SOURCE: SCI Engineered Materials, Inc.

SCI Engineered Materials, Inc.

November 04, 2013 16:24 ET

SCI Engineered Materials, Inc. Reports Third Quarter 2013 Results

COLUMBUS, OH--(Marketwired - Nov 4, 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 September 30, 2013.

Dan Rooney, Chairman, President and Chief Executive Officer, stated, "Our third quarter results reflect solid performance in SCI's core market which includes key customers in the photonics industry. Third party forecasts indicate the thin film solar market has bottomed out which further supports our belief this will be a strong long-term growth market for SCI. We are proceeding with internally financed investments to develop innovative products for customers in the solar and glass industries and new products for transparent electronics. Recently, there have been encouraging signs from several customers indicating their requirements remain strong through at least early-2014. Our $3.4 million backlog at quarter-end represents a 36% increase versus the same date a year ago and the highest quarter-end backlog in more than three years. SCI's expanding product portfolio is well-positioned to meet the growth needs of our target markets. Near term, we anticipate total revenue will increase for the third consecutive quarter."

Total revenue

Third quarter 2013 total revenue of $1,810,044 was the highest quarterly amount this year. For the same period in 2012, total revenue was $1,982,403. The year-over-year difference was attributable to no third quarter sales to a customer who was acquired earlier this year and the Company's contract research was completed in the second quarter of 2013.

Gross profit

Gross profit was $416,836 for the third quarter 2013 compared to $562,176 a year ago. This decrease was principally due to lower total revenue and change in product mix. As a percentage of total revenue, gross profit was 23.0%, representing the highest quarterly amount in 2013, compared to 28.4% for the third quarter 2012.

Operating expense

Operating expense (marketing and sales, general and administrative, and R&D expenses) was $469,179 for the third quarter 2013 compared to $449,497 the prior year. Higher internally funded research and development expense to develop new products for the solar and glass industries and innovative transparent electronics applications was partially offset by lower marketing and sales expense compared to the third quarter 2012.

(Loss) Income Applicable to Common Stock

There was a loss of $76,322, or $0.02 per share, for the third quarter 2013 versus income of $84,711, or $0.02 per share, for the third quarter 2012.

EBITDA

EBITDA (Earnings before interest, income taxes, depreciation and amortization) was $81,754 for the third quarter 2013 versus $258,257 for the same period in 2012. Adjusted EBITDA, which excludes non-cash stock based compensation, was $113,110 for the three months ended September 30, 2013, versus $289,673 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 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's belief that thin film solar will be a strong long-term growth market, several customers' indications that their requirements remain strong through into 2014, SCI's expanding product portfolio is well-positioned to meet the growth needs of SCI's target markets, the Company's anticipation that total revenue will increase for the third consecutive quarter during the final three months of 2013. 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  
    September 30,     December 31,  
    2013     2012  
    (UNAUDITED)        
Current Assets                
  Cash   $ 494,124     $ 630,819  
  Accounts receivable, less allowance for doubtful accounts     487,488       453,302  
  Inventories     1,193,231       815,075  
  Prepaid expenses     551,874       209,422  
    Total current assets     2,726,717       2,108,618  
                 
Property and Equipment, at cost     7,581,287       7,483,480  
  Less accumulated depreciation     (4,676,818 )     (4,254,302 )
      2,904,469       3,229,178  
                 
Other Assets     60,097       66,764  
                 
TOTAL ASSETS   $ 5,691,283     $ 5,404,560  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY          
                 
Current Liabilities                
  Short term debt   $ 355,262     $ 537,937  
  Accounts payable     186,407       260,531  
  Customer deposits     1,265,708       313,745  
  Accrued expenses     188,110       194,218  
    Total current liabilities     1,995,487       1,306,431  
                   
  Long term debt     1,106,420       1,220,435  
    Total liabilities     3,101,907       2,526,866  
                 
Commitments and contingencies                
                 
Total Shareholders' Equity     2,589,376       2,877,694  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 5,691,283     $ 5,404,560  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
STATEMENT OF OPERATIONS  
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012  
(UNAUDITED)  
   
    THREE MONTHS ENDED SEPT. 30,     NINE MONTHS ENDED SEPT. 30,  
    2013     2012     2013     2012  
                         
Product revenue   $ 1,810,044     $ 1,926,040     $ 4,946,251     $ 6,387,799  
Contract research revenue     -       56,363       90,170       181,363  
      1,810,044       1,982,403       5,036,421       6,569,162  
                                 
Cost of product revenue     1,393,208       1,373,258       3,971,147       5,021,258  
Cost of contract research revenue     -       46,969       76,648       147,552  
      1,393,208       1,420,227       4,047,795       5,168,810  
                                 
Gross profit     416,836       562,176       988,626       1,400,352  
                                 
Operating expense     469,179       449,497       1,370,655       1,448,159  
                                 
(Loss) income from operations     (52,343 )     112,679       (382,029 )     (47,807 )
                                 
Other (expense) income     (17,941 )     (20,693 )     (7,375 )     (65,254 )
                                 
(Loss) income before provision for income taxes     (70,284 )     91,986       (389,404 )     (113,061 )
                                 
Income tax (expense) benefit     -       (1,237 )     -       24,652  
                                 
Net (loss) income     (70,284 )     90,749       (389,404 )     (88,409 )
                                 
Dividends on preferred stock     (6,038 )     (6,038 )     (18,114 )     (18,114 )
                                 
(LOSS) INCOME APPLICABLE TO COMMON SHARES   $ (76,322 )   $ 84,711     $ (407,518 )   $ (106,523 )
                                 
Earnings per share - basic and diluted                                
(Loss) income per common share                                
  Basic   $ (0.02 )   $ 0.02     $ (0.11 )   $ (0.03 )
  Diluted   $ (0.02 )   $ 0.02     $ (0.11 )   $ (0.03 )
                                   
Weighted average shares outstanding                                
  Basic     3,841,963       3,817,963       3,835,997       3,812,019  
  Diluted     3,841,963       3,827,774       3,835,997       3,812,019  
                                   
                                   
                                   
SCI ENGINEERED MATERIALS, INC.  
CONDENSED STATEMENTS OF CASH FLOWS  
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012  
   
    2013     2012  
             
CASH PROVIDED BY (USED IN):                
  Operating activities   $ 214,727     $ 260,622  
  Financing activities     31,658       (563,997 )
  Investing activities     (383,080 )     96,684  
NET DECREASE IN CASH     (136,695 )     (206,691 )
                 
CASH - Beginning of period     630,819       798,069  
                 
CASH - End of period   $ 494,124     $ 591,378  
                 
                 
                 
SCI ENGINEERED MATERIALS, INC.  
RECONCILIATION OF GAAP TO NON-GAAP MEASURES  
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012  
   
    Three months ended
Sept. 30,
  Nine months ended
Sept. 30,
 
                       
    2013     2012   2013     2012  
Net (loss) income   $ (70,284 )   $ 90,749   $ (389,404 )   $ (88,409 )
Interest, net     17,650       19,843     56,772       64,404  
Income taxes     -       1,237     -       (24,652 )
Depreciation and amortization     134,388       146,428     437,079       435,948  
EBITDA     81,754       258,257     104,447       387,291  
                               
Stock based compensation     31,356       31,416     101,086       102,294  
Adjusted EBITDA   $ 113,110     $ 289,673   $ 205,533     $ 489,585  

Contact Information

  • Contact:
    Robert Lentz
    (614) 876-2000