Executive Summary

Revenue rose 13.7% year over year to $12.003M, driven by higher commercial and government shipments at the Advanced Technology Group (ATG); however net income fell 70.4% YoY to $0.098M with EPS of $0.04 as cost of goods and SG&A increased, compressing margins .
ATG revenue was $10.595M (+16.2% YoY) while Consumer Products Group (CPG) revenue declined to $1.408M (-2.5% YoY); CPG posted negative gross margin (-3.9%), highlighting segment mix pressure .
Operating cash flow turned positive at $0.505M versus a use of $(0.113)M in the prior year, while capital expenditures increased to $0.642M to support production, and working capital was ~$22.6M .
No formal guidance or earnings call was provided; management remains “optimistic about the remainder of the fiscal year,” citing quality products, employees, and customer/vendor relationships as core fundamentals .

What Went Well and What Went Wrong

What Went Well

Top-line growth: Revenue increased 13.7% YoY to $12.003M, led by ATG commercial and government shipments; ATG revenue rose 16.2% YoY to $10.595M .
Gross margin held: Consolidated gross margin dollars ticked up by $24k YoY; ATG delivered 20.1% gross margin in Q1 despite mix and pricing headwinds .
Liquidity and investment: Cash from operations was $0.505M; capex of $0.642M supported ATG capacity expansion, including ERP and equipment initiatives .
- Quote: “We still have work to do, but I am optimistic about the remainder of the fiscal year…” — Kenneth D. Trbovich, CEO and Chairman .

What Went Wrong

Earnings compression: Net income declined 70.4% YoY to $0.098M and EPS fell to $0.04, reflecting higher cost of goods sold and SG&A as a percentage of sales; net income margin dropped to 0.8% from 3.1% YoY .
CPG weakness: CPG revenue fell 2.5% YoY to $1.408M and gross margin turned negative (-3.9%) amid increased sales promotions, trade show attendance, and travel expenditures impacting SG&A .
Sequential comparison unfavorable: Versus Q3 2018’s revenue of $12.768M and net income of $1.457M (EPS $0.63 basic/$0.61 diluted), Q1 2019 showed lower revenue and significantly lower profitability .

Financial Results

Revenue, EPS, and Margins vs Prior Periods and Estimates

Metric	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019
Revenue ($USD Millions)	$10.559	$11.946	$12.768	N/A (not disclosed)	$12.003
EPS Basic ($USD)	$0.14	$0.31	$0.63	N/A	$0.04
EPS Diluted ($USD)	$0.14	$0.30	$0.61	N/A	$0.04
Gross Margin %	19.4%	24.5%	30.9%	N/A	17.3%
Net Income Margin %	3.1%	~5.9% (707/11,946)	~11.4% (1,457/12,768)	N/A	0.8%

Notes: Q4 2018 press release provided full-year results without standalone quarterly disclosure .

Segment Breakdown (Q1 2019)

Segment	Revenue ($USD Millions)	Cost of Goods Sold ($USD Millions)	Gross Margin ($USD Millions)	Gross Margin %
ATG	$10.595	$(8.467)	$2.128	20.1%
CPG	$1.408	$(1.463)	$(0.055)	-3.9%
Consolidated	$12.003	$(9.930)	$2.073	17.3%

KPIs

KPI	Q1 2018	Q1 2019
Cash from Operations ($USD Millions)	$(0.113)	$0.505
Capital Expenditure ($USD Millions)	$0.511	$0.642
Working Capital ($USD Millions)	~$23.141	~$22.583
Depreciation & Amortization ($USD Millions)	$0.244	$0.274

Guidance Changes

No formal guidance (revenue, margins, OpEx, tax rate, segment) was issued in Q1 2019 press materials or the 10-Q .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2019	None	None	N/A
Gross Margin	FY2019	None	None	N/A
SG&A	FY2019	None	None	N/A
Tax Rate	FY2019	None	None	N/A
Segment Outlook	FY2019	None	Qualitative optimism; no ranges	Maintained qualitative

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 2019 [ListDocuments returned 0 for earnings-call-transcript].

Topic	Previous Mentions (Q3 2018 press)	Previous Mentions (Q4 2018 press)	Current Period (Q1 2019 10‑Q/press)	Trend
Demand/Backlog	Strong demand; revenue up; margin improvement cited at ATG	Fifth consecutive year of revenue growth; momentum; investments in workforce and technology	Strong ATG backlog; shipment schedules may change with customer delivery timing; commercial aircraft market supportive	Positive but cautious on timing
Segment Mix	ATG commercial growth offset by lower CPG shipments	N/A	ATG up (20.1% GM); CPG down with negative GM (-3.9%)	Mix skews to ATG; CPG under pressure
Cost Control/Margins	Gross margin improved; SG&A decreased at ATG YoY	GM 25.3% for FY2018; EBITDA 11.2%; non-GAAP adjustments in FY2017 only	Gross margin flat YoY dollars; margin % down; SG&A up 18.4% driven by CPG promotions/travel	Margin compression near-term
Technology/ERP	N/A	Investments in technology highlighted	ERP implementation and IT equipment in CIP (~$1.378M total CIP)	Ongoing execution
Government Exposure	N/A	Fixed price contracts; defense appropriation uncertainty	~10% of revenue from U.S. Government contracts; risks from defense budgets and foreign policy	Stable exposure with macro sensitivity
Legal/Regulatory	N/A	Non-GAAP reconciliation notes for FY2017	Litigation with Aero, Inc.; company deems risk of loss remote; counter-claim filed	Watch, but risk assessed remote
Financing & Liquidity	N/A	Lines of credit and equipment financing available	$2M LOC undrawn; equipment lease line ~$0.659M outstanding; term loans secured; covenant compliant	Adequate liquidity

Management Commentary

“We continue to invest for the future while maintaining the same level of quality we have delivered for nearly 60 years… I am optimistic about the remainder of the fiscal year…” — Kenneth D. Trbovich, CEO and Chairman .
“We had a strong year in 2018… fifth consecutive year of revenue growth… continue to drive for further growth through the implementation of technological improvements and investments in our workforce.” — Kenneth D. Trbovich, CEO and Chairman .

Q&A Highlights

No Q1 2019 earnings call transcript or Q&A was available [ListDocuments found 0 earnings-call-transcript results].

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable due to missing CIQ mapping for SVT; as a result, comparison to consensus cannot be provided at this time [GetEstimates error].

Default practice is to use S&P Global for consensus; however, for Q1 2019, consensus EPS and revenue were not retrievable.

Metric	Q1 2019 Consensus	Q1 2019 Actual	Surprise
Revenue ($USD Millions)	N/A (consensus unavailable)	$12.003	N/A
EPS ($USD)	N/A (consensus unavailable)	$0.04	N/A

Key Takeaways for Investors

Mix shift favors ATG: Strong ATG shipments underpin revenue growth; continued commercial aerospace strength supports ATG backlog, but delivery timing could affect quarterly cadence .
Margin pressure is the watch item: Consolidated gross margin rate fell to 17.3% and CPG’s negative GM highlights mix/pricing challenges and elevated SG&A at CPG; monitor CPG profitability actions .
Earnings compression despite revenue growth: Net income dropped 70.4% YoY and EPS fell to $0.04; without guidance or a call, near-term narrative hinges on execution and cost discipline — a potential driver of sentiment when margins inflect .
Investment cycle underway: Capex $0.642M in Q1 and ERP/CIP projects suggest near-term cost absorption for medium-term productivity gains; look for margin recovery as projects come online .
Liquidity intact: Positive operating cash flow and available credit facilities provide flexibility; covenants in compliance .
Legal overhang appears contained: Aero, Inc. litigation assessed as remote risk by the company; continue to monitor developments .
Absence of formal guidance/estimates: With no consensus data and no call, stock reaction may hinge on future disclosures and evidence of CPG stabilization and ATG margin leverage [GetEstimates error].

SERVOTRONICS INC /DE/ (SVT)·Q1 2019 Earnings Summary