SOLITRON DEVICES INC
For the period ended Aug 31, 2024. Filed Oct 15, 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.
Aug 31, 2024 · Filed Oct 15, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-31; filed 2024-08-13.
0001654954-24-010451
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-31; filed 2024-10-15.
0001654954-24-012988
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 38 previous paragraphs and 49 current paragraphs.
18 unchanged; 19 reworded; 9 added; 1 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 2 previous and 1 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 (9)
Current report
Results of Operations-Six Months Ended August 31, 2024, Compared to Six Months Ended August 31, 2023:
Current report
Net bookings for the six months ended August 31, 2024, decreased 34% to $3,780,000 versus $5,769,000 during the six months ended August 31, 2023. Backlog as of August 31, 2024, decreased 14% to $7,572,000 as compared to a backlog of $8,785,000 as of August 31, 2023.
Current report
Cost of Sales. Cost of sales for the six months ended August 31, 2024, increased to $5,135,000 from $3,113,000 for the six months ended August 31, 2023, due to increased raw materials and direct labor costs associated with increased net sales along with the costs to scrap materials due to a plating supplier’s quality issue. Expressed as a percentage of net sales, cost of sales increased to 68% for the six months ended August 31, 2024, from 67% for the six months ended August 31, 2023.
Current report
*Gross Profit.*Gross profit for the six months ended August 31, 2024, increased to $2,413,000 from $1,504,000 for the six months ended August 31, 2023, due primarily to increased sales. Gross margins expressed as a percentage of net sales decreased to 32% for the six months ended August 31, 2024, as compared to 33% for the six months ended August 31, 2023.
Current report
Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $1,571,000 for the six months ended August 31, 2024, from $1,156,000 for the same period in the prior year. The increase was primarily due to SG&A costs at MEI, intangible amortization of $105,000 due to the acquisition of MEI, $63,000 of increased selling expenses, and $63,000 of increased wages. During the six months ended August 31, 2024, and August 31, 2023, selling, general and administrative expenses as a percentage of net sales was 21% and 25%, respectively.
Current report
*Operating Income.*Operating income for the six months ended August 31, 2024, increased to $842,000 as compared to operating income of $348,000 for the six months ended August 31, 2023. This increase is due primarily to increased sales partially offset by increased cost of sales and increased selling, general and administrative expenses as described above.
Current report
Other Income (Loss). Interest income decreased to $6,000 for the six months ended August 31, 2024, as compared to $20,000 for the six months ended August 31, 2023. Interest expense increased to ($127,000) for the six months ended August 31, 2024, as compared to $(53,000) for the six months ended August 31, 2023. Dividend income increased to $22,000 for the six months ended August 31, 2024, as compared to $19,000 for the six months ended August 31, 2023. Realized gains on investments for the six months ended August 31, 2024 decreased to $33,000 as compared to $332,000 for the six months ended August 31, 2023. Unrealized gains (loss) on investments for the six months ended August 31, 2024, were $48,000 as compared to (loss) of ($637,000) for the six months ended August 31, 2023.
Current report
*Net Income.*Net income for the six months ended August 31, 2024, increased to $606,000 as compared to net income of $29,000 for the six months ended August 31, 2023. This increase is due primarily to increased operating income due to increased sales and decreased other income (loss).
Current report
Net cash used in investing activities was ($1,767,000) for the six months ended August 31, 2024, principally reflecting $1,762,000 in purchases of property and equipment, $416,000 in purchases of marketable securities, and $89,000 of cash paid for acquisition, contingent consideration, partially offset by proceeds from the sale of marketable securities of $500,000.
Removed paragraphs (1)
Previous report
Net cash used in investing activities was ($1,864,000) for the three months ended May 31, 2024 principally reflecting ($1,750,000) in purchases of property and equipment related to the MEI facility.
Reworded paragraphs (19)
Previous wording
Net Sales. Net sales for the three months ended May 31, 2024, increased 95% to $3,967,000 as compared to $2,038,000 for the three months ended May 31, 2023. The increase in net sales was largely due to the acquisition of MEI and the release of $108,000 of sales return and allowances.
Current wording
Net Sales. Net sales for the three months ended August 31, 2024, increased 39% to $3,581,000 as compared to $2,579,000 for the three months ended August 31, 2023. The increase in net sales was largely due to the acquisition of MEI.
Previous wording
Net bookings for the three months ended May 31, 2024, decreased 42% to $2,041,000 versus $3,538,000 during the three months ended May 31, 2023 due to the variable timing on the receipt of orders. Backlog as of May 31, 2024, increased 3% to $9,413,000 as compared to a backlog of $9,133,000 as of May 31, 2023.
Current wording
Net bookings for the three months ended August 31, 2024, decreased 21% to $1,752,000 versus $2,231,000 during the three months ended August 31, 2023 due to the variable timing on the receipt of orders. Backlog as of August 31, 2024, decreased 14% to $7,572,000 as compared to a backlog of $8,785,000 as of August 31, 2023.
Previous wording
Cost of Sales. Cost of sales for the three months ended May 31, 2024, increased to $2,292,000 from $1,431,000 for the three months ended May 31, 2023, due to increased raw materials and labor costs related to increased net sales. Expressed as a percentage of net sales, cost of sales decreased to 58% for the three months ended May 31, 2024, from 70% for the three months ended May 31, 2023.
Current wording
Cost of Sales. Cost of sales for the three months ended August 31, 2024, increased to $2,843,000 from $1,682,000 for the three months ended August 31, 2023, due to increased raw materials and labor costs related to increased net sales and the cost to scrap materials due to a plating supplier’s quality issue. Expressed as a percentage of net sales, cost of sales increased to 79% for the three months ended August 31, 2024, from 65% for the three months ended August 31, 2023.
Previous wording
*Gross Profit.*Gross profit for the three months ended May 31, 2024, increased to $1,675,000 from $607,000 for the three months ended May 31, 2023, due to increased net sales exceeding increased costs noted above. Accordingly, gross margins expressed as a percentage of net sales increased to 42% for the three months ended May 31, 2024, as compared to 30% for the three months ended May 31, 2023.
Current wording
*Gross Profit.*Gross profit for the three months ended August 31, 2024, decreased to $738,000 from $897,000 for the three months ended August 31, 2023, due to increased costs noted above. Accordingly, gross margins expressed as a percentage of net sales decreased to 21% for the three months ended August 31, 2024, as compared to 35% for the three months ended August 31, 2023.
Previous wording
For the three months ended May 31, 2024, we shipped 22,777 units as compared to 16,011 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.
Current wording
For the three months ended August 31, 2024, we shipped 16,120 units as compared to 19,134 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.
Previous wording
Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $883,000 for the three months ended May 31, 2024 from $542,000 for the same period in the prior year. The increase was primarily due to increased selling costs of $62,000 related to increased revenue, $52,000 of intangible amortization, increased wages and professional fees, and the addition of SG&A costs at MEI. During the three months ended May 31, 2024, selling, general and administrative expenses as a percentage of net sales was 22% as compared to 27% for the three months ended May 31, 2023.
Current wording
Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $688,000 for the three months ended August 31, 2024 from $614,000 for the same period in the prior year. The increase was primarily due to intangible amortization of $52,000 related to the acquisition of MEI. During the three months ended August 31, 2024, selling, general and administrative expenses as a percentage of net sales was 19% as compared to 24% for the three months ended August 31, 2023.
Previous wording
*Operating Income.*Operating income for the three months ended May 31, 2024, increased to $792,000 as compared to operating income of $65,000 for the three months ended May 31, 2023. This increase is due primarily to increased net sales exceeding increased cost of sales as described above.
Current wording
*Operating Income.*Operating income for the three months ended August 31, 2024, decreased to $50,000 as compared to operating income of $283,000 for the three months ended August 31, 2023. This decrease is due primarily to increased cost of sales as described above.
Previous wording
Other Income (Loss). Interest income decreased to $5,000 for the three months ended May 31, 2024, as compared to $14,000 for the three months ended May 31, 2023. Interest expense increased to ($50,000) for the three months ended May 31, 2024, as compared to $(27,000) for the three months ended May 31, 2023. Dividend income increased to $16,000 for the three months ended May 31, 2024, as compared to $1,000 for the three months ended May 31, 2023. Realized gains on investments for the three months ended May 31, 2024, decreased to $11,000 as compared to $122,000 for the three months ended May 31, 2023. Unrealized gains (losses) on investments for the three months ended May 31, 2024 were $27,000 due to market price changes in the company’s common stock investments as compared to a loss of ($346,000) for the three months ended May 31, 2023.
Current wording
Other Income (Loss). Interest income decreased to $1,000 for the three months ended August 31, 2024, as compared to $6,000 for the three months ended August 31, 2023. Interest expense increased to ($77,000) for the three months ended August 31, 2024, as compared to $(26,000) for the three months ended August 31, 2023. Dividend income decreased to $6,000 for the three months ended August 31, 2024, as compared to $18,000 for the three months ended August 31, 2023. Realized gains on investments for the three months ended August 31, 2024, decreased to $22,000 as compared to $210,000 for the three months ended August 31, 2023. Unrealized gains (losses) on investments for the three months ended August 31, 2024, were $21,000 due to market price changes in the company’s common stock investments as compared to a loss of ($291,000) for the three months ended August 31, 2023.
Previous wording
*Net Income (Loss).*Net income (loss) for the three months ended May 31, 2024, increased to $589,000 as compared to a net loss of ($171,000) for the three months ended May 31, 2023. This increase is primarily due to increased operating income arising largely from an increase in net sales in the quarter ended May 31, 2024.
Current wording
*Net Income (Loss).*Net income (loss) for the three months ended August 31, 2024, decreased to $17,000 as compared to net income of $200,000 for the three months ended August 31, 2023. This decrease is primarily due to increased cost of sales in the quarter ended August 31, 2024, as noted above.
Previous wording
*Income Taxes.*Income taxes for the three months ended May 31, 2024, increased to ($212,000) as compared to $0 for the three months ended May 31, 2023. This increase is due to the company being profitable in the quarter and to no longer maintaining a valuation allowance on its deferred tax assets.
Current wording
*Income Taxes.*Income taxes for the six months ended August 31, 2024, increased to ($218,000) as compared to $0 for the six months ended August 31, 2023. This increase is due to the company being profitable in the six month period and to no longer maintaining a valuation allowance on its deferred tax assets.
Previous wording
Net cash provided by operating activities was $714,000 for the three months ended May 31, 2024 primarily reflecting net income of $589,000, an increase in accounts payable of $397,000, a decrease in accounts receivable of $335,000, a decrease in net deferred taxes of $146,000, and depreciation of $135,000, partially offset by a decrease in customer deposits of $475,000 and an increase in inventories of $360,000.
Current wording
Net cash provided by operating activities was $1,549,000 for the six months ended August 31, 2024, primarily reflecting net income of $606,000, a decrease in accounts receivable of $629,000, an increase in accounts payable of $380,000, depreciation of $277,000, a change in net deferred taxes of $152,000, and amortization of intangibles of $105,000 partially offset by decreased customer deposits of $287,000, a decrease in accrued expenses of $90,000 and an increase in inventories of $89,000.
Previous wording
Net cash used in operating activities was ($5,000) for the three months ended May 31, 2023 primarily reflecting net loss of $171,000, an increase in accounts receivable of $407,000 and an increase in prepaid expenses and other assets of $117,000 partially offset by net realized and unrealized losses of $224,000, decrease in inventories of $140,000, increase in accounts payable of $125,000 and depreciation of $123,000.
Current wording
Net cash provided by operating activities was $970,000 for the six months ended August 31, 2023, primarily reflecting net income of $29,000, net realized and unrealized losses of $305,000, a decrease in inventories of $339,000, and depreciation of $244,000 partially offset by an increase in accounts receivable of $168,000 and an increase in prepaid expenses and other assets of $82,000.
Previous wording
Net cash provided by investing activities was $182,000 for the three months ended May 31, 2023 principally reflecting $237,000 in proceeds from the sale of marketable securities offset by $43,000 of purchases of marketable securities and $12,000 in purchases of property and equipment.
Current wording
Net cash provided by in investing activities was $1,737,000 for the six months ended August 31, 2023, principally reflecting $1,000,000 in maturities of short-term investments and $882,000 in proceeds from the sale of marketable securities offset by $43,000 of purchases of marketable securities and $102,000 in purchases of property and equipment.
Previous wording
Net cash provided by financing activities was $1,337,000 for the three months ended May 31, 2024 principally reflecting $1,400,000 in proceeds from mortgage loan.
Current wording
Net cash provided by financing activities was $1,304,000 for the six months ended August 31, 2024, reflecting $1,400,000 in proceeds from mortgage loan offset by $61,000 in principal payments on the mortgage loan and $35,000 in payments on finance lease liabilities.
Previous wording
Net cash used in financing activities was ($29,000) for the three months ended May 31, 2023 reflecting ($27,000) in principal payments on the mortgage loan.
Current wording
Net cash used in financing activities was ($56,000) for the six months ended August 31, 2023, reflecting $53,000 in principal payments on the mortgage loan and $3,000 in payments on finance lease liabilities.
Previous wording
We expect our sole sources of liquidity over the next twelve months to be cash from operations and cash and cash equivalents, if necessary. We anticipate that our capital expenditures required to sustain operations will be approximately $250,000 during the next twelve months and that our cash from operations and cash and cash equivalents, if necessary, will be sufficient to fund these needs for the next twelve months. Available cash and cash equivalents as of July 31, 2024 was approximately $2.7 million.
Current wording
We expect our sole sources of liquidity over the next twelve months to be cash from operations and cash and cash equivalents, if necessary. We anticipate that our capital expenditures required to sustain operations will be approximately $250,000 during the next twelve months and that our cash from operations and cash and cash equivalents, if necessary, will be sufficient to fund these needs for the next twelve months. Available cash and cash equivalents as of September 30, 2024 was approximately $3.0 million.
Previous wording
At May 31, 2024 and February 29, 2024, we had cash and cash equivalents of approximately $2,404,000 and $2,217,000, respectively. The increase for the three months ended May 31, 2024, was primarily due to cash from operating activities.
Current wording
At August 31, 2024 and February 29, 2024, we had cash and cash equivalents of approximately $3,303,000 and $2,217,000, respectively. The increase for the six months ended August 31, 2024, was primarily due to cash from operating activities.
Previous wording
At May 31, 2024 and February 29, 2024, we had investments in securities of approximately $967,000 and $904,000, respectively.
Current wording
At August 31, 2024 and February 29, 2024, we had investments in securities of approximately $901,000 and $904,000, respectively.
Previous wording
At May 31, 2024 and February 29, 2024, we had working capital of $8,353,000 and $6,227,000, respectively. The increase for the three months ended May 31, 2024 was due primarily to termination of the finance lease liability due to purchasing the property and cash provided in financing activities.
Current wording
At August 31, 2024 and February 29, 2024, we had working capital of $8,475,000 and $6,227,000, respectively. The increase for the six months ended August 31, 2024 was due primarily to termination of the finance lease liability due to purchasing the property and cash provided in financing activities.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
*Income Taxes.*Income taxes for the three months ended August 31, 2024, increased to $6,000 as compared to $0 for the three months ended August 31, 2023.
Current report — wording carried from elsewhere
Net Sales. Net sales for the six months ended August 31, 2024, increased 63% to $7,548,000 as compared to $4,617,000 for the six months ended August 31, 2023. The increase in net sales was largely due to the acquisition of MEI.
Current report — wording carried from elsewhere
For the six months ended August 31, 2024, we shipped 38,897 units as compared to 35,145 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.