Arrhythmia Research Technology Inc Reports Operating Results (10-Q)
Arrhythmia Research Technology Inc has a market cap of $21 million; its shares were traded at around $7.86 with a P/E ratio of 56.1 and P/S ratio of 1. The dividend yield of Arrhythmia Research Technology Inc stocks is 0.8%. Arrhythmia Research Technology Inc had an annual average earning growth of 3.8% over the past 10 years.HRT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Revenue for the three months ended March 31, 2010 was $5,585,360 versus $4,683,454 for the three months ended March 31, 2009, an increase of 19%. Revenues related to the license of the Company s SAECG product accounted for $50,000 in the first three months of 2010. Micron s medical sensors and snaps with silver surcharge revenue increased by $353,000 and high volume precision molded products and other miscellaneous sales increased by $53,000. The change in revenues from sensors and snaps is due to increased volume in sensors. Revenue from the Micron Integrated Technology s (MIT) product life cycle management programs increased $446,000 due to increased volume with our defense industry customers. The MIT division s revenue is derived from the custom molding, precision metal machining and mold making activities.
Cost of sales was $4,601,212 for the three months ended March 31, 2010 as compared to $3,739,132 for the same period in 2009. The cost of sales was 82% of revenue for the three months ended March 31, 2010 as compared to 80% for the same period in 2009. The stabilization and reduction of costs remains a priority of management. The inability to increase our sensor prices in the competitive global marketplace hinders passing additional material and utility cost increases to our customers, excluding the escalating cost of silver. The increased cost of silver negatively affects margins as the higher cost equally increases the revenues and cost of sales. Management continues to investigate ways to improve the overall gross margin by elimination of low contribution products while increasing sales of higher margin product.
General and administrative expense was $603,997 for the three months ended March 31, 2010 as compared to $575,505 for the same period in 2009. The general and administrative expense was 11% of sales in the three months ended March 31, 2010 and 12% for the same period in 2009. The expense is expected to be higher in 2010 as it will include auditor attestation costs related to Section 404 of the Sarbanes-Oxley Act of 2002 compliance.
Other income (expense), net was $122 versus expense of ($13,836) for the three months ended March 31, 2010 and 2009, respectively. Interest income in the period ended March 31, 2010 was offset by a loss on the disposal of assets of $2,939 compared with a loss on disposal of assets of $9,304 and interest expense of $10,253 associated with an equipment note in the period ended March 31, 2009.
Working capital was $8,821,094 at March 31, 2010 compared to $8,922,328 at December 31, 2009, a decrease of $101,234. During the quarter our capital investment and payment of a dividend exceeded our operating cash flow. Capital investment will decrease working capital with any significant investment resulting from future acquisition of assets or businesses, significant expansion of production capacity, a medical study, or further software development. Additionally, capital investment in manufacturing equipment is expected to reduce working capital over the near term.
During the period ended March 31, 2010, the Board of Directors declared and paid a cash dividend of $0.06 per share for a total of $161,328.
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