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Sterion, Inc. (STEN) Reports Third Quarter 2004 Results And Earnings Outlook


10/19/2005 5:11:20 PM

MINNEAPOLIS, Aug. 4 /PRNewswire-FirstCall/ -- Sterion Incorporated , today reported results for the third fiscal quarter ended June 30, 2004. Sales for the third quarter ended June 30, 2004 were $2,796,363, a 23.2% increase over the $2,269,966 in sales for the third quarter ended June 30, 2003. Net income for the third quarter ended June 30, 2004, was $78,566 or $0.05 per share, compared to net income of $101,729, or $.06 per share for the third quarter 2003. Net income for the third quarter 2003 was positively impacted by a gain of $550,000 from the sale of assets. Third quarter operating income increased to a profit of $156,121, compared to a loss of $349,921 in the third quarter of last year. The company's gross profit margin percentage improved to 42.4% for the third quarter of fiscal year 2004 from 28.7% in the third quarter of last year. The improvement in gross profit margin is principally the result of the positive impact of the Company's LifeSafe Services business offset by erosion in gross profit margins in the medical products business.

Commenting on the third-quarter 2004 results, Kenneth Brimmer, company Chairman and CEO, noted, "We are pleased to have improved our operating profit for the quarter while continuing to make investments in our future. Our private-label medical business continues to grow. Finally, we are enthusiastic about our LifeSafe Services business, which continues to perform better than we originally projected and we look forward to an increased earnings contribution from this business unit in future periods."

The Company's current estimates for the fiscal year ending September 30, 2004 is for total revenue of approximately $11 million with earnings per share in the range of $.12 to $.14 per share. Sterion also updated and raised its estimates for the fiscal year ending September 30, 2005, in part to reflect its July 1, 2004 acquisition of Burger Time assets. Sterion now anticipates that total revenue for 2005 will exceed $16 million and that 2005 earnings per share will be in the range of $.50 to $.60 per share. These revised earnings estimates are based on a combination of current revenue trends, including the addition of revenue from the Burger Time business unit, a growing contribution from LifeSafe Services, and expected improvements in profit margins from the Company's medical products business unit.

Sterion Incorporated, headquartered in Minnesota, is a diversified business. Business units include its medical products group that is comprised of disposable operating room support products, private-label manufacturing, and the Surgidyne brand of surgical wound drainage products. Within its medical product group the company also provides contract manufacturing services for a surgical instrument sterilization container system. Through LifeSafe Services, the company provides business customers emergency oxygen equipment and related products and services. On July 1, 2004 the Company acquired an 11-unit chain of fast-food, drive-through restaurants operated under the Burger Time name.

Sterion Incorporated common stock is traded on the Nasdaq SmallCap Market under the symbol STEN. More information about Sterion is available at the Company's website: http://www.sterion.com/ . Except for historical information contained herein, the disclosures in this news release are forward-looking statements that could be affected by certain risks and uncertainties, and actual results may differ materially, depending on a variety of factors. These risks are described in the Company's Annual Report on Form 10-KSB for the year ended September 30, 2003 and other filings with the Securities and Exchange Commission. The Company undertakes no duty or obligation to update any of the forward- looking statements after the date of this release.

STERION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) For the Three Months Ended For the Nine Months Ended June 30, June 30, 2004 2003 2004 2003 Sales, net $2,796,363 $2,269,966 $7,700,316 $6,966,588 Cost of goods sold 1,611,860 1,619,412 4,562,268 4,099,360 Gross profit 1,184,503 650,554 3,138,048 2,867,228 Selling, general and administrative expenses 1,028,382 1,000,475 2,929,991 3,169,210 Income (loss) from operations 156,121 (349,921) 208,056 (301,982) Other income (expense) Gain on sale of certain assets of the sterilization container system product line 550,000 550,000 Interest expense (48,390) (25,961) (130,599) (94,962) Investment income 1,086 2,811 6,786 2,944 Total other income (expense) (47,304) 526,850 (123,813) 457,982 Income before income taxes 108,817 176,929 84,244 156,000 Provision for income taxes 30,250 75,200 21,250 68,200 Net income 78,566 101,729 62,993 87,800 Net income per share Basic $.05 $.06 $.04 $.05 Diluted $.04 $.06 $.03 $.05 Weighted average common and common equivalent shares outstanding Basic 1,738,618 1,729,537 1,738,527 1,729,537 Diluted 1,847,950 1,817,800 1,865,633 1,865,917 STERION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, September 30, 2004 2003 (unaudited) (audited) ASSETS CURRENT ASSETS Cash and cash equivalents $603,640 $1,762,819 Accounts receivable, net 1,837,507 994,629 Inventories, net 3,338,742 3,176,910 Deferred income taxes 144,000 144,000 Other current assets 431,298 270,501 Total Current Assets 6,355,187 6,348,859 PROPERTY AND EQUIPMENT, NET 3,748,745 1,568,847 OTHER ASSETS Intangible assets, net 1,195,576 118,105 Goodwill 428,579 356,439 Cash surrender value of life insurance, net of loans 12,865 41,351 Total Other Assets 1,637,020 515,895 Total Assets $11,740,952 $8,433,601 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Line of credit, bank $ 1,197,034 $- Current portion of long-term debt 313,308 116,820 Accounts payable 656,949 731,300 Accrued payroll and related taxes 379,006 244,892 Deferred revenue and service cost liability 832,797 - Other accrued expenses 163,907 57,658 Total Current Liabilities 3,543,001 1,150,670 LONG-TERM LIABILITIES Long-term debt, net of current portion 1,857,978 1,236,933 Deferred income taxes 44,000 44,000 Total Liabilities 1,901,978 2,431,603 STOCKHOLDERS' EQUITY Capital stock, $.01 par value, 20,000,000 common shares authorized, 5,000,000 undesignated shares authorized, 1,854,294 and 1,800,118 common shares issued and 1,738,618 and 1,738,418 outstanding 17,386 17,384 Additional paid-in capital 3,482,923 3,144,494 Retained earnings 2,977,988 2,914,997 Deferred compensation (182,324) (74,877) Total Stockholders' Equity 6,295,973 6,001,998 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,740,952 $8,433,601

Sterion Incorporated

CONTACT: Robbin Metz, Marketing Manager of Sterion Incorporated,+1-763-755-9516


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