Solid Quarter at Sierra Monitor as it Prepares for Largest order Ever - Analyst Blog
Solid Quarter at Sierra Monitor as it Prepares for Largest order Ever
Ken Nagy, CFA
On March 6, 2012, Sierra Monitor Corporation (SRMC) , the designer, manufacturer and seller of electronic safety and environmental instrumentation, reported financial results for its fourth quarter and full year ended December 31, 2011.
Sierra Monitor reported mixed results with year over year fourth quarter revenues falling $647,963 or 15.4 percent, to $3.572 million from $4.220 million for the comparable quarter of 2010.
The Company's fourth quarter 2011 GAAP net income dropped 60.4 percent or $219,090 to $143,388 from $362,478 during the three months ended December 31, 2010.
The decrease in net income for the quarter was primarily due to the decrease in revenues as well as a marginal increase in operating expense which was slightly offset by higher margins.
Total operating expenses increased by $47,361 or to 51.9 percent of revenues to $1.854 million from $1.807 million or 42.8 percent of revenues for the three months ended December 31, 2011.
Still, gross margin increased 70 basis points year over year from 57.6 percent to 58.3 percent for the three months ended December 31, 2011.
Non GAAP net income during the quarter dropped sharply from $386,907 for the fourth quarter of fiscal 2010 to $76,606.
Based on a weighted average number of basic common shares of 9.901 million, both GAAP and non GAAP basic net income per share resulted in $0.01 per share for the quarter. This was down from GAAP and Non GAAP basic net income per share of $0.03 on a weighted average number of basic shares of 11.187 million during the three months ended December 31, 2010.
For the full year ended December 31, 2011, year over year revenues improved by 7.9 percent or $1.135 million to $15.529 million from $14.393 million for fiscal 2010.
GAAP Net income for the full year improved by $221,017 year over year to $868,947 for the twelve months ended December 31, 2011. This compares to $647.930 for the comparable twelve months ended December 31, 2010.
Total operating expenses fell to 49.9 percent of revenues or $7.751 million from $7.279 million or 50.6 percent of revenues for the full year ended December 31, 2011.
Similarly, gross margin for the full year improved by 70 basis points to 59.2 percent compared to gross margin of 58.5 percent for the full year ended December 31, 2010.
Non GAAP net income during the year improved by 14.9 percent to $1.123 million from $977,413 for the full year ended December 31, 2010.
Based on a weighted average number of basic common shares of 9.899 million, GAAP basic net income per share resulted in $0.09 per share for the year. This was up from GAAP basic net income per share of $0.06 on a weighted average number of basic shares of 11.389 million during the fiscal year ended December 31, 2010.
Sierra Monitor's balance sheet remained strong with cash and of equivalents of $1.212 million and working capital improving by $912,673 to $5.628 million for the period ended September 30, 2011.
Likewise, the Company had trade receivables of $1.648 million as of December 31, 2011 and Days Sales Outstanding was 37 days.
Still, it should be noted that while net inventories increased by $1.803 million year over year and cash and equivalents fell by $433,007 year over year, the Company received an over $2.5 million order in the third quarter that required a significant year-end increase in inventory and a large demand on cash.
Finally, while financial results were mixed, during the quarter the Company received a large order from a new international manufacturer of electrical and electronic products customer, to develop and supply a FieldServer data gateway solution to integrate lighting controls into building automation systems.
Similarly, Sierra Monitor received orders, during the fourth quarter, from a major truck leasing company to supply gas detection in multiple CNG vehicle support centers.
Equally, the Company reported that during the three months it expanded its FieldServer presence at the new World Trade Center as well as a gas detection system at a Texas independent school district.
Sierra monitor also shipped gas detection systems to customers in Saudi Arabia and Singapore for retrofitting of off-shore platform service vessels as well as completed development and shipped initial production orders of FieldServer gateways for interfacing shade controls into building automation systems during the fourth quarter.
Last, Sierra Monitor reported that it anticipates shipment of the order for gas and fire detection instruments for a petroleum pipeline booster station in Kuwait in the first quarter of 2012.