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| 8-K - SIERRA MONITOR CORP /CA/ | v200445_8k.htm |
Sierra
Monitor Corporation Announces Financial Results
for
the Third Quarter Ended September 30, 2010
Sales
Increased 13% with Income up 79% Year-over-Year
Milpitas, California – October 28,
2010 – Sierra Monitor Corporation (OTC: SRMC.OB), a Cleantech focused
company that delivers information technology for environment measurement and
control by developing specialized embedded software that is deployed on
proprietary hardware platforms, today announced financial results for the third
quarter ended September 30, 2010.
Financial
Highlights
|
·
|
Third
quarter sales of approximately $3.8 million, an increase of 13% over the
third quarter of 2009
|
|
·
|
FieldServer
Technologies’ ProtoCessor product sales increased 46% in the third quarter
2010 compared to third quarter 2009
|
|
·
|
Third
quarter net income increased 79% to $234,746 or $0.02 per share (basic and
diluted), compared to net income of $131,477 or $0.01 per share (basic and
diluted) in the same prior year
period
|
|
·
|
Sales
of approximately $10.2 million for the nine months ended September 30,
2010, an increase of 7% over the approximately $9.5 million reported in
the same prior year period
|
|
·
|
Year-to-date
net income of $312,452 or $0.03 per share (basic and diluted), compared to
net income of $88,466 or $0.01 per share (basic and diluted) in the first
nine months of the previous year
|
|
·
|
Ended
the third quarter of 2010 with a strong balance sheet including
approximately $2.2 million of cash on hand and no bank
debt
|
Business
Highlights
|
·
|
Signed
agreement with a major water heater and boiler systems manufacturer to
develop protocol drivers allowing FieldServer data connections between
their products and building automation
systems
|
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·
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Joined
Cisco Systems Developer Network to allow customers to purchase FieldServer
products through the Cisco reseller
channel
|
|
·
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Received
new order for FieldServer Gateways to link toxic gas monitoring safety
systems in semiconductor clean room
operations
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·
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Shipped
specialized flame detectors to Singapore for use in wet bench
semiconductor tools
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|
·
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Expedited
delivery of hydrogen sulfide gas detection systems for
recently flooded areas in Western
China
|
|
·
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Shipped
FieldServer Gateways for use in the smoke and flame detection system on
advanced-technology U.S. Navy ships
|
|
·
|
Entered
window and shade controls market with contracts to develop FieldServer
interfaces to electronic shade controls for commercial buildings
|
Third
Quarter and First Nine Months of 2010 Financial Results
Net sales
for the quarter ended September 30, 2010 were $3,752,014, an increase of 13%
from $3,323,758 reported for the same period of 2009. For the nine
months ended September 30, 2010, sales increased 7% to $10,172,826, compared to
$9,530,536 for the same period of 2009.
Sierra
Monitor posted GAAP net income of $234,746, or $0.02 per share (basic and
diluted), for the quarter ended September 30, 2010, compared to GAAP net income
of $131,477, or $0.01 per share (basic and diluted), for the same period of
2009. Sierra Monitor posted GAAP net income of $312,452, or $0.03 per
share (basic and diluted), for the nine months ended September 30, 2010,
compared to GAAP net income of $88,466, or $0.01 per share (basic and diluted),
for the same period of 2009.
Sierra
Monitor posted non-GAAP net income of $327,488 or $0.03 per share (basic and
diluted), for the quarter ended September 30, 2010 compared to non-GAAP net
income of $260,097 or $0.02 per share (basic and diluted), for the same period
of 2009. Sierra Monitor posted non-GAAP net income of $604,501, or
$0.05 per share (basic and diluted), for the nine months ended September 30,
2010, compared to non-GAAP net income of $398,518, or $0.03 per share (basic and
diluted), for the same period of 2009.
“In the
third quarter of 2010 we increased sales by 13% and net income by 79%, year over
year. In the same period we had strong bookings, maintained our gross
margins and generated significant sales increases in our FieldServer
Technologies product lines,“ said Gordon R. Arnold, chairman and chief executive
officer. “Our decision to maintain the company staffing and
infrastructure, continue investment in products development and strengthen our
sales staff has positioned Sierra Monitor to capitalize on project opportunities
and expand our OEM customer base. I am delighted with the results and
look forward to working with our team to produce further positive financial
results.”
Cash
Position
Sierra
Monitor had $2,168,533 in cash at September 30, 2010 with no bank
borrowings. Net trade receivables at September 30, 2010 were
$2,209,120. At September 30, 2010, the Company’s Days Sales
Outstanding was 53 days.
About
Sierra Monitor Corporation
Sierra
Monitor delivers information technology for environment measurement and control
by developing specialized embedded software that is deployed on proprietary
hardware platforms. Embedded software enables data transfer between
subsystems using protocol and physical medium translation. Proprietary
hardware platforms allow the Company to increase its value proposition while
protecting intellectual property.
The
Company’s vision is to capitalize on the expanding worldwide demand for
Cleantech knowledge-based products and services that improve operational
performance, productivity, efficiency and safety in building automation,
industrial and military applications, while reducing demands on resources and
energy consumption.
Sierra
Monitor’s hardware platforms include original equipment modules for installation
in customer devices and controllers, gateway boxes generally used by integrators
for M2M protocol translation, and multi-component safety systems generally
focused on gas and fire detection.
By
providing an intelligent interface, the Company’s products enable various
machines, devices, systems and people to reliably communicate useful information
for the measurement and control of various environments including buildings,
plants, and factories. By delivering the data on various
communications levels, including Ethernet, internet, LONworks, Profibus and
others, the Company’s products make it possible for data to be accessed at more
appropriate levels, such as network operations centers, control rooms or remote
locations.
Safe
Harbor Statement
This
release includes forward-looking statements that are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from those contemplated by the forward-looking statements. These
forward-looking statements include, without limitation, statements made by our
Chairman and CEO relating to capitalizing on opportunities, expanding the OEM
customer base, and the prospects for future positive financial results. There
are a number of important factors that could cause the results of Sierra Monitor
to differ materially from those indicated by such forward-looking statements,
including, among others, the continuing impact of perceived or actual weakening
of economic conditions on customers' and prospective customers' spending on
Sierra Monitor products and services; quarterly fluctuations in Sierra Monitor’s
revenues or other operating results; periodic fluctuations in product mix
resulting in significant variation of profit margins, risks related to the
introduction of new products and market acceptance of such products;
customization and deployment delays or errors associated with Sierra Monitor’s
products; impact of long sales and implementation cycles for certain products;
and competitors' release of competitive products and other actions. Further
information on potential factors that could affect the financial results of
Sierra Monitor are included in risks described in Sierra Monitor’s filings with
the Securities and Exchange Commission, including, without limitation, Sierra
Monitor’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These
filings are available on the web site maintained by the Securities and Exchange
Commission at http://www.sec.gov. Sierra Monitor does not undertake any
obligation to update forward-looking statements contained in this
release.
Sierra
Monitor Investor Relations Contact:
Steve
Polcyn
408-262-6611
ext. 1341
spolcyn@sierramonitor.com
|
Table
A
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|||||||||
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SIERRA
MONITOR CORPORATION
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Statements
of Operations
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|||||||||
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(unaudited)
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|||||||||
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For
the three months ended
September
30,
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For
the nine months ended
September
30,
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|||||||||||||||
|
2010
|
2009
|
2010
|
2009
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|||||||||||||
|
Net
sales
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$ | 3,752,014 | $ | 3,323,758 | $ | 10,172,826 | $ | 9,530,536 | ||||||||
|
Cost
of goods sold
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1,526,581 | 1,289,377 | 4,183,066 | 3,895,118 | ||||||||||||
|
Gross
profit
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2,225,433 | 2,034,381 | 5,989,760 | 5,635,418 | ||||||||||||
|
Operating
expenses
|
||||||||||||||||
|
Research
and development
|
496,273 | 516,794 | 1,483,203 | 1,500,472 | ||||||||||||
|
Selling
and marketing
|
847,190 | 825,279 | 2,521,680 | 2,526,805 | ||||||||||||
|
General
and administrative
|
491,853 | 473,180 | 1,467,197 | 1,460,697 | ||||||||||||
| 1,835,316 | 1,815,253 | 5,472,080 | 5,487,974 | |||||||||||||
|
Income
from operations
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390,117 | 219,128 | 517,680 | 147,444 | ||||||||||||
|
Interest
income
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1,126 | - | 3,074 | - | ||||||||||||
|
Income
before income taxes
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391,243 | 219,128 | 520,754 | 147,444 | ||||||||||||
|
Income
tax provision
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156,497 | 87,651 | 208,302 | 58,978 | ||||||||||||
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Net
income
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$ | 234,746 | $ | 131,477 | $ | 312,452 | $ | 88,466 | ||||||||
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Net
income available to common shareholders per common share
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||||||||||||||||
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Basic
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$ | 0.02 | $ | 0.01 | $ | 0.03 | $ | 0.01 | ||||||||
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Diluted
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$ | 0.02 | $ | 0.01 | $ | 0.03 | $ | 0.01 | ||||||||
|
Weighted-average
number of common shares
used
in per share computations:
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||||||||||||||||
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Basic
|
11,446,076 | 11,438,212 | 11,441,707 | 11,432,656 | ||||||||||||
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Diluted
|
11,575,782 | 11,764,928 | 11,666,895 | 11,767,161 | ||||||||||||
|
Table
B
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||||||||
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SIERRA
MONITOR CORPORATION
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Balance
Sheet
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Assets
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September 30,
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December
31,
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||||||
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2010
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2009
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|||||||
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(unaudited)
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Current
assets:
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||||||||
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Cash
and cash equivalents
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$ | 2,168,533 | $ | 2,203,018 | ||||
|
Trade
receivables, less allowance for doubtful accounts of approximately $74,000
in 2010 and $70,000 in 2009, respectively
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2,209,120 | 1,354,775 | ||||||
|
Inventories,
net
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2,081,497 | 1,892,313 | ||||||
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Prepaid
expenses
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119,514 | 240,204 | ||||||
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Income
tax deposit
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104,327 | - | ||||||
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Deferred
income taxes - current
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259,855 | 259,855 | ||||||
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Total
current assets
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6,942,846 | 5,950,165 | ||||||
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Property
and equipment, net
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293,062 | 238,377 | ||||||
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Other
assets
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138,552 | 167,615 | ||||||
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Total
assets
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$ | 7,374,460 | $ | 6,356,157 | ||||
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Liabilities
and Shareholders’ Equity
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||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
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$ | 894,933 | $ | 523,763 | ||||
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Accrued
compensation expenses
|
451,534 | 372,035 | ||||||
|
Other
current liabilities
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85,994 | 73,351 | ||||||
|
Income
taxes payable
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202,095 | 34,251 | ||||||
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Total
current liabilities
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1,634,556 | 1,003,400 | ||||||
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Deferred
tax liability
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14,575 | 14,575 | ||||||
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Total
liabilities
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1,649,131 | 1,017,975 | ||||||
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Commitments
and contingencies
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||||||||
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Shareholders’
equity:
|
||||||||
|
Common
stock, $0.001 par value; 20,000,000 shares authorized; 11,446,076 and
11,438,212 shares issued and outstanding, respectively
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11,446 | 11,438 | ||||||
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Additional
paid-in capital
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3,669,889 | 3,595,202 | ||||||
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Retained
earnings
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2,043,994 | 1,731,542 | ||||||
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Total
shareholders’ equity
|
5,725,329 | 5,338,182 | ||||||
|
Total
liabilities and shareholders’ equity
|
$ | 7,374,460 | $ | 6,356,157 | ||||
NON-GAAP
FINANCIAL MEASURES
The
accompanying news release dated October 28, 2010 contains non-GAAP financial
measures. Table C reconciles the non-GAAP financial measures in that news
release to the most directly comparable financial measures prepared in
accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP
financial measures include non-GAAP operating expenses, non-GAAP profit (loss)
from operations and related non-GAAP profit (loss) as a percentage of revenue,
non-GAAP net profit (loss) and basic and diluted non-GAAP net profit (loss) per
share.
Sierra
Monitor continues to provide all information required in accordance with GAAP
and does not suggest or believe non-GAAP financial measures should be considered
as a substitute for, or superior to, measures of financial performance prepared
in accordance with GAAP, and the financial results calculated in accordance with
GAAP and reconciliations from these results should be carefully
evaluated. Sierra Monitor believes that these non-GAAP financial
measures provide meaningful supplemental information regarding its operating
results primarily because they exclude amounts the Company does not consider
part of ongoing operating results when assessing the overall Company
performance.
We
believe that our non-GAAP financial measures facilitate the comparison of
results for current periods with results for past periods. We exclude the
following items from non-GAAP financial measures:
Depreciation
and Amortization of Tangible and Intangible Assets
In
accordance with GAAP, depreciation and amortization of tangible and intangible
assets includes depreciation of purchased capital assets and amortization of
intangible assets including third party approval fees. We exclude these amounts
from our internal measures for budget and planning purposes.
Provision
for Bad Debt Expense
We
maintain an allowance for doubtful accounts which is analyzed on a periodic
basis to ensure that it is adequate to the best of management’s
knowledge. We exclude these amounts from our internal measures for
budget and planning purposes.
Provision
for Inventory Losses
We
evaluate our inventories for excess or obsolescence on a quarterly
basis. Inventories identified as slow moving or obsolete are
determined based on historical experience and current product
demand. The quarterly analysis is used to adjust the provision for
inventory losses. We exclude the provision for inventory losses from
our internal measures for budget and planning purposes.
Deferred
Income Taxes
The
effect of changes in deferred tax balances is non-cash and is not comparable
across periods or with other companies. We exclude these amounts from
our internal measures for budget and planning purposes.
Share-based
Compensation Expense
Our
non-GAAP financial measures exclude share-based compensation expenses, which
consist of expenses for stock options. While share-based compensation is an
expense affecting our results of operations, management excludes share-based
compensation from our budget and planning process. For these reasons we exclude
share-based compensation expenses from our non-GAAP financial
measures. We compute weighted average dilutive shares using the
methods required by GAAP for both GAAP and non-GAAP diluted net income (loss)
per share.
Sierra
Monitor refers to these non-GAAP financial measures in evaluating and measuring
the performance of our ongoing operations and for planning and forecasting in
future periods. These non-GAAP financial measures also facilitate our internal
comparisons to historical operating results. We are reporting
non-GAAP financial measures because we believe that the inclusion of comparative
numbers provides consistency in our financial reporting. We compute non-GAAP
financial measures using the same consistent method from quarter to quarter and
year to year.
Sierra
Monitor believes that non-GAAP measures have significant limitations in that
they do not reflect all of the amounts associated with Sierra Monitor's
financial results as determined in accordance with GAAP and that these measures
should only be used to evaluate Sierra Monitor's financial results in
conjunction with the corresponding GAAP measures, and the financial results
calculated in accordance with GAAP and reconciliations from these results should
be carefully evaluated. Because of these limitations, Sierra Monitor qualifies
the use of non-GAAP financial information in a statement when non-GAAP
information is presented. In addition, the exclusion of the charges and expenses
indicated above from the non-GAAP financial measures presented does not indicate
an expectation by Sierra Monitor management that similar charges and expenses
will not be incurred in subsequent periods.
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Table
C
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Sierra
Monitor Corporation
|
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Reconciliation
of GAAP to Non-GAAP Net Income
|
|||||||||
|
(Unaudited)
|
|||||||||
|
For
the three months ended
September
30,
|
For
the nine months ended
September
30,
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|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
GAAP
Net Income
|
$ | 234,746 | $ | 131,477 | $ | 312,452 | $ | 88,466 | ||||||||
|
Depreciation
and amortization
|
53,193 | 69,039 | 179,354 | 216,403 | ||||||||||||
|
Provision
for bad debt expense
|
3,000 | 9,731 | 18,000 | 23,081 | ||||||||||||
|
Provision
for inventory losses
|
15,000 | - | 20,000 | (8,000 | ) | |||||||||||
|
Deferred
income taxes
|
- | 24,372 | - | 1,979 | ||||||||||||
|
Stock
based compensation expense
|
21,549 | 25,478 | 74,695 | 76,589 | ||||||||||||
|
Total
adjustments to GAAP net income
|
92,742 | 128,620 | 292,049 | 310,052 | ||||||||||||
|
Non-GAAP
Net income
|
$ | 327,488 | $ | 260,097 | $ | 604,501 | $ | 398,518 | ||||||||
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Non-GAAP
Net income per share:
|
||||||||||||||||
|
Basic
|
$ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
|
Diluted
|
$ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
|
Weighted-average
number of shares used in per share computations:
|
||||||||||||||||
|
Basic
|
11,446,076 | 11,438,212 | 11,441,707 | 11,432,656 | ||||||||||||
|
Diluted
|
11,575,782 | 11,764,928 | 11,666,895 | 11,767,161 | ||||||||||||