SOURCE: Sutron Corporation

Sutron Corporation

November 15, 2013 08:55 ET

Sutron Reports Third Quarter 2013 Results

STERLING, VA--(Marketwired - Nov 15, 2013) - Sutron Corporation (NASDAQ: STRN) today announced results for the third quarter and nine months ended September 30, 2013.

Third Quarter 2013 Highlights

  • Revenue of $7.1 million, up 13% from previous quarter
  • Net Income of $486,975, up from a loss of ($53,170) from previous quarter

First Nine Months 2013 Highlights

  • Record Revenue of $19.9 million, up 13% from prior year period
  • Net income of $464,007, down 52% from prior year period
  • Cash of $7.0 million, up 9% from prior year period

Sutron reported revenue of $7.1 million for the third quarter of 2013, up 13% from the second quarter of 2013, and up 1% from $7.0 million in the third quarter of 2012. Our MeteoStar division had a stronger third quarter of 2013 with $1.5 million in revenue compared to $1.2 million in revenue for the same quarter of 2012, a 31% increase, due primarily to large contract sales during the quarter. However, this was offset by Sutron's Integrated Services Division that realized $2.3 million of revenue for the third quarter of 2013, compared to $3.4 million in revenue for the third quarter of 2012, a 31% decrease, due primarily to project delays as a result of the United States Government shutdown as well as slower project sales internationally. The after tax net income for the third quarter of fiscal year 2013 was $486,975, compared to after tax net loss of ($53,170) for the second quarter of 2013 and income of $490,452 in the third quarter of fiscal year 2012. The reasons after tax net income has remained flat year over year in spite of increased revenues was due primarily to: 1) lower gross margin as a percentage of sales (40.4% for the third quarter of 2013 compared to 42.1% for the third quarter of 2012) due to a different product mix in 2013; and 2) increased selling and administrative costs associated with the addition of Sabio in 2013 and planned additions to our sales and administrative staff. These differences were tempered, in part, by lower research and development costs in the third quarter of 2013 compared to the third quarter of 2012. The decrease in research and development costs was due primarily to the deployment of MeteoStar engineers to increased project work compared to the third quarter of 2012. The Company reported a third quarter net income of $0.10 per basic and diluted share in 2013 equivalent to its earnings of $0.10 per basic share and diluted share in the third quarter of 2012. 

For the first nine months of calendar year 2013, Sutron recorded record revenue of $19.9 million, a 13% increase compared to $17.6 million during the first nine months of 2012. Sutron reported an after tax net income of $464,007 for the first nine months of 2013, compared to $966,013 of net income for the same period of 2012. Similar to the quarterly results, the reasons after tax net income declined in spite of increased revenues was due primarily to: 1) lower gross margin as a percentage of sales (39.5% for the nine months ended September 30, 2013 compared to 40.7% for the nine months ended September 30, 2012) due to a different product mix; 2) increased selling and administrative costs associated with the addition of Sabio in 2013 and planned additions to our sales and administrative staff; and 3) planned increased research and development costs in MeteoStar and Sabio with respect to new products expected to launch in the near future. The first nine months net income results in earnings of $0.09 per basic and diluted share in 2013, compared to earnings of $0.20 per basic share and $0.19 per diluted share in the first nine months of 2012. 

The Company's backlog as of September 30, 2013 was approximately $12.3 million, equivalent to the backlog as of September 30, 2012.

Balance Sheet and Liquidity

Sutron ended the third quarter of 2013 with $7.0 million in cash and cash equivalents, down from $8.4 million at December 31, 2012. The decrease through the first nine months of 2013 was primarily due to our Sabio acquisition. Cash generated by operating activities during the first nine months of 2013 was $116,201 as compared to cash generated by operating activities through the first nine months of 2012 of $819,015. Capital expenditures for the first nine months of 2013 were $199,072, compared to $94,359 for the first nine months of 2012. As a consequence, Free Cash Flow for the first nine months of 2013 was $(82,871) compared to Free Cash Flow of $724,656 for the first nine months of 2012. Sutron defines Free Cash Flow as net cash provided or used by operating activities less cash used in the purchase of property and equipment. 

Management Commentary

Raul McQuivey, Chairman and Chief Executive Office said, "We continue to be affected this year by a slowdown in international project tender activity as well as the delay or cancellation of some tenders prior to anticipated awards. Our third quarter results were also negatively impacted by the U.S. Government's shutdown which delayed some orders we were anticipating domestically. While our third quarter results were impacted by these developments, we are encouraged by our record first nine month's revenue of $19.9 million, supported by the contribution from our new acquisitions that offset declines in our legacy businesses, and our backlog of $12.3 million. Our cash balance remains strong at $7.0 million. We also continue to invest in new product development across Sutron and its new Sabio and MeteoStar divisions and, while this increases our expenses in the near term, we anticipate that these investments will contribute to increased profitability once these new products come to market."

About Sutron

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. We provide hydrological, meteorological, 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)
September 30,
2013
    (Audited)
December 31,
2012
 
             
ASSETS            
Current Assets:            
  Cash and cash equivalents   $ 6,161,302     $ 7,576,374  
  Restricted cash and cash equivalents     866,978       810,396  
  Accounts receivable, net     6,356,029       5,771,013  
  Inventory, net     5,301,383       4,291,505  
  Prepaid items and other assets     362,686       248,546  
  Income taxes receivable     981,300       1,202,709  
  Deferred income taxes     716,000       666,000  
    Total Current Assets     20,745,678       20,566,543  
                 
Property and Equipment, Net     1,617,786       1,698,218  
Other Assets                
  Goodwill     4,754,152       3,768,435  
  Intangibles, net of amortization     680,878       781,633  
  Other Assets     113,256       95,217  
    Total Other Assets     5,548,286       4,645,285  
    Total Assets   $ 27,911,750     $ 26,910,046  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current Liabilities:                
  Accounts payable   $ 1,230,563     $ 1,300,917  
  Accrued payroll     283,138       464,942  
  Deferred revenue     794,981       531,397  
  Other accrued expenses     1,381,804       1,134,279  
  Billings in excess of costs and estimated earnings     604,693       306,148  
    Total Current Liabilities     4,295,179       3,737,683  
Long-Term Liabilities                
  Deferred rent     851,901       1,006,893  
  Deferred income taxes     126,000       39,000  
    Total Long-term Liabilities     977,901       1,045,893  
    Total Liabilities     5,273,080       4,783,576  
Stockholders' Equity                
  Common stock, 12,000,000 shares authorized; 5,066,009 and 5,039,632 issued and outstanding     50,660       50,397  
  Additional paid-in capital     5,318,323       5,185,325  
  Retained earnings     17,537,358       17,073,351  
  Accumulated other comprehensive loss     (267,671 )     (182,603 )
    Total Stockholders' Equity     22,638,670       22,126,470  
    Total Liabilities and Stockholders' Equity   $ 27,911,750     $ 26,910,046  
                   
                   
 
 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
    Three Months Ended September 30,
    2013     2012
           
Revenue   $ 7,124,591     $ 7,042,056
               
Cost of goods sold     4,247,587       4,080,121
  Gross profit     2,877,004       2,961,935
               
Operating expenses:              
  Selling, general and administrative expenses     1,416,634       1,250,138
  Research and development expenses     797,986       1,026,573
    Total operating expenses     2,214,620       2,276,711
               
    Operating income     662,384       685,224
               
Financing income, net     14,591       17,228
               
  Income before income taxes     676,975       702,452
               
Income tax expense     190,000       212,000
Net income   $ 486,975     $ 490,452
               
Net income per share:              
               
  Basic income per share   $ 0.10     $ 0.10
  Diluted income per share   $ 0.10     $ 0.10
               
Comprehensive income:              
               
  Net income   $ 486,975     $ 490,452
               
  Foreign currency translation adjustments     (28,754 )     5,869
               
Comprehensive income   $ 458,221     $ 496,321
               
               
 
 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
    Nine Months Ended September 30,  
    2013     2012  
             
Revenue   $ 19,922,941     $ 17,583,405  
                 
Cost of goods sold     12,043,928       10,418,376  
  Gross profit     7,879,013       7,165,029  
                 
Operating expenses:                
  Selling, general and administrative expenses     4,517,771       3,602,498  
  Research and development expenses     2,744,075       2,207,475  
    Total operating expenses     7,261,846       5,809,973  
                 
    Operating income     617,167       1,355,056  
                 
Financing income, net     23,840       43,957  
                 
  Income before income taxes     641,007       1,399,013  
                 
Income tax expense     177,000       433,000  
                 
Net income   $ 464,007     $ 966,013  
                 
Net income per share:                
                 
  Basic income per share   $ 0.09     $ 0.20  
                 
  Diluted income per share   $ 0.09     $ 0.19  
                 
Comprehensive income:                
                 
  Net income   $ 464,007     $ 966,013  
                 
  Foreign currency translation adjustments     (85,071 )     (5,912 )
                 
Comprehensive income   $ 378,936     $ 960,101  
                 
                 
 
 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Nine Months Ended September 30,  
    2013     2012
Cash Flows from Operating Activities:          
Net income   $ 464,007     $ 966,013  
Noncash items included in net income:                
  Depreciation and amortization     389,775       207,776  
  Deferred income taxes     46,000       (62,134 )
  Stock based compensation     115,355       109,636  
  Tax benefit from stock options exercised     (12,996 )     (301,413 )
Change in current assets and liabilities, net of the impact of acquisitions:                
  Accounts receivable     (502,163 )     (12,969 )
  Inventory     (842,780 )     (635,015 )
  Prepaid items and other assets     (134,787 )     (72,642 )
  Income taxes receivable     234,405       297,540  
  Accounts payable     (70,353 )     257,902  
  Accrued expenses     22,601       (308,803 )
  Deferred revenues     263,584       -  
  Billings in excess of costs and estimated earnings     298,545       509,998  
  Deferred rent     (154,992 )     (136,874 )
Net Cash Provided by Operating Activities     116,201       819,015  
                 
Cash Flows from Investing Activities:                
  Restricted cash and cash equivalents     (56,582 )     (193,611 )
  Purchase of property and equipment     (199,072 )     (94,359 )
  Certificate of deposit     -       (2,900 )
  Other assets     5,876       6,916  
  Acquisition and Goodwill     (1,214,330 )     (4,241,914 )
Net Cash Used by Investing Activities     (1,464,108 )     (4,525,868 )
                 
Cash Flows from Financing Activities:                
  Tax benefit from stock options exercised     12,996       301,413  
  Proceeds from stock options exercised     4,910       174,250  
Net Cash Provided by Financing Activities     17,906       475,663  
                 
Effect of exchange rate changes on cash and cash equivalents     (85,071 )     (8,785 )
Net decrease in cash and cash equivalents     (1,415,072 )     (3,239,975 )
Cash and Cash Equivalents, beginning of period     7,576,374       8,737,543  
Cash and Cash Equivalents, end of period   $ 6,161,302     $ 5,497,568  
                 
                 

Contact Information