Sutron Reports Third Quarter 2013 Results

Sutron Reports Third Quarter 2013 Results 
STERLING, VA -- (Marketwired) -- 11/15/13 --  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)     (Audited)   
                                               September 30,   December 31, 
                                                    2013           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 
                                                   ===========  =========== 

  
Company Contact: 
Glen Goold
+1 (703)406-2800
ggoold@sutron.com
www.sutron.com 
 
 
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