Science & Technology
Science and Technology
Science and Technology
Tue, August 11, 2009
Sierra Monitor Corporation: Sierra Monitor Corporation Announces Financial Results for the Second Quarter Ended June 30, 2009
MILPITAS, CA--(Marketwire - August 11, 2009) - Sierra Monitor Corporation (
Financial Highlights
-- Reports second quarter revenues of $2.9 million -- Achieves 60% gross margin in the second quarter of 2009 compared to 58% in the second quarter of the prior year -- Generated year-to-date revenues of $6.2 million, a decrease of 6% year- over-year -- Strong balance sheet with $1.2 million in cash and no bank borrowings
Second Quarter 2009 Business Highlights
-- Joined the Crestron Electronics Integrated Partner program to provide interoperability solutions when interfacing to other building automation and control networks and devices. -- Shipped an order valued over $100,000 of FieldServer Protocol Bridges to enable OPC communications for a plant-wide fire detection system in a Brazilian steel and aluminum processing mill. -- Supplied gas detection systems for the pilot plant of a biology based renewable energy research project. -- Completed qualification and began shipping communications modules for integration of York air conditioning systems. -- Deployed multiple FieldServers in an integration project for a major New York investment bank's data center.
Second Quarter and First Six Months of 2009 Financial Results
Net sales for the quarter ended June 30, 2009 were $2,936,722, a decrease of 15.3% from $3,466,426 reported for the same period of 2008. For the six months ended June 30, 2009, sales decreased 6% to $6,206,778, compared to $6,603,224 for the same period of 2008.
Sierra Monitor posted a GAAP net loss of $47,073, or $0.0 per share (basic and diluted), for the quarter ended June 30, 2009, compared to GAAP net income of $136,450, or $0.01 per share (basic and diluted), for the same period of 2008. Sierra Monitor posted a GAAP net loss of $43,010, or $0.0 per share (basic and diluted), for the six months ended June 30, 2009, compared to GAAP net income of $200,268, or $0.02 per share (basic and diluted), for the same period of 2008.
Sierra Monitor posted non-GAAP net income of $49,362 or $0.0 per share (basic and diluted), for the quarter ended June 30, 2009, compared to non-GAAP net income of $239,896, or $0.02 per share (basic and diluted), for the same period of 2008. Sierra Monitor posted non-GAAP net income of $138,423, or $0.01 per share (basic and diluted), for the six months ended June 30, 2009, compared to non-GAAP net income of $390,151, or $0.03 per share (basic and diluted), for the same period of 2008.
"While Sierra Monitor's second quarter operating results are disappointing, our cash flow was positive and our balance sheet remains strong. Our strategic decision to maintain capacities, avoid layoffs, and invest in critical engineering projects positions the company to continue meeting customer expectations and take advantage of future opportunities," said Gordon Arnold, chairman and chief executive officer. "Based on our current revenue forecast, we anticipate returning to profitability in the third quarter of 2009."
Cash Position
Sierra Monitor had $1,244,948 in cash at June 30, 2009 with no bank borrowings. Trade receivables at June 30, 2009 were $1,964,232. The Company's Days Sales Outstanding was 58 days during the quarter.
About Sierra Monitor Corporation
Sierra Monitor Corporation is a cleantech focused company that designs, manufactures and sells electronic safety and environmental instrumentation. The company's hazardous gas detection systems can be found in a broad range of applications including US Navy ships, waste water treatment facilities, refineries, offshore oil platforms, chemical plants, parking garages and underground telephone vaults providing 24/7 protection of personnel and facilities. The company's unique protocol translator products enable communication between disparate electronic systems overcoming protocol language barriers. By enabling communication between central building automation systems and many electronic subsystems, such as fire panels, chillers and air handlers, Sierra Monitor assists with the integration of energy saving systems. The company's products improve the safety and comfort of workers while contributing to climate and natural resource protection. With almost 30 years experience, Sierra Monitor products can be found in more than 16,000 installations worldwide.
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.
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 relating to Sierra Monitor's expected return to profitability in the third quarter and ability to take advantage of future opportunities. Forward-looking statements in this release are generally identified by words, such as "believes," "anticipates," "plans," "expects," "will," "would," "guidance," "projects" and similar expressions which are intended to identify forward-looking statements. 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.
TABLE A SIERRA MONITOR CORPORATION Statements of Operations (unaudited) For the three months ended For the six months ended June 30, June 30, ------------------------- ------------------------- 2009 2008 2009 2008 ----------- ------------ ----------- ------------ Net sales $ 2,936,722 $ 3,466,426 $ 6,206,778 $ 6,603,224 Cost of goods sold 1,186,272 1,457,333 2,605,741 2,666,424 ----------- ------------ ----------- ------------ Gross profit 1,750,450 2,009,093 3,601,037 3,936,800 ----------- ------------ ----------- ------------ Operating expenses Research and development 503,175 441,741 983,677 967,546 Selling and marketing 840,505 820,978 1,701,526 1,636,334 General and administrative 485,225 520,215 987,517 977,254 ----------- ------------ ----------- ------------ 1,828,905 1,782,934 3,672,720 3,581,134 ----------- ------------ ----------- ------------ Income (loss) from operations (78,455) 226,159 (71,683) 355,666 Income taxes (benefit) (31,382) 89,709 (28,673) 155,398 ----------- ------------ ----------- ------------ Net income $ (47,073) $ 136,450 $ (43,010) $ 200,268 =========== ============ =========== ============ Net income per share: Basic $ .00 $ 0.01 $ .00 $ 0.02 =========== ============ =========== ============ Diluted $ .00 $ 0.01 $ .00 $ 0.02 =========== ============ =========== ============ Weighted-average number of shares used in per share computations: Basic 11,431,545 11,295,192 11,429,879 11,225,192 =========== ============ =========== ============ Diluted 11,431,545 11,671,162 11,429,879 11,686,482 =========== ============ =========== ============ TABLE B SIERRA MONITOR CORPORATION Balance Sheet Assets June 30, December 31, 2009 2008 (unaudited) (1) ----------- ----------- Current assets: Cash $ 1,244,948 $ 1,338,647 Trade receivables, less allowance for doubtful accounts of approximately $85,000 and $110,000 respectively 1,964,232 1,661,846 Inventories, net 1,867,297 1,968,006 Prepaid expenses 164,467 189,389 Income taxes deposit 62,695 48,295 Deferred income taxes 321,814 299,421 ----------- ----------- Total current assets 5,625,453 5,505,604 Property and equipment, net 304,835 380,987 Other assets 166,291 185,015 ----------- ----------- Total assets $ 6,096,579 $ 6,071,606 =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 523,466 $ 521,823 Accrued compensation expenses 426,203 385,306 Other current liabilities 72,936 104,604 ----------- ----------- Total current liabilities 1,022,605 1,011,733 Deferred tax liability 42,498 42,498 ----------- ----------- Total liabilities 1,065,103 1,054,231 Commitments and contingencies Shareholders' equity: Common stock, $0.001 par value; 20,000,000 shares authorized; 11,438,212 and 11,428,212 shares issued and outstanding, respectively 11,438 11,428 Additional paid-in capital 3,543,065 3,485,964 Retained earnings 1,476,973 1,519,983 ----------- ----------- Total shareholders' equity 5,031,476 5,017,375 ----------- ----------- Total liabilities and shareholders' equity $ 6,096,579 $ 6,071,606 =========== =========== (1) Derived from December 31, 2008 audited financial statements.
NON-GAAP FINANCIAL MEASURES
The accompanying news release dated August 11, 2009 contains non-GAAP financial measures. Table C reconciles the non-GAAP financial measures in that 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 that non-GAAP financial measures should be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Sierra Monitor believes that non-GAAP financial measures provide meaningful supplemental information regarding its operating results primarily because they exclude amounts that the company does not consider part of ongoing operating results when assessing 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.
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 SFAS 128 and SFAS 123(R) for both GAAP and non-GAAP diluted net income 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. 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.
TABLE C SIERRA MONITOR CORPORATION Reconciliation of GAAP to Non-GAAP Net Income (unaudited) For the three months For the six months ended June 30, ended June 30, ----------------------- ---------------------- 2009 2008 2009 2008 ---------- ----------- ---------- ---------- GAAP Net Income (loss) $ (47,073) $ 136,450 $ (43,010) $ 200,268 Depreciation and amortization 82,469 57,283 147,365 118,255 Provision for bad debt expense 10,850 20,681 13,350 23,681 Provision for inventory losses - - (8,000) - Deferred income taxes (22,393) - (22,393) (5,363) Stock based compensation expense 25,509 25,482 51,111 53,310 ---------- ----------- ---------- ---------- Total adjustments to GAAP net income (loss) 96,435 103,446 181,433 189,883 ---------- ----------- ---------- ---------- Non GAAP Net income $ 49,362 $ 239,896 $ 138,423 $ 390,151 ========== =========== ========== ========== Non GAAP Net income per share: Basic $ .00 $ 0.02 $ .01 $ 0.03 ========== =========== ========== ========== Diluted $ .00 $ 0.02 $ .01 $ 0.03 ========== =========== ========== ========== Weighted-average number of shares used in per share computations Basic 11,431,545 11,295,192 11,429,879 11,225,192 ========== =========== ========== ========== Diluted 11,431,545 11,671,162 11,429,879 11,686,482 ========== =========== ========== ==========
