Sutron Corporation has a market cap of $24.3 million; its shares were traded at around $5.9 with a P/E ratio of 21.5 and P/S ratio of 1.2.
Highlight of Business Operations:Revenues for the second quarter ended June 30, 2012 increased 77% to $6,804,168 from $3,848,508 in 2011. Net sales and revenues are broken down between sales of standard products and sales of systems and services. Standard products had a net sales and revenue decrease of 11% to $1,607,404 in 2012 from $1,798,705 in 2011 due to decreased sales to federal agencies. Net sales and revenues for systems and services increased 154% to $5,196,764 in the second quarter of 2012 from $2,049,803 in 2011. The increase is attributed to an increased project backlog and activity in 2012 as compared to 2011 and to approximately $511,000 of post-acquisition revenues relating to our new MeteoStar Division.
Revenues for the six months ended June 30, 2012 increased 21% to $10,541,349 from $8,729,127 in 2011. Net sales and revenues are broken down between sales of standard products and sales of systems and services. Standard products had a net sales and revenue decrease in 2012 of 2% to $4,024,379 from $4,087,328 in 2011 due to decreased sales to federal customers. Net sales and revenues for systems and services increased 40% to $6,516,970 from $4,641,799 in 2011 primarily due to increased backlog and project activity.
Overall domestic revenues increased 3% to $4,154,916 for the six months ended June 30, 2012 versus $4,034,621 in 2011 due primarily to increased project activity from the MeteoStar acquisition. International revenues increased 36% to $6,386,433 for the six months ended June 30, 2012 versus $4,694,506 in 2011. The increase is attributed to an increase in the backlog and increased project activity.
Selling, general and administrative expenses were $2,352,360 in 2012 as compared to $1,848,697 in 2011, an increase of $503,663 or 27%. Selling, general and administrative expenses as a percentage of revenues increased to 22% for the six months ended June 30, 2012 from 21% in 2011. The increase in expenses is primarily attributed to $180,000 of acquisition related expenses, increased agent commissions of $155,000 and increased expenses of approximately $100,000 due to the addition of MeteoStar.
Cash and cash equivalents were $4,813,154 at June 30, 2012 compared to $8,737,543 at December 31, 2011. Working capital decreased to $15,229,615 at June 30, 2012 compared with $18,973,156 at December 31, 2011. Net cash provided by operating activities was $394,908 for the six months ended June 30, 2012 as compared to net cash used by operating activities of $144,747 for the six months ended June 30, 2011. The increase was primarily due to an increase in net income, a reduction in accounts receivable and an increase in billings in excess of costs and estimated earnings. Net cash used by investing activities was $4,400,569 for the six months ended June 30, 2012 as compared to net cash used by investing activities of $316,776 for the six months ended June 30, 2011. The increase is primarily due to the acquisition of MeteoStar. Net cash provided by financing activities was $98,873 for the six months ended June 30, 2012 as compared to net cash provided by financing activities of $46,388 for the six months ended June 30, 2011. The increase in cash provided in 2012 was primarily due to proceeds from the exercise of employee stock options. We have a revolving credit facility of $3,000,000 with Branch Banking & Trust. We are permitted to borrow based on accounts receivable and inventory according to pre-established criteria. The credit facility expires on September 5, 2013 and is secured by substantially all assets of the Company. Borrowings bear interest at the bank s prime rate. During the second quarter of 2012, there were no borrowings on the line of credit. We frequently bid on and enter into international contracts that require bid and performance bonds. At June 30, 2012 and December 31, 2011, a commercial bank had issued standby letters of credit in the amount of $1,017,409 and $898,013 that served as either a bid or performance bond. The amount available to borrow under the line of credit was reduced by this amount. Management believes that its existing cash resources, cash flow from operations and short-term borrowings on the existing credit line will provide adequate resources for supporting operations during fiscal 2012. Although there can be no assurance that our revolving credit facility will be renewed, management believes that, if needed, it would be able under current circumstances to find alternative sources of funds on commercially acceptable terms.
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