STERLING, VA--(Marketwired - Aug 13, 2014) - Sutron Corporation (NASDAQ: STRN), a global leader in hydrological, meteorological, oceanic, air quality and emergency management monitoring, control, warning and forecasting systems, announced today results for the second quarter and six months ended June 30, 2014.

Second Quarter 2014 Results

  • Record second quarter revenue of $7.6 million, up 20% over prior year period

  • Net income of $206,000, up from a net loss of $53,000 over prior year period

  • Cash of $8.6 million, up 21% from prior year period

Sutron reported revenue of $7.6 million for the second quarter of 2014, up 20% from $6.3 million in the same period in 2013. Net income for the second quarter of 2014 was $205,765 compared to a net loss of $53,170 in the second quarter of 2013. The Company reported a second quarter income of $0.04 per basic and diluted share as compared to a loss of $0.01 per basic and diluted share in the second quarter of 2013. 

For the first six months of calendar year 2014, Sutron recorded revenue of $12.5 million compared to $12.8 million during the first six months of 2013. Sutron reported a net loss of $381,712 for the first six months of 2014 compared to a net loss of $22,968 for the same period of 2013. The first six months loss in 2014 results in a loss of $0.08 per basic and diluted share as compared to a loss of $0.00 per basic and diluted share in the first six months of 2013. 

The Company's backlog as of June 30, 2014 was approximately $14.0 million, up 12.9% from the $12.4 million backlog as of December 31, 2013. The Company recorded $15.5 million in bookings for the first six months of 2014, an increase of approximately 10.4% from the $14.0 million recorded in the first six months of 2013.

Balance Sheet and Liquidity

  • Sutron ended the second quarter of 2014 with $8.6 million in cash and cash equivalents, down from $9.1 million at December 31, 2013 and down from $9.2 million at March 31, 2014. Cash used by operating activities during the first six months of 2014 was $55,088 as compared to $167,222 cash generated by operating activities through the first six months of 2013. Capital expenditures were $453,283 for the first six months of 2014 compared to $164,747 for the first six months of 2013. The increase in capital expenditures is largely due to the acquisition of new Surface Mount Technology ("SMT") machinery during the second quarter of 2014. Due to the cash used in operating activities and the investment in SMT machinery, Free Cash Flow for the first six months of 2014 was negative $508,371 compared to Free Cash Flow of $2,475 for the first six months of 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. 

Management Commentary

Raul McQuivey, Chairman and Chief Executive Officer said, "We are pleased that top line revenues returned to more expected levels in the second quarter after a slow first quarter, restoring us to just 2 percent below our record high sales through the first six months of last year. We were also encouraged with several unexpected orders from Federal government customers that suggests that sector may be picking up a bit. However, the overall domestic and international environments remain competitive as we continue to work diligently to win new projects."

"We recognize that, at 2.7 percent of top line revenue, our net income as a percentage of sales for the second quarter is not at acceptable levels. In addition to increasing revenue, we are implementing cost saving initiatives that we believe will improve the bottom line. One such initiative is the acquisition of SMT machinery during the second quarter. While a significant investment for us, we expect to generate cost efficiencies by producing our own printed circuit board assemblies. We believe this will also further improve the quality, and reduce the elapsed assembly time, of the products that we deliver to our customers."

"We continue to make progress in our R&D efforts across the organization. We have completed the development of our first Air Quality sensor which is now being tested for EPA certification. We have also completed development of the next generation of our Leading Environmental Analysis and Display Software, LEADS6®. LEADS6® is now being marketed and delivered to our customers."

"Our bookings for the first six months of 2014 were $15.5 million. That is up roughly 10.4 percent over the $14.0 million in bookings we had for the first six months of 2013. With bookings up, a backlog of $14.0 million as of June 30, 2014, and many interesting projects we continue to pursue, we are cautiously optimistic for the remainder of 2014."

Shareholder Call

The Company will hold a shareholder call to discuss its second quarter results at 11a.m. EDT on Thursday, August 14 th. The dial-in details for the call are:

     United States: +1 (805) 309-0010

     Access Code: 200-983-413

About Sutron

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. We provide hydrological, meteorological, oceanic, air quality 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, hydropower companies and other commercial entities. 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. 

Safe Harbor Statement

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, financing plans, business strategy, 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, including the risks of integration of acquired assets and operations and customer retention Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in our filings with the SEC, including the disclosure under the heading "Business" and "Management's Discussion and Analysis" in the Company's Annual Report on Form 10-K filed on March 28, 2012. 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
(Unaudited)
June 30,
2014 		(Audited)
December 31,
2013
ASSETS
Current Assets:
Cash and cash equivalents $ 7,751,469 $ 8,283,092
Restricted cash and cash equivalents 856,619 850,279
Accounts receivable, net 6,815,994 5,863,636
Inventory, net 5,381,433 4,876,641
Prepaid items and other assets 675,586 446,749
Income taxes receivable 114,060 106,897
Deferred income taxes 967,668 664,558
Total Current Assets 22,562,829 21,091,852
Property and Equipment, Net 1,728,419 1,532,144
Other Assets
Goodwill 4,452,152 4,452,152
Intangibles, net of amortization 814,981 907,495
Deferred tax assets 50,353 77,357
Other Assets 105,430 81,885
Total Assets $ 29,714,164 $ 28,142,885
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,189,988 $ 1,170,446
Accrued payroll 537,524 468,454
Deferred Rent 143,910 139,146
Deferred revenue 1,075,592 686,029
Other accrued expenses 3,088,090 1,520,261
Billings in excess of costs and estimated earnings 329,445 388,687
Total Current Liabilities 6,364,549 4,373,023
Long-Term Liabilities:
Deferred rent 682,657 751,245
Deferred income taxes - -
Total Liabilities 7,047,206 5,124,268
Stockholders' Equity
Common stock, 12,000,000 shares authorized; 5,066,009 issued and outstanding at June 30, 2014 and December 31, 2013 50,660 50,660
Additional paid-in capital 5,393,582 5,340,277
Retained earnings 17,487,544 17,869,256
Accumulated other comprehensive loss (264,828 ) (241,576 )
Total Stockholders' Equity 22,666,958 23,018,617
Total Liabilities and Stockholders' Equity $ 29,714,164 $ 28,142,885

See accompanying notes to consolidated financial statements.

SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended
June 30, 		Six Months Ended
June 30,
2014 2013 2014 2013
Revenue $ 7,615,540 $ 6,343,240 $
12,514,885 		$ 12,798,350
Cost of goods sold 4,689,578 3,987,068 8,027,129 7,796,037
Gross profit 2,925,962 2,356,172 4,487,756 5,002,313
Operating expenses:
Selling, general and administrative expenses 1,924,213 1,467,134 3,584,062 3,101,137
Research and development expenses 716,167 976,254 1,585,117 1,946,393
Total operating expenses 2,640,380 2,443,388 5,169,179 5,047,530
Operating income (loss) 285,582 (87,216 ) (681,423 ) (45,217 )
Interest and other income, net 17,660 6,046 20,533 9,249
Income (loss) before income taxes 303,242 (81,170 ) (660,890 ) (35,968 )
Income tax expense (benefit) 97,477 (28,000 ) (279,178 ) (13,000 )
Net income (loss) $ 205,765 $ (53,170 ) $ (381,712 ) $ (22,968 )
Net income (loss) per share:
Basic income (loss) per share $ 0.04 $ (0.01 ) $ (0.08 ) $ 0.00
Diluted income (loss) per share $ 0.04 $ (0.01 ) $ (0.08 ) $ 0.00
Comprehensive income:
Net income (loss) $ 205,765 $ (53,170 ) $ (381,712 ) $ (22,968 )
Foreign currency translation adjustments 4,780 (60,344 ) (23,252 ) (56,317 )
Comprehensive income (loss) $ 210,545 $ (113,514 ) $ (404,964 ) $ (79,285 )

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

SUTRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
2014 2013
Cash Flows from Operating Activities:
Net (loss) $ (381,712 ) $ (22,968 )
Noncash items included in net (loss):
Depreciation 227,123 192,680
Amortization of intangibles 92,514 67,170
Deferred income taxes (276,106 ) 36,000
Stock based compensation 53,305 80,080
Tax benefit from stock options exercised - (12,996 )
Change in current assets and liabilities, net of the impact of acquisitions:
Accounts receivable (952,358 ) 256,599 )
Inventory (504,792 ) (435,285 )
Prepaid expenses and other assets (228,836 ) (58,632 )
Income tax receivable (7,163 ) (61,449 )
Accounts payable 19,541 (151,510 )
Accrued expenses 1,636,899 138,976 Deferred revenues 389,563 25,582
Billings in excess of costs and estimated earnings (59,242 ) 233,196
Deferred rent (63,824 ) (120,221 )
Net Cash (Used) Provided by Operating Activities (55,088 ) 167,222
Cash Flows from Investing Activities:
Restricted cash and cash equivalents (6,340 ) (8,057 )
Purchase of property and equipment (423,398 ) (164,747 )
Other assets (23,545 ) 4,418
Business acquisition - (1,214,330 )
Net Cash Used by Investing Activities (453,283 ) (1,382,716 )
Cash Flows from Financing Activities:
Tax benefit from stock options exercised - 12,996
Proceeds from stock options exercised - 4,930
Net Cash Provided by Financing Activities - 17,926
Effect of exchange rate changes on cash and cash equivalents (23,252 ) (56,317 )
Net (decrease) in cash and cash equivalents (531,623 ) (1,253,885 )
Cash and Cash Equivalents, beginning of period 8,283,092 7,576,374
Cash and Cash Equivalents, end of period $ 7,751,469 $ 6,322,489

See accompanying notes to consolidated financial statements.

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