SOURCE: Sierra Monitor Corporation

Sierra Monitor Corporation

March 04, 2010 15:35 ET

Sierra Monitor Corporation Announces Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2009

Fourth Quarter Operating Profit up 12% Over Prior Year; Twelve Month 2009 Gross Profit Improved to 60%

MILPITAS, CA--(Marketwire - March 4, 2010) - Sierra Monitor Corporation (OTCBB: SRMC), a Cleantech focused company that delivers information technology for environment measurement and control by developing specialized embedded software that is deployed on proprietary hardware platforms, today announced financial results for the fourth quarter and twelve months ended December 31, 2009.

Financial Highlights

--  Reported fourth quarter 2009 sales of $3,201,478, with gross profit
    of 62%
--  Increased fourth quarter income from operations by 12% to $264,880,
    compared to prior year
--  Generated fourth quarter net income of $123,093, an increase of 6%
    compared to prior year
--  Achieved twelve month sales of $12,732,014 with gross profit of 60%
--  Earned net income of $0.01 per share (basic and diluted) for the fourth
    quarter and $0.02 per share (basic and diluted) for the twelve months
    of 2009
--  Ended 2009 with record cash on hand of $2,203,018 and no debt
--  Grew 2009 ProtoCessor sales more than 50% year over year

Business Highlights

--  Introduced five new Information Technology (IT) gas detection products
    and five new ProtoCessor products; three of which expand our
    relationship with existing OEM customers
--  Shipped FieldServer protocol gateways to integrate power meters in the
    first phase of the New York Empire State Building renovation project
--  Continued deployment of methane gas detection systems required by the
    Florida Department of Environmental Resource Management for protection
    of a school located near a landfill
--  Supplied FieldServer communication bridges for integration of fire
    safety and building automation systems in each of the ten World Cup
    Soccer stadiums in South Africa.

Fourth Quarter and Twelve Months 2009 Financial Results

Total sales for the quarter ended December 31, 2009 were $3,201,478, compared to $3,314,741 reported for the same period of 2008. For the twelve months ended December 31, 2009, sales were $12,732,014, compared to $13,749,797 for the same period of 2008.

Sierra Monitor posted GAAP net income of $123,093, or $0.01 per share (basic and diluted), for the quarter ended December 31, 2009, compared to GAAP net income of $115,757, or $0.01 per share (basic and diluted), for the same period of 2008. Sierra Monitor posted GAAP net income of $211,559, or $0.02 per share (basic and diluted), for the twelve months ended December 31, 2009, compared to GAAP net income of $485,706, or $0.04 per share (basic and diluted), for the same period of 2008.

Sierra Monitor posted non-GAAP net income of $263,103, or $0.02 per share (basic and diluted), for the fourth quarter ended December 31, 2009, compared to non-GAAP net income of $262,973, $0.02 per share (basic and diluted), for the same period of 2008. Sierra Monitor posted non-GAAP net income of $659,884, or $0.06 per share (basic and diluted), for the twelve months ended December 31, 2009, compared to non-GAAP net income of $929,171, or $0.08 per share (basic and diluted), for the same period of 2008.

"During a very challenging 2009 we remained profitable while we continued investment in engineering projects which resulted in release of five new gas detections products and five new ProtoCessor products," said Gordon Arnold, President and Chief Executive Officer. "While our domestic sales results reflected the continuing problem in the US economy we benefitted from our increased international focus primarily in the Middle East. Of particular note is our continuing success in supplying machine-to-machine communication bridges and engineering support for the high visibility King Abdullah University of Science and Technology (KAUST) project in Saudi Arabia."

Cash Position

Sierra Monitor had $2,203,018 in cash at December 31, 2009 and no debt. Trade receivables at December 31, 2009 were $1,354,775. The Company's Days Sales Outstanding in Accounts Receivable (DSOs) was 40 days.

About Sierra Monitor Corporation

Sierra Monitor delivers information technology for environment measurement and control by developing specialized embedded software that is deployed on proprietary hardware platforms. Embedded software enables data transfer between subsystems using protocol and physical medium translation. Proprietary hardware platforms allow the Company to increase its value proposition while protecting intellectual property.

The Company's vision is to capitalize on the expanding worldwide demand for Cleantech knowledge-based products and services that improve operational performance, productivity, efficiency and safety in building automation, industrial and military applications, while reducing demands on resources and energy consumption.

Sierra Monitor's hardware platforms include original equipment modules for installation in customer devices and controllers, gateway boxes generally used by integrators for M2M protocol translation, and multi-component safety systems generally focused on gas and fire detection.

By providing an intelligent interface, the Company's products enable various machines, devices, systems and people to reliably communicate useful information for the measurement and control of various environments including buildings, plants, and factories. By delivering the data on various communications levels, including Ethernet, internet, LONworks, Profibus and others, the Company's products make it possible for data to be accessed at more appropriate levels, such as network operations centers, control rooms or remote locations.

Sierra Monitor is an established supplier of safety and environmental instruments with more than 16,000 installations worldwide.

TABLE A

                        SIERRA MONITOR CORPORATION
                        Statements of Operations
                                (unaudited)


                          For the three months      For the twelve months
                           ended December 31,        ended December 31,
                            2009         2008         2009         2008
                        ------------ ------------ ------------ ------------

Net sales               $  3,201,478 $  3,314,741 $ 12,732,014 $ 13,749,797
Cost of goods sold         1,213,811    1,271,899    5,108,929    5,598,015
                        ------------ ------------ ------------ ------------
    Gross profit           1,987,667    2,042,842    7,623,085    8,151,782
Operating expenses
  Research and
   development               466,537      454,318    1,967,009    1,907,310
  Selling and
   marketing                 782,338      801,469    3,309,143    3,317,853
  General and
   administrative            473,912      550,917    1,934,609    2,050,771
                        ------------ ------------ ------------ ------------
                           1,722,787    1,806,704    7,210,761    7,275,934
                        ------------ ------------ ------------ ------------
    Income from
     operations              264,880      236,138      412,324      875,848

Interest income                  949            -          949            -
                        ------------ ------------ ------------ ------------
    Income before
     income taxes            265,829      236,138      413,273      875,848

Income tax provision         142,736      120,381      201,714      390,142
                        ------------ ------------ ------------ ------------
    Net income          $    123,093 $    115,757 $    211,559 $    485,706
                        ============ ============ ============ ============

Net income per share:
  Basic                 $       0.01 $       0.01 $       0.02 $       0.04
                        ============ ============ ============ ============
  Diluted               $       0.01 $       0.01 $       0.02 $       0.04
                        ============ ============ ============ ============
Weighted-average number
 of shares used in per
 share computations:
  Basic                   11,438,212   11,428,212   11,434,045   11,325,452
                        ============ ============ ============ ============
  Diluted                 11,739,430   11,862,557   11,765,541   11,794,484
                        ============ ============ ============ ============




TABLE B

                        SIERRA MONITOR CORPORATION
                              Balance Sheet


                 Assets                                   December 31,
                                                       2009        2008
                                                    ----------- -----------
                                                    (unaudited)     (1)
Current assets:
  Cash and cash equivalents                         $ 2,203,018 $ 1,338,647
  Trade receivables, less allowance for doubtful
   accounts  of approximately $70,000 in 2009 and
   $89,000 in 2008                                    1,354,775   1,661,846
  Inventories, net                                    1,892,313   1,968,006
  Prepaid expenses                                      240,204     189,389
  Prepaid income taxes                                        -      48,295
  Deferred income taxes                                 259,855     299,421
                                                    ----------- -----------
    Total current assets                              5,950,165   5,505,604

Property and equipment, net                             238,377     380,987
Other assets                                            167,615     185,015
                                                    ----------- -----------
    Total assets                                    $ 6,356,157 $ 6,071,606
                                                    =========== ===========

        Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                                  $   523,763 $   521,823
  Accrued compensation expenses                         372,035     385,306
  Income taxes payable                                   34,251       6,272
  Other current liabilities                              73,351      98,332
                                                    ----------- -----------
    Total current liabilities                         1,003,400   1,011,733

Deferred tax liability                                   14,575      42,498
                                                    ----------- -----------
    Total liabilities                                 1,017,975   1,054,231

Commitments
Shareholders' equity:
  Common stock, $0.001 par value; 20,000,000
   shares authorized; 11,438,212 shares issued and
   outstanding at December 31, 2009 and 11,428,212
   at December 31, 2008                                  11,438      11,428
  Additional paid-in capital                          3,595,202   3,485,964
  Retained earnings                                   1,731,542   1,519,983
                                                    ----------- -----------
    Total shareholders' equity                        5,338,182   5,017,375
                                                    ----------- -----------
    Total liabilities and shareholders' equity      $ 6,356,157 $ 6,071,606
                                                    =========== ===========

(1) Derived from the audited financial statements.

NON-GAAP FINANCIAL MEASURES

The accompanying release dated March 4, 2010 contains non-GAAP financial measures. Table C reconciles the non-GAAP financial measures in that news release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP operating expenses, non-GAAP profit (loss) from operations and related non-GAAP profit (loss) as a percentage of revenue, non-GAAP net profit (loss) and basic and diluted non-GAAP net profit (loss) per share.

Sierra Monitor continues to provide all information required in accordance with GAAP and does not suggest or believe that non-GAAP financial measures should be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Sierra Monitor believes that non-GAAP financial measures provide meaningful supplemental information regarding its operating results primarily because they exclude amounts that the company does not consider part of ongoing operating results when assessing overall company performance.

We believe that our non-GAAP financial measures facilitate the comparison of results for current periods with results for past periods. We exclude the following items from non-GAAP financial measures:

Depreciation and Amortization of Tangible and Intangible Assets

In accordance with GAAP, depreciation and amortization of tangible and intangible assets includes depreciation of purchased capital assets and amortization of intangible assets including third party approval fees. We exclude these amounts from our internal measures for budget and planning purposes.

Provision for Bad Debt Expense

We maintain an allowance for doubtful accounts which is analyzed on a periodic basis to ensure that it is adequate to the best of management's knowledge. We exclude these amounts from our internal measures for budget and planning purposes.

Provision for Inventory Losses

We evaluate our inventories for excess or obsolescence on a quarterly basis. Inventories identified as slow moving or obsolete are determined based on historical experience and current product demand. The quarterly analysis is used to adjust the provision for inventory losses. We exclude the provision for inventory losses from our internal measures for budget and planning purposes.

Deferred Income taxes

Our non-GAAP financial measures exclude non-cash tax expenses or benefits. These amounts are generally the result of timing differences related to certain accrual account balance variations. We exclude these expenses or benefits because they are non-cash expenses or benefits that we believe are not reflective of how we view our operating performance.

Share-based Compensation Expense

Our non-GAAP financial measures exclude share-based compensation expenses, which consist of expenses for stock options. While share-based compensation is an expense affecting our results of operations, management excludes share-based compensation from our budget and planning process. For these reasons, we exclude share-based compensation expenses from our non-GAAP financial measures. We compute weighted average dilutive shares using the methods required by SFAS 128 and SFAS 123(R) for both GAAP and non-GAAP diluted net income per share.

Sierra Monitor refers to these non-GAAP financial measures in evaluating and measuring the performance of our ongoing operations and for planning and forecasting in future periods. These non-GAAP financial measures also facilitate our internal comparisons to historical operating results. We are reporting non-GAAP financial measures because we believe that the inclusion of comparative numbers provides consistency in our financial reporting. We compute non-GAAP financial measures using the same consistent method from quarter-to-quarter and year-to-year.

Sierra Monitor believes that non-GAAP measures have significant limitations in that they do not reflect all of the amounts associated with Sierra Monitor's financial results as determined in accordance with GAAP and that these measures should only be used to evaluate Sierra Monitor's financial results in conjunction with the corresponding GAAP measures. Because of these limitations, Sierra Monitor qualifies the use of non-GAAP financial information in a statement when non-GAAP information is presented. In addition, the exclusion of the charges and expenses indicated above from the non-GAAP financial measures presented does not indicate an expectation by Sierra Monitor management that similar charges and expenses will not be incurred in subsequent periods.

Table C

                        Sierra Monitor Corporation
              Reconciliation of GAAP to Non-GAAP Net Income
                                (Unaudited)


                             For the three months   For the twelve months
                              ended December 31,      ended December 31,
                               2009        2008        2009        2008
                            ----------- ----------- ----------  -----------

GAAP Net Income             $   123,093 $   115,757 $  211,559  $   485,706
  Depreciation and
   amortization                  67,965      73,031    282,631      261,804
  Provision for bad debt
   expense                        7,799       9,474     30,880       41,739
  Provision for inventory
   losses                             -       8,000     (8,000)       8,000
  Deferred income taxes          37,587      30,800     39,566       25,437
  Stock based compensation
   expense                       26,659      25,911    103,248      106,485
                            ----------- ----------- ----------  -----------
Total adjustments to GAAP
 net income                     140,010     147,216    448,325      443,465
Non-GAAP Net income         $   263,103 $   262,973 $  659,884  $   929,171
                            =========== =========== ==========  ===========
Non-GAAP Net income per
 share:
  Basic                     $      0.02 $      0.02 $     0.06  $      0.08
                            =========== =========== ==========  ===========
  Diluted                   $      0.02 $      0.02 $     0.06  $      0.08
                            =========== =========== ==========  ===========
Weighted-average number of
 shares used in per share
 computations:
  Basic                      11,438,212  11,428,212 11,434,045   11,325,452
                            =========== =========== ==========  ===========
  Diluted                    11,739,430  11,862,557 11,765,541   11,794,484
                            =========== =========== ==========  ===========

Contact Information

  • Sierra Monitor Investor Relations Contact:
    Steve Polcyn
    (925) 548 3516
    Email Contact