SOURCE: SCI Engineered Materials, Inc.

May 13, 2013 16:16 ET

SCI Engineered Materials, Inc. Reports First Quarter 2013 Results

COLUMBUS, OH--(Marketwired - May 13, 2013) -  SCI Engineered Materials, Inc. ("SCI") (OTCQB: SCIA), a global supplier and manufacturer of advanced materials for PVD thin film applications that works closely with end users and OEMs to develop innovative, customized solutions, today reported its financial results for the three months ended March 31, 2013.

Dan Rooney, Chairman, President and Chief Executive Officer, commented, "SCI is in its best position in more than a decade to benefit from recent investments to increase our manufacturing capabilities and strengthen the company's presence in multiple markets. However, an inventory adjustment by a major customer combined with ongoing volatility in the solar market contributed to a decrease in total revenue compared to the same period last year and a loss for the quarter. We are responding to these short-term challenges by tightly controlling operating expenses and maintaining close contact with our customers. Our business strategy is sound and we will continue to utilize our core strengths to pursue attractive long-term growth opportunities."

Total revenue

Total revenue was $1,433,602 for the three months ended March 31, 2013, compared with $1,883,032 for the same period last year. Contract research revenue of $63,732 for the first quarter 2013 was similar to the same period last year.

Backlog was $1.6 million at March 31, 2013 versus $1.8 million at December 31, 2012 and $2.9 million on the same date a year ago. Backlog was impacted by the timing of blanket orders placed by customers and lower backlog related to contract research compared to the same date in 2012.

Gross profit

First quarter 2013 gross profit declined to $173,599 from $315,145 a year ago due to lower revenue and increased pricing pressure. As a result, gross profit margin declined to 12.1% for the first quarter 2013 from 16.7% for the same period last year.

Operating expenses

Operating expenses, which include marketing and sales, general and administrative, and R&D, declined 5.3% to $464,654 for the first quarter 2013. Lower R&D and marketing and sales expenses were partially offset by slightly higher general and administrative expense attributable to higher professional fees compared to a year ago. 

Loss Applicable to Common Stock

Loss applicable to common stock was $267,594, or $0.07 per share, for the first quarter 2013 compared with loss applicable to common shares of $195,801, or $0.05 per share, for the same period last year. The year-over-year comparison was primarily impacted by the decline in gross profit versus the same period last year.

EBITDA

First quarter 2013 EBITDA (Earnings before interest, income taxes, depreciation and amortization) was negative $89,953 compared with negative EBITDA of $30,962 for the same period last year. Adjusted EBITDA, which excludes non-cash stock based compensation, was negative $54,518 for the first quarter 2013 versus adjusted EBITDA of $4,134 a year ago. 

About SCI Engineered Materials, Inc.

SCI Engineered Materials is a global supplier and manufacturer of advanced materials for PVD thin film applications that works closely with end users and OEMs to develop innovative, customized solutions. Additional information is available at http://www.sciengineeredmaterials.com.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, customer guidance, forecasts, and plans of the Company and its management, and specifically include statements concerning SCI being in the best position in more than a decade to benefit from recent investments to increase manufacturing capabilities and strengthen the company's presence in multiple markets, responding to the short-term challenges by tightly controlling operating expenses and maintaining close contact with customers, the business strategy is sound and the company will continue to utilize core strengths as it pursues attractive long-term growth opportunities. These forward-looking statements involve numerous risks and uncertainties, including, without limitation, other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings, including the Company's Annual Report on Form 10-K for the year ended December 31, 2012. One or more of these factors have affected, and could in the future affect, the Company's projections. Therefore, there can be no assurances that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, or any other persons, that the objectives and plans of the company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

   
   
SCI ENGINEERED MATERIALS, INC.  
   
BALANCE SHEETS  
   
ASSETS   
    March 31,     December 31,  
    2013     2012  
    (UNAUDITED)        
Current Assets                
  Cash   $ 413,031     $ 630,819  
  Accounts receivable, less allowance for doubtful accounts     511,712       453,302  
  Inventories     681,700       815,075  
  Prepaid expenses     195,918       209,422  
    Total current assets     1,802,361       2,108,618  
                 
Property and Equipment, at cost     7,571,649       7,483,480  
  Less accumulated depreciation     (4,397,444 )     (4,254,302 )
      3,174,205       3,229,178  
                 
Other Assets     65,574       66,764  
                 
TOTAL ASSETS   $ 5,042,140     $ 5,404,560  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY            
    March 31,     December 31,  
    2013     2012  
    (UNAUDITED)        
Current Liabilities                
  Short term debt   $ 589,152     $ 537,937  
  Accounts payable     275,017       260,531  
  Customer deposits     226,948       313,745  
  Accrued expenses     198,337       194,218  
    Total current liabilities     1,289,454       1,306,431  
                 
  Long term debt     1,101,113       1,220,435  
    Total liabilities     2,390,567       2,526,866  
                 
Commitments and contingencies                
                 
Total Shareholders' Equity     2,651,573       2,877,694  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 5,042,140     $ 5,404,560  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
   
STATEMENTS OF OPERATIONS  
   
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012  
(UNAUDITED)  
   
             
    2013     2012  
                 
Product revenue   $ 1,369,870     $ 1,814,542  
Contract research revenue     63,732       68,490  
      1,433,602       1,883,032  
                 
Cost of product revenue     1,205,484       1,513,890  
Cost of contract research revenue     54,519       53,997  
      1,260,003       1,567,887  
                 
Gross profit     173,599       315,145  
                 
General and administrative expense     295,210       280,913  
                 
Research and development expense     64,120       96,822  
                 
Marketing and sales expense     105,324       112,668  
                 
Loss from operations     (291,055 )     (175,258 )
                 
Other income/(expense)                
  Interest, net     (20,463 )     (19,690 )
  Gain on sale of equipment     50,000       -  
      29,537       (19,690 )
                 
Loss before provision for income tax     (261,518 )     (194,948 )
                 
Income tax expense (benefit)     38       (5,185 )
                 
Net loss     (261,556 )     (189,763 )
                 
Dividends on preferred stock     6,038       6,038  
                 
LOSS APPLICABLE TO COMMON STOCK   $ (267,594 )   $ (195,801 )
                 
Earnings per share - basic and diluted                
                 
Loss per common share                
  Basic   $ (0.07 )   $ (0.05 )
  Diluted   $ (0.07 )   $ (0.05 )
                 
Weighted average shares outstanding                
  Basic     3,829,898       3,805,931  
  Diluted     3,829,898       3,805,931  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
STATEMENTS OF CASH FLOWS  
   
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012  
(UNAUDITED)  
             
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES                
  Net loss   $ (261,556 )   $ (189,763 )
  Adjustments to reconcile net loss to net cash from operating activities:                
    Depreciation and accretion     150,645       143,524  
    Amortization     457       772  
    Stock based compensation     35,435       35,096  
    Gain on sale of equipment     (50,000 )     -  
    Inventory reserve     5,437       95  
    Credit for doubtful accounts     (3,294 )     -  
    Changes in operating assets and liabilities:                
      Accounts receivable     (55,116 )     (22,055 )
      Inventories     127,938       (470,699 )
      Prepaid expenses     13,504       (54,563 )
      Other assets     733       6,859  
      Accounts payable     14,486       205,315  
      Accrued expenses and customer deposits     (84,838 )     400,557  
        Net cash (used in) provided by operating activities     (106,169 )     55,138  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
  Proceeds on sale of equipment     50,000       -  
  Purchases of property and equipment     (7,123 )     (37,167 )
        Net cash provided by (used in) investing activities     42,877       (37,167 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
  Principal payments on capital lease obligations and notes payable     (154,496 )     (127,252 )
        Net cash used in financing activities     (154,496 )     (127,252 )
                 
NET DECREASE IN CASH     (217,788 )     (109,281 )
                 
CASH - Beginning of period     630,819       798,069  
                 
CASH - End of period   $ 413,031     $ 688,788  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
  Cash paid during the year for:                
    Interest   $ 20,683     $ 20,111  
    Income taxes     38       -  
                 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES                
  Property and equipment purchased by capital lease     86,389       -  
  Increase in asset retirement obligation     2,160       2,160  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
RECONCILIATION OF GAAP TO NON-GAAP MEASURES  
THREE MONTHS ENDED MARCH 31   2013     2012  
                 
Net loss   $ (261,556 )   $ (189,763 )
Interest, net     20,463       19,690  
Income taxes     38       (5,185 )
Depreciation and amortization     151,102       144,296  
EBITDA     (89,953 )     (30,962 )
Stock based compensation     35,435       35,096  
Adjusted EBITDA   $ (54,518 )   $ 4,134  
                 
                 

Contact Information

  • Contact:
    Robert Lentz
    (614) 876-2000