ROCHESTER, NEW YORK, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Syntec Optics (Nasdaq: OPTX), a leading provider of mission-critical products to advanced technology defense, biomedical, and communications equipment manufacturers, today reported financial results for the first quarter of 2024.
Third Quarter 2024 Financial Highlights
- Net Sales of $7.86 million increased by 12.3% from $7.01 million in Q2 2024, and sales from products of $7.33 million increased by 17.2% from $6.26 million in Q3 2023.
- Adjusted EBITDA decreased to $1.10 million from $1.32 million in Q2 2024.
- Earnings per Share decreased to $0.00 from $0.01 in Q2 2024.
Dean Rudy, CFO, said, "At the previous earnings call, we provided guidance for the third quarter 2024 revenue to be between $9.5 and $11.0 million. Our revenues came in below this projection at $7.86 million but 12.3% higher than the prior quarter, showing sequential growth. The company ramped up data center connectivity products for increased Artificial Intelligence deployment and continued its production of currently deployed night vision optics and opto-mechanicals, mission-critical biomedical products, space optics, and other diverse products."
Strong End-Market Expansion:
- Continued production of space optics for Low Earth Orbit (LEO) satellites. Satellite broadband could represent a significant portion of the $1 trillion global space economy by 2040.
- Ramped up production to nearly triple the quantity per week for the high-growth data center market driven by the deployment of Artificial Intelligence. The data center market is expected to reach $622.4 billion by 2030.
Technological Leadership and Innovation:
- Delivered proof of concept for phase 1 advanced optical solutions, including high-performance, disposable optics for biomedical imaging with a multi-angled, wider field of view and increased imaging detail. SPIE assessed the 2021 photonics-enabled biomedical marketplace as $201 billion in total revenues.
- Delivered designs for complex optical systems, such as high numerical aperture lens systems for digital night vision.
Third Quarter 2024 Financial and Operating Results
The $7.86 million in net sales for the three months ending 2024 increased 12.3% compared to $7.01 million in Q2 2024. The overall sales increased by 19.2% compared to $6.60 million in Q3 2023, and sales from products increased by 19.9% as the company shifts from development to production ramp-up.
The increase in net sales compared to the prior year is due to increases in our product revenue stream. Product revenue increased by $1.1 million for the three months ended 2024 compared to 2023, a 17.2% increase.
The third quarter of 2024 adjusted EBITDA was $1.10 million for the three months ending 2024, compared to $1.32 million adjusted EBITDA in the second quarter of 2024 and $1.30 million in 2023. Contributing factors to the decrease over the previous quarter were a reduction in gross profit of $0.3 million, a reduction in other income of $0.3 million, and offset by a decrease in general and administrative expenses of $0.3 million. Contributing factors to the year-over-year decrease include a $0.4 million increase in general and administrative expenses to enable future product launches.
The Company ended the third quarter of 2024 with an unused $3.9 million line of credit, an unused $4.8 million equipment line of credit, and a paydown of 3.3% principal on other commercial bank lines.
Our net income for the three months ended in the third quarter of 2024 was a negative $0.01 million, or $0.00 per share, down from $0.3 million or negative $0.01 per share for Q2 2024, and compared to $0.4 million, or $0.01 per share, for Q3 2023.
Guidance
Our recent increases in ongoing sales into the communications, medical, and defense industries are expected to accelerate in the third quarter, particularly within our space communications optics and datacom microlens arrays. As such, the fourth quarter 2024 revenue is expected to be in the range of $7.4 - $9.0 million.
We expect our gross margin to hold level or slightly improve based on the profitability of ramping up products. General and administrative costs are expected to increase modestly to enable ramped-up engineering, quality, and pilot production to support continued growth in the fourth quarter.
Looking to the first quarter of 2025, we anticipate continued strength from the communications and biomedical end-markets, with additional growth coming from defense-based product launches.
Our products are propelled by tailwinds as we move towards laser-based satellite communications versus radar-based for low latency, biomedical automation, defense equipment modernization, and on-shoring. Mission-critical products use proprietary techniques that provide an economic moat.
Lastly, we expect positive net income in the fourth quarter, enabling further investments to energize our continued growth.
About Syntec Optics
Syntec Optics Holdings, Inc. (Nasdaq: OPTX), headquartered in Rochester, NY, is one of the largest custom and diverse end-market optics and photonics manufacturers in the United States. Operating for over two decades, Syntec Optics runs a state-of-the-art facility with extensive core capabilities of various optics manufacturing processes, both horizontally and vertically integrated, to provide a competitive advantage for mission-critical OEMs. Syntec Optics recently launched new products, including Low Earth Orbit (LEO) satellite optics, lightweight night vision goggle optics, biomedical equipment optics, and precision microlens arrays. To learn more, visit www.syntecoptics.com.
Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, including certain financial forecasts and projections. All statements other than statements of historical fact contained in this press release, including statements as to the transactions contemplated by the business combination and related agreements, future results of operations and financial position, revenue and other metrics, planned products and services, business strategy and plans, objectives of management for future operations of Syntec Optics, market size, and growth opportunities, competitive position and technological and market trends, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," "plan," "targets," "projects," "could," "would," "continue," "forecast" or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors (some of which are beyond the control of Syntec Optics), which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates, forecasts and assumptions that, while considered reasonable by Syntec Optics and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations which include, but are not limited to: 1) risk outlined in any prior SEC filings; 2) ability of Syntec Optics to successfully increase market penetration into its target markets; 3) the addressable markets that Syntec Optics intends to target do not grow as expected; 4) the loss of any key executives; 5) the loss of any relationships with key suppliers including suppliers abroad; 6) the loss of any relationships with key customers; 7) the inability to protect Syntec Optics' patents and other intellectual property; 8) the failure to successfully execute manufacturing of announced products in a timely manner or at all, or to scale to mass production; 9) costs related to any further business combination; 10) changes in applicable laws or regulations; 11) the possibility that Syntec Optics may be adversely affected by other economic, business and/or competitive factors; 12) Syntec Optics' estimates of its growth and projected financial results for the future and meeting or satisfying the underlying assumptions with respect thereto; 13) the impact of any pandemic, including any mutations or variants thereof and the Russian/Ukrainian or Israeli conflict, and any resulting effect on business and financial conditions; 14) inability to complete any investments or borrowings in connection with any organic or inorganic growth; 15) the potential for events or circumstances that result in Syntec Optics' failure to timely achieve the anticipated benefits of Syntec Optics' customer arrangements; and 16) other risks and uncertainties set forth in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in prior SEC filings including registration statement on Form S-4 filed with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Syntec Optics does not give any assurance that Syntec Optics will achieve its expected results. Syntec Optics does not undertake any duty to update these forward-looking statements except as otherwise required by law.
For further information, please contact:
Sara Hart
Investor Relations
InvestorRelations@syntecoptics.com
SOURCE: Syntec Optics Holdings, Inc. (Nasdaq: OPTX)
SYNTEC OPTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2024 AND DECEMBER 31, 2023
| 2024 (unaudited) | 2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 476,784 | $ | 2,158,245 | ||||
| Accounts Receivable, Net | 5,821,986 | 6,800,064 | ||||||
| Inventory | 7,560,983 | 5,834,109 | ||||||
| Prepaid Expenses and Other Assets | 344,442 | 359,443 | ||||||
| Total Current Assets | 14,204,195 | 15,151,861 | ||||||
| Property and Equipment, Net | 12,437,352 | 11,101,052 | ||||||
| Deferred Income Taxes | 420,261 | - | ||||||
| Intangible Assets, Net | 250,000 | 295,000 | ||||||
| Total Assets | $ | 27,311,808 | $ | 26,547,913 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 2,492,383 | $ | 3,042,315 | ||||
| Accrued Expenses | 1,224,587 | 1,071,257 | ||||||
| Federal Income Tax Payable | 92,127 | 370,206 | ||||||
| Deferred Revenue | 82,813 | - | ||||||
| Line of Credit | 6,063,863 | 6,537,592 | ||||||
| Current Maturities of Debt Obligations | 461,510 | 362,972 | ||||||
| Current Maturities of Finance Lease Obligations | 181,327 | - | ||||||
| Total Current Liabilities | 10,598,610 | 11,384,342 | ||||||
| Long-Term Liabilities | ||||||||
| Long-Term Debt Obligations | 2,698,386 | 2,024,939 | ||||||
| Long-Term Finance Lease Obligations | 1,891,659 | - | ||||||
| Deferred Income Taxes | - | 74,890 | ||||||
| Total Long-Term Liabilities | 4,590,045 | 2,099,829 | ||||||
| Total Liabilities | 15,188,655 | 13,484,171 | ||||||
| Commitments and Contingencies (Note 16) | - | |||||||
| Stockholder's Equity | ||||||||
| CL A Common Stock, Par value $.0001 per share; 121,000,000 authorized; 36,688,266 issued and outstanding as of September 30, 2024; 36,688,266 issued and outstanding as of December 31, 2023 | 3,669 | 3,669 | ||||||
| Additional Paid-In Capital | 1,927,204 | 1,927,204 | ||||||
| Retained Earnings | 10,192,280 | 11,132,869 | ||||||
| Total Stockholder's Equity | 12,123,153 | 13,063,742 | ||||||
| Total Liabilities and Stockholder's Equity | $ | 27,311,808 | $ | 26,547,913 | | |||
SYNTEC OPTICS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Net Sales | $ | 7,866,355 | $ | 6,600,525 | $ | 21,128,263 | $ | 21,177,257 | ||||||||
| Cost of Goods Sold | 6,032,635 | 4,756,467 | 16,412,773 | 15,244,863 | ||||||||||||
| Gross Profit | 1,833,720 | 1,844,058 | 4,715,490 | 5,932,394 | ||||||||||||
| General and Administrative Expenses | 1,727,480 | 1,314,885 | 5,857,806 | 4,442,117 | ||||||||||||
| Income (Loss) from Operations | 106,240 | 529,173 | (1,142,316 | ) | 1,490,277 | |||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest Expense, Including Amortization of Debt Issuance Costs | (206,069 | ) | (185,292 | ) | (533,178 | ) | (446,875 | ) | ||||||||
| Other Income | 8,575 | 21,107 | 347,547 | 70,914 | ||||||||||||
| Total Other Income (Expense), Net | (197,494 | ) | (164,185 | ) | (185,631 | ) | (375,961 | ) | ||||||||
| Income (Loss) Before Provision for (Benefit) Income Taxes | (91,254 | ) | 364,988 | (1,327,947 | ) | 1,114,316 | ||||||||||
| Provision (Benefit) for Income Taxes | (77,965 | ) | 11,008 | (387,358 | ) | 139,549 | ||||||||||
| Net Income (Loss) | $ | (13,289 | ) | $ | 353,980 | $ | (940,589 | ) | $ | 974,767 | ||||||
| Net Income (Loss) per Common Share | ||||||||||||||||
| Basic and diluted | $ | (0.00 | ) | $ | 0.01 | $ | (0.03 | ) | $ | 0.03 | ||||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||||||
| Basic and diluted | 36,688,266 | 31,600,000 | 36,688,266 | 31,600,000 | ||||||||||||
SYNTEC OPTICS HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
| 2024 | 2023 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net (Loss) Income | $ | (940,589 | ) | $ | 974,767 | |||
| Adjustments to Reconcile (Loss) Income to Net Cash (Used In) | ||||||||
| Provided By Operating Activities: | ||||||||
| Depreciation and Amortization | 2,122,999 | 2,096,335 | ||||||
| Amortization of Debt Issuance Costs | 6,806 | 5,758 | ||||||
| Gain on Disposal of Property and Equipment | (309,000 | ) | - | |||||
| Change in Allowance for Expected Credit Losses | 132,764 | (51,706 | ) | |||||
| Change in Reserve for Obsolescence | 283,196 | 16,299 | ||||||
| Deferred Income Taxes | (495,151 | ) | (536,090 | ) | ||||
| (Increase) Decrease in: | ||||||||
| Accounts Receivable | 845,314 | (504,372 | ) | |||||
| Inventory | (2,010,070 | ) | (1,831,660 | ) | ||||
| Prepaid Expenses and Other Assets | 15,001 | 193,379 | ||||||
| Increase (Decrease) in: | ||||||||
| Accounts Payables and Accrued Expenses | (1,022,602 | ) | 523,455 | |||||
| Federal Income Tax Payable | (278,079 | ) | 528,411 | |||||
| Deferred Revenue | 82,813 | (309,735 | ) | |||||
| Net Cash (Used In) Provided By Operating Activities | (1,566,598 | ) | 1,104,841 | |||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of Property and Equipment | (628,229 | ) | (979,630 | ) | ||||
| Proceeds from Disposal of Property and Equipment | 309,000 | - | ||||||
| Net Cash Used in Investing Activities | (319,229 | ) | (979,630 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| (Repayments) Borrowing on Line of Credit, Net | (473,729 | ) | 147,076 | |||||
| Borrowing on Debt Obligations | 1,100,388 | - | ||||||
| Repayments on Debt Obligations | (335,209 | ) | (633,081 | ) | ||||
| Repayments on Finance Lease Obligations | (87,084 | ) | - | |||||
| Distributions | - | (62,065 | ) | |||||
| Net Cash Provided By (Used in) Financing Activities | 204,366 | (548,070 | ) | |||||
| Net Decrease in Cash | (1,681,461 | ) | (422,859 | ) | ||||
| Cash - Beginning | 2,158,245 | 526,182 | ||||||
| Cash - Ending | $ | 476,784 | $ | 103,323 | ||||
| Supplemental Cash Flow Disclosures: | ||||||||
| Cash Paid for Interest | $ | 459,994 | $ | 451,580 | ||||
| Cash Paid for Taxes | $ | 568,143 | $ | 118,616 | ||||
| Supplemental Disclosures of Non-Cash Investing Activities: | ||||||||
| Assets Acquired and Included in Accounts Payable and Accrued Expenses | $ | 626,000 | $ | 680,337 | ||||
| Finance Lease Liability Incurred | $ | 2,160,070 | $ | - | ||||
NON-GAAP RECONCILIATION OF EBITDA
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Net (Loss) Income | $ | (13,289 | ) | $ | 353,980 | $ | (940,589 | ) | $ | 974,767 | ||||||
| Depreciation & Amortization | 739,812 | 692,716 | 2,129,805 | 2,102,093 | ||||||||||||
| Interest Expenses | 203,650 | 184,358 | 526,372 | 441,115 | ||||||||||||
| Taxes | (77,965 | ) | 11,008 | (387,358 | ) | 139,549 | ||||||||||
| Non-Recurring Items | ||||||||||||||||
| Other Income - Sale of Equipment & Accessories | - | - | - | (10,068 | ) | |||||||||||
| Discount Income | - | - | - | 192 | ||||||||||||
| Non-Recurring Contributions, Management Fees & Expenses | - | (2,404 | ) | - | 210,112 | |||||||||||
| Non-Recurring Professional & Transaction Fees | - | 55,444 | 174,500 | 213,500 | ||||||||||||
| Technology Start-up Costs | 22,275 | - | 272,067 | - | ||||||||||||
| Non-Recurring Optical Molding Evaluation Expenses | 77,386 | - | 187,734 | - | ||||||||||||
| Non-Recurring Glass Molding Evaluation Expenses | 28,240 | - | 130,196 | - | ||||||||||||
| Non-Recurring Executive Transition Expense | 122,374 | - | 122,374 | - | ||||||||||||
| Adjusted EBITDA | $ | 1,102,483 | $ | 1,295,104 | $ | 2,215,101 | $ | 4,071,261 | ||||||||
Use of Non-GAAP Financial Measures
The Company provides non-GAAP financial measures, including EBITDA and Adjusted EBITDA, as a supplement to GAAP financial information to enhance the overall understanding of the Company's financial performance and to assist investors in evaluating the Company's results of operations, period over period. Adjusted non-GAAP measures exclude significant unusual items. Investors should consider these non-GAAP measures as a supplement to, and not a substitute for financial information prepared on a GAAP basis.
Non-GAAP Financial Measures
This Annual Report includes a non-GAAP measure that the Company uses to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined as earnings before interest and other income, tax and depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted for non-recurring items, and business combination expenses. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.
Adjusted EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies. This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as an alternative to information reported in accordance with U.S. GAAP.
Adjusted EBITDA
The Company defines adjusted EBITDA, a non-GAAP financial measure, as net earnings (loss) before interest and other expenses, net, income tax expense, depreciation and amortization, as adjusted to exclude non-recurring items as outlined in our 10-Q. The Company utilizes adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allows for a more relevant comparison of our results of operations to other companies in our industry and is in accordance with the Non-GAAP Financial Measures Compliance & Disclosure Interpretations (Reference Question 102.03).
