SCI Engineered Materials, Inc. Reports 2021 Second Quarter and Year-to-Date Results
Back to Newsroom
Mentioned in this Article

SCI Engineered Materials, Inc. Reports 2021 Second Quarter and Year-to-Date Results

Thursday, July 29, 2021 8:30 AM
Share this article now
Topic:
Earnings
SCI Engineered Materials, Inc.

COLUMBUS, OH / ACCESSWIRE / July 29, 2021 / SCI Engineered Materials, Inc. ("SCI") (OTCQB:SCIA), today reported financial results for the three and six months ended June 30, 2021. SCI is a global supplier and manufacturer of advanced materials for physical vapor deposition thin film applications who works closely with end users and OEMs to develop innovative, customized solutions.

Jeremy Young, President and Chief Executive Officer, stated "The increase in second quarter results benefited from higher gross profit and a refundable credit related to certain employment taxes. Overall business conditions continue to improve, and new customers are being added in additional niche markets. As we move beyond the impacts of COVID-19, the Company is positioned for significant growth in total revenue and profitability in the third quarter of 2021."

Mr. Young added, "During the second quarter we began to purchase additional manufacturing equipment pursuant to the $800,000 equipment lease agreement entered into earlier this year. Some of the items were recently installed, and the remaining equipment is expected to be received and become operational during the second half of 2021. These additions enable us to increase manufacturing efficiencies, produce new products and increase total output as we continue to execute our growth strategy."

Total Revenue
Higher volume and product mix partially offset lower pricing for the first six months and second quarter of 2021 compared to a year ago. For the six months ended June 30, 2021, total revenue decreased 17% to $4,994,359 from $6,045,382 in 2020, while 2021 second quarter total revenue decreased 24% to $1,972,049 from $2,606,587 the prior year. Total revenue for the 2021 third quarter is anticipated to increase significantly on a sequential basis and compared to the 2020 third quarter based on orders received during the first half of this year.

Order backlog of $6.3 million on June 30, 2021, was approximately 11% higher than the March 31, 2021, amount and was 75% above the $3.6 million on the same date in 2020.

Employee Retention Credit
The Company recognized an Employee Retention Credit (ERC) of $407,200 and $151,700, respectively, during the first six months of 2021 and this year's second quarter. Of these amounts, $238,300 and $87,300 were included in gross profit for the six months and three months ended June 30, 2021, respectively, while $168,900 and $64,400, respectively, was included in operating expenses for the first half of this year and the 2021 second quarter. Enactment of the American Rescue Plan in March 2021 extended availability of the ERC for all four quarters of 2021.

Gross profit
Gross profit for the first half of 2021 and second quarter of this year benefited from higher volume, product mix and improved manufacturing efficiency. For the six months ended June 30, 2021, gross profit increased 44% to $1,365,590 from $947,122 a year ago. The 2021 second quarter gross profit increased approximately 29% to $562,554 from $437,784 for the same period in 2020. Excluding the Employee Retention Credit (ERC), gross profit increased 19% for the first half of 2021 and 9% for the 2021 second quarter versus the comparable periods last year.

Operating expenses
Operating expenses (general and administrative expense, research and development expense, and marketing and sales expense) decreased 8% to $762,012 for the six months ended June 30, 2021, from $831,877 for the same period in 2020. For the 2021 second quarter, operating expenses decreased 6% to $384,519 from $410,024 last year. The decrease in operating expenses for the first half of 2021 and second quarter of this year was attributable to qualifying compensation expenses related to the Employee Retention Credit. Excluding the ERC, operating expenses for the six months and three months ended June 30, 2021, increased 12% and 9%, respectively, versus the prior year.

EBITDA*
Earnings before interest, income taxes, depreciation, and amortization (EBITDA) increased to $1,161,774 for the first half of 2021 from $343,925 for the same period last year. For the 2021 second quarter, EBITDA increased to $295,826 from $142,750 a year ago. The increase for both periods in 2021 was primarily due to higher gross profit and the ERC. EBITDA for the first six months of 2021 also benefited from gain on extinguishment of debt in January 2021 related to forgiveness of the Company's $325,300 Paycheck Protection Program (PPP) loan.

Income Applicable to Common Stock
Income applicable to common stock increased to $762,057, or $0.17 per share, for the first six months of 2021 from $89,900, or $0.02 per share, last year. The 2021 second quarter income applicable to common stock was $115,510, or $0.03 per share, versus $14,422, or $0.00 per share, a year ago. The increases for both periods of 2021 versus a year ago were principally due to higher gross profit and the ERC. The 2021 first half amount also benefited from forgiveness of the Company's PPP Loan in January 2021.

Net Cash and Total Debt Outstanding
On June 30, 2021, net cash was $3.5 million compared to $2.9 million on December 31, 2020, and $1.9 million on the same date in 2020.

Total debt outstanding was $316,212 on June 30, 2021, compared to $728,934 at 2020 year-end. Key factors contributing to the 57% decrease included forgiveness of the Company's $325,300 PPP loan in January 2021 and principal payments of $87,422 on finance lease obligations during the first half of 2021.

About SCI Engineered Materials, Inc.
SCI Engineered Materials is a global supplier and manufacturer of advanced materials for PVD thin film applications who works closely with end user and OEMs to develop innovative, customized solutions. Additional information is available at www.sciengineeredmaterials.com or follow SCI Engineered Materials, Inc. at:

https://www.linkedin.com/company/sci-engineered-materials.-inc
https://www.facebook.com/sciengineeredmaterials/
https://www.twitter.com/SciMaterials

*A reconciliation of the differences between the GAAP and non-GAAP financial measure of EBITDA as used in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release. This non-GAAP financial measure is intended to supplement and should be read together with our financial results. It should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on this non-GAAP financial measure.

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, plans of the Company and its management. 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, 2020. 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. Due to 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.

Contact: 
Robert Lentz
(614) 439-6006

SCI ENGINEERED MATERIALS, INC.
BALANCE SHEETS
ASSETS

 
 June 30,
2021
  December 31,
2020
 

 
 (UNAUDITED)  
 
 
Current Assets
 
 
  
 
 
Cash
 $3,497,202  $2,917,551 
Accounts receivable, less allowance for doubtful accounts
  604,026   459,471 
Inventories
  4,245,768   1,180,359 
Prepaid expenses
  282,609   131,333 
Total current assets
  8,629,605   4,688,714 

 
        
Property and Equipment, at cost
  8,930,608   9,009,779 
Less accumulated depreciation
  (6,714,701)  (7,121,647)

 
  2,215,907   1,888,132 

 
        
Right of use asset, net
  316,604   357,396 
Deferred tax asset
  888,315   1,019,317 
Other assets
  91,760   96,623 
Total other Assets
  1,296,679   1,473,336 

 
        
TOTAL ASSETS
 $12,142,191  $8,050,182 

 
        
LIABILITIES AND SHAREHOLDERS' EQUITY
    
Current Liabilities
        
Short term debt
 $120,820  $412,993 
Operating lease, current
  93,090   86,844 
Accounts payable
  434,150   147,284 
Customer deposits
  4,428,665   1,010,236 
Accrued expenses
  283,184   220,728 
Total current liabilities
  5,359,909   1,878,085 

 
        
Finance lease obligations, net of current portion
  195,392   243,218 
Notes payable, net of current portion
  -   72,723 
Operating lease obligations, net of current portion
  255,179   304,989 
Total liabilities
  5,810,480   2,499,015 

 
        
Total Shareholders' Equity
  6,331,711   5,551,167 

 
        
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 $12,142,191  $8,050,182 

 
        
SCI ENGINEERED MATERIALS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(UNAUDITED)
       

 
 THREE MONTHS ENDED 
JUNE 30,
  SIX MONTHS ENDED 
JUNE 30,
 

 
 2021  2020  2021  2020 
             
Revenue
 1,972,049  2,606,587  4,994,359  6,045,382 
Cost of revenue
  1,409,495   2,168,803   3,628,769   5,098,260 
Gross profit
  562,554   437,784   1,365,590   947,122 
General and administrative expense
  283,708   272,216   571,589   555,381 
Research and development expense
  54,377   90,421   92,596   177,325 
Marketing and sales expense
  46,434   47,387   97,827   99,171 
Income from operations
  178,035   27,760   603,578   115,245 
Gain on extinguishment of debt
  -   -   (325,300)  - 
Interest expense
  9,014   7,300   16,652   11,369 
Income before provision for income taxes
  169,021   20,460   912,226   103,876 
Provision for income tax expense
  47,473   -   138,093   1,900 
Net income
  121,548   20,460   774,133   101,976 
Dividends on preferred stock
  6,038   6,038   12,076   12,076 
INCOME APPLICABLE TO COMMON SHARES
 115,510  14,422  762,057  89,900 

 
                
Earnings per share - basic and diluted
                

 
                
Income per common share
                
Basic
 0.03  0.00  0.17  0.02 
Diluted
 0.03  0.00  0.17  0.02 

 
                
Weighted average shares outstanding
                
Basic
  4,497,903   4,411,714   4,488,913   4,398,856 
Diluted
  4,526,062   4,418,325   4,516,478   4,406,478 

 
                

 

SCI ENGINEERED MATERIALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
  

 
 2021  2020  
CASH PROVIDED BY (USED IN):
 
 
  
 
  
Operating activities
 1,249,462  8,818  
Investing activities
  (558,237)  (164,936) 
Financing activities
  (111,574)  252,528  
NET INCREASE IN CASH
  579,651   96,410  

 
         
CASH - Beginning of period
  2,917,551   1,828,397  

 
         
CASH - End of period
 3,497,202  1,924,807  

 
         
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
       
 
 Three months ended June 30,  Six months ended June 30, 

 
 2021  2020  2021  2020 
Net income
 121,548  20,460  774,133  101,976 
Interest
  9,014   7,300   16,652   11,369 
Income taxes
  47,473   -   138,093   1,900 
Depreciation and amortization
  117,791   114,990   232,896   228,680 
EBITDA
  295,826   142,750   1,161,774   343,925 

 
                
Stock based compensation
  8,675   31,182   30,563   62,362 
Adjusted EBITDA
 304,501  173,932  1,192,337  406,287 
                 

SOURCE: SCI Engineered Materials, Inc.

Back to Newsroom
Copyright 2021 © ACCESSWIRE. All rights reserved. Privacy Policy  |   Terms and Conditions