Superior Drilling Products, Inc. Delivered 17% Revenue Growth and Generated $4.6 Million in Cash for 2018
- Annual revenue of $18.2 million, up $2.7 million over prior year
-
Other Related Tool Revenue drove the growth as a result of a
larger deployed tool fleet -
Annual operating income improved to $300 thousand and net loss
per diluted share was at break even -
Cash generated from operations nearly doubled over 2017 to $4.6
million -
Expects 24% revenue growth in 2019 at mid-point of revenue
guidance
VERNAL, Utah–(BUSINESS WIRE)–Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the
“Company”), a designer and manufacturer of drilling tool technologies,
today reported financial results for the fourth quarter and full-year
ended December 31, 2018.
Troy Meier, Chairman and CEO, noted, “2018 was a year of many successes
and significant progress for SDP. Of note, our Drill-N-Ream®
(“DNR”), a strongly patented and unique well bore conditioning tool,
continued to gain ground in both North America and the Middle East. We
believe that our accomplishments strengthen the foundation from which we
can drive further growth:
-
We expanded market channels in the Middle East by signing a market
development agreement with Odfjell Drilling Ltd., which has begun to
accelerate our market penetration in the region. -
We established the capability to provide service and support within
the Middle East through our services agreement with Smith
International Gulf Services, LLC. -
We increased the size of the tool fleet we have in the Middle East
driven by expectations of strong demand. -
We opened our new Abilene, Texas facility which improves the logistics
for servicing the Permian and Eagle Ford basins, among others. It also
provides the opportunity for enhancing our bit repair potential. -
We made substantial progress in the development of our StriderTM
technology, an extended reach tool. Upon commercialization of this
tool, we will provide full service support from our Abilene, Texas
facility. -
And, since year end, we now have a stronger balance sheet with our
debt restructured and greater financial flexibility with a revolving
credit facility to support our growth working capital requirements.”
He added, “While the fourth quarter was soft, with respect to DNR tool
sales, 2019 has started out strong in both the Middle East and North
America. The DNR’s market acceptance in the Middle East is expanding
quickly and we believe we are positioned to address a rapid increase in
demand. We continue to engage in productive dialogue with our North
American DNR distributor to pursue options and opportunities to increase
domestic market penetration.”
Fourth Quarter 2018 Review ($ in thousands, except per share
amounts)
|
Q4 |
Q4 |
$Y/Y |
% Y/Y |
Q3 |
$ Seq. |
% Seq. |
||||||||||||||||
| Tool sales/rental | $ | 426 | $ | 1,434 | $ | (1,007 | ) | (70.3)% | $ | 1,655 | $ | (1,229 | ) | (74.2) % | ||||||||
|
Other Related |
1,754 | 1,240 | 513 | 41.3% | 1,706 | 47 | 2.7% | |||||||||||||||
| Tool Revenue | 2,180 | 2,674 | (495 | ) | (18.5)% | 3,361 | (1,182 | ) | (35.2) % | |||||||||||||
| Contract Services | 1,301 | 1,056 | 245 | 23.2% | 1,404 | (103 | ) | (7.3) % | ||||||||||||||
| Total Revenue | $ | 3,481 | $ | 3,730 | $ | (249 | ) | (6.7)% | $ | 4,765 | $ | (1,285 | ) | (27.0) % | ||||||||
When compared with the prior-year period, growth in Other Related Tool
Revenue, which is comprised of royalties and fleet maintenance fees, was
the result of a larger fleet of deployed DNR tools being actively used
in drilling operations. This increase, combined with higher contract
services revenue, mostly offset lower tool sales/rental revenue. While
tool rentals increased from activity in the Middle East, total tool
sales/rental revenue declined on lower DNR tool sales in the U.S.
Additionally, the DNR is demonstrating a longer than previously expected
tool life which has the effect of delaying new tool sales but adds
additional refurbishments per tool. The Company also believes that the
addition of the new service center in Texas created greater logistical
efficiency for its distributor, temporarily reducing the need to add
tools to the deployed fleet.
Fourth Quarter 2018 Operating Expenses
($ in thousands)
|
|
Q4 |
Q4 |
$ Y/Y |
% Y/Y |
Q3 |
$ Seq. |
% Seq. |
||||||||||||||||||
| Cost of revenue | $ | 1,670 | $ | 1,571 | $ | 99 | 6.3% | $ | 1,666 | $ | 4 | 0.3% | |||||||||||||
| As a percent of sales | 48.0 | % | 42.1 | % | 35.0 | % | |||||||||||||||||||
|
Selling, general & |
$ | 2,116 | $ | 1,897 | $ | 219 | 11.5% | $ | 1,867 | $ | 249 | 13.3% | |||||||||||||
| As a percent of sales | 60.8 | % | 50.9 | % | 39.2 | % | |||||||||||||||||||
|
Depreciation & |
$ | 940 | $ | 931 | $ | 9 | 0.9% | $ | 942 | (2 | ) | (0.3) % | |||||||||||||
|
Total operating |
$ | 4,726 | $ | 4,400 | $ | 326 | 7.4% | $ | 4,475 | $ | 251 | 5.6% | |||||||||||||
|
Operating income |
$ | (1,245 | ) | $ | (670 | ) | $ | (575 | ) |
NM |
$ | 290 | $ | (1,535 | ) | NM | |||||||||
| As a % of sales | (35.8 | )% | (18.0 | )% | 6.1 | % | |||||||||||||||||||
| Net income (loss) | $ | (1,357 | ) | $ | (786 | ) | $ | (571 | ) | NM | $ | 225 | $ | (1,582 | ) | NM | |||||||||
|
Diluted earnings |
$ | (0.05 | ) | $ | (0.03 | ) | $ | (0.02 | ) | NM | $ | 0.01 | $ | (0.06 | ) | NM | |||||||||
| Adjusted EBITDA(1) | $ | 219 | $ | 791 | $ | (572 | ) | (72.3)% | $ | 1,365 | $ | (1,146 | ) | (83.9)% | |||||||||||
The cost of revenue increase represents the impact of lower volume and a
larger cost base from the investment in the new Abilene, Texas service
center. Cost of revenue included a $116 thousand impairment charge
related to slow moving raw material inventory.
The $200 thousand increase in selling, general and administrative
expense (SG&A) over the prior-year period reflects higher investments in
research and development, international market expansion and higher
payroll costs, mostly as a result of the reinstatement of executive
salaries and director fees following the reduction that was instituted
in October 2016.
Net loss increased as a result of both lower revenue and the increase in
costs related to investments in growth. Adjusted EBITDA(1), a
non-GAAP measure defined as earnings before interest, taxes,
depreciation and amortization, non-cash stock compensation expense and
unusual items, declined for similar reasons.
The Company believes that when used in conjunction with measures
prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”), Adjusted EBITDA, which is a non-GAAP measure, helps
in the understanding of its operating performance. (1)See
the attached tables for important disclosures regarding SDP’s use of
Adjusted EBITDA, as well as a reconciliation of net loss to Adjusted
EBITDA.
Full Year 2018 Review
($ in thousands, except per share amounts)
|
2018 |
2017 |
$ |
% |
|||||||||||
| Tool sales/rental | $ | 6,580 | $ | 6,691 | $ | (111 | ) | (1.7) % | ||||||
|
Other Related Tool |
6,562 | 3,906 | 2,656 | 68.0% | ||||||||||
| Tool Revenue | 13,142 | 10,597 | 2,545 | 24.0% | ||||||||||
| Contract Services | 5,104 | 4,999 | 105 | 2.1% | ||||||||||
| Total Revenue | $ | 18,245 | $ | 15,596 | $ | 2,650 | 17.0% | |||||||
| Operating expenses | 17,945 | 15,371 | 2,574 | 16.7% | ||||||||||
| Operating income | 300 | 225 | 76 | 33.7% | ||||||||||
| Net loss | $ | (58 | ) | $ | (279 | ) | $ | 220 | NM | |||||
| Diluted loss per share | $ | (0.00 | ) | $ | (0.01 | ) | $ | 0.01 | NM | |||||
| Adjusted EBITDA(1) | $ | 4,957 | $ | 4,972 | $ | (15 | ) | 0% | ||||||
Revenue for the full year 2018 increased 17%, or $2.7 million, over
2017, driven by strong growth in tool revenue as a result of increased
market share, including initial entry into the Middle East market,
combined with increases in royalty and repair revenue resulting from a
significantly larger fleet of DNRs in operation in 2018, compared with
2017. Operating income improved to $300 thousand while operating margin
improved 20 basis points despite a $2.6 million increase in operating
expenses supporting the Middle East expansion, addition of the Texas
service center and the development of the Strider™ oscillation
system technology.
Net loss for the full year 2018 improved by $221 thousand to near
breakeven with a loss of $58 thousand. Contributing to the improvement
to the bottom line was an $86 thousand increase in interest income and a
$132 thousand decline in interest expense on lower debt balances. On a
per diluted share basis, net income was breakeven. Adjusted EBITDA(1)
for 2018 was relatively unchanged at $5.0 million. Adjusted EBITDA
margin was 27% in 2018, compared with 32% in 2017.
Balance Sheet and Liquidity
Cash and cash equivalents was $4.3 million at December 31, 2018, up from
$2.4 million at the end of 2017. Cash generated from operations was $4.6
million, compared with $2.4 million in 2017.
Capital expenditures were $562 thousand in the fourth quarter as the
Company grew its own fleet of tools for the Middle East market. For the
full year, capital expenditures were $745 thousand.
Total debt at the end of the year was $10.9 million, down $1.9 million,
or 15.1%, compared with $12.8 million at December 31, 2017.
At December 31, 2018, SDP had working capital of approximately $1.7
million as a result of refinancing its $4.2 million real estate loan on
its Vernal, Utah corporate headquarters and manufacturing campus and
extending its maturity to February 15, 2021 at a rate of 7.25%.
On February 15, 2019, the Company secured a new $4.3 million credit
facility which included a $0.8 million term loan and a $3.5 million
revolver. The $0.8 million term loan is to support the expansion of the
Middle East DNR rental tool fleet.
2019 Outlook and Guidance estimates:
Mr. Meier concluded, “We expect 2019 to be another year of robust
growth. We expect further global market share gains with our unique well
bore conditioning tool will drive that expansion. In fact, we anticipate
revenue will be up almost 24% at the mid-point of our expected revenue
range for the year. We are making sure we can serve the strong demand
for our tool and that we are structured to provide the necessary service
support to ensure its quality in the field. Our team is energized to
excel in the oil & gas industry with this tool and our Strider
Technology oscillation system.”
|
Revenue: |
$21 million to $24 million | |
|
Gross margin: |
58% to 61% | |
|
SG&A expenses: |
$8.0 million to $9.0 million | |
|
D&A: |
$4.0 million to $4.3 million | |
|
Interest Expense: |
Approximately $780 thousand | |
|
Capital Expenditures: |
Approximately $2.8 million | |
Webcast and Conference Call
The Company will host a conference call and live webcast today at 10:00
am MT (12:00 pm ET) to review the financial and operating results for
the quarter and discuss its corporate strategy and outlook. The
discussion will be accompanied by a slide presentation that will be made
available immediately prior to the conference call on SDP’s website at www.sdpi.com/events.
A question-and-answer session will follow the formal presentation.
The conference call can be accessed by calling (201) 689-8470.
Alternatively, the webcast can be monitored at www.sdpi.com/events.
A telephonic replay will be available from 1:00 p.m. MT (3:00 p.m. ET)
the day of the teleconference until Thursday, March 14, 2019. To listen
to the archived call, dial (412) 317-6671 and enter conference ID number
13686204, or access the webcast replay at www.sdpi.com,
where a transcript will be posted once available.
About Superior Drilling Products, Inc.
Superior Drilling Products, Inc. is an innovative, cutting-edge drilling
tool technology company providing cost saving solutions that drive
production efficiencies for the oil and natural gas drilling industry.
The Company designs, manufactures, repairs and sells drilling tools. SDP
drilling solutions include the patented Drill-N-Ream® well
bore conditioning tool and the patented Strider™ oscillation
system technology. In addition, SDP is a manufacturer and refurbisher of
PDC (polycrystalline diamond compact) drill bits for a leading oil field
service company. SDP operates a state-of-the-art drill tool fabrication
facility, where it manufactures its solutions for the drilling industry,
as well as customers’ custom products. The Company’s strategy for growth
is to leverage its expertise in drill tool technology and innovative,
precision machining in order to broaden its product offerings and
solutions for the oil and gas industry.
Additional information about the Company can be found at: www.sdpi.com.
Safe Harbor Regarding Forward Looking Statements
This news release contains forward-looking statements and information
that are subject to a number of risks and uncertainties, many of which
are beyond our control. All statements, other than statements of
historical fact included in this release, regarding our strategy, future
operations, financial position, estimated revenue and losses, projected
costs, prospects, plans and objectives of management, are
forward-looking statements. The use of words “could,” “believe,”
“anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,”
“predict,” “potential,” “project”, “forecast,” “should” or “plan, and
similar expressions are intended to identify forward-looking statements,
although not all forward -looking statements contain such identifying
words. Certain statements in this release may constitute forward-looking
statements, including statements regarding the Company’s financial
position, market success with specialized tools, effectiveness of its
sales efforts, success at developing future tools, and the Company’s
effectiveness at executing its business strategy and plans. These
statements reflect the beliefs and expectations of the Company and are
subject to risks and uncertainties that may cause actual results to
differ materially. These risks and uncertainties include, among other
factors, success at expansion in the Middle East, options available for
market channels in North America, commercialization of the Strider
technology, the success of the Company’s business strategy and prospects
for growth; its cash flow and liquidity; financial projections and
actual operating results; the amount, nature and timing of capital
expenditures; the availability and terms of capital; competition and
government regulations; and general economic conditions. These and other
factors could adversely affect the outcome and financial effects of the
Company’s plans and described herein.
FINANCIAL TABLES FOLLOW.
|
Superior Drilling Products, Inc. |
|||||||||||||||||
|
|
|||||||||||||||||
|
For the Three Months Ended December 31, |
For the Year Ended Ended December 31, |
||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Revenue | $ | 3,480,635 | $ | 3,730,010 | $ | 18,245,212 | $ | 15,595,659 | |||||||||
| Operating cost and expenses | |||||||||||||||||
| Cost of revenue | 1,669,955 | 1,571,367 | 7,077,344 | 5,960,223 | |||||||||||||
| Selling, general, and administrative expenses | 2,115,951 | 1,897,092 | 7,107,432 | 5,734,315 | |||||||||||||
| Depreciation and amortization expense | 940,048 | 931,368 | 3,760,231 | 3,676,598 | |||||||||||||
| Total operating costs and expenses | 4,725,954 | 4,399,827 | 17,945,007 | 15,371,136 | |||||||||||||
| Operating income (loss) | (1,245,319 | ) | (669,817 | ) | 300,205 | 224,523 | |||||||||||
| Other income (expense) | |||||||||||||||||
| Interest income | 127,059 | 91,601 | 432,753 | 346,926 | |||||||||||||
| Interest expense | (220,988 | ) | (207,351 | ) | (773,680 | ) | (905,990 | ) | |||||||||
| Other income | – | – | – | 43,669 | |||||||||||||
| Gain (loss) on sale or disposition of assets | (14,013 | ) | – | (14,013 | ) | 12,167 | |||||||||||
| Total other expense | (107,942 | ) | (115,750 | ) | (354,940 | ) | (503,228 | ) | |||||||||
| Income before income taxes | $ | (1,353,261 | ) | $ | (785,567 | ) | $ | (54,735 | ) | $ | (278,705 | ) | |||||
| Income tax expense | (3,640 | ) | – | (3,640 | ) | – | |||||||||||
| Net loss | $ | (1,356,901 | ) | $ | (785,567 | ) | $ | (58,375 | ) | $ | (278,705 | ) | |||||
|
Basic income (loss) earnings per common share |
$ | (0.05 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
| Basic weighted average common shares outstanding | 24,820,600 | 24,416,577 | 24,608,967 | 24,268,409 | |||||||||||||
|
Diluted income (loss) per common share |
$ | (0.05 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
| Diluted weighted average common shares outstanding | 24,820,600 | 24,416,577 | 24,608,967 | 24,268,409 | |||||||||||||
|
Superior Drilling Products, Inc. |
||||||||||
|
|
December 31, |
|
December 31, |
|||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 4,264,767 | $ | 2,375,179 | ||||||
| Accounts receivable, net | 2,273,189 | 2,667,042 | ||||||||
| Prepaid expenses | 133,607 | 111,530 | ||||||||
| Inventories | 1,003,623 | 1,196,813 | ||||||||
| Total current assets | 7,675,186 | 6,350,564 | ||||||||
| Property, plant and equipment, net | 8,226,009 | 8,809,348 | ||||||||
| Intangible assets, net | 3,686,111 | 6,132,778 | ||||||||
| Related party note receivable | 7,367,212 | 7,367,212 | ||||||||
| Other noncurrent assets | 51,887 | 15,954 | ||||||||
| Total assets | $ | 27,006,405 | $ | 28,675,856 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 717,721 | $ | 1,021,469 | ||||||
| Accrued expenses | 631,860 | 543,758 | ||||||||
| Income tax payable | 3,640 | – | ||||||||
| Current portion of long-term debt, net of discounts | 4,578,759 | 6,101,678 | ||||||||
| Total current liabilities | $ | 5,931,980 | $ | 7,666,905 | ||||||
| Long-term debt, less current portion, net of discounts | 6,296,994 | 6,706,375 | ||||||||
| Total liabilities | $ | 12,228,974 | $ | 14,373,280 | ||||||
| Stockholders’ equity | ||||||||||
| Common stock (25,018,098 and 24,535,334) | 25,018 | 24,535 | ||||||||
| Additional paid-in-capital | 39,440,611 | 38,907,864 | ||||||||
| Accumulated deficit | (24,688,198 | ) | (24,629,823 | ) | ||||||
| Total stockholders’ equity | $ | 14,777,431 | $ | 14,302,576 | ||||||
| Total liabilities and shareholders’ equity | $ | 27,006,405 | $ | 28,675,856 | ||||||
|
Superior Drilling Products, Inc. |
||||||||
| December 31, 2018 | December 31, 2017 | |||||||
| Cash Flows From Operating Activities | ||||||||
|
Net Loss |
$ | (58,375 | ) | $ | (278,705 | ) | ||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization expense | 3,760,231 | 3,676,598 | ||||||
| Amortization of debt discount | 77,641 | 79,424 | ||||||
| Share based compensation expense | 518,956 | 612,851 | ||||||
| Income tax expense | 3,640 | – | ||||||
| Impairment of inventories | 116,396 | – | ||||||
| Loss (gain) on sale of assets | 14,013 | (12,167 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 393,853 | (1,628,378 | ) | |||||
| Inventories | 77,760 | (29,121 | ) | |||||
| Prepaid expenses and other current assets | (58,010 | ) | (21,757 | ) | ||||
| Accounts payable and accrued expenses | (215,646 | ) | 13,990 | |||||
| Other long-term liabilities | – | (53,355 | ) | |||||
| Net Cash Provided By Operating Activities | $ | 4,630,459 | $ | 2,359,380 | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of property, plant and equipment | (745,204 | ) | (936,118 | ) | ||||
| Proceeds from sale of fixed assets | – | 2,483,921 | ||||||
| Net Cash Provided By (Used In) Investing Activities | (745,204 | ) | 1,547,803 | |||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on debt | (2,009,941 | ) | (3,482,311 | ) | ||||
| Principal payments on capital lease obligations | – | (217,302 | ) | |||||
| Principal payments on related party debt | – | (74,293 | ) | |||||
| Proceeds from exercised stock options | 14,274 | – | ||||||
| Net Cash Used In Financing Activities |
|
(1,995,667 | ) | (3,773,906 | ) | |||
| Net Increase in Cash | 1,889,588 | 133,277 | ||||||
| Cash at Beginning of Period | 2,375,179 | 2,241,902 | ||||||
| Cash at End of Period | $ | 4,264,767 | $ | 2,375,179 | ||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | 577,814 | $ | 851,671 | ||||
|
Non-cash payment of other long-term liability and interest by |
$ | 377,746 | $ | 1,267,711 | ||||
| Acquisition of equipment by issuance of note payable | $ | – | $ | 16,557 | ||||
|
Superior Drilling Products, Inc. |
||||||||||||
|
Three Months Ended |
||||||||||||
| December 31, 2018 | December 31, 2017 | September 30, 2018 | ||||||||||
| GAAP net income | $ | (1,356,901) | $ | (785,567) |
|
$ | 225,194 | |||||
| Add back: | ||||||||||||
| Depreciation and amortization | 940,048 | 931,368 |
|
942,473 | ||||||||
| Interest expense, net | 93,929 | 115,750 |
|
65,087 | ||||||||
| Share-based compensation | 146,745 | 114,467 |
|
131,867 | ||||||||
| Net non-Cash compensation | 377,746 | 414,497 |
|
– | ||||||||
| Loss on disposition of assets | 14,013 | – |
|
– | ||||||||
| Income tax expense (benefit) | 3,640 | – |
|
– | ||||||||
| Non-GAAP adjusted EBITDA(1) | $ | 219,220 | $ | 790,515 |
|
$ | 1,364,621 | |||||
| GAAP Revenue | $ | 3,480,635 | $ | 3,730,010 |
|
$ | 4,765,361 | |||||
| Non-GAAP Adjusted EBITDA Margin | 6.3% | 21.2% | 28.6% | |||||||||
| Year Ended | ||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||
| GAAP net income | $ | (58,375) | $ | (278,705) | ||||||||
| Add back: | ||||||||||||
| Depreciation and amortization | 3,760,231 | 3,676,598 | ||||||||||
| Share-based compensation | 518,956 | 612,851 | ||||||||||
| Net non-cash compensation | 377,746 | 414,497 | ||||||||||
| Interest expense, net | 340,927 | 559,064 | ||||||||||
| Provision for income tax expense | 3,640 | – | ||||||||||
| (Gain) loss on disposition of assets | 14,013 | (12,167) | ||||||||||
| Non-GAAP Adjusted EBITDA(1) | $ | 4,957,138 | $ | 4,972,138 | ||||||||
| GAAP Revenue | $ | 18,245,212 | $ | 15,595,659 | ||||||||
| Non-GAAP Adjusted EBITDA Margin | 27.2% | 31.9% | ||||||||||
(1) Adjusted EBITDA represents net income adjusted for income
taxes, interest, depreciation and amortization and other items as noted
in the reconciliation table. The Company believes Adjusted EBITDA is an
important supplemental measure of operating performance and uses it to
assess performance and inform operating decisions. However, Adjusted
EBITDA is not a GAAP financial measure. The Company’s calculation of
Adjusted EBITDA should not be used as a substitute for GAAP measures of
performance, including net cash provided by operations, operating income
and net income. The Company’s method of calculating Adjusted EBITDA may
vary substantially from the methods used by other companies and
investors are cautioned not to rely unduly on it.
|
Superior Drilling Products, Inc. |
||||||||||||
| Three Months Ended | ||||||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||
| Income (loss) from operations | $ | (1,245,319) | $ | 290,281 |
|
$ | (669,817) | |||||
| Add back: | ||||||||||||
| Atypical bonus expense | 716,786 | – |
|
587,500 | ||||||||
| Inventory impairment | 116,396 | – | – | |||||||||
| Non-GAAP adjusted income from operations | $ | (412,137) | $ | 290,281 |
|
$ | (82,317) | |||||
| GAAP Revenue | $ | 3,480,635 | $ | 4,765,361 |
|
$ | 3,730,010 | |||||
| Adjusted Operating Margin | -11.8% | 6.1% | -2.2% | |||||||||
| Year Ended | ||||||||||||
| 31-Dec-18 | 31-Dec-17 | |||||||||||
| Income (loss) from operations | $ | 300,205 | $ | 224,523 | ||||||||
| Add back: | ||||||||||||
| Atypical bonus expense | 716,786 | 587,500 | ||||||||||
| Inventory impairment | 116,396 | – | ||||||||||
| Non-GAAP adjusted income from operations | $ | 1,133,387 | $ | 812,023 | ||||||||
| GAAP Revenue | $ | 18,245,212 | $ | 15,595,659 | ||||||||
| Adjusted Operating Margin | 6.2% | 5.2% | ||||||||||
(1) Adjusted income from operations is defined as income from
operations as reported, adjusted for certain items and to apply a
normalized tax rate. Adjusted income from operations is not a measure
determined in accordance with generally accepted accounting principles
in the United States, commonly known as GAAP and may not be comparable
to the measures as used by other companies. Nevertheless, the Company
believes that providing non-GAAP information, such as adjusted income
from operations, is important for investors and other readers of the
Company’s financial statements and assists in understanding the
comparison of the current quarter’s and current year’s income from
operations to the historical periods’ income from operations, as well as
facilitates a more meaningful comparison of the Company’s net income and
diluted EPS to that of other companies.
Contacts
Deborah K. Pawlowski
Kei Advisors LLC
(716) 843-3908
dpawlowski@keiadvisors.com
