Servotronics, Inc. has a market cap of $19.5 million; its shares were traded at around $8.25 with a P/E ratio of 7.6 and P/S ratio of 0.6. The dividend yield of Servotronics, Inc. stocks is 3.7%. Servotronics, Inc. had an annual average earning growth of 19.2% over the past 10 years. GuruFocus rated Servotronics, Inc. the business predictability rank of 4-star.
Highlight of Business Operations:During the three months ended June 30, 2012 and 2011 approximately 29% and 40%, respectively, and 32% and 41% for the six months ended June 30, 2012 and 2011, respectively, of the Company s revenues from continuing operations were derived from contracts with agencies of the U.S. Government or their prime contractors and their subcontractors. Sales of products sold for government applications decreased when comparing the results of three and six months ended June 30, 2012 to June 30, 2011, due to decreased government shipments at the Consumer Products Group in the amount of approximately $917,000 and $1,425,000, respectively, while shipments to the government at the Advanced Technology Group remained consistent. The Company believes that government involvement in military operations overseas will continue to have an impact on the financial results for both the ATG s and CPG s markets. While the Company is optimistic in relation to these potential opportunities, it recognizes that sales to the government are affected by defense budgets, the foreign policies of the U.S. and other nations, the level of military operations and other factors, and as such, it is difficult to predict the impact on future financial results.
The Company s consolidated revenues for continuing operations decreased approximately $291,000 or 3.6% for the three month period ended June 30, 2012 and $184,000 or 1.1% for the six month period ended June 30, 2012 when compared to the same three and six month periods in 2011. The decrease is due to decreased shipments at the Consumer Products Group (CPG) mainly due to a decrease in shipments related to orders from the U.S. Government and its prime vendors. These decreases are not fully offset by increases in combined commercial and government shipments at the Advanced Technology Group (ATG). Procurements and timing of shipments under Government contracts at the CPG may, at times, significantly impact operating results from period to period.
Selling, general and administrative (SG&A) expenses as a percentage of revenue remained relatively consistent for the three and six month periods ended June 30, 2012 as compared to the same period in 2011. Selling, general and administrative expenses are attributable to marketing of products (i.e., costs of internal and external sales efforts, catalog production, and the promotion of new and existing products in current and new markets). Also included in SG&A expenses are the labor and related costs for general and administrative support, accounting, professional, legal and information technology costs.
Income from continuing operations for the three month period ended June 30, 2012 decreased $107,000 or 14.7% when compared to the same period ended June 30, 2011. Income from continuing operations for the six month period ended June 30, 2012 decreased $434,000 or 35.8% when compared to the same period ended June 30, 2011. The decrease in income from continuing operations is primarily the result of decreased revenues and shipments of products with lower margins at the Company s Consumer Products Group.
The Company used approximately $695,000 in cash from operations during the six months ended June 30, 2012. Cash was generated primarily through net income and an increase in accrued employee compensation and benefit costs. The primary use of cash for the Company s operating activities for the six months ended June 30, 2012 include working capital requirements, mainly inventory, prepayments on insurances and property tax, other accrued liabilities and prepaid income taxes. Cash generated and used in operations is consistent with sales volume, customer expectations and competitive pressures. The Company s primary use of cash in its financing and investing activities in the first six months of 2012 included current principal payments on long-term debt and related party capital lease. The Company expended approximately $136,000 for capital expenditures during the six months ended June 30, 2012.
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