Sutron (STRN) Reports Second Quarter Operating Results

STERLING, VA — (Marketwire) — 08/13/12 — Sutron Corporation (NASDAQ: STRN), a leading provider of hydrological, meteorological and oceanic monitoring products, systems and services, announced today its financial results for the six months ended June 30, 2012.

Summary

For the second quarter ended June 30, 2012, the Company reports net income of $551,670 or $.12 per share as compared to a net loss of $21,372 or $.0 per share in the second quarter in 2011. Revenues for the second quarter ended June 30, 2012 were up 77 percent to $6,804,168 as compared to $3,848,508 in the second quarter of 2011. In the second quarter, revenues of approximately $511,000 and net income of approximately $30,000 were attributable to the MeteoStar acquisition that was consummated on May 23, 2012. Gross profit for the second quarter of 2012 as a percentage of revenues was 41 percent as compared to 36 percent for the same quarter a year ago. Operating expenses for the second quarter of 2012 were $1,975,177, an increase of 36 percent compared to operating expenses of $1,453,300 for the same quarter a year ago. The increase in operating expenses was the result of approximately $160,000 of acquisition costs relating to the purchase of MeteoStar, increased sales commissions of $163,000 and increased expenses of approximately $100,000 due to MeteoStar operations subsequent to the acquisition.

Net income for the six months ended June 30, 2012 was up 70 percent to $475,561 or $.10 per share as compared to net income of $280,205 or $.06 per share for the comparable period in 2011. Revenues for the six months ended June 30, 2012 were up 21 percent to $10,541,349 as compared to $8,729,127 in 2011. Gross profit for the six months ended June 30, 2012 as a percentage of revenues was 40 percent as compared to 37 percent in 2011. Operating expenses for the six months ended June 30, 2012 were $3,533,261 as compared to operating expenses of $2,847,473 in 2011. The increase in operating expenses was the result of acquisition costs relating to the purchase of MeteoStar, increased expenses due to MeteoStar operations, increased sales commissions and increased R&D activities.

For the six months ended June 30, 2012, customer orders or bookings totaled $14,092,000 as compared to bookings of $6,379,000 for the six months ended June 30, 2011. The backlog of customer orders at June 30, 2012 was $13,150,000 as compared to a backlog of $9,397,000 at June 30, 2011.

Outlook

“We are pleased to report Q2 revenue growth of 77 percent and net income of $551,670 as compared to a loss of $21,372 in Q2 of 2011. These results are reflective of our significantly improved business base and do not yet include a full quarter contribution from our recent MeteoStar acquisition,” said Raul McQuivey, Sutron’s Chairman and Chief Executive Officer. “Our bookings for the first six months of 2012 were $14,092,000, up 121 percent over the comparable period in 2011, and represent 78 percent of bookings for the full year 2011. Based on strong increased backlog and planned shipments, as well as a full quarter of MeteoStar operations, we anticipate strong third quarter revenues. As stated in previous releases, fluctuations in bookings and revenue are not uncommon to our business which is highly project driven and subject to governmental approval and funding processes. We are encouraged regarding our opportunities as we continue to see significant demand both domestically and internationally for our products and systems. Our balance sheet remains strong with no debt and approximately $6.6 million of cash on hand which positions us to fund our growth both organically and through select acquisitions.”

“We are very pleased with the acquisition of MeteoStar. Along with a strong customer base and suite of innovative products and services, the acquisition included 36 employees that bring to Sutron over 200 man years of expertise in the Global Meteorological Market. In May and June, we had several important meetings with key customers that we expect will result in expanded revenue opportunities. We are now in a position to expand dramatically our meteorological market. We also plan to grow MeteoStar’s Air Quality and Water Quality monitoring sales both domestically and internationally.”

About Sutron Corporation

Sutron Corporation, headquartered in Sterling, Virginia, is a project driven business. 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. We provide hydrological, meteorological and oceanic real-time data collection products, systems, software and services to a diversified customer base of federal, state, local and foreign governments, engineering companies, universities and hydropower companies. Over 60,000 Sutron stations have been installed worldwide. We manufacture our dataloggers, satellite transmitters and sensors. Our product and systems are designed to offer commonality of components and uniform interfaces in order to build modular, open, distributed systems that provide excellent performance regardless of the number of sensors or field stations.

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. 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 FINANCIAL SUMMARY
                              FINANCIAL SUMMARY

                                                       (Unaudited)
                                                   For the Three Months
                                                     Ended March 31,
HIGHLIGHTS OF OPERATING RESULTS                    2012           2011
--------------------------------------------- -------------- --------------

Revenues                                      $    6,804,168 $    3,848,508
Cost of sales                                      4,027,666      2,468,422
                                              -------------- --------------
Gross profit                                       2,776,502      1,380,086
Operating expenses                                 1,975,177      1,453,300
                                              -------------- --------------
Operating income                                     801,325        (73,214)
Interest and other income                             15,345         24,842
                                              -------------- --------------
Income before income taxes                           816,670        (48,372)
Income tax expense (benefit)                         265,000        (27,000)
                                              -------------- --------------
Net income                                    $      551,670 $      (21,372)
                                              ============== ==============
PER SHARE AMOUNTS:
Basic income per share                        $         0.12 $         0.00
                                              ============== ==============
Diluted income per share                      $         0.11 $         0.00
                                              ============== ==============

                                                       (Unaudited)
                                                    For the Six Months
                                                      Ended June 30,
HIGHLIGHTS OF OPERATING RESULTS                    2012           2011
--------------------------------------------- -------------- --------------

Revenues                                      $   10,541,349 $    8,729,127
Cost of sales                                      6,338,255      5,500,416
                                              -------------- --------------
Gross profit                                       4,203,094      3,228,711
Operating expenses                                 3,533,261      2,847,473
                                              -------------- --------------
Operating income                                     669,833        381,238
Interest and other income                             26,728         42,966
                                              -------------- --------------
Income before income taxes                           696,561        424,204
Income tax expense (benefit)                         221,000        144,000
                                              -------------- --------------
Net income                                    $      475,561 $      280,204
                                              ============== ==============
PER SHARE AMOUNTS:
Basic income per share                        $         0.10 $         0.06
                                              ============== ==============
Diluted income per share                      $         0.09 $         0.06
                                              ============== ==============

                               Balance Sheets

                                               (Unaudited)      (Audited)
                                                June 30,      December 31,
                                                  2012            2011
                                             --------------  --------------

ASSETS
Current Assets:
  Cash and cash equivalents                  $    4,813,154  $    8,737,543
  Restricted cash and cash equivalents              891,588         760,037
  Certificates of deposit                           926,227         924,294
  Accounts receivable, net                        6,430,900       6,754,434
  Inventory                                       4,159,747       3,520,530
  Prepaid items and other assets                    475,522         322,369
  Income taxes receivable                           326,181         383,943
  Deferred income taxes                             585,000         481,000
                                             --------------  --------------
    Total Current Assets                         18,608,319      21,884,150

Property and Equipment, Net                       1,721,323       1,524,880
                                             --------------  --------------
Other Assets
  Goodwill                                        4,628,435         570,150
  Other Assets                                       98,498         103,591
                                             --------------  --------------
    Total Assets                             $   25,056,575  $   24,082,771
                                             ==============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                           $      743,436  $      799,007
  Accrued payroll                                   326,368         337,563
  Other accrued expenses                          1,825,313       1,573,409
  Billings in excess of costs and estimated
   earnings                                         483,587         201,015
                                             --------------  --------------
    Total Current Liabilities                     3,378,704       2,910,994
Long-Term Liabilities
  Deferred rent                                   1,025,757       1,127,860
  Deferred income taxes                              76,000          69,000
                                             --------------  --------------
    Total Long-term Liabilities                   1,101,757       1,196,860
                                             --------------  --------------
    Total Liabilities                             4,480,461       4,107,854
                                             --------------  --------------
Stockholders' Equity
  Common stock, 12,000,000 shares
   authorized; 4,724,632 and 4,704,632
   issued and outstanding                            47,247          47,047
  Additional paid-in capital                      4,316,865       4,173,828
  Retained earnings                              16,406,112      15,930,551
  Accumulated other comprehensive loss             (194,110)       (176,509)
                                             --------------  --------------
    Total Stockholders' Equity                   20,576,114      19,974,917
                                             --------------  --------------
    Total Liabilities and Stockholders'
     Equity                                  $   25,056,575  $   24,082,771
                                             ==============  ==============

Contact:
Sidney Hooper
(703)406-2800