SOURCE: SCI Engineered Materials, Inc.

SCI Engineered Materials, Inc.

August 07, 2013 16:29 ET

SCI Engineered Materials, Inc. Reports Second Quarter 2013 Results

COLUMBUS, OH--(Marketwired - Aug 7, 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 June 30, 2013.

Dan Rooney, Chairman, President and Chief Executive Officer, commented, "We exited the second quarter with increased optimism based on solid bookings and improving market conditions. Order backlog was $2.4 million at June 30, 2013, which represents a 52% increase from the first quarter of this year. Our second quarter gross profit margin was at the highest level since 2010 benefiting from improved product mix. Specific actions we implemented earlier this year to reduce costs resulted in lower operating expenses sequentially and compared to the second quarter last year. These expenses continue to be actively monitored and will be adjusted going forward in response to product demand. We anticipate that our financial results for the second half of 2013 will be stronger than the first half of this year based on recent discussions with customers concerning their sales plans. There are increasing signs of positive developments in our markets and we are well-positioned to exploit these growth opportunities."

Total revenue

Total revenue was $1,792,775 for the three months ended June 30, 2013, which is $359,173 above the first quarter of 2013 and $910,953 below the second quarter 2012. The sequential quarter benefited from a customer's resumption of shipments following their inventory adjustment earlier this year. Second quarter 2013 revenue compared to a year ago was impacted by lower cost of a high priced raw material and lower volume.

Gross profit

Second quarter 2013 gross profit was $398,191 compared to $173,599 for the first quarter 2013 and $523,032 for the second quarter 2012. The sequential quarter increase is attributable to improved product mix and cost controls, while the year-over-year decline was primarily due to lower product volume. Gross profit margin of 22.2% for the second quarter of 2013 was above both the 12.1% for the first quarter of 2013 and 19.3% for the second quarter 2012.

Operating expense

Operating expense (marketing and sales, general and administrative, and R&D expenses) declined to $436,822 for the second quarter 2013 from $464,654 for the first quarter 2013 and $508,259 for the second quarter 2012. Second quarter 2013 operating expenses were below each of the prior periods principally due to lower professional fees and lower sales compensation.

(Loss) Income Applicable to Common Stock

There was a loss of $63,602, or $0.02 per share, for the second quarter 2013 compared to a loss of $267,594, or $0.07 per share, for the first quarter 2013 and income of $4,568, or breakeven per share, for the second quarter 2012. The sequential quarter difference was due to an increase in total revenue, improvement in gross profit and lower operating expenses.

EBITDA

Second quarter 2013 EBITDA (Earnings before interest, income taxes, depreciation and amortization) was $112,647 compared to negative EBITDA of $89,953 for the first quarter 2013 and $159,997 of EBITDA for the second quarter 2012. Adjusted EBITDA, which excludes non-cash stock based compensation, was $146,943 for the second quarter 2013 versus negative $54,518 for the first quarter 2013 and $195,778 for the second quarter 2012.

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 include statements concerning anticipation that the second half of 2013 will be stronger than the first half of this year based on discussions with customers and initial implementation of plans by SCI's customers and increasing signs of positive developments in SCI's markets. 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    
    June 30,     December 31,  
    2013     2012  
    (UNAUDITED)        
Current Assets                
  Cash   $ 342,911     $ 630,819  
  Accounts receivable, less allowance for doubtful accounts     506,332       453,302  
  Inventories     960,928       815,075  
  Prepaid expenses     102,791       209,422  
    Total current assets     1,912,962       2,108,618  
                 
Property and Equipment, at cost     7,578,987       7,483,480  
  Less accumulated depreciation     (4,545,948 )     (4,254,302 )
      3,033,039       3,229,178  
                 
Other Assets     62,756       66,764  
                 
TOTAL ASSETS   $ 5,008,757     $ 5,404,560  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current Liabilities                
  Short term debt   $ 542,298     $ 537,937  
  Accounts payable     273,235       260,531  
  Customer deposits     386,204       313,745  
  Accrued expenses     161,609       194,218  
    Total current liabilities     1,363,346       1,306,431  
                 
Long term debt     1,017,106       1,220,435  
    Total liabilities     2,380,452       2,526,866  
                 
Commitments and contingencies                
                 
Total Shareholders' Equity     2,628,305       2,877,694  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 5,008,757     $ 5,404,560  
                 
                 
 
STATEMENTS OF OPERATIONS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012
 (UNAUDITED)
 
             
    THREE MONTHS ENDED
JUNE 30,
    SIX MONTHS ENDED
JUNE 30,
 
    2013     2012     2013     2012  
                                 
Product revenue   $ 1,766,337     $ 2,647,217     $ 3,136,207     $ 4,461,759  
Contract research revenue     26,438       56,511       90,170       125,001  
      1,792,775       2,703,728       3,226,377       4,586,760  
                                 
Cost of product revenue     1,372,455       2,134,110       2,577,939       3,648,000  
Cost of contract research revenue     22,129       46,586       76,648       100,583  
      1,394,584       2,180,696       2,654,587       3,748,583  
                                 
Gross profit     398,191       523,032       571,790       838,177  
                                 
Operating expense     436,822       508,259       901,476       998,662  
                                 
(Loss) income from operations     (38,631 )     14,773       (329,686 )     (160,485 )
                                 
Other (expense) income     (18,971 )     (24,871 )     10,566       (44,561 )
                                 
Loss before provision for income taxes     (57,602 )     (10,098 )     (319,120 )     (205,046 )
                                 
Income tax benefit     38       20,704       -       25,889  
                                 
Net (loss) income     (57,564 )     10,606       (319,120 )     (179,157 )
                                 
Dividends on preferred stock     (6,038 )     (6,038 )     (12,076 )     (12,076 )
                                 
(LOSS) INCOME APPLICABLE TO COMMON SHARES   $ (63,602 )   $ 4,568     $ (331,196 )   $ (191,233 )
                                 
Earnings per share - basic and diluted                                
                                 
(Loss) income per common share                                
  Basic   $ (0.02 )   $ 0.00     $ (0.09 )   $ (0.05 )
  Diluted   $ (0.02 )   $ 0.00     $ (0.09 )   $ (0.05 )
                                 
Weighted average shares outstanding                                
  Basic     3,835,997       3,811,997       3,832,964       3,808,964  
  Diluted     3,835,997       3,821,528       3,832,964       3,808,964  
                                   
                                   
 
SCI ENGINEERED MATERIALS, INC.
 CONDENSED STATEMENTS OF CASH FLOWS
 FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
 (UNAUDITED)
 
             
    2013     2012  
                 
CASH (USED IN) PROVIDED BY:                
                 
  Operating activities   $ (37,311 )   $ 75,112  
                   
  Investing activities     34,759       (549,403 )
                   
  Financing activities     (285,356 )     205,271  
                 
NET DECREASE IN CASH     (287,908 )     (269,020 )
                 
CASH - Beginning of period     630,819       798,069  
                 
CASH - End of period   $ 342,911     $ 529,049  
                 
                 
 
SCI ENGINEERED MATERIALS, INC.
 RECONCILIATION OF GAAP TO NON-GAAP MEASURES
 THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND JUNE 30, 2012
 
             
    Three months ended
June 30,
    Six months ended
June 30,
 
                         
    2013     2012     2013     2012  
                                 
Net (loss) income   $ (57,564 )   $ 10,606     $ (319,120 )   $ (179,157 )
Interest, net     18,659       24,871       39,122       44,561  
Income taxes     (38 )     (20,704 )     -       (25,889 )
Depreciation and amortization     151,590       145,224       302,692       289,520  
EBITDA     112,647       159,997       22,694       129,035  
Stock based compensation     34,296       35,781       69,731       70,878  
Adjusted EBITDA   $ 146,943     $ 195,778     $ 92,425     $ 199,913  
                                 

Contact Information

  • Contact:
    Robert Lentz
    (614) 876-2000