MILPITAS, CA--(Marketwired - August 02, 2016) - Sierra Monitor Corporation (OTCQB: SRMC), a provider of Industrial Internet of Things (IIoT) solutions that connect and protect high-value infrastructure assets, today announced financial results for the second quarter ended June 30, 2016.
Financial Highlights
Second Quarter and Six Month 2016 Financial Results
Net sales for the quarter ended June 30, 2016 were $4,818,592, compared to $5,016,999 reported for the same period of 2015. Sierra Monitor posted a GAAP net income of $4,416 or $0.00 per share (basic and diluted), for the quarter ended June 30, 2016, compared to GAAP net income of $169,051 or $0.02 per share (basic and diluted), for the same period of 2015. See Table A of this release for condensed statements of operations.
Sierra Monitor posted non-GAAP net income of $167,319 or $0.02 per share (basic and diluted), for the quarter ended June 30, 2016, compared to non-GAAP net income of $403,382 or $0.04 per share (basic and diluted), for the same period of 2015. See Table C of this release for a reconciliation of GAAP to non-GAAP operating results.
Sierra Monitor achieved EBITDA of $158,246 for the quarter ended June 30, 2016, compared to EBITDA of $448,648 for the same period of 2015. See Table D of this release for reconciliation between GAAP Net Income and EBITDA operating results.
Net sales for the six months ended June 30, 2016 were $9,359,589, compared to $9,994,786 reported for the same period of 2015. Sierra Monitor posted GAAP net loss of $93,712 or $0.01 per share (basic and diluted), for the six months ended June 30, 2016, compared to GAAP net income of $382,546 or $0.04 per share (basic and diluted), for the same period of 2015. See Table A of this release for condensed statements of operations.
Sierra Monitor posted non-GAAP net income of $282,138 or $0.03 per share (basic and diluted), for the six months ended June 30, 2016, compared to non-GAAP net income of $837,516 or $0.08 per share (basic and diluted) for the same period of 2015. See Table C of this release for a reconciliation of GAAP to non-GAAP operating results.
Sierra Monitor achieved EBITDA of $153,284 for the six months ended June 30, 2016, compared to EBITDA of $976,079 for the same period of 2015. See Table D of this release for reconciliation between GAAP Net Income and EBITDA operating results.
Sierra Monitor had $4,327,076 in cash on June 30, 2016 with no bank borrowings, compared to $4,883,373 on December 31, 2015. Net trade receivables on June 30, 2016 were $2,570,163, compared to $2,582,664 on December 31, 2015. The company's days' sales outstanding were 47 days, compared to 43 days for the same period in 2015. Inventory at the end of Q2 2016 was $2,877,848 compared to $2,842,449 on December 31, 2015. See Table B of this release for a summary of the balance sheet.
Business Highlights
"Q2 2016 revenue increased approximately 6% over Q1 2016, with both the gas and the gateway businesses demonstrating similar improvement," said Varun Nagaraj, President and CEO. "On the new product development front, we showcased our new UV/IR and IR3 Flame Detector products at the National Fire Protection Agency (NFPA) show in June this year. These products give us access to a billion dollar segment in the life safety market. We have just started the certification process to get required Nationally Recognized Test Labs (NRTL) approvals such as FM and ATEX and expect to introduce these products broadly to the market in 1H 2017. In the meantime, the availability of pre-certified units enables us this year to begin developing the distribution channel required to address the opportunity. We are also pleased with the progress on our FieldPoP™ device cloud. Twelve of our 200+ Original Equipment Manufacturer (OEM) customers who use our gateways are now connected to the FieldPoP and are defining and testing potential new services that they could offer to their customers. We expect to have a total of 30 OEM customers in this beta program before the end of the year. We plan to transition our OEM customers to a subscription-based model in 2017. In addition to providing a subscription-based revenue stream, we expect FieldPoP to win us new OEM customers and increase customer stickiness."
Even while introducing the FieldPoP beta program, Sierra Monitor continued to expand its 200-plus OEM customer base for its FieldServer protocol gateway products. New design wins with existing and new customers continue to reinforce our position as a leading integration partner to OEMs in the Building and Facilities segments of the IIoT market.
Additionally, Sierra Monitor's FieldServer protocol gateway products continued to be purchased and used by leading system integrators in high-value and complex IIoT projects in settings such as large campuses.
Sierra Monitor's Sentry IT line of fire and gas solutions continued to be selected to protect high-value assets and facilities around the world for various applications.
About Sierra Monitor Corporation
Sierra Monitor Corporation addresses the industrial and commercial facilities management market with Industrial Internet of Things (IIoT) solutions that connect and protect high-value infrastructure assets.
The company's FieldServer brand of protocol gateways is used by system integrators and OEMs to enable local and remote monitoring and control of assets and facilities. With more than 200,000 installed units, supporting over 140 protocols, installed in commercial and industrial facilities, FieldServer is the industry's leading multi-protocol gateway.
Sierra Monitor's Sentry IT fire and gas detection solutions are used by industrial and commercial facilities managers to protect their personnel and assets. Sentry IT branded controllers, sensor modules, and software are installed at thousands of facilities such as natural gas vehicle fueling and maintenance stations, wastewater treatment plants, oil and gas refineries and pipelines, parking garages, US Navy ships, and underground telephone vaults.
Headquartered in the heart of Silicon Valley in Milpitas, California, Sierra Monitor was founded in 1979 and has been a public company since 1989. By combining its distinguished track record in industrial sensing and automation with emerging IoT technologies such as cloud connectivity, big data, and analytics, Sierra Monitor is at the forefront of the emerging IIoT trend.
For more information visit: http://www.sierramonitor.com/
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, including those statements concerning future product plans and releases, market acceptance and adoption of our solutions, macroeconomic trends and market conditions, investment plans, results of operations, market position, and strategic plans and objectives. These statements are not guarantees of future performance and actual results may differ materially from those described in these forward-looking statements as a result of a number of factors. Further information on these risks, uncertainties and assumptions as well as information regarding other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time. Forward-looking statements contained in this announcement are made as of this date and will not be updated.
Table A
SIERRA MONITOR CORPORATION Statements of Operations (Unaudited) For the three months For the six months ended June 30, ended June 30, 2016 2015 2016 2015 ---------- ---------- ---------- ---------- Net sales $ 4,818,592 $ 5,016,999 $ 9,359,589 $ 9,944,786 Cost of goods sold 2,022,418 2,033,284 3,935,198 4,015,211 ---------- ---------- ----------- ---------- Gross profit 2,796,174 2,983,715 5,424,391 5,929,575 Operating expenses Research and development 680,441 574,965 1,380,362 1,141,046 Selling and marketing 1,216,580 1,308,946 2,473,013 2,493,624 General and administrative 828,098 755,207 1,597,237 1,531,461 ---------- ---------- ----------- ---------- 2,725,119 2,639,118 5,450,612 5,166,131 ---------- ---------- ----------- ---------- Income (loss) from operations 71,055 344,597 (26,221) 763,444 Interest income 150 31 203 63 ---------- ---------- ----------- ---------- Income (loss) before income taxes 71,205 344,628 (26,018) 763,507 Income tax provision 66,789 175,577 67,694 380,961 ---------- ---------- ----------- ---------- Net income (loss) $ 4,416 $ 169,051 $ (93,712) $ 382,546 ========== ========== =========== ========== Net income (loss) available to common shareholders per common share Basic $ 0.00 $ 0.02 $ (0.01) $ 0.04 ========== ========== =========== ========== Diluted $ 0.00 $ 0.02 $ (0.01) $ 0.04 ========== ========== =========== ========== Weighted average number of common shares used in per share computations: Basic 10,145,862 10,128,311 10,145,862 10,128,311 ========== ========== =========== ========== Diluted 10,147,539 10,144,109 10,145,862 10,140,638 ========== ========== =========== ==========
Table B
SIERRA MONITOR CORPORATION Balance Sheets Assets June 30, December 31, 2016 2015 ------------- ------------- (Unaudited) Current assets: Cash and cash equivalents $ 4,327,076 $ 4,883,373 Trade receivables, less allowance for doubtful accounts of approximately $79,000 at June 30, 2016 (unaudited) and December 31, 2015 2,570,163 2,582,664 Inventories, net 2,877,848 2,842,449 Prepaid expenses 285,999 215,406 Income tax deposit 159,929 11,887 Deferred income taxes - current 308,486 308,486 ------------- ------------- Total current assets 10,529,501 10,844,265 Property and equipment, net 187,641 226,888 Other assets 269,098 365,960 ------------- ------------- Total assets $ 10,986,240 $ 11,437,113 ============= ============= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 807,866 $ 978,838 Accrued compensation expenses 478,750 654,609 Other current liabilities 145,693 148,361 ------------- ------------- Total current liabilities 1,432,309 1,781,808 Deferred tax liability 164,341 164,341 ------------- ------------- Total liabilities 1,596,650 1,946,149 Commitments and contingencies Shareholders' equity: Common stock, $0.001 par value; 20,000,000 shares authorized; 10,145,862 shares issued and outstanding at June 30, 2016 (unaudited) and December 31, 2015. 10,146 10,146 Additional paid-in capital 3,967,691 3,772,435 Retained earnings 5,411,753 5,708,383 ------------- ------------- Total shareholders' equity 9,389,590 9,490,964 ------------- ------------- Total liabilities and shareholders' equity $ 10,986,240 $ 11,437,113 ============= =============
SIERRA MONITOR CORPORATION
The accompanying news release contains non-GAAP financial measures. The following tables reconcile the non-GAAP financial measures used to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include EBITDA, non-GAAP net income, and basic and diluted non-GAAP net income 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.
Stock-based Compensation Expense
Our non-GAAP financial measures exclude stock-based compensation expenses, which consist of expenses for stock options. While stock-based compensation is an expense affecting our results of operations, management excludes stock-based compensation from our budget and planning process. For these reasons we exclude stock-based compensation expenses from our non-GAAP financial measures. We compute weighted average dilutive stocks using the methods required by GAAP for both GAAP and non-GAAP diluted net income per share.
EBITDA
EBITDA represents net earnings attributable to Sierra Monitor excluding interest expense, income taxes, depreciation and amortization. As required by SEC rules, we have provided reconciliation on Table D of this measure to the most directly comparable GAAP measure. Management believes that EBITDA is one of the appropriate measures for evaluating the operating performance of the Company because it reflects the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet, and make strategic acquisitions.
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.
Table C
SIERRA MONITOR CORPORATION Reconciliation of GAAP to Non-GAAP Operating Results (Unaudited) For the three months For the six months ended June 30, ended June 30, 2016 2015 2016 2015 ----------- ---------- ----------- ---------- GAAP Net Income $ 4,416 $ 169,051 $ (93,712) $ 382,546 Depreciation and amortization 87,191 104,051 179,505 212,635 Provision for bad debt expense - - - 6,308 Provision for inventory losses (21,411) 36,000 1,089 47,165 Stock based comp expense 97,123 94,280 195,256 188,862 ----------- ---------- ----------- ---------- Total adjustments 162,903 234,331 375,850 454,970 Non-GAAP Net Income $ 167,319 $ 403,382 $ 282,138 $ 837,516 ----------- ---------- ----------- ---------- Non GAAP Net Income Per Share: Basic $ 0.02 $ 0.04 $ 0.03 $ 0.08 =========== =========== ============ =========== Diluted $ 0.02 $ 0.04 $ 0.03 $ 0.08 =========== =========== ============ =========== Weighted-average number of shares used in per share computations: Basic 10,145,862 10,128,311 10,145,862 10,128,311 =========== =========== ============ =========== Diluted 10,147,539 10,144,109 10,145,862 10,140,638 =========== =========== ============ ===========
Table D
SIERRA MONITOR CORPORATION Reconciliation of GAAP to EBITDA Operating Results (Unaudited) For the three months For the six months ended ended June 30, June 30, 2016 2015 2016 2015 ----------- ----------- ----------- ----------- GAAP Net Income (Loss) $ 4,416 $ 169,051 $ (93,712) $ 382,546 Interest Income (150) (31) (203) (63) Income Tax Provision 66,789 175,577 67,694 380,961 Depreciation and amortization 87,191 104,051 179,505 212,635 ----------- ----------- ----------- ----------- Non-GAAP EBITDA $ 158,246 $ 448,648 $ 153,284 $ 976,079 =========== =========== =========== ===========
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