Sierra Monitor Enjoys A Power Quarter

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Sierra Monitor Enjoys A Power Quarter

Ken Nagy, CFA


On May 2, 2012, Sierra Monitor Corporation (SRMC), the designer, manufacturer and seller of electronic safety and environmental instrumentation, reported financial results for its first quarter ended March 31, 2012.

Sierra Monitor reported strong results with year over year first quarter revenues increasing $2.033 million or nearly 49 percent to record first quarter sales of $6.201 million from $4.168 million for the comparable quarter of 2011.

The jump in revenues during the quarter was primarily a result of the manufacturing and shipping of Sierra Monitor’s largest gas detection instrumentation order in the Company's history.

The Company’s first quarter 2012 GAAP net income rocketed nearly 81 percent or $256,433 to record first quarter net income of $573,056 from $316,623 during the three months ended March 31, 2011.

Here again, the jump during the quarter was a result of the $2.5 million gas detection instrumentation order, the largest order in the Company's history.

Still, gross margin dropped sharply year over year from 60.2 percent to 50.9 percent for the three months ended March 31, 2012.

Based on a weighted average number of basic common shares of 9.901 million, basic net income per share resulted in $0.06 per share during the first quarter fiscal 2012.  This compared to basic net income per share of $0.03 on a weighted average number of basic shares of 9.896 million during the three months ended March 31, 2011.

Non-GAAP net income for the first quarter of 2012 increased year over year by over 60 percent to $682,214 and non-GAAP earnings per basic share for the first quarter of 2011 jumped to $0.07 compared to $0.04 for the three months ended March 31, 2011.

Sierra Monitor’s balance sheet remained strong with cash and equivalents of $513,391 and net accounts receivables of $4.116 million, which reflects the impact of the large gas detection instrumentation shipment in the first quarter.  This compares to cash and equivalents of $1.212 million and net accounts receivables of $1.647million for the three months ended December 31, 2011.

Likewise, the Company had a Days Sales Outstanding in Accounts Receivable of 44 days.

Working capital for the quarter improved sequentially by $612,374 to $6.241 million from $5.628 million for the period ended December 31, 2011.

It should be noted that during the quarter, Sierra Monitor expanded the Company’s coverage in significant global gas detection markets by opening a Singapore sales office. The addition, combined with Sierra’s Middle East and Latin America offices, is the Company’s third international location.

Similarly, the Company’s previous strategic decision to open a Dubai based sales office was confirmed with the receipt of Serra Monitor’s largest single order of $2.5 million for a major Middle East project.

Along the same lines, during the quarter, the Company received an order valued at over $100,000 for gas and flame detection systems for a pipeline project in Peru.

Correspondingly, it should further be noted that Sierra Monitor continues its plan to emphasize expansion of its international sales channels.

Finally, during the first quarter the Company noted that it qualified its infrared-based gas monitors to be deployed worldwide by a global leader in sterilization services for detection of leaks of highly toxic and flammable Ethylene Oxide in storage and process systems.

For a free copy of the full research report, visit scr.zacks.com.
 

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