Sutron Corporation Reports Fourth Quarter and Full Year 2014 Results

STERLING, VA--(Marketwired - March 27, 2015) - Sutron Corporation (NASDAQ: STRN)

• 2014 Net Revenue of $26.2M, Down 4% From Prior Year

• Q4 Net Revenue of $7.2M, Down 2% From Prior Year's Quarter

• 2014 Net Income of $484,908, Down 39% From Prior Year

• Q4 Net Income of $620,599, Up 87% From Prior Year's Quarter

• 2014 Bookings of $27.1M, Up 5% From Prior Year

• Cash of $8.7M at the end of 2014, Down 4.9% From Prior Year

• 2014 Free Cash Flow of $(287,326), Compared to $1.96M at the end of 2013

Sutron Corporation (NASDAQ: STRN), a global leader in hydrological, meteorological, air quality and oceanic monitoring products, systems, software and services, announced results for the fourth quarter and full year ended December 31, 2014.

Raul McQuivey, Chairman and Chief Executive Officer, stated, "While we continue to see many new opportunities in our global marketspace, we are disappointed in this year's results in that several opportunities we expected to close in 2014 were delayed to 2015. However, our deal pipeline remains robust and growing and we believe we are well positioned to capitalize on many of these opportunities in 2015. We expect investments made in research and development efforts in 2013 and 2014 will also begin to generate returns in 2015. Given our pipeline and the progress we have made with our development efforts, I am confident we will have increased revenues and increased profitability in 2015.

"In 2014, we invested approximately $529,000 in new surface mount technology ('SMT') machinery that we believe will allow us to better control our production process, improve quality of our printed circuit boards ('PCB'), better serve our customers through faster lead times, and improve the material costs of many of our products through efficiencies gained in managing our own PCB process.

"We continue to work on expanding our bundled end-to-end solution capabilities with our recent acquisitions. As such, we have reorganized our corporate structure to align with this strategy. In 2015 we will have five Sutron divisions: Hydromet Products Division ('HPD'), Integrated Systems Division ('ISD'), Sutron India Division ('SIO'), Weather Solutions Division ('WSD'), and Air Quality Division ('AQD'). Outside of HPD, through which we deliver our standard products, we have opportunities in each of our other divisions to deliver bundled end-to-end solutions in 2015. We are beginning to see traction in the marketplace for these solutions and are committed to bring additional innovative products and solutions to market in 2015 that we believe will foster growth of sales and profitability in 2015 and beyond."

Consolidated Results

Continuing Sutron operations are presented below.

Quarter Ended December 31, 2014

Net Revenue was $7.2 million for the fourth quarter of 2014, a decrease of 2% from $7.3 million in the fourth quarter of 2013. Several projects the Company was expecting to close and deliver by year-end were delayed causing the small decrease in revenue.

Gross Profit was $3.0 million, or 41% of net revenue, as compared to $2.9 million, or 40% of net revenue, in the fourth quarter of 2013. An increase in our Hydromet standard products sales, as well as increased margin on a large project we won in November 2014, resulted in the stronger gross margin as a percentage of sales compared to the fourth quarter of 2013.

Operating Expenses were $2.3 million, or 33% of net revenue, as compared to $2.3 million, or 32% of net revenue, in the fourth quarter of 2013. 

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was approximately $823,000 in the fourth quarter of 2014 as compared to EBITDA of approximately $796,000 in the fourth quarter of 2013. The slight increase over fourth quarter of 2013 was due to the slightly higher margin on product sales in the fourth quarter 2014.

Net Income was $620,599, or $.12 per basic and $.12 per diluted common share for the fourth quarter of 2014, compared to net income of $332,898, or $.07 per basic and $.06 per diluted common share, in the fourth quarter of 2013. The number of shares outstanding used to calculate basic and diluted earnings per common share in the fourth quarter of 2014 were 5.08 and 5.10 million, respectively, compared to 5.07 and 5.12 million, respectively, for basic and diluted earnings per common share in the fourth quarter of 2013.

Year Ended December 31, 2014

Net revenue for the year ended December 31, 2014 was $26.2M, down 4% from $27.2 in 2013. Sales from our legacy business were $19.6M, down 3% from $20.1M in 2013. MeteoStar generated $5.2M of revenue in 2014, down 10% from $5.8m in 2013. MeteoStar, has had a number of large projects delayed that we expect will close in 2015. Sabio generated $1.4M of revenue in 2014, up 11% from $1.3M in 2013. The increase in revenue is largely due to 2014 being the first full year of our ownership.

Gross profit for the year ended December 31, 2014 was $10.3M, or 39% of net revenue, as compared to $10.8M, or 40% of net revenue, in 2013. 

Operating expenses were $10.0M in 2014, or 38% of net revenue, as compared to $9.6M, or 35% of net revenue, in 2013. The increase is due primarily to a full year of costs for running our Sabio division compared to 2013 and an increase in our sales and marketing expenditures. In 2014, we launched our renovated corporate web-site and have been integrating all divisions of the Company into that web-site.

EBITDA for the year ended December 31, 2014 was approximately $1.05M, or 4.0% of net revenues, as compared to EBITDA of approximately $1.78M, or 6.5% of net revenues, in 2013. 

Net Income was $484,908 in 2014, or $.10 per basic and $.09 per diluted common share, compared to net income of $795,905, or $.16 per basic and diluted common share, in 2013. The number of shares outstanding used to calculate basic and diluted earnings per common share in 2014 were 5.08 and 5.10 million, respectively, compared to 5.07 and 5.12 million, respectively, for basic and diluted earnings per common share in 2013.

Balance Sheet, Liquidity and Capital Resources

Sutron ended 2014 with $8.6 million in cash and cash equivalents, down from $9.1 million at the end of 2013. For the year ended December 31, 2014, cash generated by operating activities was $574,204 as compared to cash generated by operating activities of $2,178,449 in 2013. For the year ended December 31, 2014, capital expenditures were $861,530 as compared to $207,407 in 2013. The increase in capital expenditures was primarily due to the Company's investment in its SMT machinery.

Free Cash Flow for the year ended December 31, 2014 was $(287,326) as compared to Free Cash Flow of $1,964,266 in 2013. Sutron defines Free Cash Flow as net cash provided or used by operating activities less cash used in the purchase of property and equipment.

Shareholder Call

The Company will hold a shareholder call to discuss its 2014 results at 11a.m. EDT on Monday, March 30th. The dial-in details for the call are:

Dial-in Number: [phone]

Access Code: 186-391-485

For those not able to dial in for the call, the call will be recorded and uploaded to our website -- www.sutron.com.

ABOUT SUTRON CORPORATION

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. 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. We provide hydrological, meteorological, air quality, 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 and hydropower companies. Over 70,000 Sutron stations have been installed worldwide. We manufacture our dataloggers, satellite transmitters and sensors. Our product and systems are designed to offer commonality of components and uniform interfaces in order to build modular, open, distributed systems that provide excellent performance regardless of the number of sensors or field stations.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

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
				December 31,				December 31,
				2014				2013
ASSETS
Current Assets:
	Cash and cash equivalents			$	7,873,903			$	8,283,092
	Restricted cash and cash equivalents				809,509				850,279
	Accounts receivable, net				4,693,260				4,480,218
	Costs in excess of billings				1,500,603				1,383,418
	Inventory				4,747,676				4,876,641
	Prepaid items and other assets				293,568				446,749
	Income taxes receivable				173,537				106,897
	Deferred income taxes				1,046,593				664,558
		Total Current Assets			21,138,649				21,091,852
Property and Equipment, Net					1,935,760				1,532,144
Other Assets
	Goodwill				4,452,152				4,452,152
	Intangibles, net of amortization				722,466				907,495
	Deferred tax asset				-				77,357
	Other assets				102,514				81,885
		Total Assets		$	28,351,541			$	28,142,885
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable			$	1,045,170			$	1,170,446
	Accrued payroll				110,639				468,454
	Deferred revenue				1,286,121				686,029
	Deferred rent				149,011				139,146
	Other accrued expenses				1,520,074				1,520,261
	Billings in excess of costs and estimated earnings				125,242				388,687
		Total Current Liabilities			4,236,257				4,373,023
Long-Term Liabilities
	Deferred rent				608,568				751,245
	Deferred tax liability				30,871				-
		Total Liabilities			4,875,696				5,124,268
Stockholders' Equity
	Common stock, $0.01 par value, 12,000,000 shares authorized; 5,084,134 and 5,066,009 issued and outstanding				50,842				50,660
	Additional paid-in capital				5,465,723				5,340,277
	Retained earnings				18,354,164				17,869,256
	Accumulated other comprehensive loss				(394,884	)			(241,576	)
		Total Stockholders' Equity			23,475,845				23,018,617
		Total Liabilities and Stockholders' Equity		$	28,351,541			$	28,142,885

SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
			For the Years Ended December 31,
			2014				2013				2012
Net sales and revenues			$	26,243,398			$	27,208,304			$	25,229,519
Cost of sales and revenues				15,914,728				16,424,127				15,212,433
	Gross profit			10,328,670				10,784,177				10,017,086
Operating expenses:
	Selling, general and administrative expenses			6,647,788				6,124,930				5,275,676
	Research and development expenses			3,367,172				3,438,250				3,384,393
	Total operating expenses			10,014,960				9,563,180				8,660,069
	Operating income			313,710				1,220,997				1,357,017
Financing income, net				83,067				46,892				74,783
	Income before income taxes			396,777				1,267,889				1,431,800
Income tax expense (benefit)				(88,131	)			471,984				289,000
Net income			$	484,908			$	795,905			$	1,142,800
Net income per share:
	Basic income per share		$	.10			$	.16			$	.24
	Diluted income per share		$	.09			$	.16			$	.23
Comprehensive income (loss):
	Net income			484,908				795,905				1,142,800
	Foreign currency translation adjustments			(153,308	)			(58,973	)			(6,094	)
Comprehensive income			$	331,600			$	736,932			$	1,136,706

Contact:
Glen Goold
[phone]
[e-mail]