ELMA, N.Y., April 6, 2021 /PRNewswire/ -- Servotronics, Inc. (NYSE American – SVT) a designer and manufacturer of servo-control components and other advanced technology products announced today the results of its operations for the year ended December 31, 2020.
Net income for year ended December 31, 2020 was $100,000 (or $0.04 per share Basic and Diluted) on consolidated revenues of $49,844,000 as compared to net income for the year ended December 31, 2019 of $2,447,000 (or $1.05 per share Basic and $1.03 Diluted) on revenues of $55,272,000.
Gross margin for 2020 was $8,240,000, or 16.5% of revenue, compared with $12,126,000, or 21.9% of revenue for 2019. The gross margin as a percentage of revenue decreased at the ATG and increased at the CPG. The decrease at the ATG is primarily due to lower units shipped and an increase in costs per units shipped including the underutilization of production resources as compared to the same period in 2019. The increase at the CPG is primarily attributed to an increase in units shipped and an improvement in utilization of production resources.
"By any standard, 2020 was a challenging year," said Kenneth D. Trbovich, CEO and Chairman of the Board. "We started the year with the highest quarterly revenue in our Company's history and then COVID-19 hit. We faced significant and persistent headwinds during the remainder of the year as we anticipated and then experienced lower shipments as customers began deferring orders due to the uncertainty of the pandemic. Throughout it all, our team demonstrated dedication, flexibility and creative problem-solving as we adjusted various areas of our operations to maintain a competitive cost structure while safeguarding our employees. While the economic outlook for 2021 remains uncertain, we believe the Company is positioned to build on our pre-pandemic successes as business conditions normalize."
The Company continues to monitor government programs and actions being implemented or expected to be implemented to counter the economic impacts of the COVID-19 pandemic. In the second quarter of 2020, the Company received a loan in the amount of $4,000,000 as part of the Paycheck Protection Program (the "PPP Loan") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). As of December 31, 2020, the Company incurred payroll costs and other eligible qualifying expenses within the applicable 24-week covered period that the Company believes to be consistent with the terms of the PPP Loan. The Company anticipates submitting a forgiveness application in connection with its PPP Loan within the required time frame, however, no assurance can be given that the Company will obtain forgiveness of the PPP Loan in whole or in part.
Additionally, in December 2020 and again in March 2021, the U.S. government revised the eligibility requirements for certain refundable employee retention credits ("ERC") under the CARES Act and extended those credits through the end of 2021. The ERC is available to offset all federal employment withholdings owed in a particular quarter. To the extent that the credit exceeds employment withholdings, the employer may request a refund of prior taxes paid. The Company qualified for the ERC for the first quarter of 2021 and will continue to monitor its eligibility for future quarters.
The Company is composed of two groups – the ATG and the CPG. The ATG primarily designs, develops and manufactures servo controls and other components for various commercial and government applications (i.e., aircraft, jet engines, missiles, manufacturing equipment, etc.). The CPG designs and manufactures cutlery, bayonets, pocket knives, machetes and combat knives, survival, sporting, agricultural knives and other edged products for both commercial and government applications.
Certain paragraphs of this release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those pertaining to the Company's capital resources and profitability, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses' and governments' responses to the pandemic on the Company's operations and personnel, and on commercial activity and demand across the Company's and its customers' businesses, and on global supply chains; and the Company's inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations. Forward-looking statements involve numerous risks and uncertainties. The Company derives a material portion of its revenue from fixed price contracts with agencies of the U.S. Government or their prime contractors. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: uncertainties in today's global economy, including political risks, adverse changes in legal and regulatory environments, and difficulty in predicting defense appropriations, the introduction of new technologies and the impact of competitive products. the vitality of the commercial aviation industry and its ability to purchase new aircraft, the willingness and ability of the Company's customers to fund long-term purchase programs, and market demand and acceptance both for the Company's products and its customers' products which incorporate Company-made components, the Company's ability to accurately align capacity with demand, the availability of financing and changes in interest rates, the outcome of pending and potential litigation and the additional risks discussed in the Company's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof. The Company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.
SERVOTRONICS, INC. (SVT) IS LISTED ON NYSE American
SOURCE Servotronics, Inc.