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8-K - CURRENT REPORT - SOLITRON DEVICES INC | sodi_8k.htm |
Exhibit 99.1
SOLITRON
DEVICES, INC. FINANCIAL/CORPORATE UPDATE
WEST
PALM BEACH, FL – Solitron Devices, Inc. (OTCBB: SODI)
(“Solitron” or the “Company”) is providing
the following financial/corporate update.
FISCAL
2021 FIRST QUARTER HIGHLIGHTS
➢
Net sales of $2.7
million in the fiscal first quarter versus $2.6 million in prior
year period
➢
Net bookings of
$1.5 million in the fiscal first quarter versus $1.9 million in
prior year period
➢
Estimated net
income of approximately $200,000 to $275,000 in the fiscal first
quarter versus a loss of $249,000 in the prior year
period
➢
Cash and Securities
of $1.8 million and no debt at the end of the fiscal first quarter
versus $1.5 million at the end of fiscal 2020
FISCAL
2021 SECOND QUARTER HIGHLIGHTS
➢
Net sales of $3.1
million in the fiscal second quarter versus $2.4 million in prior
year period
➢
Net bookings of
$1.7 million in the fiscal second quarter versus $3.7 million in
prior year period
➢
Estimated net
income of approximately $400,000 to $600,000 in the fiscal second
quarter versus a revised loss of $320,000 in the prior year
period
➢
Cash and Securities
of $2.9 million and debt of $0.8 million under our PPP loan at the
end of the fiscal second quarter versus $1.8 million at the end of
the fiscal first quarter.
CURRENT
FISCAL YEAR 2021 EXPECTATIONS
➢
Net sales in line
with previous expectation of approximately $10.5 million in fiscal
2021
➢
Net bookings
expectation increased from $10.0 million to $11.5 million in fiscal
2021
➢
Expect a meaningful
improvement in net income from fiscal 2020
For the
fiscal 2021 first quarter, three-month period ended May 31, 2020,
net sales were approximately $2.7 million versus $2.6 million in
the fiscal 2020 first quarter. Earnings in the fiscal 2021 first
quarter are projected to be approximately $0.2 million to $0.3
million, or $0.10 to $0.13 per share, as compared to a loss of
$(0.25) million, $(0.13) per share in the first quarter of fiscal
2020. The projected earnings improvement is due to increased
revenue, decreased cost of sales due to less scrap, rework and
inventory obsolescence, completion of our wafer fab improvement
plan, its return to full production, along with a roughly $50,000
decrease in SG&A during the quarter.
For the
fiscal 2021 second quarter, three-month period ended August 31,
2020, net sales were approximately $3.1 million versus $2.4 million
in the fiscal 2020 second quarter. Earnings in the fiscal 2021
second quarter are projected to be between $0.4 million and $0.6
million, or $0.19 to $0.29 per share, as compared to a revised loss
of $(0.3) million, or $(0.17) per share, in the second quarter of
fiscal 2020. The previously reported loss for the fiscal second
quarter of fiscal 2020 was $(0.2) million. The $(0.1) increase is
due to a revision in how we treated a disputed invoice that
originally was accrued in October 2018 and reversed, creating a
benefit to SG&A, in July 2019. We reversed both the original
accrual and reversal. The projected earnings improvement is due to
increased gross profit due to higher revenue, a large decrease in
SG&A during the quarter due to the prior year period having
$282,000 in stock based compensation expense, and approximately
$35,000 in other income in the fiscal 2021 second
quarter.
Due to COVID-19 we have been experiencing a slowness in the
issuance of purchase orders over the last six months. Net bookings
were $1.5 million in the fiscal 2021 first quarter as compared to
$1.9 million in the fiscal 2020 first quarter, and $1.7 million in
the fiscal 2021 second quarter as compared to $3.7 million in the
fiscal 2020 second quarter. As mentioned previously in our press
releases and public filings, bookings will be volatile on a
quarterly basis due to the timing of receipt of some of our larger
orders.
In our prior press release reporting preliminary revenue and
bookings for the fiscal 2020 fourth quarter, we had said that we
had expected to receive the next order under our largest program of
roughly $2.5 to $3.0 million during the fiscal 2021 first quarter.
That not only did not happen in the fiscal first quarter, it was
not received in the fiscal second quarter either. Based on
conversations with the customer, we currently expect the order to
be in excess of $4 million and to be received in the current fiscal
year. We also expect to be awarded the first half of a $1.3 million
order with a major defense contractor in the fiscal third quarter,
and because of that order we are increasing our current expectation
for bookings in fiscal 2021 to approximately $11.5 million from
approximately $10 million. As a reminder, timing is always
uncertain with regard to the receipt of government/defense related
contracts.
Based
on our current backlog and having already shipped in excess of $5.7
million in the first six months of the fiscal year, we continue to
expect to see a revenue increase in fiscal 2021 versus the $9.2
million recorded in fiscal 2020, and a meaningful improvement in
net income for the fiscal year. Due to the slowness in the issuance
of purchase orders by our customers, we expect fiscal third quarter
revenues to be approximately $2.2 million and potentially modest
net loss.
As a
small manufacturing concern with high fixed costs, we believe we
have excellent operating leverage if we can increase sales. The
differences between the projected profitability between our first
three quarters of fiscal 2021 is a reflection of this belief. Since
new management took over, one of our primary areas of focus has
been to expand our capabilities into newer products, including
Silicon Carbide, and we are continuing to see the fruits of our
efforts. In the coming months we plan on adding additional
personnel and equipment to assist in this effort.
Our
current estimate for fiscal 2021 revenues is being maintained at
approximately $10.5 million. If achieved, it would be the first
time the Company has exceeded $10 million in fiscal year revenues
since the company went through a reorganization more than 25 years
ago. As a reminder, when current management took over, trailing
twelve months sales were approximately $7.5 million.
In
July, based on the current economic uncertainty due to the
resurgence of the coronavirus in the country, and South Florida in
particular, and the impact of the coronavirus on our bookings, the
Company applied for and was approved for a PPP loan in the amount
of $0.8 million.
Our
expectation of a material improvement in net income for fiscal 2021
is based on 1) fiscal 2020 results, which are still subject to
completion of our audit, resulting in a net loss of $(0.5) to
$(0.6) million; 2) the strong results in the first two quarters of
fiscal 2021; 3) the assumption of a few months of losses due to the
resurgence of the coronavirus; and 4) the assumption of fiscal 2021
fourth quarter results being comparable to the first quarter.
Obviously projected results for the third and fourth quarters of
fiscal 2021 are subject to substantial change due to uncertainty
related to the coronavirus.
As
noted above our cash and securities as of the end of the fiscal
2021 second quarter was approximately $2.9 million, long term debt
due to the PPP loan was $0.8 million, and our accounts receivable
of $1.7 million exceeded our total current
liabilities.
Audit Update
Our
audit is ongoing. We expected the audit to take significantly more
time than normal. A two-year audit is essentially nearly three
times the work of a normal annual audit. In a normal one year
audit, assuming the prior year’s financials were audited, the
auditor has to audit the closing balances and activity during the
year. With a two-year audit where the previous year was not
audited, it involves the opening balances, the first year’s
balances and the second year’s balances as well as the
activity in both years. In addition to the complexity and more
labor intensive process, we have had to deal with the impact of the
coronavirus. We cannot give a precise estimate for completion, but
once completed and filed, we will work expeditiously to file the
next two quarterly filings as soon as possible.
These
preliminary, unaudited revenue and bookings for the fiscal 2020 and
2021 first and second quarters are based on management's review of
operations for those periods and the information available to the
Company as of the date of this press release. An independent
registered public accounting firm has not reviewed or performed any
procedures with respect to the preliminary information presented
for the fiscal quarters and fiscal years ended August 31, 2020, May
31, 2020, February 29, 2020, August 31,2019, May 31, 2019, February
28, 2019, or February 28, 2018, nor completed the audit for the
fiscal year ended February 28, 2017.
About Solitron Devices, Inc.
Solitron Devices, Inc., a Delaware corporation, designs, develops,
manufactures and markets solid state semiconductor components and
related devices primarily for the military and aerospace markets.
The Company manufactures a large variety of bipolar and metal oxide
semiconductor (“MOS”) power transistors, power and
control hybrids, junction and power MOS field effect transistors
(“Power MOSFETS”), and other related products. Most of
the Company's products are custom made pursuant to contracts with
customers whose end products are sold to the United States
government. Other products, such as Joint Army/Navy
(“JAN”) transistors, diodes and Standard Military
Drawings voltage regulators, are sold as standard or catalog items.
The Company was incorporated under the laws of the State of New
York in March 1959 and reincorporated under the laws of the State
of Delaware in August 1987.
Forward-Looking Statements
This press release contains forward-looking statements regarding
future events and the future performance of Solitron Devices, Inc.
that involve risks and uncertainties that could materially affect
actual results, including statements regarding the Company’s
unaudited fiscal 2020 and 2021 first and second quarter results and
the Company’s expectations regarding bookings, revenue, and
net income in fiscal 2021. Factors that could cause actual results
to vary from current expectations and forward-looking statements
contained in this press release include, but are not limited to:
(1) the successful completion of the two-year audit the Company is
currently undergoing; (2) actual bookings, revenue and net income
for fiscal year 2021; (3) the global impact of the pandemic
outbreak of coronavirus (COVID-19) and its impact on our operations
and the operations of our suppliers and clients, staffing levels
and labor costs, the timing and size of orders from our clients,
our delivery schedules and our liquidity and cash position (4) our
ability to properly account for inventory
in the future; (5) our ability to protect the Company’s net
operating losses and tax benefits; (6) volatility and changes in
our stock price, corporate or other market conditions; (7) the loss
of, or reduction of business from, substantial clients; (8) our
dependence on government contracts, which are subject to
termination, price renegotiations and regulatory compliance; (9)
changes in government policy or economic conditions; (10) increased
competition; (11) the uncertainty of current economic conditions,
domestically and globally; and (12) other factors contained in the
Company’s Securities and Exchange Commission filings,
including its most recent Form 10-K, 10-Q and 8-K
reports.
Tim Eriksen
Chief Executive Officer
(561) 848-4311
Corporate@solitrondevices.com