SCI reports record income
SCI Engineered Materials, a US supplier and manufacturer of advanced materials for physical vapour deposition thin film applications, has reported record net income for the six months and three months ended June 30, 2018.
Dan Rooney, president and CEO, said: "We are pleased with our results for the first six months and second quarter of 2018, which include significant increases in revenue and net income, that were driven by solid performance across our product portfolio. During this period, we added new customers and the sharp increase in orders contributed to a backlog of $6.3 million at June 30, 2018. Included in this amount was a $2 million order from a new customer for thin film solar products. These achievements position us for a strong second half."
Rooney continued: "We are actively monitoring industry and global developments, especially in the thin film solar market. At mid-year 2018, sales of thin film solar products exceeded the amount for all of last year. Based on current orders booked, customer deposits received and customer forecasts for additional solar orders for the remainder of 2018, we are hiring more employees in our manufacturing operations and recently added inside sales and R&D staff. We anticipate revenue for the second half of this year will be similar to 2018's first half results. We are working diligently to respond to increased demand for SCI's products and are excited regarding our future opportunities."
Higher volume of thin film solar products and higher volume and pricing of photonics products resulted in significant revenue growth for the 2018 year-to-date and second quarter compared to last year. Revenue increased 34 percent to $4,390,609 for the first half of this year from $3,283,414 a year ago. For the three months ended June 30, 2018, revenue increased 33 percent to $2,543,751 from $1,911,498 in 2017.
The company anticipates that revenue in the second half of 2018 will be similar to the first half of this year.
Order backlog was a record $6.3 million at June 30, 2018, compared to $3.6 million at March 31, 2018, and $2.9 million on the same date a year ago.
Gross profit and gross margin for the first six months and second quarter of 2018 benefited from the increase in revenue, pricing and improved product mix. For the six months ended June 30, 2018, gross profit increased 56 percent to $1,251,541 from $799,832 a year ago. Second quarter 2018 gross profit increased 71 percent to $789,529 from $462,847 a year ago.
The growth in operating expenses (general and administrative expense, marketing and sales expense and research and development expense), has principally occurred in marketing and sales related to higher wages, benefits and sales rep commissions versus last year.
The company continues to invest through its internal research and development initiatives in an innovative buffer layer for thin film solar cells and other applications. Operating expenses for the first half of 2018 were $833,838 or 11 percent higher than a year ago and $460,039 or 20 percent above the second quarter of 2017.
The sharp increase in revenue and significantly higher gross profit in each period compared to a year ago contributed to record income applicable to common stock for the first six months and second quarter of this year. Income applicable to common stock increased to $386,171, or $0.09 per share, for the first six months of 2018 from $16,797, or $0.00 per share, a year ago. For the second quarter of 2018, income applicable to common stock increased significantly to $314,972, or $0.07 per share, for the three months ended June 30, 2018, from $63,283, or $0.02 per share, for the comparable period in 2017.
Earnings before interest, income taxes, depreciation and amortisation (EBITDA) for the first six months of 2018 increased 131 percent to $661,507 from $286,296 a year ago. The 2018 amount benefited from significantly higher net income versus the same period last year. Adjusted EBITDA, which excludes non-cash stock based compensation, was $704,526 for the first half of 2018 compared to $383,827 or 83 percent above a year ago.
EBITDA for the three months ended June 30, 2018, more than doubled to $452,937 from $202,176 for the same period in 2017 due to the significant increase in net income. Adjusted EBITDA increased 88 percent to $475,370 for the second quarter of 2018 from $252,845 for the same period last year.
Cash on hand of $2,582,296 at June 30, 2018, was 144 percent and 163 percent, respectively, above the March 31, 2018, and 2017 year-end amounts.
Cash provided by operating activities of $1,976,724 for the first six months of 2018 was 330 percent above the same period last year. This increase is principally due to customer deposits received from thin film solar and photonics customers during the first half of 2018.
The company's total debt outstanding decreased 15 percent during the six months ended June 30, 2018, and was approximately $451,000 compared to $532,000 at 2017 year-end. The company entered into a new equipment capital lease obligation of approximately $105,000 during the first half of 2018 to increase operating capacity.