Servotronics Announces Fourth-Quarter and Full-Year 2024 Financial Results
PR Newswire
ELMA, N.Y., March 17, 2025
-- Continued actions to optimize business results in increased sales and margins for the full year --
-- Challenging market conditions and customer delays drive lower revenues in the fourth quarter--
ELMA, N.Y., March 17, 2025 /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 fourth quarter and full year ended December 31, 2024.
"We achieved a number of significant milestones in 2024, posting increased revenues, improved margins and improved bottom-line results, even in a year where commercial aircraft deliveries decreased nearly 10%, " commented Chief Executive Officer William F. Farrell, Jr. "Although the year ended on a challenging note, the industry and Servotronics are well positioned for growth in 2025."
Highlights for the fourth quarter financial results include:
-- Revenues of $9.8 million, down 20.8% from $12.3 million in the fourth
quarter of 2023, driven by significant industry headwinds and deferred
customer deliveries resulting in lower volumes, as units shipped
decreased by 22.0%.
-- Gross profit declined to $1.2 million, or 12.3% of revenue, in the fourth
quarter, as compared to $2.8 million, or 22.4% of revenue, in the fourth
quarter of 2023. The decrease was primarily due to the volume decline,
unfavorable product mix, and lower fixed overhead absorption.
-- Operating loss for the quarter was ($1.1) million, as compared to
operating income of $0.5 million in the fourth quarter of 2023, driven by
lower volumes and related lower gross margins. Operating loss included a
$0.1 million charge relating to legal settlement costs with a former
executive.
-- Loss from continuing operations was ($1.3) million, or ($0.50) per
diluted share in the fourth quarter of 2024, compared to income from
continuing operations of $0.4 million, or $0.15 per diluted share in the
fourth quarter of 2023.
"Shifting customer demand led to a challenging end to 2024. The year started off with robust growth forecasts, but industry headwinds prompted a series of order delays. Early in the year our team was able to pivot effectively, but as the year progressed, these changes pushed fourth quarter deliveries into 2025. This resulted in an increase of finished goods inventory as we had little room to maneuver," said Chief Executive Officer William F. Farrell, Jr. "In order to better align with shifting customer demand, we have moved to a monthly review of all customer forecasts, ensuring changes flow through to all suppliers. We are also redesigning our supply chains to shorten lead-times and improve our ability to rapidly react to market shifts and customer demand changes. As a result, we believe Servotronics is better positioned to manage market volatility as aircraft deliveries resume their growth in 2025."
Operating Results
Three Months Ended Years Ended
December 31, Years Ended December 31,
(Dollars in thousands) 2024 2023 % Change 2024 2023 % Change
------------ ------------ --------- ------------ -------------- --------
Revenues $ 9,768 $ 12,338 (20.8) % $ 44,917 $ 43,629 3.0 %
Cost of goods sold 8,568 9,577 (10.5) % 36,651 35,824 2.3 %
------------ ------------ --------- ------------ -------------- --------
Gross profit 1,200 2,761 (56.5) % 8,266 7,805 5.9 %
Gross margin 12.3 % 22.4 % (10.1) % 18.4 % 17.9 % 0.5 %
Selling, general and
administrative 2,311 2,245 2.9 % 9,275 9,918 (6.5) %
------------ ------------ --------- ------------ -------------- --------
Operating loss (1,111) 516 (315.3) % (1,009) (2,113) (52.2) %
Interest & other expense (143) (102) 40.2 % (496) (336) 47.6 %
------------ ------------ --------- ------------ -------------- --------
(Loss) income before
income taxes (1,254) 414 (402.9) % (1,505) (2,449) (38.5) %
Income taxes (7) (36) (80.6) % (7) (1,098) (99.4) %
------------ ------------ --------- ------------ -------------- --------
Net loss from cont
operations $ (1,261) $ 378 (433.6) % $ (1,512) $ (3,547) (57.4) %
============ ============ ========= ============ ============== ========
Non-GAAP measures for
comparison:
-----------------------
Operating (loss) income
per above $ (1,111) $ 516 (315.3) % $ (1,009) $ (2,113) (52.2) %
Addback: one-time
expenses 134 - 100.0 % 704 1,211 (41.9) %
------------ ------------ --------- ------------ -------------- --------
Adjusted operating
(loss) $ (977) $ 516 (289.3) % $ (305) $ (902) (66.2) %
Net (loss) income per
above $ (1,261) $ 378 (433.6) % $ (1,512) $ (3,547) (57.4) %
Addback: one-time
expenses 134 - 100.0 % 704 2,309 100.0 %
------------ ------------ --------- ------------ -------------- --------
Adjusted net loss $ (1,127) $ 378 (398.1) % $ (808) $ (1,238) (34.7) %
============ ============ ========= ============ ============== ========
Adjusted EBITA $ (747) $ 801 (193.3) % $ 716 $ 49 1361.2 %
============ ============ ========= ============ ============== ========
Highlights for the full-year financial results include:
-- Annual sales growth of 3.0% to $44.9 million for 2024, from $43.6 million
in 2023 driven by increased prices and higher volumes, partially offset
by unfavorable mix and lower volumes for repair services.
-- Consolidated gross profit was $8.3 million, or 18.4% of revenue in 2024,
compared with $7.8 million, or 17.9% for 2023. Gross margin improvement
was driven by price increases for certain customers and improved
production efficiencies, mostly offset by unfavorable product mix.
-- Operating (selling, general and administrative) expenses decreased to
$9.3 million, or 20.6% of sales in 2024, from $9.9 million, or 22.7% for
2023. The decrease in operating expenses was primarily driven by a
reduction in non-recurring costs in 2024 of $0.7 million relating to a
legal settlement, compared to approximately of $1.2 million for proxy
contest and bank refinancing costs in 2023.
-- Operating loss improved 52.2% to a loss of ($1.0) million, from a loss of
($2.1) million in 2023. The reduction in operating loss was driven by
higher gross profit combined with lower operating costs. Operating loss
included a $0.7 million charge relating to legal settlement costs with a
former executive.
-- Income tax expense was $0.0 million in 2024 compared to $1.1 million in
2023, due to the full valuation allowance recorded against deferred tax
assets in the prior year. This allowance will be reversed in future years
as the Company becomes profitable.
-- Loss from continuing operations for the year was ($1.5) million, or a
loss of ($0.60) per diluted share in 2024, compared to loss from
continuing operations of ($3.5) million, or a loss of ($1.44) per diluted
share in 2023.
-- On an adjusted basis, non-GAAP adjusted loss from continuing operations
improved by 34.7% to a loss of $0.8 million, while adjusted EBITDA
increased significantly to a profit of $0.7 million, reflecting the
efforts to improve operations over the past year exclusive of items that
are not reflective of ongoing results.
Servotronics' Chief Financial Officer Robert A. Fraass commented, "We continue our focus on enhancing and strengthening our financial position, as evident by our improved operating cash flows in 2024. We also continue to closely monitor our working capital requirements necessary to support our customers' demand and delivery expectations in 2025."
Cash provided by operating activities was $1.3 million for 2024, compared to a use of ($3.8) million for 2023, with the improvement driven primarily by a lower net loss and a reduction in accounts receivable due to cash collections.
Mr. Farrell concluded, "We are well positioned on several major commercial airline platforms including the 737 Max, 787, and A320 family. This has significant upside potential but also creates challenges when aircraft deliveries are impacted by market conditions or production delays at the prime manufacturers. These factors have a temporary effect on our production, working capital, liquidity and ultimately our bottom line. Utilizing the lessons learned over the past year, our team is taking an agile and proactive stance to manage any demand volatility to continue improving financial results and enhancing shareholder value. As we look ahead, the industry outlook for 2025 is positive and we expect profitable growth for Servotronics."
IMPORTANT INFORMATION
Servotronics, Inc. ("Servotronics" or the "Company") will file a proxy statement with the Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies for its annual meeting of shareholders. The Company will furnish the definitive proxy statement to its shareholders. Shareholders are strongly advised to read the proxy statement because it will contain important information from the Company. Shareholders may obtain a free copy of the proxy statement, any amendments or supplements to the proxy statement and other documents that the Company files with the SEC from www.sec.gov or the Company's website at https://servotronics.com/investor-relations/ as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
The Company, its directors and its executive officers may be deemed participants in the Company's solicitation of proxies from shareholders in connection with the matters to be considered at the upcoming annual meeting of shareholders. Information about the Company's directors and executive officers is set forth in the Company's Proxy Statement for its last Annual Meeting of Shareholders, which was filed with the SEC on April 11, 2024, and is available at the SEC's website at www.sec.gov or the Company's website at https://servotronics.com/investor-relations/. Additional information regarding the interests of participants in the solicitation of proxies in connection with the upcoming annual meeting of shareholders will be included in the definitive proxy statement that the Company will file with the SEC.
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 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
CONSOLIDATED BALANCES SHEETS
Years Ended December 31,
----------------------------------------------------------------
(in thousands
except share and
per share data) 2024 2023
------------------------------ --------------------------------
Current assets:
Cash $ 111 $ 95
Cash, restricted 150 150
Accounts
receivable, net 9,288 12,065
Inventories, net 15,826 14,198
Prepaid and other
current assets 968 1,507
Assets related to
discontinued
operation 1,436 1,552
------------------------------ --------------------------------
Total current
assets 27,779 29,567
Property, plant
and equipment,
net 7,005 6,978
Other non-current
assets 48 42
------------------------------ --------------------------------
Total Assets $ 34,832 $ 36,587
============================== ================================
Liabilities and
Shareholders'
Equity
Current
liabilities:
Line of credit $ 2,127 $ 2,103
Current portion
of
postretirement
obligation 84 97
Accounts payable 2,413 2,061
Accrued employee
compensation and
benefits costs 705 1,003
Accrued warranty 333 542
Other accrued
liabilities 1,170 1,909
Liabilities
related to
discontinued
operation 23 213
------------------------------ --------------------------------
Total current
liabilities 6,855 7,928
------------------------------ --------------------------------
Long Term
liabilities:
Post retirement
obligation 4,097 4,262
Post-retirement
obligation,
current portion (84) (97)
------------------------------ --------------------------------
Post-retirement
obligation, net 4,013 4,165
Other long-term
liabilities 460 -
------------------------------ --------------------------------
Total long-term
liabilities 4,473 4,165
Shareholders'
equity:
Common stock, par
value $0.20;
4,000,000 shares
authorized;
2,629,052 shares
issued;
2,537,753 shares
outstanding
(2,514,775
shares
outstanding -
December 31,
2023) 526 525
Capital in excess
of par value 14,828 14,617
Retained earnings 11,331 12,954
Accumulated other
comprehensive
loss (2,059) (2,389)
Employee stock
ownership trust
commitment - (56)
Treasury stock,
at cost 75,513
shares (87,525
shares -
December 31,
2023) (1,122) (1,157)
------------------------------ --------------------------------
Total
shareholders'
equity 23,504 24,494
------------------------------ --------------------------------
Total Liabilities
and
Shareholders'
Equity $ 34,832 $ 36,587
============================== ================================
SERVOTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Years Ended December 31,
--------------------------------------------------------------
(in thousands
except per share
data) 2024 2023
------------------------------ ------------------------------
Revenue $ 44,917 $ 43,629
Costs of goods
sold 36,651 35,824
------------------------------ ------------------------------
Gross profit 8,266 7,805
Operating
expenses:
Selling, general
and
administrative 9,275 9,918
------------------------------ ------------------------------
Operating loss (1,009) (2,113)
Other expense:
Interest
expense, net (478) (336)
Loss on sale of
equipment (18) -
------------------------------ ------------------------------
Total other
expense, net (496) (336)
------------------------------ ------------------------------
Loss from
continuing
operations
before income
taxes (1,505) (2,449)
Income tax
expense (7) (1,098)
------------------------------ ------------------------------
Loss from
continuing
operations, net
of tax (1,512) (3,547)
Loss from
discontinued
operation
before income
taxes (111) (7,240)
------------------------------ ------------------------------
Loss from
discontinued
operation, net
of tax (see
Note 2) (111) (7,240)
Net loss $ (1,623) $ (10,787)
============================== ==============================
Basic and
diluted loss per
share:
Continuing
operations $ (0.60) $ (1.44)
Discontinued
operation (0.04) (2.93)
Basic and
diluted loss
per share $ (0.64) $ (4.37)
============================== ==============================
SERVOTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
--------------------------------------------------------------
(in thousands) 2024 2023
------------------------------ ------------------------------
Cash flows
related to
operating
activities:
Loss from
continuing
operations $ (1,512) $ (3,547)
Adjustments to
reconcile loss
from continuing
operations to
net cash
provided by
(used in)
operating
activities:
Depreciation
and
amortization 990 1,083
Stock based
compensation 288 120
Allowance for
(recovery of)
credit losses (106) 5
Inventory
reserve 171 (15)
Warranty
reserve (209) (39)
Deferred income
taxes - 1,072
Loss on sale of
equipment 18 -
Change in assets
and
liabilities:
Accounts
receivable 2,883 (3,617)
Inventories (1,799) 103
Prepaid and
other current
assets 533 (909)
Accounts
payable 352 221
Accrued
employee
compensation
and benefit
costs (298) (54)
Post retirement
obligations 165 148
Other long-term
liabilities 460 -
Employee stock
ownership
trust
commitment 56 101
Accrued income
taxes 7 -
Other accrued
liabilities (746) 1,513
------------------------------ ------------------------------
Net cash
provided by
(used in)
operating
activities from
continuing
operations 1,253 (3,815)
------------------------------ ------------------------------
Cash flows
related to
investing
activities:
Purchase of
property,
plant and
equipment (1,038) (689)
Disposal of
property,
plant and
equipment 3 -
------------------------------ ------------------------------
Net cash used in
investing
activities from
continuing
operations (1,035) (689)
------------------------------ ------------------------------
Cash flows
related to
financing
activities:
Advances on
line of
credit, net of
payments 24 2,103
Principal
payments on
equipment
financing
lease
obligations - (501)
Purchase of
treasury
shares (41) -
------------------------------ ------------------------------
Net cash (used
in) provided by
financing
activities from
continuing
operations (17) 1,602
------------------------------ ------------------------------
Discontinued
Operation
Cash used in
operating
activities (185) (2,823)
Cash provided
by investing
activities - 2,158
------------------------------ ------------------------------
Net cash used in
operating and
investing
activities from
discontinued
operation (185) (665)
------------------------------ ------------------------------
Net increase
(decrease) in
cash and
restricted
cash 16 (3,567)
------------------------------ ------------------------------
Cash and
restricted cash
at beginning of
year $ 245 $ 3,812
------------------------------ ------------------------------
Cash and
restricted cash
at end of year $ 261 $ 245
============================== ==============================
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SOURCE Servotronics, Inc.
/CONTACT: Rob Fraass, 716-655-5990
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March 17, 2025 16:10 ET (20:10 GMT)