SOURCE: SCI Engineered Materials, Inc.

SCI Engineered Materials, Inc.

May 04, 2017 16:19 ET

SCI Engineered Materials, Inc. Reports First Quarter 2017 Results

COLUMBUS, OH--(Marketwired - May 4, 2017) -  SCI Engineered Materials, Inc. ("SCI") (OTCQB: SCIA), a global supplier and manufacturer of advanced materials for physical vapor deposition 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, 2017.

Dan Rooney, President and Chief Executive Officer, said, "We are encouraged by the recovery in our business during the first three months of 2017 which included strong growth in backlog. Gross profit dollars and gross margin percentage achieved solid increases, while operating expenses were 24% below the same period last year. The decrease in operating expense was principally due to Company cost-savings and efficiency measures implemented during the second half of 2016." 

Mr. Rooney added, "SCI's backlog of $1.9 million at March 31, 2017, more than doubled since year-end 2016. This improvement was driven by follow-on orders from both photonics and solar customers. Bookings also remained strong during April 2017." 

Revenue

Revenue was $1,371,916 for the first three months of 2017 which was similar to the same period last year. Higher thin film solar revenue during the first quarter of 2017 offset lower sales to photonics customers. 

Order backlog increased substantially during the first quarter of 2017 and was more than $1 million higher than at December 31, 2016. The adverse impact of customers' destocking during the second half of 2016 has generally abated, although the Company continues to experience shorter product delivery lead times from its thin film solar and photonics customers. 

Gross profit

Gross profit dollars and gross profit margin for the first quarter 2017 increased 30% and 5.7 percentage points, respectively, compared to the same period in 2016. Gross profit increased to $336,985 for the first three months of 2017 from $259,610 a year ago. First quarter of 2017 gross profit margin increased to 24.6% from 18.9% the prior year, benefiting from product mix on flat revenue comparisons year-over-year.

Operating expenses

Operating expenses (general and administrative expense, marketing and sales expense and research and development expense) decreased 24% to $365,939 for the first quarter of 2017 from $478,814 the prior year. This substantial year-over-year decrease was attributable to actions the Company implemented during the fourth quarter of 2016 including restructuring the sales department and additional cost-savings measures particularly involving general and administrative expense. 

Loss Applicable to Common Shares

For the first three months of 2017 the loss applicable to common shares was $46,486 or $0.01 per share compared to loss applicable to common shares of $236,927 or $0.06 per share for the same period a year ago. This improvement was attributable to the increase in gross profit dollars and lower operating expenses.

EBITDA

Earnings before interest, income taxes, depreciation and amortization (EDITDA) increased $193,715 to $87,585 for the first quarter of 2017 compared to a year ago. 

Adjusted EBITDA, which excludes non-cash stock based compensation, increased to $134,446 for the first three months of 2017 from adjusted EBITDA of $(52,558) the prior year. 

Cash and Total Debt Outstanding

Cash on hand increased 6% during the first three months of 2017 and was $776,881 at quarter-end. 

Cash provided by operating activities was $136,170 for the first three months of 2017 compared to cash used in operating activities of $26,365 for the same period a year ago. 

The Company's total debt outstanding was approximately $767,000 at March 31, 2017, versus approximately $741,000 at year-end 2016. This increase was attributable to a new $103,000 capital lease obligation for manufacturing equipment, which commenced in the first quarter of 2017. 

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 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 includes a statement concerning bookings continued to be strong in April 2017. 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, 2016. 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,  
    2017     2016  
    (UNAUDITED)        
Current Assets                
  Cash   $ 776,881     $ 730,352  
  Accounts receivable, less allowance for doubtful accounts     423,407       271,832  
  Inventories     565,273       376,561  
  Prepaid expenses     247,273       59,203  
    Total current assets     2,012,834       1,437,948  
                 
Property and Equipment, at cost     8,270,044       8,156,749  
  Less accumulated depreciation     (6,133,719 )     (6,019,844 )
      2,136,325       2,136,905  
                 
Other Assets     49,672       50,620  
                 
TOTAL ASSETS   $ 4,198,831     $ 3,625,473  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY  
           
Current Liabilities                
  Short term debt   $ 347,540     $ 293,791  
  Accounts payable     426,943       151,757  
  Customer deposits     565,684       249,977  
  Accrued expenses     160,807       210,769  
    Total current liabilities     1,500,974       906,294  
                 
  Long term debt     419,314       447,049  
    Total liabilities     1,920,288       1,353,343  
                 
Commitments and contingencies                
                 
Total Shareholders' Equity     2,278,543       2,272,130  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 4,198,831     $ 3,625,473  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
   
STATEMENTS OF OPERATIONS  
   
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016  
             
(UNAUDITED)  
             
    2017     2016  
                 
Revenue   $ 1,371,916     $ 1,374,812  
                 
Cost of revenue     1,034,931       1,115,202  
Gross profit     336,985       259,610  
                 
S,G & A expense     283,327       398,738  
                 
Research and development expense     82,612       80,076  
                 
Loss from operations     (28,954 )     (219,204 )
                 
Interest     (11,494 )     (11,685 )
                 
Loss before provision for income taxes     (40,448 )     (230,889 )
                 
Income tax expense     -       -  
                 
Net loss     (40,448 )     (230,889 )
                 
Dividends on preferred stock     (6,038 )     (6,038 )
                 
LOSS APPLICABLE TO COMMON SHARES   $ (46,486 )   $ (236,927 )
                 
Earnings per share - basic and diluted                
                 
Loss per common share                
  Basic   $ (0.01 )   $ (0.06 )
  Diluted   $ (0.01 )   $ (0.06 )
                 
Weighted average shares outstanding                
  Basic     4,103,510       4,024,254  
  Diluted     4,103,510       4,024,254  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
   
CONDENSED STATEMENTS OF CASH FLOWS  
   
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016  
   
(UNAUDITED)  
             
    2017     2016  
                 
CASH PROVIDED BY (USED IN):                
  Operating activities   $ 136,170     $ (26,365 )
  Investing activities     (61,520 )     (7,085 )
  Financing activities     (28,121 )     (89,603 )
NET INCREASE (DECREASE) IN CASH     46,529       (123,053 )
                 
CASH - Beginning of period     730,352       997,170  
                 
CASH - End of period   $ 776,881     $ 874,117  
                 
                 
                 
RECONCILIATION OF GAAP TO NON-GAAP MEASURES  
   
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016  
   
(UNAUDITED)  
             
    2017     2016  
Net loss   $ (40,448 )   $ (230,889 )
Interest     11,494       11,685  
Income taxes     -       -  
Depreciation and amortization     116,539       113,074  
EBITDA     87,585       (106,130 )
                 
Stock based compensation     46,861       53,572  
Adjusted EBITDA   $ 134,446     $ (52,558 )
                 

Contact Information

  • Contact:
    Robert Lentz
    (614) 876-2000