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

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Nov 04, 2010
BTU International Inc. (BTUI, Financial) filed Quarterly Report for the period ended 2010-10-03.

Btu International Inc. has a market cap of $72.7 million; its shares were traded at around $7.76 with and P/S ratio of 1.6. BTUI is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Research, Development and Engineering (RD&E). RD&E expenses increased by $0.2 million, or 14.7%, from $1.4 million in the third quarter of 2009 to $1.6 million in the third quarter of 2010. The increases relate principally development of our products for the solar industry.

Selling, General and Administrative (SG&A.) SG&A expenses for the first nine months of 2010 as compared to the same period in 2009 increased by $3.1 million, or 23.4%, from $13.4 million to $16.5 million. This increase was primarily the result of increased commission expense from increased revenues of 64.2% for the first nine months of 2010 as compared to the same period in 2009.

Research, Development and Engineering (RD&E). RD&E expenses decreased by $0.5 million, or 8.9 %, to $4.8 million for the first nine months of 2010, compared to $5.3 million for the same period in 2009. The reduction in R&D is the result of the Companys actions of reducing, Research and Development prototype model costs, as new products were introduced in 2010.

As of October 3, 2010, we had $21.8 million in cash and cash equivalents, a decrease of $3.6 million, compared to $25.4 million at December 31, 2009.

During the nine months ended October 3, 2010, the Company used net cash of approximately $2.5 million in operating activities. This use of cash was primarily the result of an increase in accounts receivable of $7.2 million and an increase in inventory of $2.8 million, offset by depreciation and amortization of $1.7 million, an increase in accounts payable of $3.6 million, stock-based compensation expense of $1.0 million, a decrease of other assets of $0.1million, and an increase in other current liabilities of $1.1 million.

The Company has a mortgage note that is secured by its real property in Billerica, MA. The original amount of the note was $10 million. This mortgage note payable has a balloon payment of $6.7 million due and payable at maturity on December 23, 2015. On September 9, 2010, the Company signed a Loan Modification Agreement with the same bank that that the mortgage was entered into on December 23, 2003 and amended on March 30, 2006 (see below). The 2010 modifications resulted in lowering the annual interest rate from 6.84% to 5.50%, and lowering the monthly payment from $76,280 to $69,000. The mortgage note had an outstanding balance at October 3, 2010 of approximately $8.8 million.

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