SYNTEC OPTICS HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
OPTX$4.87+29.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001493152-24-032108
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001493152-24-045768
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 98 previous paragraphs and 99 current paragraphs.
74 unchanged; 18 reworded; 7 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Gross profit decreased by $0.01 million, or 0.6%, to $1.8 million for the three months ended September 30, 2024, as compared to $1.8 million for the three months ended September 30, 2023. This decrease was primarily due to an increase in cost of goods sold as a percent of revenue.
Current report
Other income (expense) increased by $0.03 million, or 20.3%, to ($0.20) million for the three months ended September 30, 2024, as compared to other income (expense) of ($0.16) million for the three months ended September 30, 2023. This increase was primarily due to a decrease in other income of $0.1 due to an insurance reimbursement in the prior period as well as $0.02 million increase in interest expense.
Current report
Comparisons for the nine months ended September 30, 2024 and 2023
Current report
Cost of revenue increased by $1.2 million, or 7.7%, to $16.4 million for the nine months ended September 30, 2024, as compared to $15.2 million for the nine months ended September 30, 2023. This increase was primarily due to a $1.1 million increase in payroll costs and $0.1 million increase in material and subcontracted costs.
Current report
The company has identified several non-recurring items included in our non-GAAP adjusted EBITDA financial measure. These items encompass management fees, professional & transaction fees, technology start-up costs, optical molding evaluation expenses, glass molding evaluation expenses, and executive transition expenses. Notably, several projects were concluded during the three months ended September 30, 2024, while some expenses were incurred in prior periods. The company evaluated these projects and retroactively adjusted prior periods to account for these expenses. This retroactive adjustment is reflected in the nine months ended September 30, 2024, below.
Current report
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Current report
Cash Flow — Nine months ended September 30, 2024 and 2023
Removed paragraphs (5)
Previous report
Gross profit decreased by $0.2 million, or 8.5%, to $2.2 million for the three months ended June 30, 2024, as compared to $2.4 million for the three months ended June 30, 2023. This decrease was primarily due to the decrease in revenue offset by the decrease in costs of goods sold.
Previous report
Comparisons for the six months ended June 30, 2024 and 2023
Previous report
Cost of revenue decreased by $0.1 million, or 1.0%, to $10.4 million for the six months ended June 30, 2024, as compared to $10.5 million for the six months ended June 30, 2023. This decrease was primarily due to $0.1 million decrease in material costs.
Previous report
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Previous report
Cash Flow — Six months ended June 30, 2024 and 2023
Reworded paragraphs (18)
Previous wording
Our sales consist of sales of highly specialized optic and photonic enabled components and sub-components. These products are sold to different customer types (e.g., OEMs and Tier 1 manufacturers) and at different prices and involve varying levels of costs. In any particular period, changes in the mix and volume of particular products sold and the prices of those products relative to other products will impact our average selling price and our cost of goods sold. The price of our products may also increase as a result of increases in the cost of components due to inflation, labor and raw materials. The Company generated 53% of revenues for the six months ended June 30, 2024 from three customers and 51% of revenues for the six months ended June 30, 2023 from three customers. In addition, revenues from these larger customers may fluctuate from time to time based on these customers’ business needs and customer experience, the timing of which may be affected by market conditions or other factors outside of our control. These customers have a broad product purchase mix across various departments of Syntec Optics. Syntec Optics supplies several mission critical components and sub-components to these customers that are not tied to a single application, customer initiative, or purchase order. We expect sales to increase as we further advance our full-system design expertise and product offerings and customers increasingly demand more sophisticated systems, rather than drop-in replacements. In addition to the impacts attributable to the general sales mix across our products, our results of operations are impacted by the relative margins of products sold. As we continue to introduce new products at varying price points, our overall gross margin may vary from period to period as a result of changes in product and customer mix.
Current wording
Our sales consist of sales of highly specialized optic and photonic enabled components and sub-components. These products are sold to different customer types (e.g., OEMs and Tier 1 manufacturers) and at different prices and involve varying levels of costs. In any particular period, changes in the mix and volume of particular products sold and the prices of those products relative to other products will impact our average selling price and our cost of goods sold. The price of our products may also increase as a result of increases in the cost of components due to inflation, labor and raw materials. The Company generated 53% of revenues for the nine months ended September 30, 2024 from three customers and 41% of revenues for the nine months ended September 30, 2023 from two customers. In addition, revenues from these larger customers may fluctuate from time to time based on these customers’ business needs and customer experience, the timing of which may be affected by market conditions or other factors outside of our control. These customers have a broad product purchase mix across various departments of Syntec Optics. Syntec Optics supplies several mission critical components and sub-components to these customers that are not tied to a single application, customer initiative, or purchase order. We expect sales to increase as we further advance our full-system design expertise and product offerings and customers increasingly demand more sophisticated systems, rather than drop-in replacements. In addition to the impacts attributable to the general sales mix across our products, our results of operations are impacted by the relative margins of products sold. As we continue to introduce new products at varying price points, our overall gross margin may vary from period to period as a result of changes in product and customer mix.
Previous wording
Net sales decreased by $0.7 million, or 8.9%, to $7.0 million for the three months ended June 30, 2024, as compared to $7.7 million for the three months ended June 30, 2023. This decrease was primarily due to a decrease of $1.3 million spread across the medical, consumer and defense end markets offset by an increase of $0.6 million in the communications end market.
Current wording
Net sales increased by $1.3 million, or 19.2%, to $7.9 million for the three months ended September 30, 2024, as compared to $6.6 million for the three months ended September 30, 2023. This increase was primarily due to a increase of $2.0 million spread across the communication, defense and medical end markets offset by a decrease of $0.7 million in the consumer end market.
Previous wording
Cost of revenue decreased by $0.5 million, or 9.1%, to $4.8 million for the three months ended June 30, 2024, as compared to $5.3 million for the three months ended June 30, 2023. This decrease was primarily due to a decrease of $0.5 in material costs.
Current wording
Cost of revenue increased by $1.3 million, or 26.8%, to $6.0 million for the three months ended September 30, 2024, as compared to $4.8 million for the three months ended September 30, 2023. This decrease was primarily due to an increase of $0.4 million in payroll costs and $0.9 million in material and subcontractor costs.
Previous wording
General and administrative expenses increased by $1.0 million, or 32.1%, to $4.1 million for the six months ended June 30, 2024, as compared to $3.1 million for the six months ended June 30, 2023. This increase was primarily due to an approximately $0.4 million increase in professional fees, $0.2 million in research and development expenses, $0.2 million in insurance, $0.1 million in franchise taxes, and $0.1 million in advertising expenses.
Current wording
General and administrative expenses increased by $0.4 million, or 31.4%, to $1.7 million for the three months ended September 30, 2024, as compared to $1.3 million for the three months ended September 30, 2023. This increase was primarily due to an approximately $0.4 million increase in increase in salaries and wages.
Previous wording
Income tax expense decreased by $0.09 million, or 75.2%, to $0.03 million for the three months ended June 30, 2024, as compared to $0.12 million for the three months ended June 30, 2023. This decrease was primarily due to the decrease in net income.
Current wording
Income tax expense decreased by $0.09 million, or 808.3%, to ($0.08) million for the three months ended September 30, 2024, as compared to $0.01 million for the three months ended September 30, 2023. This decrease was primarily due to the decrease in net income.
Previous wording
Net income decreased by $0.3 million, or 50.4%, to $0.3 million for the three months ended June 30, 2024, as compared to $0.6 million for the three months ended June 30, 2023. This decrease was primarily due to a decrease in sales of $0.7 million, and an increase in general and administrative expenses of $0.4 million, offset by a decrease in cost of goods sold of $0.5 million, an increase in other income (expense) of $0.2 million and a decrease in provision for income tax of $0.1 million.
Current wording
Net income (loss) decreased by $0.4 million, or 103.8%, to $0.02 million for the three months ended September 30, 2024, as compared to $0.35 million for the three months ended September 30, 2023. This decrease was primarily due to an increase in cost of goods sold of $1.3 million, and an increase in general and administrative expenses of $0.4 million, offset by an increase in sales of $1.3 million.
Previous wording
The following table sets forth our results of operations for the six months ended June 30, 2024 and 2023, respectively. This data should be read together with our financial statements and related notes included elsewhere in this Quarterly Report, and is qualified in its entirety by reference to such financial statements and related notes.
Current wording
The following table sets forth our results of operations for the nine months ended September 30, 2024 and 2023, respectively. This data should be read together with our financial statements and related notes included elsewhere in this Quarterly Report, and is qualified in its entirety by reference to such financial statements and related notes.
Previous wording
Net sales decreased by $1.3 million, or 9.0%, to $13.3 million for the six months ended June 30, 2024, as compared to $14.6 million for the six months ended June 30, 2023. This decrease was primarily due to a decrease of $3.6 million spread across the medical, consumer and defense end markets offset by an increase of $2.3 million in the communications end market.
Current wording
Net sales decreased by $0.05 million, or 0.2%, to $21.1 million for the nine months ended September 30, 2024, as compared to $21.2 million for the nine months ended September 30, 2023. This decrease was primarily due to a decrease of $4.2 million spread across the medical, consumer and defense end markets offset by an increase of $4.1 million in the communications end market.
Previous wording
Gross profit decreased by $1.2 million, or 29.5%, to $2.9 million for the six months ended June 30, 2024, as compared to $4.1 million for the six months ended June 30, 2023. This decrease was primarily due to the decrease in revenue and the decrease in cost of goods sold.
Current wording
Gross profit decreased by $1.2 million, or 20.5%, to $4.7 million for the nine months ended September 30, 2024, as compared to $5.9 million for the nine months ended September 30, 2023. This decrease was primarily due to the decrease in revenue and the increase in cost of goods sold.
Previous wording
General and administrative expenses increased by $0.4 million, or 25.3%, to $2.0 million for the three months ended June 30, 2024, as compared to $1.6 million for the three months ended June 30, 2023. This increase was primarily due to an approximately $0.1 million increase in professional fees, $0.1 million increase in salaries and wages, $0.1 million increase in insurance, and $0.1 million in research and development expenses.
Current wording
General and administrative expenses increased by $1.4 million, or 31.9%, to $5.9 million for the nine months ended September 30, 2024, as compared to $4.4 million for the nine months ended September 30, 2023. This increase was primarily due to an approximately $0.4 million increase in salaries and wages, $0.7 million in professional fees, $0.2 million in research and development expenses, and $0.1 million in advertising expenses.
Previous wording
Other income (expense) increased by $0.2 million, or 105.6%, to $0.01 million for the six months ended June 30, 2024, as compared to other income (expense) of ($0.2) million for the six months ended June 30, 2023. This increase was primarily due to the sale of machinery and equipment of $0.3 million offset by increased interest expense of ($0.07) million due to increased rates for the debt facilities.
Current wording
Other income (expense) decreased by $0.2 million, or 50.6%, to ($0.2) million for the nine months ended September 30, 2024, as compared to other income (expense) of ($0.4) million for the nine months ended June 30, 2023. This decrease was primarily due to the sale of machinery and equipment of $0.3 million offset by increased interest expense of ($0.09) million due to increased rates for the debt facilities.
Previous wording
Income tax expense (benefit) decreased by ($0.4) million, or 340.7%, to ($0.3) million for the six months ended June 30, 2024, as compared to $0.1 million for the six months ended June 30, 2023. This increase was primarily due to the increase in net loss.
Current wording
Income tax expense (benefit) decreased by ($0.5) million, or 377.6%, to ($0.39) million for the nine months ended September 30, 2024, as compared to $0.14 million for the nine months ended September 30, 2023. This increase was primarily due to the increase in net loss.
Previous wording
Net income decreased by $1.5 million, or 249.4%, to ($0.9) million for the six months ended June 30, 2024, as compared to $0.6 million for the six months ended June 30, 2023. This decrease was primarily due to a decrease in sales of $1.3 million, and an increase in general and administrative expenses of $1.0 million, offset by a decrease in cost of goods sold of $0.1 million, an increase in other income (expense) of $0.2 million and a decrease in provision for income tax of $0.4 million.
Current wording
Net income decreased by $1.9 million, or 196.5%, to ($0.9) million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. This decrease was primarily due to an increase in cost of goods sold of $1.3 million and an increase in general and administrative expenses of $1.5 million, offset by a decrease in other income (expense) of $0.2 million and a decrease in provision for income tax of $0.5 million.
Previous wording
The table below presents our adjusted EBITDA, reconciled to net income for the three and six months ended June 30, 2024 and 2023.
Current wording
The table below presents our adjusted EBITDA, reconciled to net income for the three and nine months ended September 30, 2024 and 2023.
Previous wording
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of June 30, 2024, our principal sources of liquidity were cash totaling $0.8 million and a line of credit with $3.7 million available.
Current wording
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of September 30, 2024, our principal sources of liquidity were cash totaling $0.5 million and a line of credit with $3.9 million available.
Previous wording
Net cash used in operating activities was $2.0 million for the six months ended June 30, 2024, as compared to net cash provided by operating activities of $0.6 million for the six months ended June 30, 2023. The primary drivers for the year-over-year change include an increase in net loss of $1.5 million, an increase in inventory of $1.0 million, a decrease in accounts payable and accrued expenses of $1.8 million, offset by a decrease in accounts receivable of $2.1 million.
Current wording
Net cash used in operating activities was $1.6 million for the nine months ended September 30, 2024, as compared to net cash provided by operating activities of $1.1 million for the nine months ended September 30, 2023. The primary drivers for the year-over-year change include an increase in net loss of $1.9 million, a decrease in federal income tax payable of $0.8 million, a decrease in accounts payable and accrued expenses of $1.6 million, offset by a decrease in accounts receivable of $1.3 million and an increase in deferred revenue of $0.4 million.
Previous wording
Net cash provided by investing activities was $0.1 million for the six months ended June 30, 2024, as compared to net cash used in investing activities of $0.8 million for the six months ended June 30, 2023. The net cash used in investing activities decreased primarily due to a decrease in capital expenditures of $0.6 million and an increase in proceeds from sale of equipment of $0.3 million.
Current wording
Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2024, as compared to net cash used in investing activities of $1.0 million for the nine months ended September 30, 2023. The net cash used in investing activities decreased primarily due to a decrease in capital expenditures of $0.4 million and an increase in proceeds from sale of equipment of $0.3 million.
Previous wording
Net cash provided by financing activities was $0.6 million for the six months ended June 30, 2024, as compared to net cash used in financing activities of $0.2 million for the six months ended June 30, 2023. The primary drivers for the year-over-year change include an increase in borrowing of debt obligations of $1.1 million, a decrease in repayments on debt obligations of $0.3 million, offset by an increase in repayments on the line of credit of $0.6 million.
Current wording
Net cash provided by financing activities was $0.2 million for the nine months ended September 30, 2024, as compared to net cash used in financing activities of $0.5 million for the nine months ended September 30, 2023. The primary drivers for the year-over-year change include an increase in borrowing of debt obligations of $1.1 million, a decrease in repayments on debt obligations of $0.3 million, offset by an increase in repayments on the line of credit of $0.6 million, and an increase in repayments on finance lease obligations of $0.1 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other income (expense) increased by $0.2 million, or 284.7%, to $0.15 million for the three months ended June 30, 2024, as compared to other income (expense) of ($0.08) million for the three months ended June 30, 2023. This increase was primarily due to the sale of machinery and equipment of $0.3 million offset by increased interest expense of ($0.04) million due to increased rates for the debt facilities.