Sierra Monitor Corporation Announces Financial Results for the First Quarter Ended March 31, 2009
First Quarter 2009 Sales Increased 4% in Challenging Business Climate
May 7, 2009 10:00:00 AM
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View Additional ProfilesMILPITAS, CA -- (MARKET WIRE) -- 05/07/09 -- Sierra Monitor Corporation (OTCBB: SRMC), a Cleantech focused company that designs, manufactures and sells electronic safety and environmental instrumentation, today announced financial results for the first quarter ended March 31, 2009.
Financial Highlights
-- Achieved first quarter sales of $3.3 million, an increase of 4.2% year-
over-year
-- Generated income from operations of $6,772 for the first quarter of
2009
-- Reported first quarter net income of $4,063
-- Recorded fifteenth consecutive quarter of profitability
Business Highlights
-- Received Factory Mutual (FM) compliance certification for both
performance and hazardous location operation for a new Hydrogen Sulfide Gas
Detector series
-- Commissioned new FieldServer bridge and gas detection systems that
protect both the newly opened New York Mets Citi Field and the New York
Yankees minor league ball park against landfill gas risks
-- Began shipments of flame detectors to a solar panel tool manufacturer
-- Shipped major gas detection system to Saudi Arabia for protection of a
power plant
-- Completed shipment of a significant order of Open Path Hydrogen
Sulfide detection systems for use in a petrochemical facility in Colombia
First Quarter 2009 Financial Results
Total sales for the quarter ended March 31, 2009 were $3,270,056, an increase of 4.2% from the $3,136,798 reported for the same period of 2008.
Sierra Monitor posted GAAP net income of $4,063, or $0.00 per share (basic and diluted) for the quarter ended March 31, 2009, compared to GAAP net income of $63,818, or $0.01 per share (basic and diluted) for the same period of 2008.
Sierra Monitor posted non-GAAP net income of $100,551, or $0.01 per share (basic and diluted) for the quarter ended March 31, 2009, compared to non-GAAP net income of $155,618, or $0.01 per share (basic and diluted) for the same period of 2008.
"The Sierra Monitor team has risen to the challenge of the current economic conditions to deliver record sales," said Gordon Arnold, Chairman and Chief Executive Officer. "Changes in product mix and increased sales discounts have put pressure on margins and our fixed expenses have been impacted by Sarbanes-Oxley compliance costs and other administrative expenses. As a result of these factors our net income has weakened compared to the prior year results. Our balance sheet and business fundamentals remain strong as we face the continued difficult business environment," he said.
Cash Position
Sierra Monitor had $1,188,156 in cash and no debt at March 31, 2009. Receivables at March 31, 2009 were $2,090,868. The Company's Days Sales Outstanding in Accounts Receivable (DSOs) was 60 days.
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, wastewater 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.
Table A
Sierra Monitor Corporation
Condensed Statements of Operations
(Unaudited)
For the three months
ended
March 31, March 31,
2009 2008
----------- -----------
Net sales $ 3,270,056 $ 3,136,798
Cost of goods sold 1,419,469 1,209,091
----------- -----------
Gross profit 1,850,587 1,927,707
Operating expenses
Research and development 480,502 525,805
Selling and marketing 861,021 815,356
General and administrative 502,292 457,039
----------- -----------
1,843,815 1,798,200
----------- -----------
Income from operations 6,772 129,507
Income before income taxes 6,772 129,507
Income taxes 2,709 65,689
----------- -----------
Net income $ 4,063 $ 63,818
=========== ===========
Net income available to common shareholders per
common share:
Basic $ 0.00 $ 0.01
=========== ===========
Diluted $ 0.00 $ 0.01
=========== ===========
Weighted-average number of shares used in per
share computations:
Basic 11,428,212 11,115,192
=========== ===========
Diluted 11,774,366 11,674,421
=========== ===========
Table B
SIERRA MONITOR CORPORATION
Balance Sheet
Assets March 31, December 31,
2009 2008
(unaudited) (1)
Current assets:
Cash $ 1,188,156 $ 1,338,647
Trade receivables, less allowance for doubtful
accounts of approximately $88,000 and $89,000
in 2009 and 2008 respectively 2,090,868 1,661,846
Inventories, net 1,954,848 1,968,006
Prepaid expenses 176,392 189,389
Prepaid income taxes 50,189 48,295
Deferred income taxes 299,421 299,421
----------- -----------
Total current assets 5,759,874 5,505,604
Property and equipment, net 340,064 380,987
Other assets 176,510 185,015
----------- -----------
Total assets $ 6,276,448 $ 6,071,606
=========== ===========
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 618,248 $ 521,823
Accrued compensation expenses 468,013 385,306
Income taxes payable 9,905 6,272
Other current liabilities 90,744 98,332
----------- -----------
Total current liabilities 1,186,910 1,011,733
Deferred tax liability 42,498 42,498
----------- -----------
Total liabilities 1,229,408 1,054,231
Shareholders’ equity:
Common stock, $0.001 par value; 20,000,000
shares authorized; 11,428,212 shares issued and
outstanding at March 31, 2009 and December 31,
2008 11,428 11,428
Additional paid-in capital 3,511,566 3,485,964
Retained earnings 1,524,046 1,519,983
----------- -----------
Total shareholders’ equity 5,047,040 5,017,375
----------- -----------
Total liabilities and
shareholders’ equity $ 6,276,448 $ 6,071,606
=========== ===========
(1) Derived from December 31, 2008 audited financial statements.
NON-GAAP FINANCIAL MEASURES
The accompanying news release dated May 7, 2009 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. 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.
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)
March 31,
2009 2008
---------- -----------
GAAP Net Income $ 4,063 $ 63,818
Depreciation and amortization 76,386 60,972
Provision for bad debt expense 2,500 3,000
Provision for inventory losses (8,000) -
Stock based compensation expense 25,602 27,828
---------- -----------
Total adjustments to GAAP net income 96,488 91,800
---------- -----------
Non-GAAP Net income $ 100,551 $ 155,618
========== ===========
Non-GAAP Net income per share:
Basic $ 0.01 $ 0.01
========== ===========
Diluted $ 0.01 $ 0.01
========== ===========
Weighted-average number of shares used in per share
computations:
Basic 11,428,212 11,115,192
========== ===========
Diluted 11,774,366 11,674,421
========== ===========
Sierra Monitor Investor Relations Contact:
Steve Polcyn
(925) 548 3516
Email Contact
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