Servotronics Announces Improved First Quarter 2025 Financial Results
-- Rebounding Industry Demand Drives 12% Top Line Growth and 360 bps Gross Margin Increase --
ELMA, N.Y., May 9, 2025 /PRNewswire/ -- Servotronics, Inc. (NYSE American – SVT), a designer and manufacturer of servo-control components and other advanced technology products, today reported improved financial results for the first quarter ended March 31, 2025. Solid revenue growth and operating leverage drove a return to profitability in the quarter.
Highlights for the first quarter financial results include:
- Revenues of $11.7 million, up 12.0% from $10.4 million in the first quarter of 2024, driven by higher volumes, and improved pricing, partially offset by unfavorable product mix.
- Gross profit saw a 36.0% increase to $2.4 million, or 20.2% of revenue, in the first quarter, up significantly from $1.7 million, or 16.6% of revenue, in the first quarter of 2024. The increase was the result of increased volumes, higher fixed cost absorption and enhanced operational efficiencies.
- Operating income significantly improved by $0.5 million to $0.2 million in the first quarter of 2025, compared to a loss of ($0.3) million in the first quarter of 2024, driven by increased gross profit and enhanced cost absorption from higher production volumes, partially offset by higher SG&A costs.
- Net income from continuing operations was $0.1 million, or $0.06 per diluted share in the first quarter of 2025, compared to a net loss from continuing operations of $0.4 million, or ($0.15) per diluted share in the first quarter of 2024.
"As industry conditions have begun to rebound, Servotronics has benefited from the increase in volumes, noticeable in both our top-line and margin strength during the first quarter. We saw a significant turnaround in our operating income that was a direct result of our ongoing attention to process improvements and revenue enhancing strategies," commented Chief Executive Officer William F. Farrell, Jr. "We are also seeing the benefits of efforts in growing our business with both current and new customers in the military and commercial aerospace markets. The strength of our performance during the quarter is a testament to the team's dedication to the continued success of Servotronics and the focus we have on achieving our long-term strategic goals."
Servotronics' Chief Financial Officer Robert A. Fraass commented, "During the first quarter we worked diligently with key customers to improve pricing terms for the foreseeable future. Revised pricing will bolster our margins with improvements starting this year and picking up pace in 2026. This initiative is a validation of the value Servotronics delivers to the aerospace industry and the trust our customers place in us."
First Quarter Business Results | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2025 | 2024 | 2025 vs 2024 | |||||||||||
(in thousands) | Dollars | % Sales | Dollars | % Sales | Change $ | Change % | |||||||
Revenue | $ 11,703 | 100.0 % | $ 10,446 | 100.0 % | $ 1,257 | 12.0 % | |||||||
Costs of goods sold | 9,343 | 79.8 % | 8,711 | 83.4 % | 632 | 7.3 % | |||||||
Gross profit | 2,360 | 20.2 % | 1,735 | 16.6 % | 625 | 36.0 % | |||||||
Selling, general and administrative | 2,118 | 18.1 % | 2,018 | 19.3 % | 100 | 5.0 % | |||||||
Operating income (loss) | 242 | 2.1 % | (283) | -2.7 % | 525 | 185.5 % | |||||||
Interest & other expense, net | 97 | 0.8 % | 83 | 0.8 % | 14 | 16.9 % | |||||||
Income (loss) from continuing operations before income taxes | 145 | 1.2 % | (366) | -3.5 % | 511 | 139.6 % | |||||||
Income tax expense | - | 0.0 % | - | 0.0 % | - | 0.0 % | |||||||
Income (loss) from continuing operations, net of tax | $ 145 | 1.2 % | $ (366) | -3.5 % | $ 511 | 139.6 % | |||||||
Non-GAAP measure: | |||||||||||||
Operating income (loss) | $ 242 | 2.1 % | $ (283) | -2.7 % | $ 525 | 185.5 % | |||||||
Addback: depreciation & amort | 218 | 1.9 % | 271 | 2.6 % | (53) | 19.6 % | |||||||
Addback: one-time costs | 65 | 0.6 % | - | 0.0 % | 65 | 0.0 % | |||||||
Adjusted EBITDA | $ 525 | 4.5 % | $ (12) | -0.1 % | $ 537 | 4475.0 % | |||||||
Revenues increased to $11.7 million in the first quarter of 2025, up 12.0% from the first quarter of 2024, due primarily to increased volume and improved average selling prices with key customers.
For the first quarter, gross profit increased 36.0% to $2.4 million, or 20.2% of sales, up from $1.7 million, or 16.6% of sales in the prior-year period. Gross profit significantly benefited from the increased sales volume, enhanced operational efficiencies, and improved pricing, partially offset by an unfavorable product mix.
First-quarter selling, general and administrative (SG&A) expenses increased 5.0% to $2.1 million compared to $2.0 million in the prior-year period. The SG&A expense increase was driven primarily by professional fees relating to the review of strategic alternatives and proxy solicitation for the upcoming annual meeting.
Net income from continuing operations was $0.1 million, or $0.06 per share, compared to a net loss from continuing operations of ($0.4) million, or a loss of ($0.15) per share, in the first quarter of 2024.
From a non-GAAP standpoint, adjusted EBITDA (adjusted for one-time costs related to the review of strategic alternatives and the proxy contest) was $0.5 million and represents a significant improvement over prior-year period and reflects our operating improvement initiatives.
Mr. Farrell concluded, "I am pleased with our start to this year and our team's achievements. With markets continuing to improve, we are actively evaluating all opportunities in front of us and selectively choosing margin-accretive projects to further drive revenues, operational efficiencies, and bottom-line results. As our team executes our strategic plan, we expect to generate improved financial results, positioning us well as we continue evaluating strategic alternatives with the Board. We have already begun conversations with potential strategic partners and have received positive responses as we seek to realize the full potential value of our business."
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 America
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands except share and per share data) | ||||
March 31, | December 31, | |||
2025 | 2024 | |||
(Unaudited) | (Audited) | |||
Current Assets: | ||||
Cash | $ 37 | $ 111 | ||
Cash, restricted | 150 | 150 | ||
Accounts receivable, net | 11,362 | 9,288 | ||
Inventories, net | 15,488 | 15,826 | ||
Prepaid and other current assets | 1,142 | 968 | ||
Assets related to discontinued operation | 1,450 | 1,436 | ||
Total current assets | 29,629 | 27,779 | ||
Property, plant and equipment, net | 7,031 | 7,005 | ||
Other non-current assets | 48 | 48 | ||
Total Assets | $ 36,708 | $ 34,832 | ||
Liabilities and Shareholders' Equity | ||||
Current Liabilities: | ||||
Line of credit | $ 3,725 | $ 2,127 | ||
Current portion of post-retirement obligation | 84 | 84 | ||
Accounts payable | 2,737 | 2,413 | ||
Accrued employee compensation and benefits costs | 794 | 705 | ||
Accrued warranty | 337 | 333 | ||
Other accrued liabilities | 851 | 1,170 | ||
Liabilities related to discontinued operation | 23 | 23 | ||
Total Current Liabilities | 8,551 | 6,855 | ||
Long-Term Liabilities: | ||||
Post-retirement obligation | 4,121 | 4,097 | ||
Post-retirement obligation, current | (84) | (84) | ||
Post-retirement obligation, net | 4,037 | 4,013 | ||
Other long-term liabilities | 425 | 460 | ||
Total long-term liabilities | 4,462 | 4,473 | ||
Shareholders' Equity: | ||||
Common stock, par value $0.20; 4,000,000 shares authorized; 2,629,052 shares issued; 2,544,246 shares outstanding (2,537,753 shares outstanding as of December 31, 2024) | 526 | 526 | ||
Capital in excess of par value | 14,862 | 14,828 | ||
Retained earnings | 11,459 | 11,331 | ||
Accumulated other comprehensive loss | (2,042) | (2,059) | ||
Treasury stock, at cost 69,020 shares (75,513 shares as of December 31,2024) | (1,110) | (1,122) | ||
Total shareholders' equity | 23,695 | 23,504 | ||
Total Liabilities and Shareholders' Equity | $ 36,708 | $ 34,832 | ||
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share data) (Unaudited) | ||||
Three Months Ended | ||||
March 31, | ||||
2025 | 2024 | |||
Revenue | $ 11,703 | $ 10,446 | ||
Costs of goods sold | 9,343 | 8,711 | ||
Gross profit | 2,360 | 1,735 | ||
Selling, general and administrative | 2,118 | 2,018 | ||
Operating income (loss) | 242 | (283) | ||
Interest & other expense, net | 97 | 83 | ||
Income (loss) from continuing operations before income taxes | 145 | (366) | ||
Income tax expense | - | - | ||
Income (loss) from continuing operations, net of tax | 145 | (366) | ||
Loss from discontinued operation before income taxes | (17) | (17) | ||
Loss from discontinued operation, net of tax (see Note 2) | (17) | (17) | ||
Net income (loss) | $ 128 | $ (383) | ||
Basic and diluted income (loss) per share: | ||||
Continuing operations | $ 0.06 | $ (0.15) | ||
Discontinued operation | (0.01) | (0.01) | ||
Basic and diluted income (loss) per share | $ 0.05 | $ (0.16) | ||
SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) | ||||
Three Months Ended | ||||
March 31, | ||||
2025 | 2024 | |||
Cash flows related to operating activities: | ||||
Income (loss) from continuing operations | $ 145 | $ (366) | ||
Adjustments to reconcile income (loss) from continuing operations to net cash (used) provided by operating activities: | ||||
Depreciation and amortization | 218 | 271 | ||
Stock based compensation | 46 | 63 | ||
(Decrease) increase allowance for credit losses | (3) | 3 | ||
(Decrease) increase inventory reserve | (6) | 38 | ||
Increase (decrease) warranty reserve | 4 | (59) | ||
Changes in assets and liabilities (using) providing cash: | ||||
Accounts receivable | (2,071) | 1,589 | ||
Inventories | 344 | (769) | ||
Prepaid and other current assets | (174) | (412) | ||
Accounts payable | 324 | 77 | ||
Accrued employee compensation and benefit costs | 89 | (164) | ||
Other accrued liabilities | (378) | 118 | ||
Post-retirement obligations | 41 | 24 | ||
Other long-term liabilities | (168) | - | ||
Net cash (used) provided by operating activities from continuing operations | (1,589) | 413 | ||
Cash flows related to investing activities: | ||||
Purchase of property, plant and equipment | (69) | (152) | ||
Disposal of property, plant and equipment | 17 | - | ||
Net cash used by investing activities from continuing operations | (52) | (152) | ||
Cash flows related to financing activities: | ||||
Proceeds from (payments on) line of credit, net | 1,598 | (94) | ||
Net cash provided (used) by financing activities from continuing operations | 1,598 | (94) | ||
Discontinued Operation | ||||
Cash used by operating activities | (31) | (126) | ||
Net cash used by discontinued operation | (31) | (126) | ||
Net (decrease) increase in cash and restricted cash | (74) | 41 | ||
Cash and restricted cash at beginning of period | 261 | 245 | ||
Cash and restricted cash at end of period | $ 187 | $ 286 | ||
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SOURCE Servotronics, Inc.