Syntec Optics Holdings, Inc. (Nasdaq: OPTX) Reports Third Quarter 2024 Financial Results

ROCHESTER, NEW YORK, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Syntec Optics (NASDAQ:OPTX), a leading provider of mission-critical products to advanced technology defense, biomedical, and communications equipment manufacturers, today reported financial results for the first quarter of 2024.

Third Quarter 2024 Financial Highlights

• Net Sales of $7.86 million increased by 12.3% from $7.01 million in Q2 2024, and sales from products of $7.33 million increased by 17.2% from $6.26 million in Q3 2023.
• Adjusted EBITDA decreased to $1.10 million from $1.32 million in Q2 2024.
• Earnings per Share decreased to $0.00 from $0.01 in Q2 2024.

Dean Rudy, CFO, said, "At the previous earnings call, we provided guidance for the third quarter 2024 revenue to be between $9.5 and $11.0 million. Our revenues came in below this projection at $7.86 million but 12.3% higher than the prior quarter, showing sequential growth. The company ramped up data center connectivity products for increased Artificial Intelligence deployment and continued its production of currently deployed night vision optics and opto-mechanicals, mission-critical biomedical products, space optics, and other diverse products."

Strong End-Market Expansion:

• Continued production of space optics for Low Earth Orbit (LEO) satellites. Satellite broadband could represent a significant portion of the $1 trillion global space economy by 2040.
• Ramped up production to nearly triple the quantity per week for the high-growth data center market driven by the deployment of Artificial Intelligence. The data center market is expected to reach $622.4 billion by 2030.

 Technological Leadership and Innovation:

• Delivered proof of concept for phase 1 advanced optical solutions, including high-performance, disposable optics for biomedical imaging with a multi-angled, wider field of view and increased imaging detail. SPIE assessed the 2021 photonics-enabled biomedical marketplace as $201 billion in total revenues.
• Delivered designs for complex optical systems, such as high numerical aperture lens systems for digital night vision.

Third Quarter 2024 Financial and Operating Results

The $7.86 million in net sales for the three months ending 2024 increased 12.3% compared to $7.01 million in Q2 2024. The overall sales increased by 19.2% compared to $6.60 million in Q3 2023, and sales from products increased by 19.9% as the company shifts from development to production ramp-up.

The increase in net sales compared to the prior year is due to increases in our product revenue stream. Product revenue increased by $1.1 million for the three months ended 2024 compared to 2023, a 17.2% increase.

The third quarter of 2024 adjusted EBITDA was $1.10 million for the three months ending 2024, compared to $1.32 million adjusted EBITDA in the second quarter of 2024 and $1.30 million in 2023. Contributing factors to the decrease over the previous quarter were a reduction in gross profit of $0.3 million, a reduction in other income of $0.3 million, and offset by a decrease in general and administrative expenses of $0.3 million. Contributing factors to the year-over-year decrease include a $0.4 million increase in general and administrative expenses to enable future product launches.

The Company ended the third quarter of 2024 with an unused $3.9 million line of credit, an unused $4.8 million equipment line of credit, and a paydown of 3.3% principal on other commercial bank lines.

Our net income for the three months ended in the third quarter of 2024 was a negative $0.01 million, or $0.00 per share, down from $0.3 million or negative $0.01 per share for Q2 2024, and compared to $0.4 million, or $0.01 per share, for Q3 2023.

Guidance

Our recent increases in ongoing sales into the communications, medical, and defense industries are expected to accelerate in the third quarter, particularly within our space communications optics and datacom microlens arrays.  As such, the fourth quarter 2024 revenue is expected to be in the range of $7.4 - $9.0 million. 

We expect our gross margin to hold level or slightly improve based on the profitability of ramping up products. General and administrative costs are expected to increase modestly to enable ramped-up engineering, quality, and pilot production to support continued growth in the fourth quarter.

Looking to the first quarter of 2025, we anticipate continued strength from the communications and biomedical end-markets, with additional growth coming from defense-based product launches.

Our products are propelled by tailwinds as we move towards laser-based satellite communications versus radar-based for low latency, biomedical automation, defense equipment modernization, and on-shoring. Mission-critical products use proprietary techniques that provide an economic moat.

Lastly, we expect positive net income in the fourth quarter, enabling further investments to energize our continued growth.

About Syntec Optics

Syntec Optics Holdings, Inc. (NASDAQ:OPTX), headquartered in Rochester, NY, is one of the largest custom and diverse end-market optics and photonics manufacturers in the United States. Operating for over two decades, Syntec Optics runs a state-of-the-art facility with extensive core capabilities of various optics manufacturing processes, both horizontally and vertically integrated, to provide a competitive advantage for mission-critical OEMs. Syntec Optics recently launched new products, including Low Earth Orbit (LEO) satellite optics, lightweight night vision goggle optics, biomedical equipment optics, and precision microlens arrays. To learn more, visit www.syntecoptics.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, including certain financial forecasts and projections. All statements other than statements of historical fact contained in this press release, including statements as to the transactions contemplated by the business combination and related agreements, future results of operations and financial position, revenue and other metrics, planned products and services, business strategy and plans, objectives of management for future operations of Syntec Optics, market size, and growth opportunities, competitive position and technological and market trends, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," "plan," "targets," "projects," "could," "would," "continue," "forecast" or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors (some of which are beyond the control of Syntec Optics), which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates, forecasts and assumptions that, while considered reasonable by Syntec Optics and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations which include, but are not limited to: 1) risk outlined in any prior SEC filings; 2) ability of Syntec Optics to successfully increase market penetration into its target markets; 3) the addressable markets that Syntec Optics intends to target do not grow as expected; 4) the loss of any key executives; 5) the loss of any relationships with key suppliers including suppliers abroad; 6) the loss of any relationships with key customers; 7) the inability to protect Syntec Optics' patents and other intellectual property; 8) the failure to successfully execute manufacturing of announced products in a timely manner or at all, or to scale to mass production; 9) costs related to any further business combination; 10) changes in applicable laws or regulations; 11) the possibility that Syntec Optics may be adversely affected by other economic, business and/or competitive factors; 12) Syntec Optics' estimates of its growth and projected financial results for the future and meeting or satisfying the underlying assumptions with respect thereto; 13) the impact of any pandemic, including any mutations or variants thereof and the Russian/Ukrainian or Israeli conflict, and any resulting effect on business and financial conditions; 14) inability to complete any investments or borrowings in connection with any organic or inorganic growth; 15) the potential for events or circumstances that result in Syntec Optics' failure to timely achieve the anticipated benefits of Syntec Optics' customer arrangements; and 16) other risks and uncertainties set forth in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in prior SEC filings including registration statement on Form S-4 filed with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Syntec Optics does not give any assurance that Syntec Optics will achieve its expected results. Syntec Optics does not undertake any duty to update these forward-looking statements except as otherwise required by law.

For further information, please contact:

Sara Hart

Investor Relations

[email protected]

SOURCE: Syntec Optics Holdings, Inc. (NASDAQ:OPTX)

SYNTEC OPTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

		2024 (unaudited)				2023
ASSETS
Current Assets
Cash		$	476,784			$	2,158,245
Accounts Receivable, Net			5,821,986				6,800,064
Inventory			7,560,983				5,834,109
Prepaid Expenses and Other Assets			344,442				359,443
Total Current Assets			14,204,195				15,151,861
Property and Equipment, Net			12,437,352				11,101,052
Deferred Income Taxes			420,261				-
Intangible Assets, Net			250,000				295,000
Total Assets		$	27,311,808			$	26,547,913
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable		$	2,492,383			$	3,042,315
Accrued Expenses			1,224,587				1,071,257
Federal Income Tax Payable			92,127				370,206
Deferred Revenue			82,813				-
Line of Credit			6,063,863				6,537,592
Current Maturities of Debt Obligations			461,510				362,972
Current Maturities of Finance Lease Obligations			181,327				-
Total Current Liabilities			10,598,610				11,384,342
Long-Term Liabilities
Long-Term Debt Obligations			2,698,386				2,024,939
Long-Term Finance Lease Obligations			1,891,659				-
Deferred Income Taxes			-				74,890
Total Long-Term Liabilities			4,590,045				2,099,829
Total Liabilities			15,188,655				13,484,171
Commitments and Contingencies (Note 16)							-
Stockholder's Equity
CL A Common Stock, Par value $.0001 per share; 121,000,000 authorized; 36,688,266 issued and outstanding as of September 30, 2024; 36,688,266 issued and outstanding as of December 31, 2023			3,669				3,669
Additional Paid-In Capital			1,927,204				1,927,204
Retained Earnings			10,192,280				11,132,869
Total Stockholder's Equity			12,123,153				13,063,742
Total Liabilities and Stockholder's Equity		$	27,311,808			$	26,547,913

SYNTEC OPTICS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Net Sales		$	7,866,355			$	6,600,525			$	21,128,263			$	21,177,257
Cost of Goods Sold			6,032,635				4,756,467				16,412,773				15,244,863
Gross Profit			1,833,720				1,844,058				4,715,490				5,932,394
General and Administrative Expenses			1,727,480				1,314,885				5,857,806				4,442,117
Income (Loss) from Operations			106,240				529,173				(1,142,316	)			1,490,277
Other Income (Expense)
Interest Expense, Including Amortization of Debt Issuance Costs			(206,069	)			(185,292	)			(533,178	)			(446,875	)
Other Income			8,575				21,107				347,547				70,914
Total Other Income (Expense), Net			(197,494	)			(164,185	)			(185,631	)			(375,961	)
Income (Loss) Before Provision for (Benefit) Income Taxes			(91,254	)			364,988				(1,327,947	)			1,114,316
Provision (Benefit) for Income Taxes			(77,965	)			11,008				(387,358	)			139,549
Net Income (Loss)		$	(13,289	)		$	353,980			$	(940,589	)		$	974,767
Net Income (Loss) per Common Share
Basic and diluted		$	(0.00	)		$	0.01			$	(0.03	)		$	0.03
Weighted Average Number of Common Shares Outstanding
Basic and diluted			36,688,266				31,600,000				36,688,266				31,600,000

SYNTEC OPTICS HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

		2024				2023
Cash Flows From Operating Activities
Net (Loss) Income		$	(940,589	)		$	974,767
Adjustments to Reconcile (Loss) Income to Net Cash (Used In)
Provided By Operating Activities:
Depreciation and Amortization			2,122,999				2,096,335
Amortization of Debt Issuance Costs			6,806				5,758
Gain on Disposal of Property and Equipment			(309,000	)			-
Change in Allowance for Expected Credit Losses			132,764				(51,706	)
Change in Reserve for Obsolescence			283,196				16,299
Deferred Income Taxes			(495,151	)			(536,090	)
(Increase) Decrease in:
Accounts Receivable			845,314				(504,372	)
Inventory			(2,010,070	)			(1,831,660	)
Prepaid Expenses and Other Assets			15,001				193,379
Increase (Decrease) in:
Accounts Payables and Accrued Expenses			(1,022,602	)			523,455
Federal Income Tax Payable			(278,079	)			528,411
Deferred Revenue			82,813				(309,735	)
Net Cash (Used In) Provided By Operating Activities			(1,566,598	)			1,104,841
Cash Flows From Investing Activities
Purchases of Property and Equipment			(628,229	)			(979,630	)
Proceeds from Disposal of Property and Equipment			309,000				-
Net Cash Used in Investing Activities			(319,229	)			(979,630	)
Cash Flows From Financing Activities
(Repayments) Borrowing on Line of Credit, Net			(473,729	)			147,076
Borrowing on Debt Obligations			1,100,388				-
Repayments on Debt Obligations			(335,209	)			(633,081	)
Repayments on Finance Lease Obligations			(87,084	)			-
Distributions			-				(62,065	)
Net Cash Provided By (Used in) Financing Activities			204,366				(548,070	)
Net Decrease in Cash			(1,681,461	)			(422,859	)
Cash - Beginning			2,158,245				526,182
Cash - Ending		$	476,784			$	103,323
Supplemental Cash Flow Disclosures:
Cash Paid for Interest		$	459,994			$	451,580
Cash Paid for Taxes		$	568,143			$	118,616
Supplemental Disclosures of Non-Cash Investing Activities:
Assets Acquired and Included in Accounts Payable and Accrued Expenses		$	626,000			$	680,337
Finance Lease Liability Incurred		$	2,160,070			$	-

NON-GAAP RECONCILIATION OF EBITDA

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Net (Loss) Income		$	(13,289	)		$	353,980			$	(940,589	)		$	974,767
Depreciation & Amortization			739,812				692,716				2,129,805				2,102,093
Interest Expenses			203,650				184,358				526,372				441,115
Taxes			(77,965	)			11,008				(387,358	)			139,549
Non-Recurring Items
Other Income - Sale of Equipment & Accessories			-				-				-				(10,068	)
Discount Income			-				-				-				192
Non-Recurring Contributions, Management Fees & Expenses			-				(2,404	)			-				210,112
Non-Recurring Professional & Transaction Fees			-				55,444				174,500				213,500
Technology Start-up Costs			22,275				-				272,067				-
Non-Recurring Optical Molding Evaluation Expenses			77,386				-				187,734				-
Non-Recurring Glass Molding Evaluation Expenses			28,240				-				130,196				-
Non-Recurring Executive Transition Expense			122,374				-				122,374				-
Adjusted EBITDA		$	1,102,483			$	1,295,104			$	2,215,101			$	4,071,261

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial measures, including EBITDA and Adjusted EBITDA, as a supplement to GAAP financial information to enhance the overall understanding of the Company's financial performance and to assist investors in evaluating the Company's results of operations, period over period. Adjusted non-GAAP measures exclude significant unusual items. Investors should consider these non-GAAP measures as a supplement to, and not a substitute for financial information prepared on a GAAP basis.

Non-GAAP Financial Measures

This Annual Report includes a non-GAAP measure that the Company uses to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income, tax and depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted for non-recurring items, and business combination expenses. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.

Adjusted EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies. This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as an alternative to information reported in accordance with U.S. GAAP.

Adjusted EBITDA

The Company defines adjusted EBITDA, a non-GAAP financial measure, as net earnings (loss) before interest and other expenses, net, income tax expense, depreciation and amortization, as adjusted to exclude non-recurring items as outlined in our 10-Q. The Company utilizes adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allows for a more relevant comparison of our results of operations to other companies in our industry and is in accordance with the Non-GAAP Financial Measures Compliance & Disclosure Interpretations (Reference Question 102.03).