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Sutron Reports Second Quarter 2013 Results


Sutron Reports Second Quarter 2013 Results

STERLING, VA -- (Marketwired) -- 08/13/13 -- Sutron Corporation (NASDAQ: STRN) today announced results for the second quarter and six months ended June 30, 2013.

Second Quarter 2013 Highlights


 
--  Revenue of $6.3 million, down 2% from Q1 2013
--  Backlog of $14.6 million, up 11% from Q1 2013
--  Cash of $7.1 million, up 42% from Q1 2013

First Half 2013 Highlights


 
--  Record Revenue of $12.8 million, up 21% from prior year period
--  Backlog of $14.6 million as of mid-year, up 11% from prior year period

Sutron reported revenue of $6.3 million for the second quarter of 2013, down 7% from $6.8 million in the second quarter of 2012. This decrease was primarily driven by decreased international project activity. The net loss for the second quarter of fiscal year 2013 was $53,170 compared to net income of $551,670 in the second quarter of fiscal year 2012. This result was primarily due to the impact of the decline in revenue and to increased research and development investments. The Company reported a second quarter loss of $0.01 per basic and diluted share as compared to earnings of $0.12 per basic share and $0.11 per diluted share in the second quarter of 2012.

For the first six months of calendar year 2013, Sutron recorded record revenue of $12.8 million, a 21% increase compared to $10.5 million during the first six months of 2012. Sutron reported a net loss of $22,968 for the first six months of 2013 compared to $475,561 of net income for the same period of 2012. The first six months loss results in $0.00 per basic and diluted share as compared to earning $0.10 per basic share and $0.09 per diluted share in the first six months of 2012.

The Company's backlog as of June 30, 2013 was approximately $14.6 million, up 11% from the backlog as of June 30, 2012.

Balance Sheet and Liquidity

Sutron ended the second quarter of 2013 with $7.1 million in cash and cash equivalents, up from $5 million at March 31, 2013. Cash generated by operating activities during the first six months of 2013 was $167,222 as compared to cash generated by operating activities through the first six months of 2012 of $394,908. Capital expenditures were $164,747 for the first six months of 2013 compared to $30,264 for the first six months of 2012. As a consequence, Free Cash Flow for the first six months of 2013 was $2,475 compared to Free Cash Flow of $364,644 for the first six 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 Officer, said, "We have been affected this year by a perceptible slowdown in international project tender activity as well as the cancellation of some tenders prior to anticipated awards. While our second quarter results were largely impacted by these developments, we are encouraged by our record first six month's revenue of $12.8 million and our backlog of $14.6 million. After funding our recent acquisitions of Sabio and MeteoStar with cash, we have been able to build back to a strong cash balance of $7.1 million. We also continue to invest in new product development in these new divisions and, while this has increased our expenses in the near term, we anticipate that these investments will contribute to increased profitability in the upcoming quarters. As evidenced by this quarter's results, our business remains highly project driven through competitive tender and, thus, we expect periodic fluctuations in bookings and revenue due to the uncertain timing of governmental approval and funding processes."

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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)   
                                 (Unaudited)                                
                                                                            
                                                 Three Months Ended June 30,
                                                 ---------------------------
                                                     2013           2012    
                                                 ------------  -------------
Revenue                                          $  6,343,240  $   6,804,168
Cost of goods sold                                  3,987,068      4,027,666
                                                 ------------  -------------
  Gross profit                                      2,356,172      2,776,502
                                                 ------------  -------------
Operating expenses:                                                         
  Selling, general and administrative expenses      1,467,134      1,347,544
  Research and development expenses                   976,254        627,633
                                                 ------------  -------------
  Total operating expenses                          2,443,388      1,975,177
                                                 ------------  -------------
  Operating income (loss)                             (87,216)       801,325
Financing income, net                                   6,046         15,345
                                                 ------------  -------------
  Income (loss) before income taxes                   (81,170)       816,670
Income tax expense (benefit)                          (28,000)       265,000
                                                 ------------  -------------
Net income (loss)                                $    (53,170) $     551,670
                                                 ============  =============
Net income (loss) per share:                                                
  Basic income (loss) per share                  $      (0.01) $        0.12
                                                 ============  =============
  Diluted income (loss) per share                $      (0.01) $        0.11
                                                 ============  =============
                                                                            
                                                                            
                                                                            
                             SUTRON CORPORATION                             
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)   
                                 (Unaudited)                                
                                                                            
                                                  Six Months Ended June 30, 
                                                 ---------------------------
                                                     2013           2012    
                                                 ------------  -------------
Revenue                                          $ 12,798,350  $  10,541,349
Cost of goods sold                                  7,796,037      6,338,255
                                                 ------------  -------------
  Gross profit                                      5,002,313      4,203,094
                                                 ------------  -------------
Operating expenses:                                                         
  Selling, general and administrative expenses      3,101,137      2,352,360
  Research and development expenses                 1,946,393      1,180,901
                                                 ------------  -------------
  Total operating expenses                          5,047,530      3,533,261
                                                 ------------  -------------
  Operating income (loss)                             (45,217)       669,833
Financing income, net                                   9,249         26,728
                                                 ------------  -------------
  Income (loss) before income taxes                   (35,968)       696,561
Income tax expense (benefit)                          (13,000)       221,000
Net income (loss)                                $    (22,968) $     475,561
                                                 ------------  -------------
Net income per share:                                                       
  Basic income per share                         $       0.00  $        0.10
                                                 ------------  -------------
  Diluted income per share                       $       0.00  $        0.09
                                                 ------------  -------------
                                                                            
                                                                            
                                                                            
                             SUTRON CORPORATION                             
                        CONSOLIDATED BALANCE SHEETS                         
                                                                            
                                                  (Unaudited)    (Audited)  
                                                   June 30,    December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
ASSETS                                                                      
Current Assets:                                                             
  Cash and cash equivalents                      $  6,322,489  $  7,576,374 
  Restricted cash and cash equivalents                818,453       810,396 
  Accounts receivable, net                          5,597,267     5,771,013 
  Inventory                                         4,893,888     4,291,505 
  Prepaid items and other assets                      310,445       248,546 
  Income taxes receivable                           1,277,154     1,202,709 
  Deferred income taxes                               745,000       666,000 
                                                 ------------  ------------ 
    Total Current Assets                           19,964,696    20,566,543 
Property and Equipment, Net                         1,679,802     1,698,218 
                                                 ------------  ------------ 
Other Assets                                                                
  Goodwill                                          4,754,152     3,768,435 
  Intangibles, net of amortization                    714,463       781,633 
  Other Assets                                         90,799        95,217 
                                                 ------------  ------------ 
    Total Assets                                 $ 27,203,912  $ 26,910,046 
                                                 ============  ============ 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current Liabilities:                                                        
  Accounts payable                               $  1,149,407  $  1,300,917 
  Accrued payroll                                     349,524       464,942 
  Deferred revenue                                    556,979       531,397 
  Other accrued expenses                            1,431,795     1,134,279 
  Billings in excess of costs and estimated                                 
   earnings                                           539,344       306,148 
                                                 ------------  ------------ 
    Total Current Liabilities                       4,027,049     3,737,683 
Long-Term Liabilities                                                       
  Deferred rent                                       886,672     1,006,893 
  Deferred income taxes                               145,000        39,000 
                                                 ------------  ------------ 
    Total Long-term Liabilities                     1,031,672     1,045,893 
                                                 ------------  ------------ 
    Total Liabilities                               5,058,721     4,783,576 
                                                 ------------  ------------ 
Stockholders' Equity                                                        
  Common stock, 12,000,000 shares authorized;                               
   5,069,009 and 5,039,632 issued and                                       
   outstanding                                         50,469        50,397 
  Additional paid-in capital                        5,283,259     5,185,325 
  Retained earnings                                17,050,383    17,073,351 
  Accumulated other comprehensive loss               (238,920)     (182,603)
                                                 ------------  ------------ 
    Total Stockholders' Equity                     22,145,191    22,126,470 
                                                 ------------  ------------ 
    Total Liabilities and Stockholders' Equity   $ 27,203,912  $ 26,910,046 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                             SUTRON CORPORATION                             
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                (Unaudited)                                 
                                                                            
                                                  Six Months Ended June 30, 
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Cash Flows from Operating Activities:                                       
Net income (loss)                                $    (22,968) $    475,561 
Noncash items included in net income:                                       
  Depreciation and amortization                       259,850       143,365 
  Deferred income taxes                                36,000       (32,134)
  Stock based compensation                             80,080        44,364 
  Tax benefit from stock options exercised            (12,996)       (9,873)
Change in current assets and liabilities:                                   
  Accounts receivable                                 256,599       323,534 
  Inventory                                          (435,285)     (639,217)
  Prepaid items and other assets                      (58,632)     (153,153)
  Income taxes receivable                             (61,449)       67,636 
  Accounts payable                                   (151,510)      (55,571)
  Accrued expenses                                    138,976      (124,933)
  Deferred revenues                                    25,582       174,860 
  Billings in excess of costs and estimated                                 
   earnings                                           233,196       282,572 
  Deferred rent                                      (120,221)     (102,103)
                                                 ------------  ------------ 
Net Cash Provided by Operating Activities             167,222       394,908 
                                                 ------------  ------------ 
Cash Flows from Investing Activities:                                       
  Restricted cash and cash equivalents                 (8,057)     (131,551)
  Purchase of property and equipment                 (164,747)      (30,264)
  Certificate of deposit                                    -        (1,933)
  Other assets                                          4,418         5,093 
  Business Acquisition                             (1,214,330)   (4,241,914)
                                                 ------------  ------------ 
Net Cash Used by Investing Activities              (1,382,716)   (4,400,569)
                                                 ------------  ------------ 
Cash Flows from Financing Activities:                                       
  Tax benefit from stock options exercised             12,996         9,873 
  Proceeds from stock options exercised                 4,930        89,000 
                                                 ------------  ------------ 
Net Cash Provided by Financing Activities              17,926        98,873 
                                                 ------------  ------------ 
Effect of exchange rate changes on cash and cash                            
 equivalents                                          (56,317)      (17,601)
                                                 ------------  ------------ 
Net increase (decrease) in cash and cash                                    
 equivalents                                       (1,253,885)   (3,924,389)
Cash and Cash Equivalents, beginning of period      7,576,374     8,737,543 
                                                 ------------  ------------ 
Cash and Cash Equivalents, end of period         $  6,322,489  $  4,813,154 
                                                 ============  ============ 

Company Contact: Sidney Hooper +1 (703)406-2800 shooper@sutron.com www.sutron.com

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