared to the third quarter of 2023 due to continued focus on aligning costs with sales growth, and lower R&D project costs. - Legal costs for pending settlement with the Company's former CEO of approximately
$0.6 million - Adjusted (exclusive of legal settlement costs) operating income of
$0.3 million - Positive results for the quarter were partially offset by ongoing, industry-wide supply chain, quality and labor force challenges impacting customer production output and resulting in reforecasting of demand for the Company's products.
"I am very pleased with our revenue growth for the third quarter and the way our team has managed through the current ongoing challenges that we are experiencing as a key supplier to the commercial aerospace industry. Production delays within the industry resulted in deferral of some deliveries of our products impacting revenue, profit, and inventory. We are working closely with our customers to align our operations with their needs for the remainder of the year. Overall, demand for our products and services remains very strong and we are optimistic about the future of our business as the industry returns to growth," said Chief Executive Officer William F. Farrell, Jr.
Summary of Results from Continuing Operations | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
(Dollars in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||
Revenues | $ 12,430 | $ 11,582 | 7.3 % | $ 35,149 | $ 31,291 | 12.3 % | ||||||
Gross profit | 2,268 | 2,499 | (9.2) % | 7,066 | 5,039 | 40.2 % | ||||||
Gross margin | 18.2 % | 21.6 % | (3.4) % | 20.1 % | 16.1 % | 4.0 % | ||||||
Selling, general and administrative | 1,979 | 2,219 | (10.8) % | 6,394 | 7,663 | (16.6) % | ||||||
Legal settlement | 570 | - | 100.0 % | 570 | - | 100.0 % | ||||||
Total operating expenses | 2,549 | 2,219 | 14.9 % | 6,964 | 7,663 | (9.1) % | ||||||
Operating (loss) income | (281) | 280 | (200.4) % | 102 | (2,624) | 103.9 % | ||||||
Net (loss) income | $ (453) | $ 182 | (348.9) % | $ (251) | $ (3,926) | 93.6 % | ||||||
Non-GAAP measures for comparison: | ||||||||||||
Operating (loss) income per above | $ (281) | $ 280 | (200.4) % | $ 102 | $ (2,624) | 103.9 % | ||||||
Addback: legal settlement | 570 | - | 100.0 % | 570 | - | 100.0 % | ||||||
Adjusted operating income (loss) | $ 289 | $ 280 | 3.2 % | $ 672 | $ (2,624) | 125.6 % | ||||||
Net (loss) income per above | $ (453) | $ 182 | (348.9) % | $ (251) | $ (3,926) | 93.6 % | ||||||
Addback: legal settlement | 570 | - | 100.0 % | 570 | - | 100.0 % | ||||||
Adjusted net income (loss) | $ 117 | $ 182 | (35.7) % | $ 319 | $ (3,926) | 108.1 % | ||||||
Servotronics' Chief Financial Officer Robert A. Fraass commented, "I am encouraged by our significant improvement in operating cash flow compared to 2023, however, the recent volatility in the industry will continue to apply pressure on our working capital needs. Actively managing this remains a major focus during the fourth quarter and moving into 2025."
The Company's operating cash flows increased by approximately
Mr. Farrell concluded, "Our overall customer demand and backlog remain strong, and our operational advancements are driving higher revenue and improved operating results in the current year. We believe the customer delays we are seeing are temporary and we are managing our way through them. We remain steadfast on achieving our strategy of long-term growth and increasing 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
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 ( | ||||||
September 30, | December 31, | |||||
2024 | 2023 | |||||
(Unaudited) | (Audited) | |||||
Current Assets: | ||||||
Cash | $ | 46 | $ | 95 | ||
Cash, restricted | 150 | 150 | ||||
Accounts receivable, net | 12,598 | 12,065 | ||||
Inventories, net | 15,408 | 14,198 | ||||
Prepaid and other current assets | 810 | 1,507 | ||||
Assets related to discontinued operation | 1,466 | 1,552 | ||||
Total current assets | 30,478 | 29,567 | ||||
Property, plant and equipment, net | 7,143 | 6,978 | ||||
Other non-current assets | 42 | 42 | ||||
Total Assets | $ | 37,663 | $ | 36,587 | ||
Liabilities and Shareholders' Equity | ||||||
Current Liabilities: | ||||||
Line of credit | $ | 3,169 | $ | 2,103 | ||
Current portion of post-retirement obligation | 97 | 97 | ||||
Accounts payable | 2,954 | 2,061 | ||||
Accrued employee compensation and benefits costs | 927 | 1,003 | ||||
Accrued warranty | 413 | 542 | ||||
Other accrued liabilities | 1,046 | 1,909 | ||||
Liabilities related to discontinued operation | 27 | 213 | ||||
Total Current Liabilities | 8,633 | 7,928 | ||||
Post-retirement obligation | 4,210 | 4,165 | ||||
Other long-term liabilities | 427 | - | ||||
Total Liabilities | 13,270 | 12,093 | ||||
Shareholders' Equity: | ||||||
Common stock, par value | 525 | 525 | ||||
Capital in excess of par value | 14,796 | 14,617 | ||||
Retained earnings | 12,631 | 12,954 | ||||
Accumulated other comprehensive loss | (2,331) | (2,389) | ||||
Employee stock ownership trust commitment | (56) | (56) | ||||
Treasury stock, at cost 74,816 (87,525 - 2023) shares | (1,172) | (1,157) | ||||
Total shareholders' equity | 24,393 | 24,494 | ||||
Total Liabilities and Shareholders' Equity | $ | 37,663 | $ | 36,587 | ||
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ( | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Revenue | $ | 12,430 | $ | 11,582 | $ | 35,149 | $ | 31,291 | ||||||||
Costs of goods sold, inclusive of depreciation and amortization | 10,162 | 9,083 | 28,083 | 26,252 | ||||||||||||
Gross profit | 2,268 | 2,499 | 7,066 | 5,039 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general and administrative | 1,979 | 2,219 | 6,394 | 7,663 | ||||||||||||
Legal settlement (Note 9) | 570 | - | 570 | - | ||||||||||||
Total operating expenses | 2,549 | 2,219 | 6,964 | 7,663 | ||||||||||||
Operating (loss) income | (281) | 280 | 102 | (2,624) | ||||||||||||
Other expense | ||||||||||||||||
Interest & other expense, net | 172 | 98 | 353 | 239 | ||||||||||||
Total other expense | 172 | 98 | 353 | 239 | ||||||||||||
(Loss) income from continuing operations before income | (453) | 182 | (251) | (2,863) | ||||||||||||
Income tax expense | - | - | - | (1,063) | ||||||||||||
(Loss) income from continuing operations, net of tax | (453) | 182 | (251) | (3,926) | ||||||||||||
Loss from discontinued operation before income taxes | (43) | (386) | (72) | (7,326) | ||||||||||||
Income taxes | - | - | - | - | ||||||||||||
Loss from discontinued operation, net of tax (Note 2) | (43) | (386) | (72) | (7,326) | ||||||||||||
Net loss | $ | (496) | $ | (204) | $ | (323) | $ | (11,252) | ||||||||
Basic and diluted (loss) earnings per share: | ||||||||||||||||
Continuing operations | $ | (0.18) | $ | 0.07 | $ | (0.10) | $ | (1.59) | ||||||||
Discontinued operation | (0.02) | (0.16) | (0.03) | (2.97) | ||||||||||||
Basic and diluted loss per share | $ | (0.20) | $ | (0.09) | $ | (0.13) | $ | (4.56) | ||||||||
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ( | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2024 | 2023 | |||||||
Cash flows related to operating activities: | ||||||||
Loss from continuing operations | $ | (251) | $ | (3,926) | ||||
Adjustments to reconcile loss from continuing operations to net cash provided | ||||||||
Depreciation and amortization | 768 | 790 | ||||||
Stock based compensation | 185 | 111 | ||||||
Allowance for credit losses | (90) | 8 | ||||||
Inventory reserve | 108 | 34 | ||||||
Warranty reserve | (129) | (37) | ||||||
Deferred income taxes | - | 1,077 | ||||||
Changes in assets and liabilities providing (using) cash: | ||||||||
Accounts receivable | (443) | (3,852) | ||||||
Inventories | (1,318) | (796) | ||||||
Prepaid and other current assets | 697 | (251) | ||||||
Accounts payable | 893 | 1,118 | ||||||
Accrued employee compensation and benefit costs | (18) | 229 | ||||||
Other accrued liabilities | (863) | 528 | ||||||
Post-retirement obligations | 45 | 59 | ||||||
Other long-term liabilities | 427 | - | ||||||
Net cash provided (used) by operating activities from continuing | 11 | (4,908) | ||||||
Cash flows related to investing activities: | ||||||||
Purchase of property, plant and equipment, net of disposals | (933) | (606) | ||||||
Net cash used by investing activities from continuing operations | (933) | (606) | ||||||
Cash flows related to financing activities: | ||||||||
Proceeds from line of credit, net of payments | 1,066 | 2,164 | ||||||
Purchase of treasury shares | (21) | - | ||||||
Payments on finance lease obligations | - | (501) | ||||||
Net cash provided by financing activities from continuing operations | 1,045 | 1,663 | ||||||
Discontinued Operation | ||||||||
Cash used by operating activities | (172) | (1,753) | ||||||
Cash provided by investing activities | - | 2,100 | ||||||
Net cash (used) provided by discontinued operation | (172) | 347 | ||||||
Net decrease in cash and restricted cash | (49) | (3,504) | ||||||
Cash and restricted cash at beginning of period | 245 | 3,812 | ||||||
Cash and restricted cash at end of period | $ | 196 | $ | 308 | ||||
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SOURCE Servotronics, Inc.
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