ELMA, N.Y., March 23, 2018 /PRNewswire/ -- Servotronics,
Inc. (NYSE MKT: SVT) a designer and manufacturer of servo-control
components and other advanced technology products announced today
the results of its operations for the year ended December 31, 2017.
Net income for the twelve month period ended December 31, 2017 was $1,317,000 (or $0.58 per share Basic and $0.57 Diluted) on revenues of $41,444,000 as compared to net income for the
same period of 2016 of $1,753,000 (or
$0.79 per share Basic and
$0.76 Diluted) on revenues of
$38,587,000. Excluding certain
non-recurring items related to the death benefits under the
employment agreement for the Company's late founder, Chairman and
Chief Executive Officer and arbitration expense, each net of tax,
the Company's adjusted net income increased approximately 1.1% from
$1,753,000 for the twelve-month
period ended December 31, 2016 to
$1,772,000 for the same period of
2017.
Gross profit for 2017 was $10.8
million, or 26.1% of revenue, compared with $10.0 million, or 26.0% of revenue for
2016. The increase as a percentage of revenue is primarily
due to the mix of product sold, as well as the realization of
certain expected operational efficiencies attributable to increased
production volumes at our Ontario Knife Company subsidiary.
EBITDA for the twelve month period ended December 31, 2017 was $3,027,000 as compared to $3,355,000 for the same period of 2016. EBITDA
for 2017, adjusting certain non-recurring items, was $3.7 million, or 9.0% of revenue, compared to
$3.4 million, or 8.7% of revenue for
2016.
"We are pleased with our financial results for 2017, which were
in line with our expectations,"
observed Kenneth D. Trbovich, CEO
and Chairman of the Board. "We again achieved record annual sales
with a 4.4% increase in revenues from 2016. Our ability to be
successful in this competitive market environment requires
efficient operations and a skilled workforce. We continue to invest
in our employees as well as our facilities and equipment to allow
us to focus on quality and continuous improvement as we pursue our
strategic and operational goals. We thank our employees for their
continued support and commitment and look forward to building on
our most recent success as we grow the Company in the future."
Reconciliation of Non-GAAP Financial Measures
This
press release contains financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting
Principles, ("GAAP"). The Company's management uses the non-GAAP
measure "adjusted net income", EBITDA and adjusted EBITDA in their
analysis of the Company's performance. The Company defines EBITDA
as earnings before interest, taxes, depreciation, amortization and
such measure is used to evaluate and compare the core operating
performance of the Company from period to period. Adjusted net
income and adjusted EBITDA reflect changes in financial results
associated with the non-recurring charges and income items
highlighted below. Management believes the presentation of these
financial measures provides important supplemental information in
evaluating the operating results of the Company from period to
period by removing nonrecurring items that are not indicative of
ongoing operating results. This non-GAAP disclosure has limitations
as an analytical tool, should not be viewed as a substitute for net
earnings determined in accordance with GAAP, and should not be
considered in isolation or as a substitute for analysis of the
Company's results as reported under GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies. This supplemental presentation should not be
construed as an inference that the Company's future results will be
unaffected by similar adjustments to net income determined in
accordance with GAAP.
Included below is a reconciliation of non-GAAP adjusted
financial measures to reported amounts ($000's omitted):
|
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
Adjusted Net
Income Reconciliation
|
2017
|
|
2016
|
|
|
|
|
|
|
As reported net
income
|
$
1,317
|
|
$
1,753
|
|
Non-GAAP adjustments,
net of tax
|
|
|
|
|
|
Non-recurring
employment contract expense
|
284
|
|
-
|
|
|
Non-recurring
arbitration expense
|
171
|
|
-
|
Non-GAAP adjusted net
income
|
$
1,772
|
|
$
1,753
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
Non-GAAP adjusted net
income per share (basic)
|
$
0.78
|
|
$
0.79
|
Basic weighted
average common shares
|
2,267
|
|
2,215
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and
Adjusted EBITDA Reconciliation
|
2017
|
|
2016
|
|
|
|
|
|
|
As reported net
income
|
$
1,317
|
|
$
1,753
|
|
Add/(Subtract)
back:
|
|
|
|
|
|
Other income,
net
|
(10)
|
|
(11)
|
|
|
Interest
Expense
|
77
|
|
73
|
|
|
Depreciation and
amortization
|
885
|
|
823
|
|
|
Provision for income
taxes
|
758
|
|
717
|
EBITDA
|
|
|
3,027
|
|
3,355
|
|
|
Non-recurring
employment contract expense
|
449
|
|
-
|
|
|
Non-recurring
arbitration expense
|
270
|
|
-
|
Non-GAAP adjusted
EBITDA
|
$
3,746
|
|
$
3,355
|
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 planned growth efforts
and expectation of new business and success in its entry into new
product programs. 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
MKT
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SOURCE Servotronics, Inc.