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Servotronics Q3 Earnings Decline Y/Y, Revenues Increase 7.3%
SVTServotronics(SVT) ZACKS·2024-11-12 18:36

Core Viewpoint - Servotronics faced operational and financial challenges in Q3 2024, resulting in a loss despite increased revenues from higher sales volume and price adjustments [1][8] Q3 Results - The company reported a loss per share of 18 cents compared to earnings of 7 cents in the same quarter last year, attributed to operational difficulties [3] - Total revenues for the quarter were 12.4million,reflectinga7.312.4 million, reflecting a 7.3% increase from 11.6 million in Q3 2023 due to higher sales volume and prices [3] Gross Profit & Margins - Gross profit decreased by 9.2% to 2.27millioninQ32024from2.27 million in Q3 2024 from 2.50 million in Q3 2023, with a gross margin of 18.2%, down from 21.6% [4] - The decline in gross margin was influenced by increased overhead costs and a less favorable product mix, although partially offset by higher prices and reduced prior-year product liability costs [4] Operating Performance - The operating margin fell to -2.3% from a positive 2.4% in Q3 2023, primarily due to one-time legal settlement expenses of 570,000[5]−Thenetlosswidenedto570,000 [5] - The net loss widened to 0.5 million from a net loss of 0.2millionintheprior−yearquarter,impactedbylegalsettlementcostsandhigherinterestexpenses[5]Expenses−Costofgoodssoldincreasedby11.90.2 million in the prior-year quarter, impacted by legal settlement costs and higher interest expenses [5] Expenses - Cost of goods sold increased by 11.9% to 10.16 million in Q3 2024 from 9.08millioninQ32023,drivenbyalessfavorableproductmixandincreasedoverheadcosts[6]−Selling,generalandadministrativeexpensesdecreasedby10.89.08 million in Q3 2023, driven by a less favorable product mix and increased overhead costs [6] - Selling, general and administrative expenses decreased by 10.8% year over year to 1.98 million, attributed to lower research and development and legal expenses [6] Cash, Debt & Capex - Cash and restricted cash at the end of Q3 2024 were 196,000,downfrom196,000, down from 245,000 at the end of 2023, with line of credit usage rising to 3.17million[7]−CapitalexpenditurefortheninemonthsendedSeptember30was3.17 million [7] - Capital expenditure for the nine months ended September 30 was 933,000, an increase from $606,000 in 2023, focused on machinery and building improvements [7] Other Developments - In 2023, Servotronics divested its Consumer Products Group segment, now concentrating on advanced technology products in aerospace and defense [7] - This strategic shift aims to align resources with core competencies in servo-control components, continuing to impact operational results [7]