SOURCE: Sutron Corporation

Sutron Corporation

May 15, 2015 12:37 ET

Sutron Reports First Quarter 2015 Results

STERLING, VA--(Marketwired - May 15, 2015) - Sutron Corporation (NASDAQ: STRN) today announced results for the first quarter ended March 31, 2015.

First Quarter 2015 Results

  • First Quarter 2015 Revenue of $4.5 million; down from $4.9 million Revenue First Quarter 2014
  • First Quarter Net Loss of $735 thousand; increased from $540 thousand Net Loss in First Quarter 2014
  • Backlog as of March 31, 2015 was $15.5 million, up 28% from Prior Year Quarter

Sutron reported revenue of $4.5 million for the first quarter of 2015, down $400 thousand, or 8% from the prior year first quarter. The lower revenue year over year is due to slower project activity being awarded in the first quarter than prior years. Standard product revenues for the first quarter of 2015 increased to $2.5 million as compared to $2.0 million for the first quarter of 2014. The increase in standard product revenue is attributed to increased orders from the federal, state and local sectors compared to the previous year. Revenues for systems and services for the first quarter of 2015 was $2.0 million, a decrease from $2.9 million in 2014.

Net loss for the first quarter of fiscal year 2015 was $735 thousand, a decrease from a net loss of $540 thousand in the first quarter of fiscal year 2014. Loss per share was $(0.14) per basic and diluted share for the first quarter of 2015 as compared to loss per share of $(0.11) per share in the first quarter of 2014.

The Company's backlog as of March 31, 2015 was approximately $15.5 million, up 28% from the backlog as of March 31, 2014. Of the $15.5 million in backlog, we expect to convert approximately two-thirds of that backlog to revenue within 2015.

Balance Sheet and Liquidity

Sutron ended the first quarter of 2015 with $6.3 million in cash and cash equivalents, down from $8.7 million at December 31, 2014 and from $9.2 million at March 31, 2014. Cash used by operating activities in the first quarter of 2015 was approximately $2.3 million compared to cash generated by operating activities in the first quarter of 2014 of $113 thousand. The principal components of the use of cash in the first quarter of 2015 were the recognition of net operating loss, decrease of accounts payable and the increase of vendor advance payments contrasted against uses of cash of increased prepayments to vendors and an increase in our inventory on hand as of March 31, 2015. Capital expenditures were $71 thousand in the first quarter of 2015 compared to $48 thousand in the first quarter of 2014.

Free Cash Flow in the first quarter of 2015 was approximately $(2.3) million compared to Free Cash Flow of $66 thousand for the first quarter of 2014. Sutron defines Free Cash Flow as net cash provided or used by operating activities less cash used in the purchase of property and equipment. The primary cause for the year over year variance was the low operating cash flow in the first quarter of 2014.

Management Commentary

"Although the first quarter is historically slow for Sutron, we are disappointed by these first quarter results," stated Raul McQuivey, Chairman and Chief Executive Officer. "The low quarterly top line revenue was due to continuing delay for some projects and our inability to ship a couple of orders awaiting payment from customers. Our performance in the first quarter of 2015 is significantly below our budget. One note of optimism is a $15 million backlog at quarter's end and our deep pipeline of opportunities that we are pursuing. Hopefully, this will position us to recover from our slow first quarter and to realize more acceptable performance for the remainder of 2015. Our focus for the remainder of 2015 will be to drive revenue growth and also to achieve steady improvement in our operating margins and net income. We are making progress in some of our new development initiatives that we believe will produce dividends for us later in 2015."

Conference Call

The Company will host a conference call on May 20, 2015 at 1:45 p.m. Eastern Time during its Annual Shareholders Meeting to discuss its strategic direction and focus and to review the results for the first quarter of 2015. The on-line presentation can be accessed via the following webinar link and phone number:

On-line webinar/presentation:
https://global.gotomeeting.com/join/633561373

Audio Dial-in
Phone Number: +1 (626) 425-3113
Access Code: 633-561-373

About Sutron

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. 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, hydropower companies and other commercial entities. 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.

Safe Harbor Statement

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
 
  (Unaudited)
March 31,
2015
 (Audited)
December 31,
2014
ASSETS     
Current Assets:     
 Cash and cash equivalents $5,545,940   $7,873,903  
 Restricted cash and cash equivalents  767,493    809,509  
 Accounts receivable, net  4,865,253    4,693,260  
 Costs in excess of billings  1,446,800    1,500,603  
 Inventory, net  4,997,806    4,747,676  
 Prepaid items and other assets  634,708    293,568  
 Income taxes receivable  243,163    173,537  
 Deferred income taxes  1,450,643    1,046,593  
  Total Current Assets  19,951,806    21,138,649  
           
Property and Equipment, Net  1,870,789    1,935,760  
Other Assets          
 Goodwill  4,452,152    4,452,152  
 Intangibles, net of amortization  676,209    722,466  
 Other Assets  85,444    102,514  
  Total Assets $27,036,400   $28,351,541  
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities:          
 Accounts payable $721,791   $1,045,170  
 Accrued payroll  1,042,594    886,367  
 Deferred revenue  929,792    1,286,121  
 Deferred rent  151,584    149,011  
 Other accrued expenses  688,665    744,346  
 Billings in excess of costs and estimated earnings  157,831    125,242  
  Total Current Liabilities  3,692,257    4,236,257  
Long-Term Liabilities          
 Deferred rent  571,178    608,568  
 Deferred income taxes  8,153    30,871  
  Total Liabilities  4,271,588    4,875,696  
Stockholders' Equity          
 Common stock, 12,000,000 shares authorized; 5,084,134 issued and outstanding at March 31, 2015 and December 31, 2014  50,842    50,842  
 Additional paid-in capital  5,503,775    5,465,723  
 Retained earnings  17,619,088    18,354,164  
 Accumulated other comprehensive loss  (408,893 )  (394,884 )
  Total Stockholders' Equity  22,764,812    23,475,845  
  Total Liabilities and Stockholders' Equity $27,036,400   $28,351,541  
           

See accompanying notes to consolidated financial statements.

 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
  
  Three Months Ended
March 31,
     Restated
  2015  2014
      
Revenue $4,502,578   $4,899,345  
           
Cost of goods sold  3,173,231    3,263,304  
 Gross profit  1,329,347    1,636,041  
           
Operating expenses:          
 Selling, general and administrative expenses  1,675,479    1,659,849  
 Research and development expenses  825,771    868,949  
  Total operating expenses  2,501,250    2,528,798  
           
  Operating (loss) income  (1,171,903 )  (892,757 )
           
Financing income, net  14,675    2,873  
           
  (Loss) income before income taxes  (1,157,228 )  (889,884 )
           
Income tax (benefit) expense  (422,152 )  (349,666 )
Net (loss) income $(735,076 ) $(540,218 )
           
Net (loss) income per share:          
           
 Basic (loss) income per share $(0.14 ) $(0.11 )
 Diluted (loss) income per share $(0.14 ) $(0.11 )
           
Comprehensive income:          
           
 Net (loss) income $(735,076 ) $(540,218 )
           
 Foreign currency translation adjustments  (14,009 )  (28,032 )
           
Comprehensive (loss) income $(749,085 ) $(568,250 )
        
 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
   Three Months Ended
March 31,
      Restated
   2015  2014
Cash Flows from Operating Activities:      
Net (loss) income  $(735,076 ) $(540,218 )
Noncash items included in net income:           
 Depreciation   135,630    113,562  
 Amortization of intangibles   46,257    46,257  
 Deferred income taxes   (426,768 )  (373,877 )
 Stock based compensation   38,052    22,998  
Change in current assets and liabilities, net of the impact of acquisitions:           
 Accounts receivable   (171,993 )  396,082  
 Costs in excess of billings   53,803    (195,569 )
 Inventory   (250,130 )  (400,189 )
 Prepaid expenses and other assets   (341,140 )  (239,007 )
 Income tax receivable   (69,626 )  29,031  
 Accounts payable   (323,379 )  192,051  
 Accrued expenses   100,546    1,124,649  
 Deferred revenues   (356,329 )  103,544  
 Billings in excess of costs and estimated earnings   32,589    (134,917 )
 Deferred rent   (34,817 )  (31,040 )
Net Cash (Used) Provided by Operating Activities   (2,302,381 )  113,357  
            
Cash Flows from Investing Activities:           
 Restricted cash and cash equivalents   42,016    (25,541 )
 Purchase of property and equipment   (70,659 )  (47,537 )
 Other assets   17,070    1,458  
Net Cash Used by Investing Activities   (11,573 )  (71,620 )
            
Effect of exchange rate changes on cash and cash equivalents   (14,009 )  (28,032 )
Net (decrease) increase in cash and cash equivalents   (2,327,963 )  (13,705 )
Cash and Cash Equivalents, beginning of period   7,873,903    8,283,092  
Cash and Cash Equivalents, end of period  $5,545,940   $8,296,797  

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