Menu Search

Company Announcements

Servotronics Inc

Servotronics Announces Third Quarter 2024 Financial Results

-- Strong revenue growth despite industry-wide challenges --

ELMA, N.Y. , Nov. 8, 2024 /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 third quarter and nine months ended September 30, 2024.

Highlights of the third-quarter financial results are as follows:

  • Revenues were $12.4 million, up 7.3% from $11.6 million in the third quarter of 2023, driven by higher volumes and improved pricing.
  • Gross profit of $2.3 million, or 18.2% of sales, down 9.2% from $2.5 million, or 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 resulting from employment contract disputes originating in 2021, expected to be finalized in the fourth quarter of 2024.
  • Adjusted (exclusive of legal settlement costs) operating income of $0.3 million consistent with the third quarter of 2023, driven by higher sales and lower SG&A costs, partially offset by lower gross profit.
  • 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 $4.9 million for the year compared to the same period in 2023 primarily driven by the prior year's significant net loss and higher accounts receivable.

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 Elma and Franklinville, New York.

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

($000's omitted except share and per share data)







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 $0.20; authorized 4,000,000 shares; issued 2,629,052
shares; outstanding 2,527,484 (2,514,775 - 2023) shares


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

($000's omitted except per share data)










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
taxes



(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

($000's omitted)







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
(used) by operating activities:









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
operations



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


 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/servotronics-announces-third-quarter-2024-financial-results-302298915.html

SOURCE Servotronics, Inc.