COLUMBUS, Ohio (February 5, 2020) SCI Engineered Materials, Inc. (“SCI”) (SCIA: OTCQB), 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, today reported results for the full-year and three months ended December 31, 2019.
Mr. Jeremy Young, President and Chief Executive Officer, said, “We realized solid progress in key areas of our photonics business during the past year despite challenging conditions in the global thin film solar market. Key achievements included record revenue of nearly $\text{13.0 million}$, increased presence in additional niche markets, lower operating expenses and completion of a smooth executive management transition. We are pursuing opportunities to increase the Company’s market penetration and further diversify our foundation for future growth as we build upon our legacy business and solid increase in customers this past year.”
Mr. Young continued, “We were disappointed in 2019 that increased volatility in the global solar market, including disruptive factors that affected customer behavior, contributed to a significant decline in order rates for our thin film solar products. The Company anticipates another profitable year in 2020 based on factors we can control, which are primarily focused on increased sales to our growing base of photonics customers and other niche markets.”
Mrs. Laura Shunk, Chairman of the Board, stated, “The Board is pleased with the progress Mr. Young has demonstrated in transitioning to his role as President and CEO, including his active exploration of new growth strategies and disciplined operational oversight.”
Financial Highlights
Revenue
Revenue rose 14% to a record $12,950,387 for the twelve months ended December 31, 2019. This benefited from new customers, increased volume for photonics products, and higher pricing, but was partially offset by a substantial decline in thin film solar product revenue.
For the three months ended December 31, 2019, total revenue decreased 32% to $2,938,200 from $4,318,331 for the same period in 2018.
Order backlog of $5.8 million at December 31, 2019, was unchanged from the amount at September 30, 2019.
Gross Profit
Gross profit decreased 24% to $2,208,563 for 2019 from $2,904,776 in 2018. Gross profit for the fourth quarter of 2019 declined 64% to $359,072 from $987,351 a year ago, primarily due to product mix and lower volume of thin film solar sales.
Operating Expenses
Full-year 2019 operating expenses decreased 5% to 1,877,705 from 2018 due to lower marketing and sales expenses (compensation/commission).
Operating expenses for the fourth quarter of 2019 were 435,186 or 29% below the same period in 2018, primarily due to completion of the executive management transition and lower travel/commission expenses.
Income (Loss) Applicable to Common Shares
Income applicable to common shares was $281,199, or 0.06 per common share, for 2019 compared to $\text{883,717}$, or $\text{0.21}$ per common share, the prior year.
The Company’s loss applicable to common shares was ($84,779), or ($0.02) per share, for the 2019 fourth quarter versus income of $359,458, or $0.08 per share, for the same period in 2018.
EBITDA*
Earnings before interest, income taxes, depreciation and amortization (EBITDA) was $833,531 for the twelve months ended December 31, 2019, versus $1,387,810 for 2018.
Cash and Total Debt Outstanding
The Company had $1,828,397 of cash at December 31, 2019.
Total debt outstanding was $223,835 at December 31, 2019, a decrease of approximately 15% from the prior year.
About SCI Engineered Materials, Inc.
SCI Engineered Materials is a global supplier and manufacturer of advanced materials for PVD thin film applications that 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:
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*Note Regarding Non-GAAP Financial Measure
*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.
Forward-Looking Statements
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, and forecasts. 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, 2019. 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. Considering 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.