Syntec Optics Holdings, Inc. (Nasdaq: OPTX) Reports Third Quarter 2024 Financial Results

About this update from Syntec Optics Holdings, Inc.

Syntec continues sequential revenue growth with positive EBITDA 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 [email protected] 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). Source: Syntec Optics

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