SOURCE: Sutron Corporation

Sutron Corporation

November 13, 2014 12:35 ET

Sutron Reports Third Quarter 2014 Results

STERLING, VA--(Marketwired - Nov 13, 2014) - Sutron Corporation (NASDAQ: STRN) today announced results for the third quarter and nine months ended September 30, 2014.

Third Quarter 2014 Results

  • Third quarter revenue of $6.6 million, down $516,000 year over year
  • Net income of $118,000, down $369,000 year over year
  • Cash of $8.1 million, down 6% from prior year period
  • Backlog of $15.3 million, up 23% from prior year end and up 24% year over year

Sutron reported revenue of $6.6 million for the third quarter of 2014, down 8% from $7.1 million in the same period in 2013. Net income for the third quarter of 2014 was $118,000 compared to net income of $487,000 in the third quarter of 2013. The Company reported third quarter income of $0.02 per basic and diluted share as compared to income of $0.10 per basic and diluted share in the third quarter of 2013. 

For the first nine months of calendar year 2014, Sutron recorded revenue of $19.1 million compared to $19.9 million during the first nine months of 2013. Sutron reported a net loss of $264,000 for the first nine months of 2014 compared to net income of $464,000 for the same period of 2013. The first nine months loss in 2014 results in a loss of $0.05 per basic and diluted share as compared to income of $0.09 per basic and diluted share in the first nine months of 2013. 

The Company's backlog as of September 30, 2014 was approximately $15.3 million, up 23.1% from the $12.4 million backlog as of December 31, 2013, and up 24.4% from the $12.3 million backlog as of September 30, 2013. The Company recorded $22.2 million in bookings for the first nine months of 2014, an increase of approximately 8.5% from the $20.4 million recorded in the first nine months of 2013.

Balance Sheet and Liquidity

Sutron ended the third quarter of 2014 with $8.1 million in cash and cash equivalents, down from $9.1 million at December 31, 2013 and down from $8.6 million at June 30, 2014. Cash used by operating activities during the first nine months of 2014 was $234,871 as compared to $116,201 cash generated by operating activities through the first nine months of 2013. For the first nine months of 2014, Sutron used $559,741 in cash in investing activities compared to $1,464,108 in cash used in investing activities through the first nine months of 2013, primarily related to the Company's acquisition of Sabio Instruments. Through the first nine months of 2014, the Company's investment in its new Surface Mount Technology ("SMT") machinery has been $527,000. Due to the cash used in operating activities and the investment in SMT machinery, Free Cash Flow for the first nine months of 2014 was negative $761,871 compared to Free Cash Flow of negative $82,871 for the first nine months of 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. 

Management Commentary

Raul McQuivey, Chairman and Chief Executive Officer said, "We are disappointed that a number of the larger projects we have been pursuing throughout the year continue to be delayed. We remain hopeful that some of these projects will be closed by the end of 2014. In addition to pursuing these existing projects, we continue to build an additional pipeline of opportunities, and see many potential projects in the global market."

"We are encouraged that our historical business segments continue to perform consistently. Our HPD, ISD, and India departments, which comprise our legacy business, have contributed a combined pre-tax $157,000 to our bottom line through the first nine months of 2014. Operations of our recently acquired divisions, MeteoStar and Sabio, have resulted in a pre-tax net loss of $665,000 through the first nine months of 2014. We believe, however, that our investments in these divisions will generate positive contributions in the coming quarters. We continue to be excited about the opportunity we have with MeteoStar and Sabio to build end-to-end solutions that will enable us to deliver tailored solutions to our customers. With MeteoStar, we are progressing the development of their state of the art LEADS6© weather forecasting and displaying software. With MeteoStar's software, our legacy business' dataloggers and systems, and our modeling and systems integration expertise, we plan to deliver to our global customer base an end-to-end solution in the hydrological and meteorological market. We are pursuing a number of opportunities that will validate this initiative. With Sabio, our R&D efforts are developing new ambient air analyzers that will enable us to develop an innovative end-to-end solution in the Air Quality market. These are new products for Sutron that are being designed to offer distinct advantages over existing market offerings. We expect to bring these solutions to the Air Quality market in the coming quarters. We continue to integrate our new SMT machinery into our processes. We have begun producing our own printed circuit boards for a number of our products and continue expanding the capability to additional products. We expect to see reductions in our cost structure and an enhanced ability to deliver our products to market faster."

"We are encouraged that our bookings of new orders for the first nine months of 2014 are up 8.5% year over year and believe that trend, together with a backlog of $15.3 million as of September 30, 2014, and the progress we are making in developing end-to-end solutions to take to market, are positioning Sutron for better performance in the coming quarters."

Shareholder Call

The Company will hold a shareholder call to discuss its third quarter results at 11a.m. EST on Friday, November 14th. The dial-in details for the call are:

United States: +1 646 749-3131

Access Code: 610-201-685

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

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. We provide hydrological, meteorological, oceanic, air quality 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,
2014
    (Audited)
December 31,
2013
 
             
ASSETS            
Current Assets:            
  Cash and cash equivalents   $ 7,177,741     $ 8,283,092  
  Restricted cash and cash equivalents     952,968       850,279  
  Accounts receivable, net     5,327,202       5,863,636  
  Inventory, net     5,078,200       4,876,641  
  Prepaid items and other assets     387,994       446,749  
  Income taxes receivable     367,471       106,897  
  Deferred income taxes     896,787       664,558  
    Total Current Assets     20,188,363       21,091,852  
                 
Property and Equipment, Net     1,770,713       1,532,144  
Other Assets                
  Goodwill     4,452,152       4,452,152  
  Intangibles, net of amortization     768,724       907,495  
  Deferred tax assets     49,716       77,357  
  Other Assets     103,971       81,885  
    Total Assets   $ 27,333,639     $ 28,142,885  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current Liabilities:                
  Accounts payable   $ 865,330     $ 1,170,446  
  Accrued payroll     245,104       468,454  
  Deferred Rent     146,438       139,146  
  Deferred revenue     825,681       686,029  
  Other accrued expenses     1,683,612       1,520,261  
  Billings in excess of costs and estimated earnings     125,200       388,687  
    Total Current Liabilities     3,891,365       4,373,023  
Long-Term Liabilities:                
  Deferred rent     645,612       751,245  
    Total Liabilities     4,536,977       5,124,268  
Stockholders' Equity                
  Common stock, $0.01 par value, 12,000,000 shares authorized; 5,066,009 issued and outstanding     50,660       50,660  
  Additional paid-in capital     5,431,634       5,340,277  
  Retained earnings     17,605,319       17,869,256  
  Accumulated other comprehensive loss     (290,951 )     (241,576 )
    Total Stockholders' Equity     22,796,662       23,018,617  
    Total Liabilities and Stockholders' Equity   $ 27,333,639     $ 28,142,885  
                 
                 

See accompanying notes to consolidated financial statements.

 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2014     2013     2014     2013  
                         
Revenue   $ 6,558,381     $ 7,124,591     $ 19,073,266     $ 19,922,941  
                                 
Cost of goods sold     3,879,341       4,247,587       11,906,470       12,043,928  
  Gross profit     2,679,040       2,877,004       7,166,796       7,879,013  
                                 
Operating expenses:                                
  Selling, general and administrative expenses     1,660,133       1,416,634       5,244,195       4,517,771  
  Research and development expenses     839,704       797,986       2,424,820       2,744,075  
    Total operating expenses     2,499,837       2,214,620       7,669,015       7,261,846  
                                 
  Operating income (loss)     179,203       662,384       (502,219 )     617,167  
                                 
Interest and other income, net     17,072       14,591       37,605       23,840  
                                 
  Income (loss) before income taxes     196,275       676,975       (464,614 )     641,007  
                                 
Income tax expense (benefit)     78,501       190,000       (200,677 )     177,000  
Net income (loss)   $ 117,774     $ 486,975     $ (263,937 )   $ 464,007  
                                 
Net income (loss) per share:                                
                                 
  Basic income (loss) per share   $ 0.02     $ 0.10     $ (0.05 )   $ 0.09  
  Diluted income (loss) per share   $ 0.02     $ 0.10     $ (0.05 )   $ 0.09  
                                 
Comprehensive income:                                
                                 
  Net income (loss)   $ 117,774     $ 486,975     $ (263,937 )   $ 464,007  
                                 
  Foreign currency translation adjustments     (26,123 )     (28,754 )     (49,375 )     (85,071 )
                                 
Comprehensive income (loss)   $ 91,651     $ 458,221     $ (313,312 )   $ 378,936  

See accompanying notes to consolidated financial statements.

 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
 
   

Common
Shares
 

Stock
Par Value
 
Additional
Paid-In
Capital
 

Retained
Earnings
    Accumulated
Other
Comprehensive
Loss
   


Total
 
Balances, December 31, 2012   5,039,632   $ 50,397   $ 5,185,325   $ 17,073,351     $ (182,603 )   $ 22,126,470  
Net income   -     -     -     464,007       -       464,007  
Foreign currency translation adjustment   -     -     -     -       (85,068 )     (85,068 )
Issuance of Stock   19,125     191     12,731                     12,922  
Amortization of stock based compensation   -     -     115,335     -       -       115,335  
Exercise of stock options   7,252     72     4,932     -       -       5,004  
Balances, September 30, 2013   5,066,009   $ 50,660   $ 5,318,323   $ 17,537,358     $ (267,671 )   $ 22,638,670  
                                         
                                         
                                         
Balances, December 31, 2013   5,066,009   $ 50,660   $ 5,340,277   $ 17,869,256     $ (241,576 )   $ 23,018,617  
Net loss   -     -     -     (263,937 )     -       (263,937 )
Foreign currency translation adjustment   -     -     -     -       (49,375 )     (49,375 )
Amortization of stock based compensation   -     -     91,357    
-
      -       91,357  
Balances, September 30, 2014   5,066,009   $ 50,660   $ 5,431,634   $ 17,605,319     $ (290,951 )   $ 22,796,662  
                                         
                                         

See accompanying notes to consolidated financial statements.

 
SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Nine Months Ended
September 30,
    2014     2013
Cash Flows from Operating Activities:          
Net (loss) income   $ (263,937 )   $ 464,007  
Noncash items included in net (loss) income:                
  Depreciation     463,761       289,020  
  Amortization of intangibles     138,771       100,755  
  Deferred income taxes     (204,588 )     46,000  
  Stock based compensation     91,357       115,335  
  Tax benefit from stock options exercised     -       (12,996 )
  Gain on asset disposal     (6,000 )     -  
Change in current assets and liabilities, net of the impact of acquisitions:                
  Accounts receivable     536,434       (502,163 )
  Inventory     (201,559 )     (842,780 )
  Prepaid expenses and other assets     58,755       (134,767 )
  Income tax receivable     (260,574 )     234,405  
  Accounts payable     (305,116 )     (70,353 )
  Accrued expenses     (59,999 )     22,601  
  Deferred revenues     139,652       263,584  
  Billings in excess of costs and estimated earnings     (263,487 )     298,545  
  Deferred rent     (98,341 )     (154,992 )
Net Cash (Used) Provided by Operating Activities     (234,871 )     116,201  
                 
Cash Flows from Investing Activities:                
  Restricted cash and cash equivalents     (102,689 )     (56,582 )
  Purchase of property and equipment     (702,330 )     (199,072 )
  Proceeds from the sale of property and equipment     6,000       -  
  Other assets     (22,086 )     5,876  
  Business acquisition     -       (1,214,330 )
Net Cash Used by Investing Activities     (821,105 )     (1,464,108 )
                 
Cash Flows from Financing Activities:                
  Tax benefit from stock options exercised     -       12,996  
  Proceeds from stock options exercised     -       4,910  
Net Cash Provided by Financing Activities     -       17,906  
                 
Effect of exchange rate changes on cash and cash equivalents     (49,375 )     (85,071 )
Net (decrease) in cash and cash equivalents     (1,105,351 )     (1,415,072 )
Cash and Cash Equivalents, beginning of period     8,283,092       7,576,374  
Cash and Cash Equivalents, end of period   $ 7,177,741     $ 6,161,302  
                 
                 

See accompanying notes to consolidated financial statements.

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