Business Segments

9 Months Ended

Sep. 30, 2021

Business Segments

Business Segments

11.         Business Segments

The Company operates in two business segments, ATG and CPG. The Company’s reportable segments are strategic business units that offer different products and services. The segments are composed of separate corporations and are managed separately. Operations in ATG primarily involve the design, manufacture, and marketing of servo-control components (i.e., torque motors, control valves, actuators, etc.) for government, commercial and industrial applications. CPG’s operations involve the design, manufacture and marketing of a variety of cutlery products for use by consumers and government agencies. The Company derives its primary sales revenue from domestic customers, although a portion of finished products are for foreign end use.

As of September 30, 2021, the Company had identifiable assets of approximately $54,213,000 ($50,328,000 – December 31, 2020) of which approximately $44,784,000 ($40,826,000 – December 31, 2020) was for ATG and approximately $9,429,000 ($9,502,000 – December 31, 2020) was for CPG.

Information regarding the Company’s operations in these segments is summarized as follows:

	($000’s omitted except per share data)
	ATG						CPG						Consolidated
	Nine Months Ended						Nine Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,
	2021			2020			2021			2020			2021			2020
Revenues from unaffiliated customers	$	23,495		$	33,228		$	6,508		$	6,021		$	30,003		$	39,249
Cost of goods sold, inclusive of depreciation		(19,214)			(26,495)			(6,152)			(5,187)			(25,366)			(31,682)
Gross margin		4,281			6,733			356			834			4,637			7,567
Gross margin %		18.2	%		20.3	%		5.5	%		13.9	%		15.5	%		19.3	%
Selling, general and administrative		(5,586)			(4,857)			(1,317)			(1,255)			(6,903)			(6,112)
Legal settlement awards		(1,800)			—			(90)			—			(1,890)			—
Total operating costs and expenses		(26,600)			(31,352)			(7,559)			(6,442)			(34,159)			(37,794)
Operating (loss)/income		(3,105)			1,876			(1,051)			(421)			(4,156)			1,455
Employee retention credit (ERC)		4,584			—			1,038			—			5,622			—
Paycheck Protection Program loan forgiveness		4,000			—			—						4,000			—
Interest expense		(130)			(125)			(2)			(9)			(132)			(134)
Total other income (expense)		8,454			(125)			1,036			(9)			9,490			(134)
Income (loss) before income tax provision		5,349			1,751			(15)			(430)			5,334			1,321
Income tax provision (benefit)		370			318			(1)			(78)			369			240
Net income (loss)	$	4,979		$	1,433		$	(14)		$	(352)		$	4,965		$	1,081
Capital expenditures	$	64		$	640		$	4		$	68		$	68		$	708

	($000’s omitted except per share data)
	ATG						CPG						Consolidated
	Three Months Ended						Three Months Ended						Three Months Ended
	September 30,						September 30,						September 30,
	2021			2020			2021			2020			2021			2020
Revenues from unaffiliated customers	$	8,449		$	8,184		$	2,466		$	2,113		$	10,915		$	10,297
Cost of goods sold, inclusive of depreciation		(6,762)			(8,635)			(2,381)			(1,827)			(9,143)			(10,462)
Gross margin		1,687			(451)			85			286			1,772			(165)
Gross margin %		20.0	%		(5.5)	%		3.4	%		13.5	%		16.2	%		(1.6)	%
Selling, general and administrative		(2,240)			(1,712)			(481)			(384)			(2,721)			(2,096)
Legal settlement awards		(1,800)			—			(90)			—			(1,890)			—
Total operating costs and expenses		(10,802)			(10,347)			(2,952)			(2,211)			(13,754)			(12,558)
Operating loss		(2,353)			(2,163)			(486)			(98)			(2,839)			(2,261)
Employee retention credit (ERC)		1,598			—			380			—			1,978			—
Paycheck Protection Program loan forgiveness		4,000			—			—			—			4,000			—
Interest expense		(5)			(41)			—			(1)			(5)			(42)
Total other income (expense)		5,593			(41)			380			(1)			5,973			(42)
Income (loss) before income tax provision		3,240			(2,204)			(106)			(99)			3,134			(2,303)
Income tax benefit		(83)			(512)			(21)			(9)			(104)			(521)
Net income (loss)	$	3,323		$	(1,692)		$	(85)		$	(90)		$	3,238		$	(1,782)
Capital expenditures	$	54		$	99		$	1		$	16		$	55		$	115