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Syntec Optics Holdings, Inc. (Nasdaq: OPTX) Reports Fourth Quarter 2023, Full Year 2023 and First Quarter 2024 Financial Results

ROCHESTER, NEW YORK, May 24, 2024 (GLOBE NEWSWIRE) -- Syntec Optics Holdings, Inc. (“Syntec Optics” or the “Company”) (Nasdaq: OPTX), a leading provider of mission-critical optics to scientific and technical instruments and defense and aerospace OEMs, reported financial and operational results for the fourth quarter and full year of 2023 and also 2024 First Quarter.

Fourth Quarter 2023 Financial Highlights

  • Net Sales of $8.3 million, increased from $7.1 million compared to Q4 2022
  • Adjusted EBITDA was $1.3 million, compared to $1.1 million in Q4 2022
  • Cash was $2.2 million, increased from $0.5 million in 2022 and debt decreased to $8.9 million from $9.9 million in 2022

Full Year 2023 Financial Highlights

  • Net Sales of $29.4 million were higher compared to $27.8 million in 2022
  • Adjusted EBITDA for the full year 2023 was $5.3 million, compared to $4.5 million in 2022
  • Earnings per Share rises to $0.06 from Negative $0.01 in 2022
  • Cash was $2.2 million, increased from $0.5 million in 2022 and debt decreased to $8.9 million from $9.9 million in 2022

First Quarter 2024 Financial Highlights

  • Net Sales of $6.3 million, decreased from $6.9 million compared to Q1 2023
  • Adjusted EBITDA was negative $0.7 million, compared to $1.0 million in Q1 2023
  • Cash was $1.7 million, decreased from $2.2 million end of Quarter 4 2023, and debt decreased to $8.8 million from $8.9 million end of Quarter 4 2023

Operational and Business Highlights

  • Entered Communications end market with the launch of space optics for Low Earth Orbit Satellites and recorded revenue of $5.3 million in the year 2023
  • Launched three new products in defense in the third and fourth quarter of 2023
  • Launched one new product in high precision biomedical optics in Quarter 4 2023
  • Launched one product in biomedical disposable optics in Quarter 1 of 2024
  • Launched one product in telecommunications microlens arrays in Quarter 4 2023 and created a higher volume production line in Quarter 1 2024

The calendar year 2023 was marked by record-high Net Sales and growth within a new end-market – Communications, while effectively managing the technical challenges of multiple product launches across various lines of capability. Syntec Optics leveraged a robust platform and continued to innovate, offering products for existing markets with existing customers using existing capabilities. Space Optics reached higher production levels. Next, high-precision biomedical mirrors achieve ramp, and low-weight hybrid optics used in night vision goggle systems are finalizing volume production OEM acceptances. Production ramp happens after the product comes off a higher volume line, meets customer specifications, and is integrated into the end product by the customer for final OEM acceptance. Even though some new products meet customer specifications, the OEM end-customer may introduce new parameters, extending the production ramp time. 

Fourth Quarter and Full Year 2023 Financial and Operating Results

Fourth quarter 2023 Net Sales were $8.3 million, increased from $7.1 million compared to the fourth quarter of 2022. Full year 2023 Net sales increased by $1.6 million to $29.4 million for the years ended December 31, 2023, as compared to $27.8 million for the year ended December 31, 2022 with the higher production line running for space optics.

Fourth quarter 2023 Adjusted EBITDA was $1.3 million, compared to $1.1 million in the fourth quarter of 2022. Full year 2023 Adjusted EBITDA was $5.3 million, compared to $4.5 million in 2022.

The Company ended the fourth quarter of 2023 with $2.2 million in cash and $8.9 million in debt. Syntec Optics retains financial flexibility with access to an unused $4.4 million effective line of credit and a $5.0 million equipment line of credit.

First Quarter 2024 Financial and Operating Results

First quarter 2024 Net Sales were $6.3 million, decreased from $6.9 million compared to the first quarter of 2023. This decrease was primarily due to a delay in receiving nearly $2.3 million orders spread across the biomedical, consumer, and defense end markets, offset by an increase of $1.7 million in the communications end market over the prior year, 2023.

First quarter 2024 Adjusted EBITDA was negative $0.7 million, compared to $1.0 million in the first quarter of 2023. Contributing factors included 2024 trade show expenses, 2023-year-end audit expenses, and development costs of new products.

The Company ended the first quarter of 2024 with $1.7 million in cash and $8.8 million in debt. Syntec Optics retains financial flexibility with access to an unused $4.6 million line of credit and a $4.8 million equipment line of credit.

Full year 2023 earnings per share rises over 2022. Several new products were launched in 2023. Space optics achieved production ramp. In the First Quarter of 2024, the new product telecom microlens array advanced to the production ramp, the new biomedical mirrors approach the production ramp, and a new high-volume biomedical disposable optics product development was launched.

About Syntec

Syntec Optics Holdings, Inc. (Nasdaq: OPTX), headquartered in Rochester, NY, is one of the largest custom 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

The 2023 financial results contained in this press release are subject to finalization in connection with the completion of the audit and the preparation of the Company’s Annual Report Form 10-K report for the year ended December 31, 2023. 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 further business combination; 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.

If any of these risks materialize or any of the Company’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently does not know or that it currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements contained in this press release speak only as of the date they were made. Except to the extent required by law, the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

For further information, please contact:

Sara Hart

Investor Relations

InvestorRelations@syntecoptics.com

SOURCE: Syntec Optics Holdings, Inc. (Nasdaq: OPTX)

 

 SYNTEC OPTICS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2023 AND 2022

       
  2023  2022  
ASSETS      
Current Assets        
Cash $2,158,245   526,182 
Accounts Receivable, Net  6,800,064   5,925,724 
Inventory  5,834,109   3,626,360 
Prepaid Expenses and Other Assets  359,443   689,385 
         
Total Current Assets  15,151,861   10,767,651 
         
Property and Equipment, Net  11,101,052   11,624,819 
         
Operating Lease Right of Use Assets, Net  -   63,227 
         
Intangible Assets, Net  295,000   - 
         
Total Assets $26,547,913  $22,455,697 
         
LIABILITIES AND STOCKHOLDER’S EQUITY        
         
Current Liabilities        
Accounts Payable $3,042,315  $412,058 
Accrued Expenses  1,071,257   539,966 
Federal Income Tax Payable  370,206   108,738 
Deferred Revenue  -   348,095 
Line of Credit  6,537,592   6,400,000 
Current Maturities of Debt Obligations  362,972   1,624,851 
Current Maturities of Operating Lease Liabilities  -   13,374 
         
Total Current Liabilities  11,384,342   9,447,082 
         
Long-Term Liabilities        
Long-Term Debt Obligations  2,024,939   1,913,538 
Long-Term Operating Lease Liabilities  -   49,853 
Due to Related Parties  -   11,767 
Deferred Grant Revenue  -   300,000 
Deferred Income Taxes  74,890   1,274,104 
         
Total Long-Term Liabilities  2,099,829   3,549,262 
         
Total Liabilities  13,484,171   12,996,344 
         
Commitments and Contingencies (Note 22)  -   - 
         
Stockholder’s Equity        
CL A Common Stock, Par value $.0001 per share; 121,000,000 authorized; 36,688,266 issued and outstanding as of December 31, 2023 31,600,000 issued and outstanding as of December 31, 2022  3,669   3,160 
Additional Paid-In Capital  1,927,204   237,692 
Retained Earnings  11,132,869   9,218,501 
         
Total Stockholder’s Equity  13,063,742   9,459,353 
         
Total Liabilities and Stockholder’s Equity $26,547,913  $22,455,697 

SYNTEC OPTICS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

  2023  2022 
       
Net Sales $29,441,180  $27,839,312 
         
Cost of Goods Sold  21,520,189   21,713,220 
         
Gross Profit  7,920,991   6,126,092 
         
General and Administrative Expenses  6,379,879   6,654,326 
         
Income (Loss) from Operations  1,541,112   (528,234)
         
Other Income (Expense)        
Interest Expense, Including Amortization of Debt Issuance Costs  (654,765)  (335,974)
Other Income  370,914   274,810 
         
Total Other Expense, Net  (283,851)  (61,164)
         
Income (Loss) Before Provision for (Benefit) Income Taxes  1,257,261   (589,398)
         
Benefit From Income Taxes  (719,172)  (154,829)
         
Net Income (Loss) $1,976,433  $(434,569)
         
Net Income (Loss) per Common Share        
Basic and diluted $0.06  $(0.01)
         
Weighted Average Number of Common Shares Outstanding        
Basic and diluted  32,366,725   31,600,000 

SYNTEC OPTICS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

  2023  2022 
Cash Flows From Operating Activities        
Net Income (Loss) $1,976,433  $(434,569)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:        
Depreciation and Amortization  2,769,284   3,140,601 
Amortization of Debt Issuance Costs  12,451   10,847 
Grant Revenue Income  (300,000)  - 
Change in Allowance for Expected Credit Losses  (25,820)  - 
Change in Reserve for Obsolescence  124,911   (331,881)
Deferred Income Taxes  (1,199,214)  (507,913)
(Increase) Decrease in:        
Accounts Receivable  (848,520)  (756,520)
Inventory  (2,332,660)  1,267,263 
Federal Income Tax Receivable  -   100,000 
Prepaid Expenses and Other Assets  340,298   (104,407)
Increase (Decrease) in:        
Accounts Payables and Accrued Expenses  2,493,826   (597,709)
Federal Income Tax Payable  129,328   108,738 
Deferred Revenue  (348,095)  34,265 
         
Net Cash Provided By Operating Activities  2,792,222   1,928,715 
         
Cash Flows From Investing Activities        
Borrowings (Repayments) from Related Parties, Net  -   40,837 
Purchases of Property and Equipment  (1,921,182)  (1,241,637)
Proceeds from Disposal of Property and Equipment  -   515,372 
         
Net Cash Used in Investing Activities  (1,921,182)  (685,428)
         
Cash Flows From Financing Activities        
Borrowings (Repayments) on Line of Credit, Net  137,592   (1,600,000)
Borrowing on Debt Obligations  1,745,573   - 
Repayments on Debt Obligations  (2,908,502)  (917,400)
Repayments on Finance Lease Obligations  -   (222,376)
Cash proceeds from OLIT  45,946   - 
Net proceeds from OLIT Trust  1,802,479   - 
Distributions  (62,065)  (280,770)
         
Net Cash Provided By (Used in) Financing Activities  761,023   (3,020,546)
         
Net Increase (Decrease) in Cash  1,632,063   (1,777,259)
         
Cash - Beginning  526,182   2,303,441 
         
Cash - Ending $2,158,245  $526,182 
         
Supplemental Cash Flow Disclosures:        
         
Cash Paid for Interest $652,778  $319,056 
         
Cash Paid for Taxes $283,561  $159,968 
         
Supplemental Disclosures of Non-Cash Investing Activities:        
Asset Acquired and Included in Accounts Payable and Accrued Expenses $642,547  $23,213 
Loan to Stockholder Settled $-  $5,505,957 
Stock Subscription Receivable Settled  -   176,071 
Non-Cash Distributions $-  $5,682,028 


NON-GAAP RECONCILICATION OF EBITDA

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

  2023  2022 
Net (Loss) Income $1,976,433  $(434,569)
Depreciation & Amortization  2,781,735   3,151,448 
Interest Expenses  642,314   325,127 
Taxes  (719,172)  (154,829)
Non-Recurring Items  653,018    1,613,112  
Adjusted EBITDA $5,334,328  $4,500,289 


The table above presents our adjusted EBITDA, reconciled to net income for the periods indicated. 

SYNTEC OPTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2024 AND DECEMBER 31, 2023

  2024 (unaudited)  


2023
 
ASSETS        
         
Current Assets        
Cash $1,684,308   2,158,245 
Accounts Receivable, Net  5,094,215   6,800,064 
Inventory  6,473,850   5,834,109 
Prepaid Expenses and Other Assets  397,122   359,443 
         
Total Current Assets  13,649,495   15,151,861 
Property and Equipment, Net  10,585,538   11,101,052 
Deferred Income Taxes  106,992   - 
Intangible Assets, Net  280,000   295,000 
Total Assets $24,622,025  $26,547,913 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities        
Accounts Payable $2,389,071  $3,042,315 
Accrued Expenses  1,271,965   1,071,257 
Federal Income Tax Payable  247,430   370,206 
Deferred Revenue  20,363   - 
Line of Credit  5,437,204   6,537,592 
Current Maturities of Debt Obligations  447,702   362,972 
         
Total Current Liabilities  9,813,735   11,384,342 
         
Long-Term Liabilities        
Long-Term Debt Obligations  2,953,691   2,024,939 
Deferred Income Taxes  -   74,890 
         
Total Long-Term Liabilities  2,953,691   2,099,829 
         
Total Liabilities  12,767,426   13,484,171 
         
Commitments and Contingencies (Note 15)        
         
Stockholders’ Equity        
CL A Common Stock, Par value $.0001 per share; 121,000,000 authorized; 36,688,266 issued and outstanding as of March 31, 2024 and December 31, 2023  3,669   3,669 
Additional Paid-In Capital  1,927,204   1,927,204 
Retained Earnings  9,923,726   11,132,869 
         
Total Stockholders’ Equity  11,854,599   13,063,742 
Total Liabilities and Stockholders’ Equity $24,622,025  $26,547,913 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1


 

SYNTEC OPTICS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

  2024  2023 
       
Net Sales $6,255,908  $6,884,436 
         
Cost of Goods Sold  5,548,465   5,172,735 
         
Gross Profit  707,443   1,711,701 
         
General and Administrative Expenses  2,114,543   1,517,961 
         
(Loss) Income from Operations  (1,407,100)  193,740 
         
Other Income (Expense)        
Interest Expense, Including Amortization of Debt Issuance Costs  (159,867)  (130,021)
Other Income  19,349   751 
         
Total Other Expense, Net  (140,518)  (129,270)
         
(Loss) Income Before (Benefit) Provision for Income Taxes  (1,547,618)  64,470 
         
(Benefit) Provision for Income Taxes  (338,475)  11,448 
         
Net (Loss) Income $(1,209,143) $53,022 
         
Net (Loss) Income per Common Share        
Basic and diluted $(0.03) $0.00 
         
Weighted Average Number of Common Shares Outstanding        
Basic and diluted  36,688,266   31,600,000 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
SYNTEC OPTICS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

  2024  2023 
Cash Flows From Operating Activities        
Net (Loss) Income $(1,209,143) $53,022 
Adjustments to Reconcile (Loss) Income to Net Cash (Used In) Provided By Operating Activities:        
Depreciation and Amortization  695,826   723,938 
Amortization of Debt Issuance Costs  1,973   2,712 
Change in Allowance for Expected Credit Losses  (24,103)  51,375 
Change in Reserve for Obsolescence  208,287   (334)
Deferred Income Taxes  (181,882)  (228,415)
(Increase) Decrease in:        
Accounts Receivable  1,729,951   (44,131)
Inventory  (848,028)  (774,344)
Prepaid Expenses and Other Assets  (37,679)  18,755 
Increase (Decrease) in:        
Accounts Payables and Accrued Expenses  (522,630)  548,899 
Federal Income Tax Payable  (122,776)  229,855 
Deferred Revenue  20,363   (54,593)
         
Net Cash (Used In) Provided By Operating Activities  (289,841)  526,739 
         
Cash Flows From Investing Activities        
Purchases of Property and Equipment  (95,218)  (226,871)
         
Net Cash Used in Investing Activities  (95,218)  (226,871)
         
Cash Flows From Financing Activities        
Repayments on Line of Credit, Net  (1,100,388)  - 
Borrowing on Debt Obligations  1,100,388   - 
Repayments on Debt Obligations  (88,878)  (246,380)
Distributions  -   (46,106)
         
Net Cash Used in Financing Activities  (88,878)  (292,486)
         
Net (Decrease) Increase in Cash  (473,937)  7,382 
         
Cash- Beginning  2,158,245   526,182 
         
Cash- Ending $1,684,308  $533,564 
         
Supplemental Cash Flow Disclosures:        
         
Cash Paid for Interest $157,895  $137,773 
         
Cash Paid for Taxes $85,098  $10,008 
         
Supplemental Disclosures of Non-Cash Investing Activities:        
         
Assets Acquired and Included in Accounts Payable and Accrued Expenses $412,641  $30,891 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

  2024  2023 
Net (Loss) Income $(1,209,143) $53,022 
Depreciation & Amortization  697,799   726,650 
Interest Expenses  157,894   127,309 
Taxes  (338,475)  11,448 
Non-Recurring Items  25,265    81,258  
Adjusted EBITDA $(666,660) $999,687 

The table above presents our adjusted EBITDA, reconciled to net income for the periods indicated. 

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-K and 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 allow 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).


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