Sierra Monitor Delivers Record Sales and Income - Analyst Blog

Ken Nagy, CFA

Sierra Monitor Delivers Record Sales and Income

Sierra Monitor Corporation (SRMC) designs and develops hazardous gas monitoring devices for the protection of personnel and facilities in industrial work places. Through its subsidiary FieldServer Technologies the firm has branched into protocol translation technology, which enables machine to machine (M2M) communication in energy and building automation applications. This high growth business should complement the gas detection business, while not sacrificing market or margins. FieldServer should see a tailwind as a result of the push toward zero net energy building designs.

On March 8th 2011SRMC announced financial results for the fourth quarter and twelve months ended December 31, 2010. The firm delivered record sales and record net income in both the fourth quarter and the full year of 2010. This was the fifth consecutive year of positive net income.

The firm introduced new products in each of its product lines, repurchased and retired approximately thirteen percent of outstanding shares and ended the year with a strong balance sheet and a healthy backlog. Products were installed in a number of high profile facilities including the World Cup soccer stadiums in South Africa; the Empire State building; KAUST University in Saudi Arabia; Kuwait Oil pipelines; and the roof tops of hundreds of major discount retailers such as Target and Wal-Mart.

Fieldserver Technologies
FieldServer Technologies consist of the Fieldserver and ProtoCessor business units. This technology targets commercial buildings infrastructure and essentially makes products that provide interoperability from device to enterprise networks. The result is the firm has a grasp on everything from energy efficiency and automation to roof-top air conditioning and lighting controls.

Research and spending over the next several years will focus on “zero net energy” building designs. The WBCSD (World Business Council for Sustainable Development) identified buildings as one of the five main users of energy where “mega trends” are needed to transform energy efficiency. They account for 40% of primary energy in most countries covered by this project and consumption is rising. The International Energy Agency (IEA) estimates that current trends in energy demand for buildings will stimulate about half of energy supply investments to 2030. If building site energy consumption in China and India grows to current US levels, China’s and India’s consumption will be respectively about four and seven times greater than they are today. Energy consumption will grow dramatically without action to improve energy efficiency substantially. The construction boom, especially in China, is increasing energy demand significantly, but economic development and other factors are adding to the challenge because they also increase buildings’ energy needs.

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