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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 10/28/22 SCI Engineered Materials, Inc. 10-Q 9/30/22 54:3.8M Toppan Merrill Bridge/FA |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 946K 6: EX-99.1 Miscellaneous Exhibit HTML 194K 2: EX-31.1 Certification -- §302 - SOA'02 HTML 21K 3: EX-31.2 Certification -- §302 - SOA'02 HTML 22K 4: EX-32.1 Certification -- §906 - SOA'02 HTML 18K 5: EX-32.2 Certification -- §906 - SOA'02 HTML 18K 12: R1 Document And Entity Information HTML 68K 13: R2 Balance Sheets HTML 128K 14: R3 Balance Sheets (Parenthetical) HTML 27K 15: R4 Statements of Income HTML 101K 16: R5 Statements of Shareholders' Equity HTML 48K 17: R6 Statements of Cash Flows HTML 98K 18: R7 Business Organization and Purpose HTML 19K 19: R8 Summary of Significant Accounting Policies HTML 23K 20: R9 Recent Accounting Pronouncements HTML 28K 21: R10 Common Stock and Stock Options HTML 39K 22: R11 Preferred Stock HTML 18K 23: R12 Inventories HTML 33K 24: R13 Earnings Per Share HTML 49K 25: R14 Notes Payable HTML 23K 26: R15 Income Taxes HTML 39K 27: R16 Operating Lease HTML 31K 28: R17 Finance Leases HTML 38K 29: R18 Summary of Significant Accounting Policies HTML 33K (Policies) 30: R19 Common Stock and Stock Options (Tables) HTML 37K 31: R20 Inventories (Tables) HTML 33K 32: R21 Earnings Per Share (Tables) HTML 47K 33: R22 Income Taxes (Tables) HTML 36K 34: R23 Operating Lease (Tables) HTML 32K 35: R24 Finance Leases (Tables) HTML 38K 36: R25 Business Organization and Purpose (Details) HTML 18K 37: R26 Summary of Significant Accounting Policies HTML 33K (Details) 38: R27 Common Stock and Stock Options - Additional HTML 55K Information (Details) 39: R28 Common Stock and Stock Options (Details) HTML 34K 40: R29 Preferred Stock - Additional Information (Details) HTML 36K 41: R30 Inventories (Details) HTML 28K 42: R31 Earnings Per Share - Reconciliation of Earnings HTML 29K Per Share Calculations (Details) 43: R32 Notes Payable (Details) HTML 28K 44: R33 Income Taxes - Income tax expense (Details) HTML 26K 45: R34 Income Taxes - Additional information (Details) HTML 29K 46: R35 Operating Lease - Future Minimum Lease Payments HTML 28K (Details) 47: R36 Operating Lease - Additional Information (Details) HTML 30K 48: R37 Finance Leases - Future minimum lease payments HTML 33K (Details) 49: R38 Finance Leases - Equipment under finance lease and HTML 26K additional information (Details) 52: XML IDEA XML File -- Filing Summary XML 89K 50: XML XBRL Instance -- scia-20220930x10q_htm XML 661K 51: EXCEL IDEA Workbook of Financial Reports XLSX 68K 8: EX-101.CAL XBRL Calculations -- scia-20220930_cal XML 140K 9: EX-101.DEF XBRL Definitions -- scia-20220930_def XML 241K 10: EX-101.LAB XBRL Labels -- scia-20220930_lab XML 662K 11: EX-101.PRE XBRL Presentations -- scia-20220930_pre XML 448K 7: EX-101.SCH XBRL Schema -- scia-20220930 XSD 91K 53: JSON XBRL Instance as JSON Data -- MetaLinks 249± 357K 54: ZIP XBRL Zipped Folder -- 0001558370-22-015546-xbrl Zip 182K
Exhibit 99.1
Contact: Robert Lentz
(614) 439-6006
SCI Engineered Materials, Inc. Reports
2022 Third Quarter and Year-to-date Results
COLUMBUS, Ohio (October 28, 2022) SCI Engineered Materials, Inc. (“SCI”) (SCIA: OTCQB), today reported financial results for the three and nine months ended September 30, 2022. 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, commented, “Total revenue of $17.6 million for the first nine months of this year exceeded the 2021 full-year amount. Our financial results for the 2022 year-to-date and third quarter periods reflect solid progress, especially considering the one-time Employee Retention Tax credits and first quarter gain on extinguishment of debt recognized in 2021. We are proactively managing our business in a challenging environment while pursuing exciting growth initiatives.”
Mr. Young continued, “During the 2022 third quarter we installed a new vacuum hot press. This new equipment increases our manufacturing capacity and has already enabled us to develop new products. These achievements enhance our R&D and marketing initiatives which involve active collaboration with our customers to create innovative, value-added solutions.”
Total Revenue
For the nine months ended September 30, 2022, total revenue increased 73% to a record $17,648,275 compared to $10,205,528 for the same period last year. Total revenue for the 2022 third quarter increased 12% to $5,816,838 from $5,211,169 a year ago. Higher pricing, primarily attributable to increased raw material costs, higher volume and product mix contributed to the increases in 2022 for both the year-to-date and third quarter periods.
Order backlog was approximately $4.2 million on September 30, 2022, compared to $3.6 million on the same date a year ago. Orders remain solid while customers continue to prefer intra-quarter shipments.
ERC Tax Credit
The Company recorded an Employee Retention Credit (ERC) during each of the first three quarters last year. In the 2021 year-to-date period, recognition of the ERC totaled $560,921 which resulted in lower cost of revenue of $323,038 and lower operating expenses of $237,883. For the three months
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ended September 30, 2021, the Company recognized an ERC of $153,713, which reduced cost of revenue by $84,763 and operating expenses by $68,950.
Gross profit
Gross profit increased 33% to $3,543,352 for the first nine months of 2022 from $2,667,958 for the same period last year due to record year-to-date revenue. For the three months ended September 30, 2022, gross profit was $1,171,583 compared to $1,302,368 last year. Higher volume and product mix for the 2022 third quarter was offset by increased raw material costs and the 2021 third quarter benefited from the ERC.
Operating expenses
Operating expenses (general and administrative, research and development, and marketing and sales) were $1,727,901 for the 2022 year-to-date period compared to $1,187,353 for the same period last year. The 2022 third quarter operating expenses were $561,868 versus $425,341 a year ago. Excluding the ERC recognized in 2021, operating expenses for the first nine months and third quarter of 2021 were $1,425,236 and $494,291, respectively. Operating expense increases for both periods in 2022 compared to 2021 were primarily attributable to additional staff, higher compensation, professional expenses, increased travel expenses related to in-person customer visits and participation in trade shows.
EBITDA*
EBITDA (earnings before interest, income taxes, depreciation, and amortization) of $2,112,174 for the nine months ended September 30, 2022, was flat compared to the same period last year. The Company’s 2022 third quarter EBITDA was $708,717 versus $968,063 the prior year. Lower gross profit and higher operating expenses resulted in lower net income which impacted the 2022 third quarter versus 2021 comparison.
Income Applicable to Common Stock
For the 2022 year-to-date period, income applicable to common stock was $1,491,977 versus $1,424,701 the prior year, an increase of approximately 5%. This was due to higher revenue and gross profit notwithstanding a $325,300 gain on extinguishment of debt and $560,921 attributable to the ERC which benefited the prior year results. Earnings per common share were $0.33 compared to $0.32 for the same period in 2021. For the 2022 third quarter, income applicable to common stock was $442,703, or $0.10 per share, versus $662,644, or $0.15 per share in the prior year. Increased revenue for the three months ended September 30, 2022, was offset by lower gross profit due to higher raw material costs and higher operating expenses compared to a year ago.
Net Cash and Total Debt Outstanding
Cash on hand on September 30, 2022, was a record $5,614,257 compared to $4,140,942 on December 31, 2021, and $3,953,385 on the same date a year ago. The 36% increase since 2021 year-end was primarily due to $2,051,679 from net cash provided by operating activities for the first nine months of
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2022. During the 2022 third quarter, the Company paid $245,000 in cash for the remaining amount due plus installation costs for its new vacuum hot press.
Total debt outstanding was $171,087 on September 30, 2022, versus $243,218 on December 31, 2021, a decrease of approximately 30%. During the first nine months and third quarter of 2022 the Company made principal payments of $72,131 and $24,305, respectively, for finance lease obligations.
*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.
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
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, 2021. One or more of these factors have affected and could affect the Company's projections in the future. 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.
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SCI ENGINEERED MATERIALS, INC.
BALANCE SHEETS
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ASSETS |
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| September 30, |
| |||
| | 2022 | | 2021 | ||
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| (UNAUDITED) | | | | |
Current Assets |
| |
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Cash | | $ | 5,614,257 | | $ | 4,140,942 |
Accounts receivable, less allowance for doubtful accounts | |
| 688,382 | |
| 531,577 |
Inventories | |
| 1,452,588 | |
| 1,073,218 |
Prepaid expenses | |
| 91,792 | |
| 678,357 |
Total current assets | |
| 7,847,019 | |
| 6,424,094 |
Property and Equipment, at cost | |
| 9,444,349 | |
| 8,966,488 |
Less accumulated depreciation | |
| (7,087,742) | |
| (6,809,850) |
Property and Equipment, net | |
| 2,356,607 | |
| 2,156,638 |
Right of use asset, net | |
| 207,958 | |
| 274,298 |
Deferred tax asset | |
| 375,820 | |
| 663,820 |
Other assets | |
| 86,242 | |
| 89,552 |
Total other assets | |
| 670,020 | |
| 1,027,670 |
TOTAL ASSETS | | $ | 10,873,646 | | $ | 9,608,402 |
LIABILITIES AND SHAREHOLDERS' EQUITY | |
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Current Liabilities | |
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Short term debt | | $ | 99,909 | | $ | 96,702 |
Operating lease, current | |
| 103,653 | |
| 97,292 |
Accounts payable | |
| 506,748 | |
| 250,383 |
Customer deposits | |
| 1,282,178 | |
| 1,724,556 |
Accrued expenses | |
| 410,979 | |
| 348,026 |
Total current liabilities | |
| 2,403,467 | |
| 2,516,959 |
Long term debt | |
| 71,178 | |
| 146,516 |
Operating lease, long term | |
| 127,078 | |
| 205,623 |
Total liabilities | |
| 2,601,723 | |
| 2,869,098 |
Total Shareholders' Equity | |
| 8,271,923 | |
| 6,739,304 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 10,873,646 | | $ | 9,608,402 |
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SCI ENGINEERED MATERIALS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
| | | | | | | | | | | | |
|
| THREE MONTHS ENDED SEPT. 30, |
| NINE MONTHS ENDED SEPT. 30, | ||||||||
| | 2022 |
| 2021 | | 2022 |
| 2021 | ||||
Revenue | | $ | 5,816,838 | | $ | 5,211,169 | | $ | 17,648,275 | | $ | 10,205,528 |
Cost of revenue | |
| 4,645,255 | |
| 3,908,801 | |
| 14,104,923 | |
| 7,537,570 |
Gross profit | |
| 1,171,583 | |
| 1,302,368 | |
| 3,543,352 | |
| 2,667,958 |
General and administrative expense | |
| 374,193 | |
| 306,997 | |
| 1,170,782 | |
| 878,586 |
Research and development expense | |
| 93,081 | |
| 56,612 | |
| 272,197 | |
| 149,208 |
Marketing and sales expense | |
| 94,594 | |
| 61,732 | |
| 284,922 | |
| 159,559 |
Income from operations | |
| 609,715 | |
| 877,027 | |
| 1,815,451 | |
| 1,480,605 |
Gain on extinguishment of debt | |
| — | |
| — | |
| — | |
| (325,300) |
Interest (income) expense | |
| (363) | |
| 8,156 | |
| 11,899 | |
| 24,808 |
Income before provision for income taxes | |
| 610,078 | |
| 868,871 | |
| 1,803,552 | |
| 1,781,097 |
Provision for income tax expense | |
| 167,375 | |
| 200,189 | |
| 311,575 | |
| 338,282 |
Net income | |
| 442,703 | |
| 668,682 | |
| 1,491,977 | |
| 1,442,815 |
Dividends on preferred stock | |
| — | |
| 6,038 | |
| — | |
| 18,114 |
INCOME APPLICABLE TO COMMON STOCK | | $ | 442,703 | | $ | 662,644 | | $ | 1,491,977 | | $ | 1,424,701 |
Earnings per share - basic and diluted | |
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Income per common share | |
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Basic | | $ | 0.10 | | $ | 0.15 | | $ | 0.33 | | $ | 0.32 |
Diluted | | $ | 0.10 | | $ | 0.15 | | $ | 0.33 | | $ | 0.32 |
Weighted average shares outstanding | |
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Basic | |
| 4,516,518 | |
| 4,500,256 | |
| 4,513,785 | |
| 4,492,736 |
Diluted | |
| 4,544,651 | |
| 4,531,523 | |
| 4,541,590 | |
| 4,521,746 |
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SCI ENGINEERED MATERIALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
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| 2022 |
| 2021 | ||
CASH PROVIDED BY (USED IN): |
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Operating activities | | $ | 2,051,679 | | $ | 1,780,698 |
Investing activities | |
| (506,233) | |
| (596,997) |
Financing activities | |
| (72,131) | |
| (147,867) |
NET INCREASE IN CASH | |
| 1,473,315 | |
| 1,035,834 |
CASH - Beginning of period | |
| 4,140,942 | |
| 2,917,551 |
CASH - End of period | | $ | 5,614,257 | | $ | 3,953,385 |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
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| Three months ended Sept. 30, |
| Nine months ended Sept. 30, | ||||||||
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| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
Net income | | $ | 442,703 | | $ | 668,682 | | $ | 1,491,977 | | $ | 1,442,815 |
Interest | |
| (4,000) | |
| 2,984 | |
| (169) | |
| 8,114 |
Income taxes | |
| 167,375 | |
| 200,189 | |
| 311,575 | |
| 338,282 |
Depreciation and amortization | |
| 102,639 | |
| 96,208 | |
| 308,791 | |
| 329,104 |
EBITDA | |
| 708,717 | |
| 968,063 | |
| 2,112,174 | |
| 2,118,315 |
Stock based compensation | |
| 8,671 | |
| 8,670 | |
| 40,642 | |
| 39,232 |
Adjusted EBITDA | | $ | 717,388 | | $ | 976,733 | | $ | 2,152,816 | | $ | 2,157,547 |
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This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/31/22 | ||||
Filed on: | 10/28/22 | |||
For Period end: | 9/30/22 | |||
12/31/21 | 10-K, SD | |||
9/30/21 | 10-Q | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/29/20 SCI Engineered Materials, Inc. 8-K:1,2,9 4/24/20 2:3.4M Toppan Merrill/FA 4/28/11 SCI Engineered Materials, Inc. DEF 14A 6/10/11 1:309K DG3/FA 11/07/07 SCI Engineered Materials, Inc. 10QSB 9/30/07 7:937K Toppan Merrill/FA 5/01/06 SCI Engineered Materials, Inc. DEF 14A 5/01/06 1:201K Bowne of Pittsbur… 01/FA 9/28/00 SCI Engineered Materials, Inc. 10SB12G 11:341K Toppan Merrill-FA2/FA |