Financial Performance - Consolidated revenues decreased approximately $366,000 or 3.3% for the three-month period ended March 31, 2023, compared to the same period in 2022, with ATG down $108,000 (1.2%) and CPG down $258,000 (12.9%)[84][94]. - Gross profit decreased approximately $2,042,000 for the three-month period ended March 31, 2023, with ATG down $1,688,000 and CPG down $354,000 compared to the same period in 2022[96]. - Operating loss increased to $1,911,000 for the three-month period ended March 31, 2023, compared to an operating income of $456,000 in the same period in 2022, reflecting a decrease of approximately $2,367,000[91][104]. - Net income for the three-month period ended March 31, 2023, decreased by approximately $1,872,000 compared to the same period in 2022, with ATG down by $1,402,000 and CPG down by $470,000[109]. - Consolidated loss before income taxes increased by approximately $2,376,000 for the three-month period ended March 31, 2023, compared to the same period in 2022[108]. Expenses and Costs - Selling, general and administrative expenses increased approximately $325,000 or 13.0% for the three-month period ended March 31, 2023, driven primarily by the CPG segment[102][103]. - Increased compensation and benefits contributed approximately $1,095,000 to the rise in operating costs during the three-month period ended March 31, 2023[97]. - The unfavorable product mix shipped at the ATG resulted in a net increase in operating costs of approximately $1,030,000 during the three-month period ended March 31, 2023[97]. - Consolidated operating income decreased due to reduced revenue, increased cost of goods sold, and higher SG&A expenditures[105]. Cash Flow and Liquidity - Cash used in operating activities was approximately $2,834,000 for the three months ended March 31, 2023, compared to $544,000 for the same period in 2022[111]. - Working capital decreased from approximately $34,601,000 as of March 31, 2022, to $25,449,000 as of March 31, 2023[111]. - The company anticipates refinancing its line of credit by June 29, 2023, to maintain sufficient liquidity[113]. - The maximum availability under the amended Borrowing Base LOC will be reduced to $3,900,000 by June 29, 2023, and further to $1,000,000 by August 1, 2023[117]. Shareholder Equity - Total shareholders' equity was approximately $33,619,000 as of March 31, 2023[119]. Market and Strategic Initiatives - The ATG segment accounted for approximately 84% of consolidated revenues for the three months ended March 31, 2023, while the CPG segment accounted for approximately 16%[84]. - The company is actively marketing the CPG segment to potential buyers as part of a strategic review process initiated on February 28, 2023[90]. External Factors - Supply chain challenges and cost inflation for parts and components are expected to persist throughout 2023, impacting operating results[86][88]. Interest and Investment - Interest expense decreased by approximately $17,000 due to the reimbursement of line of credit and equipment financing lease obligations[107]. - Cash flow from investing activities was approximately $437,000 for the three months ended March 31, 2023, compared to $77,000 for the same period in 2022[114].
Servotronics(SVT) - 2023 Q1 - Quarterly Report