Servotronics, Inc.Announces Third Quarter Results for the Period Ended September 30, 2021
ELMA, NY, November 15, 2021 / PRNewswire / – Servotronics, Inc. (NYSE American – SVT), a designer and manufacturer of servo drive components and other advanced technology products, today announced the results of its operations for the quarter ended September 30, 2021.
In the third quarter of 2021, Servotronics achieved net income of $ 3,238,000 (Where $ 1.34 per Basic and Diluted share) compared to a net loss of $ 1,782,000 (Where ($ 0.75) per basic and diluted share) for the comparable period ended September 30, 2020.
Revenue for the quarter was $ 10,915,000, an increase of 6.0% compared to $ 10,297,000 in the third quarter of 2020. The increase in sales is due to higher sales volume and higher prices, also distributed on a consolidated basis. Although ATG shipments were lower in the third quarter of 2021, a more financially favorable product mix with higher prices was shipped. CPG shipments were higher in the third quarter of 2021 and in addition, CPG shipped a more financially favorable product mix with higher prices.
The gross margin for the third quarter of 2021 on a consolidated basis increased to $ 1,772,000, compared to a negative gross margin of $ 165,000 for the same period in 2020. ATG’s gross margin increase is due to lower costs per unit shipped offset by underutilization of production resources and continued low absorption of manufacturing overheads. The decrease in CPG gross margins is due to an increase in the number of units shipped offset by higher costs per unit shipped, including the underutilization of production resources compared to the same period in 2020.
Selling, general and administrative (SG&A) expenses increased by 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 increase in expenses for legal and professional fees. There were also legal costs for pending litigation reflected in general and administrative costs on a consolidated basis, of approximately $ 1,890,000.
As permitted by the Coronavirus Aid, Relief, and Economic Security Act, the Society has recognized a $ 1,978,000 employee retention credit (ERC) during the quarter ended September 30, 2021. The ERC is a refundable tax credit on certain employment taxes and is recognized in other income. In april 2020, the Company requested and obtained 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). At August 4, 2021, the company submitted a PPP loan cancellation request and the entire loan amount was canceled by the SBA. Thus, during the third trimester, a gain of $ 4,000,000 has been recognized in other income.
The operating loss, which does not include ERC, PPP loan cancellation 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 cancellation of ERC and PPP loans, ATG’s net income was approximately higher than $ 5,015,000 compared to the same period in 2020. The net loss at CPG improved by approximately $ 5,000 compared to the same period in 2020.
“We continue to be affected by the COVID-19 pandemic as we adjust our operations to meet customer demand in the short and long term,” said James C. Takacs, Chief Executive Officer. “While our sales to both ATG and CPG have each increased sequentially for the past two quarters, we have yet to rebound to pre-pandemic levels. We remain optimistic about our growth expectations for future periods and we are committed to making investments. in our team, facilities and product development efforts to position the company on the path to success. As we look ahead, we will remain focused on delivering benefits to all of our stakeholders. “
The Company is made up of two groups – ATG and CPG. ATG primarily designs, develops and manufactures servo drives and other components for various commercial and government applications (i.e. aircraft, jet engines, missiles, manufacturing equipment, etc.). CPG designs and manufactures cutlery, bayonets, pocket knives, machetes and combat knives, survival, sporting, agricultural knives and other sharp products for commercial and government applications.
Certain paragraphs of this press 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 relating to the capital resources and profitability of the Company and the Company’s inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to negatively impact our business operations. Forward-looking statements involve many risks and uncertainties. The Company derives a significant portion of its revenues from fixed price contracts with US government agencies or their prime contractors. The following factors, among others, could cause actual results and future events to differ materially from those stated or contemplated in forward-looking statements: uncertainties in the current global economy, including political risks, adverse changes in legal and regulatory environments; and difficulties in forecasting defense credits, the introduction of new technologies and the impact of competing 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 purchasing programs, and market demand and acceptance for both the Company’s products and the products of its customers that incorporate the Company- manufactured components, the Company’s ability to accurately align capacity with demand, availability of financing and changes in interest rates , the outcome of current and potential litigation and additional risks discussed in the documents filed by the Company 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 any forward-looking statements, whether as a result of new information, future events or otherwise.
SERVOTRONICS, INC. (SVT) IS LISTED ON NYSE American
SOURCE Servotronics, Inc.