ELMA, N.Y., Nov. 13, 2020 /PRNewswire/ -- Servotronics,
Inc. (NYSE American – SVT) a designer and manufacturer of
servo-control components and other advanced technology products
announced today the results of its operations for the quarter ended
September 30, 2020.
In the third quarter of 2020, Servotronics reported a net loss
of $1,782,000 (or ($0.75) per share Basic and Diluted) compared to
net income of $1,132,000 (or
$0.49 per share Basic and
$0.47 Diluted) for the comparable
period ended September 30, 2019.
Revenues for the quarter were $10,297,000, a 16.7% decrease compared with
$12,362,000 in the third quarter of
2019. The decline in revenue is due to lower sales volume and
an unfavorable mix of units shipped at the ATG as customer orders
have been delayed to future periods due to the COVID-19
pandemic, partially offset by an increase in shipments coupled
with a slightly unfavorable mix at the CPG.
The push-out of orders and reduction in units shipped at the ATG
led to the underutilization of production resources and the weak
absorption of manufacturing overhead during the third quarter of
2020 resulting in negative gross margin of $165,000 or (1.6)% on a consolidated basis
compared to gross margin of $3,535,000 or 28.6% for the same period in
2019.
Selling, general and administrative expenses decreased
approximately $38,000 or (1.8)% for
the three-month period ended September 30,
2020 compared to the same period in 2019. As a
percentage of revenue, these operating expenses were 20.3% compared
to 17.3% for the same period in 2019.
"From the start of the COVID-19 pandemic, Servotronics has
continued to focus its efforts on safeguarding our employees and
maintaining a competitive cost structure as we service our
customers' needs," said Kenneth D.
Trbovich, CEO and Chairman of the Board. "As a result of
reduced economic activity, caused by the response to the COVID-19
pandemic, we experienced lower earnings and net income in the
quarter. The Company has taken actions to reduce costs and
prioritize spending and we will adjust production as conditions
warrant and are prepared to respond quickly to any changes in
customer demand."
In April 2020, the Company applied
for and received a loan in the principal amount of $4,000,000 as part of the Paycheck Protection
Program (PPP) administered by the Small Business Administration. As
of September 30, 2020, the Company
incurred payroll costs and other eligible qualifying expenses that
the Company believes to be consistent with the terms of the PPP
loan. The use of these funds allowed the Company to avoid certain
involuntary furloughs and layoffs of employees during the third
quarter. While there is no guarantee that the Company will receive
forgiveness for any outstanding amounts under the PPP loan, the
Company believes that it has acted in compliance with the terms of
the program.
The Company is composed of two groups – the ATG and the 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
Certain paragraphs of this 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 pertaining to the Company's capital resources and
profitability and the Company's inability to predict the extent to
which the COVID-19 pandemic and related impacts will continue to
adversely impact our business operations. Forward-looking
statements involve numerous risks and uncertainties. The Company
derives a material portion of its revenue from fixed price
contracts with agencies of the U.S. Government or their prime
contractors. The following factors, among others, could cause
actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
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 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
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SOURCE Servotronics, Inc.