– Investor Webcast and Business Update Set for Tuesday, November 21, 1 pm ETMIAMI, Nov. 15, 2017 — PEN Inc. (OTCQB:PENC) (“PEN” or “the Company”), a global leader in developing, commercializing and marketing consumer and industrial products enabled by nanotechnology, reported financial results for its third quarter ended September 30, 2017.
Scott Rickert, PEN’s President, Chairman and CEO, said: “During the third quarter, we relocated our Ohio operations to a facility nearby with a much smaller footprint. Although we incurred some one-time charges related to the relocation which impacted this quarter’s financial results, this move will ultimately lower our cost structure and provide for operating leverage in the future. It will also allow us to focus on what PEN does best—developing groundbreaking formulas, providing outstanding customer service and meeting the flexible packaging needs of our customers.“We will soon begin the rollout of our rebranded environmentally friendly surface protector to customers in the hospitality industry and related markets. While it will take some time for sales to ramp, we are excited to be actively marketing this revolutionary product that addresses the growing need for safe and effective products that protect us from disease. The PEN Design Center continues to distinguish itself as a valuable development partner, especially in the area of nuclear medicine. I am pleased with our progress in executing our business plan and look forward to closing the year with a fully streamlined organization positioned for future growth.” Third Quarter 2017 Financial ResultsDuring the third quarter of 2017, PEN’s revenues and gross margins were relatively stable. The Company generated a loss for the quarter, which includes the impact of a one-time, non-cash loss on the sale of equipment associated with the relocation of its Ohio operations. The Company generated over $100,000 in cash flow from operations during the quarter.For the three months ended September 30, 2017, total revenues were $2,028,261, compared to revenues of $2,006,838 in the comparable period in 2016.For the third quarter of 2017, overall gross profit amounted to $632,982 compared to $631,083 for the third quarter of 2016. Gross margin was 31%, relatively unchanged from the year ago period. Operating expenses totaled $681,113 in the third quarter of 2017, down from $866,855 in the third quarter of 2016. In the third quarter of 2017, salaries, wages and related benefits decreased by 33% due to personnel reductions related to the Company’s ongoing efforts to reduce costs. Selling and marketing expenses decreased by 64% as a result of heavy spending earlier in the year, and general and administrative expenses decreased by 22% due to several factors, including the end of amortization of intangibles, and personnel reductions. These reductions were partially offset by minor increases in professional fees and research and development expenses attributable to further work on specialty coatings for new markets and evaluating different parameters and potential enhancements of the surface protector and fortifier product. Operating loss was $48,131 in the third quarter of 2017, compared to an operating loss of $235,772 in the third quarter of 2016.Other expense was $76,599 in the third quarter of 2017, due primarily to a $122,050 loss on disposal of fixed assets, which was partially offset by other income. This compares to other income of $24,870 in the third quarter of 2016. Net loss for the three months ended September 30, 2017 amounted to $124,730 or ($0.04) per basic and diluted share, as compared to a net loss of $210,902, or ($0.07) per basic and diluted share, for the three months ended September 30, 2016. Basic and diluted earnings per share were based on 3,062,759 and 3,020,062 weighted average shares outstanding, respectively, for the three months ended September 30, 2017 and 2016. PEN Brands’ Health and Safety Products – Product SegmentSales from PEN’s Product segment for the third quarter of 2017 were $1,772,960, relatively unchanged from $1,781,755 for the three months ended September 30, 2016. During the third quarter of 2017, the Company recorded a one-time adjustment to its cooperative advertising liability which increased Product segment revenue by approximately $346,000. In addition, certain orders from PEN’s large customers that were expected to be filled in the third quarter of 2017 were postponed until the fourth quarter of 2017.Gross margin in the Product segment in the second quarter of 2017 was 37%, relatively unchanged from the year-ago period. PEN Design Center – Contract Services SegmentRevenues from the Contract services segment for the third quarter of 2017 were $255,301 compared to $225,083 in the third quarter of 2016. Gross margin from the Contract services segment in the third quarter of 2017 was negative 7%, compared to negative 15% in the year ago period. The improvement in gross margin from was attributable to increased revenue and fixed costs that were unchanged.Nine Months 2017 Results
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