BTU International Inc. Reports Operating Results (10-Q)

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May 05, 2010
BTU International Inc. (BTUI, Financial) filed Quarterly Report for the period ended 2010-04-04.

Btu International Inc. has a market cap of $54.9 million; its shares were traded at around $5.93 with and P/S ratio of 1.2. BTUI is in the portfolios of Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Net Sales. Net sales in Q1 2010 increased by $7.4 million or 75.3% compared to Q1 2009. Net sales in Q1 2010 for the Companys alternative energy systems increased by 37.5%, or $2.2 million, to $7.9 million compared to $5.8 million in Q1 2009. Net sales in Q1 2010 for the Companys electronics market systems increased by 260% or $5.5 million to $7.6 million compared to $2.1 million in Q1 2009. Net sales in Q1 2010 for the Companys parts, service and other market systems decreased by 15.8%, or $0.3 million, to $1.6 million from $1.9 million in Q1 2009. The alternative energy systems growth in Q1 2010 as compared to the same quarter in 2009 is the result of increased revenue for both nuclear and solar products. The substantial growth in electronic market systems revenue, particularly in China in Q1 2010, as compared to Q1 2009, represents the continuing recovery of demand for our electronic products from the economic recession, for which Q1 2009 was a low point.

Selling, General and Administrative. SG&A expenses increased in Q1 2010 versus Q1 2009 by $1.6 million, or 40.1%, from $3.9 million in Q1 2009 to $5.5 million in Q1 2010. Approximately 40%, or $0.6 million, of the Q1 2010 increase occurred in commission expense as the result of increased revenues. The remaining portion or $1.0 million of the Q1 2010 increase occurred in each of the expense functions of service, sales, marketing and administration related to the volume increase and the hiring of critical personnel in support of the Companys strategies related to the alternative energy market.

Research, Development and Engineering RD&E expenses decreased by approximately $0.3 million, or 17.1%, from $2.0 million in Q1 2009 to $1.6 million in Q1 2010. The decrease is the result of the Companys actions of reducing R&D prototype model costs, as new products were introduced.

As of April 4, 2010, we had $21.9 million in cash and cash equivalents, a decrease of $3.5 million compared to $25.4 million at the end of 2009.

During Q1 2010, The Company used net cash of approximately $3.3 million from operating activities. This use of cash was primarily the result of a reduction in customer deposits of $1.9 million, an increase in restricted cash of $1.1 million, an increase in accounts receivable of $0.5 million, a decrease in accrued expenses of $0.4 million, and a decrease in accounts payable of $0.3 million, and our net loss of $0.3 million; offset by depreciation and amortization of $0.5 million, an increase in reserves of $0.4 million, and stock based compensation of $0.3 million.

On March 30, 2006, the Company entered into a mortgage note that is secured by our real property in North Billerica, MA, in the amount of $10 million. The mortgage note requires monthly payments of $76,280, which includes interest calculated at the rate of 6.84% per annum. This mortgage note payable has a balloon payment of $6.8 million due and payable at maturity on December 23, 2015. The mortgage note had an outstanding balance at April 4, 2010 of approximately $8.9 million.

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