HOUSTON, Nov. 3, 2008 (GLOBE NEWSWIRE) -- American Electric Technologies, Inc. (Nasdaq:AETI), the premium supplier of custom-designed power distribution and control solutions for the traditional and alternative energy industries, announced today that net sales for the third quarter of 2008 were $14.8 million compared with $13.1 million for the third quarter of 2007, an increase of $1.7 million or 13.0%. Net income for the third quarter of 2008 was $0.013 million, or 0.2 cents per basic and diluted share, compared with $0.3 million, or 4 cents per basic and diluted share, for the same quarter last year. For the nine months ending September 30, 2008, net sales, net income and basic and fully diluted earnings per share were $48.4 million, $0.7 million and $0.09, respectively compared to $39.2 million, $1.7 million and $0.25, respectively in the comparable prior year period. The reported sales and earnings include the results of operations from our merger partner American Access Technologies, Inc. (AAT) since May 15, 2007. The 2007 quarter and nine months results included non-recurring pre-tax gains of $0.1 and $1.0 million, respectively, attributable to the sale of marketable securities.
As previously announced, AETI experienced production delays in its Gulf Coast operations due to preparation for and clean up after Hurricanes Ike and Gustav and estimates that revenues for the third quarter of 2008 were reduced by approximately $2.5 million as a result. The 2008 third quarter included hurricane related costs of approximately $100,000 that are not expected to be reimbursed by insurance.
"The disruption caused by the September hurricanes delayed the improvement in operating performance that we had anticipated. However, the dedication our people showed in storm preparation and recovery has restored the company's Gulf Coast facilities to full capacity in a relatively short time," said Arthur Dauber, AETI's chief executive officer. "We believe these efforts will result in full year sales exceeding $63 million and that our operating margins will continue to improve as we replace new school construction business with more value added products and services."
Outlook for Fiscal 2008 and early 2009
The company's sales through September 30, 2008 represent a 23% increase over the comparable prior year of which 9% is ascribable to the merger with AAT. As noted above, management expects that sales will exceed $63 million for the year and that full year profitability will reflect a substantial improvement over 2007. AETI expects recent margin improvements to continue, particularly in light of the reduced exposure to the new school construction market.
Operations have seen some impact from supplier delivery delays, particularly in the Technical Products and Services segment. Inflationary pressure on raw materials and components has moderated recently in the face of the turmoil in the global financial and commodity markets. Although the Company has not experienced any decline in its backlog as a result of the recent volatility, management believes that a slowdown in economic activity is possible and accordingly has recently initiated action plans to reduce overhead costs and conserve working capital. The Company believes these actions will sustain its strong financial position in the future without negatively impacting potential growth opportunities. Moreover, management believes that traditional energy and Chinese markets will remain healthy and that alternative energy markets continue to look promising. Accordingly, the Company's recent product development investments for these markets will continue.
Third Quarter and Nine Months ended September 30, 2008 AETI highlights:
* TP&S develops, manufactures, markets and services switchgear
and variable speed drives and other power distribution and
control equipment. The group offers technical services that
include system start-up and commissioning and global
service/support, as well as testing and maintenance services
(power infrastructure consulting, substation services, breaker,
switchgear and transformer services). TP&S generated 53% and 51%
of the company's total sales in the third quarter and nine
months ending September 30, 2008, respectively. TP&S third
quarter sales were $7.8 million compared with sales of $6.0
million in the same period of 2007, an increase of 29.5%. This
increase was largely due to the continued strength in sales to
all sectors of the global energy markets. As of September 30,
2008, the backlog for TP&S was approximately $15.9 million,
a 3.9% increase from the end of the 2007. Approximately 70
percent of this backlog should be realized by December 31, 2008.
This segment recently announced $5 million in contracts with
L-3 Westwood for the marine propulsion market of which $2.2
will benefit future quarters.
* AETI's Electrical & Instrumentation (E&I) Construction segment
installs electrical equipment for the energy, industrial,
marine, water/wastewater and commercial markets. E&I
Construction generated sales of $4.9 million in the third
quarter and $17.4 million for the first nine months, increases
of 1.0% and 19.2%, respectively, over the comparable 2007
periods. The rate of increase declined in the quarter due to
reduction in new school construction project revenues. However,
marine and wastewater treatment plant markets reflected stronger
activity levels. The backlog for the E&I Construction segment was
$8.9 million as of September 30, 2008, a decline of $9.8 million
from December 31, 2007. This reduction is consistent with AETI's
intention to reduce its exposure to the lower-margin new
school construction market. Approximately sixty percent of this
backlog should be realized in revenues over the remainder of this
fiscal year. The backlog associated with the new school
construction business is estimated to be down to only $1.7
million as of December 31, 2008.
* The AAT segment manufactures and markets zone cabling enclosures
and manufactures formed metals products. This segment reported
sales of $2.1 million for the third quarter, essentially
unchanged from 2007 levels. AAT has experienced a slow-down in
its custom fabricating market but has been able to augment sales
with improvements in the patented zone cabling and contract
manufacturing sectors. In the first quarter, AAT's capital
expenditures were approximately $0.7 million for shop equipment
intended to increase capacity and productivity. No results for
AAT were included for the period prior to its acquisition on
May 15, 2007 so nine months reported sales in 2008 reflect a
$2.7 million increase over the prior year. Year-to-date actual
sales levels are essentially unchanged from the prior year for
the AAT segment.
Joint Venture Highlights:
* In the third quarter of 2008, AETI recorded equity income of
$0.5 million, resulting from its 40 percent ownership in BOMAY,
AETI's joint venture in China that manufactures electrical
systems for the Chinese drilling market. BOMAY recorded sales
of $35 million for the first nine months of 2008 that are not
consolidated in the company's results. For the nine months
ending September 30, 2008 and 2007, AETI recorded equity income
of $1.5 million and $1.1 million, respectively.
* During July, 2008, BOMAY paid a dividend of $1 million to AETI
from its 2007 retained earnings.
AETI had borrowings of $4 million as of September 30, 2008, under its revolving credit facility, a reduction of $1 million from the previous quarter and December 2007 balance. AETI management believes existing cash, working capital and the $6 million unused availability from its credit facility combined with operating earnings will be sufficient to meet capital expenditures and working capital needs in the foreseeable future. In light of the recent turbulence in financial markets, AETI has implemented additional steps to optimize operating cash flow including the initiation of more rigorous credit and collection activities, inventory reduction plans and restriction of capital spending to necessity and high return projects.
AETI's unaudited consolidated income statement and balance sheet for the period are attached and detailed information on the financial results for the quarter ended September 30, 2008 is included in the company's Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission on November 10, 2008.
American Electric Technologies, Inc. (Nasdaq:AETI) is the premium supplier of custom-designed power delivery solutions to the traditional and alternative energy industries. AETI offers M&I Electric(tm) power distribution and control products, electrical services, and E&I Construction services, as well as American Access Technologies zone enclosures, and Omega Metals custom fabrication services. South Coast Electric Systems L.L.C., a subsidiary, services Gulf Coast marine and vessel customers.
AETI is headquartered in Houston and has global sales, support and manufacturing operations in Beaumont, Texas, Keystone Heights, Fla. and Bay St. Louis, Miss. In addition, AETI has minority interests in two joint ventures, which have facilities located in Xian, China, Singapore and Jakarta, Indonesia. AETI's SEC filings, news and product/service information are available at www.aeti.com.
Forward-Looking Statements
This press release contains forward-looking statements, as defined in Section 27A of the Securities Exchange Act of 1934, concerning our anticipated future revenues, profits, plans and objectives. While the Company believes that such forward-looking statements are based on reasonable assumptions, there can be no assurance that such future revenues, profits, plans and objectives will be achieved on the schedule or in the amounts indicated. Investors are cautioned that these forward-looking statements are not guarantees of future performance. Actual events or results may differ from the Company's expectations, and are subject to various risks and uncertainties, including those listed in Item 1A of the Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. The Company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future events make it clear that any of the projected results expressed or implied herein will not be realized.
AMERICAN ELECTRIC TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Unaudited
Nine Months Ended Three Months Ended
September 30, September 30,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net sales $48,377,640 $39,191,846 $14,827,591 $13,117,377
Cost of sales 42,441,583 34,462,736 13,362,901 11,584,858
----------- ----------- ----------- -----------
Gross profit 5,936,057 4,729,110 1,464,690 1,532,519
Operating
expenses:
General and
adminis-
trative 4,351,063 2,933,179 1,352,388 1,158,070
Selling 1,763,520 1,179,149 568,697 517,506
----------- ----------- ----------- -----------
Total
operating
expenses 6,114,583 4,112,328 1,921,085 1,675,576
----------- ----------- ----------- -----------
Income from
operations (178,526) 616,782 (456,395) (143,057)
Other income
(expense):
Equity in
income of
joint ventures 1,503,651 1,116,000 494,654 616,000
Gain on sale
of marketable
securities -- 1,022,157 -- 59,827
Interest
expense (218,397) (94,760) (70,234) (67,774)
Other, net 55,016 19,313 52,814 10,533
----------- ----------- ----------- -----------
Total other
income
(expense) 1,340,270 2,062,710 477,234 618,586
----------- ----------- ----------- -----------
Income
before
income tax
expense 1,161,744 2,679,492 20,839 475,529
----------- ----------- ----------- -----------
Income tax
expense 429,863 945,759 7,710 166,115
----------- ----------- ----------- -----------
Net income $ 731,881 $ 1,733,733 $ 13,129 $ 309,414
=========== =========== =========== ===========
Net income
per common
share:
Basic $ 0.096 $ 0.253 $ 0.002 $ 0.045
Diluted $ 0.095 $ 0.252 $ 0.002 $ 0.045
Weighted-average
shares:
Basic 7,658,916 6,858,625 7,660,265 6,837,942
Diluted 7,667,500 6,867,209 7,668,849 6,844,765
AMERICAN ELECTRIC TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Unaudited
Sept. 30, Dec. 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 799,489 $ 593,494
Accounts receivable-trade, net of
allowance of $584,330 and $558,660,
respectively 14,926,935 15,830,379
Accounts receivable-other 60,587 29,145
Income taxes receivable 271,468 819,403
Inventories, net 3,168,192 3,023,087
Costs and estimated earnings in
excess of billings on uncompleted
contracts 3,426,926 3,139,065
Prepaid expenses and other current
assets 186,954 401,815
Due from employees 74,506 61,104
Deferred income taxes 380,059 473,408
------------ ------------
Total current assets 23,295,116 24,370,900
Property, plant and equipment, net 5,753,051 5,357,526
Other assets, net 169,800 170,375
Advances to and investments in
joint ventures 4,825,077 4,265,738
Deferred tax asset 2,103,900 2,173,526
------------ ------------
Total assets $ 36,146,944 $ 36,338,065
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 4,937,860 $ 5,397,310
Accrued payroll and benefits 1,278,799 1,125,551
Other accrued expenses 578,647 586,879
Billings in excess of costs and
estimated earnings on
uncompleted contracts 1,747,844 2,582,375
Income tax payable 360,576 --
Short-term notes payable 626,588 500,000
------------ ------------
Total current liabilities 9,530,314 10,192,115
Notes payable 4,550,726 5,000,000
------------ ------------
Total liabilities 14,081,040 15,192,115
Commitments and contingencies
Stockholders' equity:
Common stock; $0.001 par value,
50,000,000 shares authorized,
7,663,434 shares issued and
outstanding 7,663 7,661
Additional paid-in capital 7,324,035 7,294,910
Accumulated other comprehensive
income 262,954 104,008
Retained earnings 14,471,252 13,739,371
------------ ------------
Total stockholders' equity 22,065,904 21,145,950
------------ ------------
Total liabilities and stock-
holders' equity $ 36,146,944 $ 36,338,065
============ ============