Sierra Monitor Margins Tick up
Ken Nagy, CFA
On November 1, 2011, Sierra Monitor Corporation (SRMC) the designer, manufacturer and seller of electronic safety and environmental instrumentation, reported financial results for its third quarter and nine months ended September 30, 2011.
Sierra Monitor reported mixed results with year over year third quarter revenues increasing $51,322 or 1.4 percent, to $3.803 million from $3.752 million for the comparable quarter of 2010.
Still, the Company’s third quarter 2011 net income dropped 22.6 percent or $53,010 to $181,736 from $234,746 during the three months ended September 30, 2010.
The decrease was primarily due to slightly lower margins as well as a marginal increase in total operating expenses. Gross margin decreased moderately year over year from 59.3 percent to 58.9 percent for the three months ended September 30, 2011.
Based on a weighted average number of basic common shares of 9.901 million, basic net income per share resulted in $0.02 per share. This was stable compared to basic net income per share of $0.02 on a weighted average number of basic shares of 11.446 million during the three months ended September 30, 2010.
For the nine months ended September 30, 2011, year over year revenues improved by 17.5 percent or $1.783 million to $11.956 million from $10.172 million for the comparable nine months of 2010.
Net income for the nine months improved by $413,108 year over year to $725,560 for the nine months ended September 30, 2011. This compares to $312,452 for the comparable nine months of 2010.
Gross margin for the nine months improved marginally to 59.4 percent compared to gross margin of 58.9 percent for the nine months ended September 30, 2010.
Sierra Monitor’s balance sheet continued to improve with cash and equivalents increasing year over year by $85,930 to $1.731 million and working capital improving by $688,425 to $5.404543 million for the period ended September 30, 2011.
Likewise, the Company had trade receivables of $1.836 million as of September 30, 2011 and Days Sales Outstanding was 40 days.
Although results for the three months were mixed, it should be noted that the Company’s strategic decision to open a Dubai based sales office was confirmed with the receipt of Serra Monitor’s largest single order in history during the quarter.
The entire $2.5 million order to supply fire and gas instrumentation, combined with ancillary monitoring and alarm equipment, for a major Middle East project, is anticipated to be shipped during the first quarter of 2012.
Similarly, it should further be noted that Sierra Monitor continues its plan to emphasize expansion of its international sales channels.
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