SOURCE: Sutron Corporation

Sutron Corporation

March 27, 2015 17:11 ET

Sutron Corporation Reports Fourth Quarter and Full Year 2014 Results

STERLING, VA--(Marketwired - March 27, 2015) - Sutron Corporation (NASDAQ: STRN)

  • 2014 Net Revenue of $26.2M, Down 4% From Prior Year
  • Q4 Net Revenue of $7.2M, Down 2% From Prior Year's Quarter
  • 2014 Net Income of $484,908, Down 39% From Prior Year
  • Q4 Net Income of $620,599, Up 87% From Prior Year's Quarter
  • 2014 Bookings of $27.1M, Up 5% From Prior Year
  • Cash of $8.7M at the end of 2014, Down 4.9% From Prior Year
  • 2014 Free Cash Flow of $(287,326), Compared to $1.96M at the end of 2013

Sutron Corporation (NASDAQ: STRN), a global leader in hydrological, meteorological, air quality and oceanic monitoring products, systems, software and services, announced results for the fourth quarter and full year ended December 31, 2014.

Raul McQuivey, Chairman and Chief Executive Officer, stated, "While we continue to see many new opportunities in our global marketspace, we are disappointed in this year's results in that several opportunities we expected to close in 2014 were delayed to 2015. However, our deal pipeline remains robust and growing and we believe we are well positioned to capitalize on many of these opportunities in 2015. We expect investments made in research and development efforts in 2013 and 2014 will also begin to generate returns in 2015. Given our pipeline and the progress we have made with our development efforts, I am confident we will have increased revenues and increased profitability in 2015.

"In 2014, we invested approximately $529,000 in new surface mount technology ('SMT') machinery that we believe will allow us to better control our production process, improve quality of our printed circuit boards ('PCB'), better serve our customers through faster lead times, and improve the material costs of many of our products through efficiencies gained in managing our own PCB process.

"We continue to work on expanding our bundled end-to-end solution capabilities with our recent acquisitions. As such, we have reorganized our corporate structure to align with this strategy. In 2015 we will have five Sutron divisions: Hydromet Products Division ('HPD'), Integrated Systems Division ('ISD'), Sutron India Division ('SIO'), Weather Solutions Division ('WSD'), and Air Quality Division ('AQD'). Outside of HPD, through which we deliver our standard products, we have opportunities in each of our other divisions to deliver bundled end-to-end solutions in 2015. We are beginning to see traction in the marketplace for these solutions and are committed to bring additional innovative products and solutions to market in 2015 that we believe will foster growth of sales and profitability in 2015 and beyond."

Consolidated Results

Continuing Sutron operations are presented below.

Quarter Ended December 31, 2014

Net Revenue was $7.2 million for the fourth quarter of 2014, a decrease of 2% from $7.3 million in the fourth quarter of 2013. Several projects the Company was expecting to close and deliver by year-end were delayed causing the small decrease in revenue.

Gross Profit was $3.0 million, or 41% of net revenue, as compared to $2.9 million, or 40% of net revenue, in the fourth quarter of 2013. An increase in our Hydromet standard products sales, as well as increased margin on a large project we won in November 2014, resulted in the stronger gross margin as a percentage of sales compared to the fourth quarter of 2013.

Operating Expenses were $2.3 million, or 33% of net revenue, as compared to $2.3 million, or 32% of net revenue, in the fourth quarter of 2013. 

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was approximately $823,000 in the fourth quarter of 2014 as compared to EBITDA of approximately $796,000 in the fourth quarter of 2013. The slight increase over fourth quarter of 2013 was due to the slightly higher margin on product sales in the fourth quarter 2014.

Net Income was $620,599, or $.12 per basic and $.12 per diluted common share for the fourth quarter of 2014, compared to net income of $332,898, or $.07 per basic and $.06 per diluted common share, in the fourth quarter of 2013. The number of shares outstanding used to calculate basic and diluted earnings per common share in the fourth quarter of 2014 were 5.08 and 5.10 million, respectively, compared to 5.07 and 5.12 million, respectively, for basic and diluted earnings per common share in the fourth quarter of 2013.

Year Ended December 31, 2014

Net revenue for the year ended December 31, 2014 was $26.2M, down 4% from $27.2 in 2013. Sales from our legacy business were $19.6M, down 3% from $20.1M in 2013. MeteoStar generated $5.2M of revenue in 2014, down 10% from $5.8m in 2013. MeteoStar, has had a number of large projects delayed that we expect will close in 2015. Sabio generated $1.4M of revenue in 2014, up 11% from $1.3M in 2013. The increase in revenue is largely due to 2014 being the first full year of our ownership.

Gross profit for the year ended December 31, 2014 was $10.3M, or 39% of net revenue, as compared to $10.8M, or 40% of net revenue, in 2013. 

Operating expenses were $10.0M in 2014, or 38% of net revenue, as compared to $9.6M, or 35% of net revenue, in 2013. The increase is due primarily to a full year of costs for running our Sabio division compared to 2013 and an increase in our sales and marketing expenditures. In 2014, we launched our renovated corporate web-site and have been integrating all divisions of the Company into that web-site.

EBITDA for the year ended December 31, 2014 was approximately $1.05M, or 4.0% of net revenues, as compared to EBITDA of approximately $1.78M, or 6.5% of net revenues, in 2013. 

Net Income was $484,908 in 2014, or $.10 per basic and $.09 per diluted common share, compared to net income of $795,905, or $.16 per basic and diluted common share, in 2013. The number of shares outstanding used to calculate basic and diluted earnings per common share in 2014 were 5.08 and 5.10 million, respectively, compared to 5.07 and 5.12 million, respectively, for basic and diluted earnings per common share in 2013.

Balance Sheet, Liquidity and Capital Resources

Sutron ended 2014 with $8.6 million in cash and cash equivalents, down from $9.1 million at the end of 2013. For the year ended December 31, 2014, cash generated by operating activities was $574,204 as compared to cash generated by operating activities of $2,178,449 in 2013. For the year ended December 31, 2014, capital expenditures were $861,530 as compared to $207,407 in 2013. The increase in capital expenditures was primarily due to the Company's investment in its SMT machinery.

Free Cash Flow for the year ended December 31, 2014 was $(287,326) as compared to Free Cash Flow of $1,964,266 in 2013. Sutron defines Free Cash Flow as net cash provided or used by operating activities less cash used in the purchase of property and equipment.

Shareholder Call

The Company will hold a shareholder call to discuss its 2014 results at 11a.m. EDT on Monday, March 30th. The dial-in details for the call are:

Dial-in Number: +1 (224) 501-3412

Access Code: 186-391-485

For those not able to dial in for the call, the call will be recorded and uploaded to our website -- www.sutron.com.

ABOUT SUTRON CORPORATION

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. Our quarterly results may fluctuate substantially based upon contract awards that are difficult to project in terms of timing and may be delayed due to differing time frames in securing government approvals and funding. We provide hydrological, meteorological, air quality, oceanic and aviation real-time data collection products, systems, software and services to a diversified customer base of federal, state, local and foreign governments, engineering companies, universities and hydropower companies. Over 70,000 Sutron stations have been installed worldwide. We manufacture our dataloggers, satellite transmitters and sensors. Our product and systems are designed to offer commonality of components and uniform interfaces in order to build modular, open, distributed systems that provide excellent performance regardless of the number of sensors or field stations.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

The statements in this press release that relate to future plans, events or performance are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. Forward-looking statements include without limitation any statements regarding our expected future financial position, results of operations, cash flows, EBITDA, financing plans, business strategy, bookings, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "should" and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. We are under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

  
SUTRON CORPORATION 
CONSOLIDATED BALANCE SHEETS 
  
   December 31,   December 31,  
   2014   2013  
            
ASSETS           
Current Assets:           
 Cash and cash equivalents  $7,873,903   $8,283,092  
 Restricted cash and cash equivalents   809,509    850,279  
 Accounts receivable, net   4,693,260    4,480,218  
 Costs in excess of billings   1,500,603    1,383,418  
 Inventory   4,747,676    4,876,641  
 Prepaid items and other assets   293,568    446,749  
 Income taxes receivable   173,537    106,897  
 Deferred income taxes   1,046,593    664,558  
  Total Current Assets   21,138,649    21,091,852  
            
Property and Equipment, Net   1,935,760    1,532,144  
Other Assets           
 Goodwill   4,452,152    4,452,152  
 Intangibles, net of amortization   722,466    907,495  
 Deferred tax asset   -    77,357  
 Other assets   102,514    81,885  
  Total Assets  $28,351,541   $28,142,885  
            
LIABILITIES AND STOCKHOLDERS' EQUITY           
Current Liabilities:           
 Accounts payable  $1,045,170   $1,170,446  
 Accrued payroll   110,639    468,454  
 Deferred revenue   1,286,121    686,029  
 Deferred rent   149,011    139,146  
 Other accrued expenses   1,520,074    1,520,261  
 Billings in excess of costs and estimated earnings   125,242    388,687  
  Total Current Liabilities   4,236,257    4,373,023  
Long-Term Liabilities           
 Deferred rent   608,568    751,245  
 Deferred tax liability   30,871    -  
  Total Liabilities   4,875,696    5,124,268  
Stockholders' Equity           
 Common stock, $0.01 par value, 12,000,000 shares authorized; 5,084,134 and 5,066,009 issued and outstanding   50,842    50,660  
 Additional paid-in capital   5,465,723    5,340,277  
 Retained earnings   18,354,164    17,869,256  
 Accumulated other comprehensive loss   (394,884 )  (241,576 )
  Total Stockholders' Equity   23,475,845    23,018,617  
  Total Liabilities and Stockholders' Equity  $28,351,541   $28,142,885  
         
  
SUTRON CORPORATION 
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
  
   For the Years Ended December 31,  
   2014   2013   2012  
              
Net sales and revenues  $26,243,398   $27,208,304   $25,229,519  
                 
Cost of sales and revenues   15,914,728    16,424,127    15,212,433  
 Gross profit   10,328,670    10,784,177    10,017,086  
                 
Operating expenses:                
 Selling, general and administrative expenses   6,647,788    6,124,930    5,275,676  
 Research and development expenses   3,367,172    3,438,250    3,384,393  
 Total operating expenses   10,014,960    9,563,180    8,660,069  
                 
 Operating income   313,710    1,220,997    1,357,017  
                 
Financing income, net   83,067    46,892    74,783  
                 
 Income before income taxes   396,777    1,267,889    1,431,800  
                 
Income tax expense (benefit)   (88,131 )  471,984    289,000  
                 
Net income  $484,908   $795,905   $1,142,800  
                 
Net income per share:                
                 
 Basic income per share  $.10   $.16   $.24  
                 
 Diluted income per share  $.09   $.16   $.23  
                 
Comprehensive income (loss):                
                 
 Net income   484,908    795,905    1,142,800  
                 
 Foreign currency translation adjustments   (153,308 )  (58,973 )  (6,094 )
                 
Comprehensive income  $331,600   $736,932   $1,136,706  
             

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