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SI

SERVOTRONICS INC /DE/ (SVT)·Q4 2018 Earnings Summary

Executive Summary

  • FY 2018 delivered material improvement: revenue rose to $47.857M (+15.5% YoY), net income reached $3.498M, diluted EPS was $1.49, gross margin expanded to $12.1M (25.3%), and EBITDA increased to $5.339M (11.2% margin) .
  • Management cited momentum from product mix and operational efficiencies at ATG; 2018 marked the fifth consecutive year of revenue growth, underpinning a strategy focused on long-term, sustainable growth .
  • Q3 2018 showed strong execution: revenue $12.768M, diluted EPS $0.61, net income $1.457M, and gross margin 30.9% (vs. 27.3% prior year), reflecting higher volumes and pricing at ATG offset by lower CPG shipments .
  • The company did not disclose discrete Q4 2018 quarterly figures or hold a publicly available earnings call transcript; investor focus centers on full-year results and continued ATG-driven margin expansion .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded in FY 2018 to 25.3% ($12.1M), with EBITDA up to $5.339M (11.2% of revenue), driven by product mix and operational efficiencies at ATG .
  • Management highlighted “strong year in 2018” and “fifth consecutive year of revenue growth,” emphasizing technological improvements and workforce investments that underpin sustained growth (“well positioned to generate value”) .
  • Q3 2018 saw revenue growth to $12.768M and notable margin expansion to 30.9% on higher units shipped and improved average price at ATG .

What Went Wrong

  • CPG shipments decreased in both Q2 and Q3 2018; Q2 saw an aggregate $314k decline and higher SG&A tied to sales/marketing initiatives (media advertising, trade shows), pressuring segment contribution .
  • Q2 2018 SG&A rose ~24.1% YoY primarily due to increased wages and vacation accruals, alongside sales and marketing spend, partially offsetting operating leverage .
  • Lack of disclosed Q4 2018 quarterly detail and no available earnings call transcript limit granularity on intra-quarter dynamics and segment cadence into year-end .

Financial Results

Annual Comparison (FY 2017 → FY 2018)

MetricFY 2017FY 2018
Revenue ($USD Millions)$41.444 $47.857
Net Income ($USD Millions)$1.317 $3.498
Diluted EPS ($USD)$0.57 $1.49
Gross Margin ($USD Millions)$10.0 $12.1
Gross Margin (%)24.1% 25.3%
EBITDA ($USD Millions)$3.027 $5.339
EBITDA Margin (%)7.3% 11.2%

Notes: 2017 adjusted net income was $1.772M and adjusted EBITDA $3.746M, reflecting non-recurring employment contract and arbitration expenses; no similar adjustments in 2018 .

Quarterly Trend (Q2 2017 → Q3 2018)

MetricQ2 2017Q3 2017Q2 2018Q3 2018
Revenue ($USD Millions)$9.616 $11.325 $11.946 $12.768
Net Income ($USD Millions)$0.105 $0.671 $0.707 $1.457
Diluted EPS ($USD)$0.05 $0.29 $0.30 $0.61
Gross Margin (%)18.6% 27.3% 24.5% 30.9%

Segment Commentary (ATG vs CPG shipment changes)

PeriodATG Commercial Shipments (YoY)ATG Government Shipments (YoY)CPG Shipments (YoY)
Q2 2018 vs Q2 2017+$2.775M -$0.131M -$0.314M (aggregate)
Q3 2018 vs Q3 2017Increase (not quantified) —Decrease (not quantified)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4 2018None disclosed None disclosed Maintained (no guidance)
Gross MarginFY/Q4 2018None disclosed None disclosed Maintained (no guidance)
EPSFY/Q4 2018None disclosed None disclosed Maintained (no guidance)
SG&AFY/Q4 2018None disclosed None disclosed Maintained (no guidance)

No formal quantitative guidance was provided in the press releases/8-Ks reviewed .

Earnings Call Themes & Trends

No Q4 2018 earnings call transcript was found in the document set; themes are derived from press releases.

TopicPrevious Mentions (Q2 2018)Previous Mentions (Q3 2018)Current Period (FY 2018 release)Trend
ATG operational efficienciesProduction employment grew; margin improved to 24.5%; D&A up with new machinery Higher units and average price at ATG lifted gross margin to 30.9% Margin expansion attributed to product mix and expected operational efficiencies at ATG Improving efficiency and mix-driven margins
Segment mix (ATG vs CPG)ATG commercial +$2.775M; CPG total -$0.314M YoY ATG increase offset by CPG decrease (not quantified) Two-group structure reiterated; mix a key driver of margin ATG strength; CPG mixed execution
SG&A and cost disciplineSG&A +24.1% on wages/vacation and marketing; % of revenue flat (16.9%) SG&A down slightly YoY; ATG benefited from non-recurring 2017 charges; CPG SG&A +$155k Continued investments in workforce and technology Investing for growth; mixed SG&A dynamics
Demand backdropOrganic growth of existing product lines; strong demand “Strong demand” reflected in higher revenues “Fifth consecutive year of revenue growth” Sustained demand tailwind

Management Commentary

  • “We had a strong year in 2018 and we are proud of the continued improvement in both our top and bottom line results. This was our fifth consecutive year of revenue growth...” — Kenneth D. Trbovich, CEO and Chairman .
  • “We continue to drive for further growth through the implementation of technological improvements and investments in our workforce.” — Kenneth D. Trbovich .
  • “Our quarterly and nine-month results continue to reflect strong demand for our products... gross margin... increased... reflecting our efforts to control costs while also investing for the future.” — Kenneth D. Trbovich (Q3 release) .
  • “This growth, largely attributed to organic growth of our existing product lines, is a testament to the hard work and dedication of the entire Servotronics team...” — Kenneth D. Trbovich (Q2 release) .

Q&A Highlights

  • No Q4 2018 earnings call transcript was available in the filings/document set; we found no Q&A content to extract [List search result showed 0 transcripts].

Estimates Context

  • We were unable to retrieve S&P Global consensus estimates for SVT’s Q4 2018; the company’s filings/press releases do not include third-party consensus data. As a result, estimate comparisons are omitted .

Key Takeaways for Investors

  • FY 2018 marked a step-change in profitability: net income $3.498M, diluted EPS $1.49, EBITDA $5.339M, with gross margin up to 25.3% on $47.857M revenue, indicating improved operating leverage and mix at ATG .
  • Quarterly cadence into year-end showed strengthening margins (Q3 GM 30.9%) and EPS ($0.61 diluted), supported by higher volumes and pricing at ATG; watch for sustainability of mix/pricing tailwinds .
  • ATG remains the growth engine; CPG experienced shipment declines and higher sales/marketing costs in mid-2018—segment execution and SG&A discipline are key monitoring points .
  • Investment in technology and workforce underpins management’s confidence; margin expansion attributed to operational efficiencies at ATG provides a tangible driver for future results .
  • Lack of disclosed Q4 discrete figures or call transcript reduces near-term visibility; investors should focus on full-year momentum and subsequent quarterly disclosures for confirmation .
  • Non-GAAP adjustments in 2017 (employment contract and arbitration) were absent in 2018, making 2018 results a cleaner read-through on core performance .
  • With multi-year revenue growth and improving margins, the medium-term thesis centers on ATG capacity/demand alignment, product mix advantages, and controlled SG&A to translate volume into sustained margin expansion .