SCI Engineered Materials, Inc. (OTCQB:SCIA) reported higher revenue and net income for the three months and nine months ended September 30, 2026. The company also recorded lower gross profit margins, increased year-to-date operating expenses and costs related to an imposter scam reported earlier in the year.
#Revenue and backlog
Revenue for the third quarter reached $8,056,414, compared with $5,289,116 for the same period in 2025. For the first nine months of 2026, revenue was $25,701,895, compared with $12,398,652 a year earlier.
SCI Engineered Materials attributed the revenue changes to higher raw material input costs, product mix and higher volume. Order backlog stood at $7.7 million on September 30, 2026, versus $5.8 million on September 30, 2025, and $7.9 million on June 30, 2026.
#Gross profit and margins
Third-quarter gross profit was $1,689,682, compared with $1,331,145 in the prior-year period. The company said higher revenue supported gross profit, although the result was partly offset by increased raw material input costs and product mix.
Gross profit margin for the quarter was 21.0%, down from 25.2% in 2025. For the first nine months, gross profit increased to $6,001,257 from $3,562,116, while the margin declined to 23.3% from 28.7%. SCI Engineered Materials said the year-to-date result was affected by raw material input costs, product mix and volume.
#Operating expenses and fraud-related costs
Operating expenses for the third quarter were $688,839, compared with $790,976 a year earlier. The 2026 figure included recognition of $262,745 recovered through the company’s Smart Cyber insurance claim and associated reimbursed expenses. The quarter also included higher marketing and sales compensation and benefits, additional research and development materials and supplies, and higher general and administrative professional fees.
For the first nine months, operating expenses were $3,112,024, compared with $2,363,601 in the same period of 2025. The year-to-date figure included $299,281 of fraud expense, along with higher marketing and sales compensation and benefits, research and development materials and supplies, and general and administrative professional fees.
SCI Engineered Materials said an imposter scam of $898,325 connected with bank fraud was reported on February 10, 2026. By September 30, 2026, the company had recovered $599,044, including $262,745 received during the third quarter through the Smart Cyber insurance claim and reimbursement of related expenses.
#Net income and taxes
Third-quarter net income was $862,312, or $0.19 per share, compared with $510,279, or $0.11 per share, in the prior-year period. Net income for the first nine months was $2,494,850, or $0.56 per share, versus $1,184,455, or $0.26 per share, a year earlier. The company attributed both 2026 periods partly to higher gross profit.
Income tax expense rose to $253,137 in the third quarter from $149,849. For the first nine months, income tax expense was $728,434, compared with $347,829 in the prior-year period. The effective tax rate was 22.7% for the three months ended September 30, 2026, and 2025, respectively, and 22.6% for the first nine months of 2026 compared with 22.7% in 2025.
The deferred tax liability was $615,244 at September 30, 2026, compared with $389,572 at December 31, 2025. Interest income was $114,606 for the quarter and $334,051 for the first nine months, compared with $119,959 and $333,769, respectively, in the corresponding 2025 periods. The company said lower interest rates affected both 2026 periods compared with the prior year.
#Cash and operating initiatives
Cash and cash equivalents totalled $11,041,812 at September 30, 2026, compared with $7,939,000 at the end of 2025. Investments in marketable securities were $3,368,813, compared with $3,367,125 at December 31, 2025.
President and Chief Executive Officer Jeremy Young said SCI Engineered Materials was continuing to implement its growth strategy through investments in manufacturing capabilities and service offerings. He also said the company had received and installed spherical equipment intended to enhance its powder capabilities.
According to Young, the company’s marketing activity for 3D printing and additive manufacturing included targeted customer contact, trade shows and online campaigns.
#Key Takeaways
- Third-quarter revenue was $8,056,414, while first-nine-month revenue reached $25,701,895.
- Order backlog was $7.7 million at September 30, 2026.
- Gross profit increased in both reporting periods, but margins declined to 21.0% for the quarter and 23.3% for the first nine months.
- First-nine-month operating expenses included $299,281 of fraud expense after an imposter scam of $898,325 was reported on February 10, 2026.
- Cash and cash equivalents were $11,041,812 at September 30, 2026, while investments in marketable securities were $3,368,813.
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