Q3 revenue down 37% on midstream oil & gas sector weakness
Backlog up 24% from power gen and downstream market sales progress
HOUSTON, Nov. 14, 2016 (GLOBE NEWSWIRE) -- American Electric Technologies, Inc. (NASDAQ:AETI), a leading supplier of power delivery solutions for the global energy industry, today announced its third quarter 2016 financial results.
Third quarter revenues were $8.7 million, down from $11.4 million in the second quarter of 2016 and down from $13.8 million in the third quarter of 2015. Revenues were impacted by the previously reported slowdown in customer spending in the midstream oil & gas market that impacted Q2 ending backlog and significant market pricing pressures experienced by the company.
The Company reported a net loss attributable to common shareholders in the third quarter of $2.7 million compared to the $0.1 million net income from the second quarter of 2016 and compared to the $0.1 million net income reported in the third quarter of 2015. The Company reported fully diluted loss from operations per share of $0.33 for the quarter compared to a fully diluted income of $0.01 per share in the second quarter of 2016 and compared to the fully diluted earnings of $0.01 per share reported in the third quarter of 2015.
“The reduced customer spending and the pricing pressures we saw in the midstream oil and gas market in Q1 and Q2 significantly impacted our profitability in Q3,” said Charles Dauber, AETI chief executive officer.
The Company reported a quarter ending backlog of $10.9 million, up 24% from the $8.8 million reported for the third quarter of 2015 but down slightly from the end of the second quarter of 2016.
The Company recently announced new contracts to provide its IntelliSafe™ arc-resistant switchgear to a major power generation equipment manufacturer for a 50MW power plant in the Midwest US and a follow-on order from a large Engineering, Procurement and Construction (EPC) firm for a New England LNG project which was booked in Q4. The Company also announced the shipment in Q3 of a highly customized control system for a biomass power generation project in Hawaii.
“Although the midstream market remains very challenging, the Company continues to execute on our strategy to penetrate the power generation and downstream oil and gas market, which now represents almost 60% of our backlog heading into Q4,” said Dauber. “We are also seeing a growing sales pipeline for M&I’s IntelliSafe medium voltage arc-resistant product in our target EPC and power generation sectors.”
The Company’s international joint ventures reported a net equity income of $0.2 million for the quarter all from BOMAY in China.
“We are pleased by the continued growth of our wholly owned international operations in Brazil, and with BOMAY’s continued profitability in a challenging Chinese market environment,” said Dauber.
The Company reported EBITDA, a non-U.S. GAAP measure, from operations of ($2.3) million for the quarter compared with $0.5 million in the second quarter of 2016 and compared with $0.4 million EBITDA in the third quarter of 2015. A reconciliation of this non-U.S. GAAP measure to our net income is set forth in the selected financial information below.
Conference Call
AETI will conduct a conference call at 11 a.m. EST on November 14, 2016 to discuss the results with analysts, investors and other interested parties. Individuals who wish to participate in the conference call should dial 888-601-3861, passcode 776368, in the United States and Canada. International callers should dial +1 913-312-1419, passcode 776368.
American Electric Technologies, Inc. (NASDAQ:AETI) is a leading provider of power delivery solutions to the global energy industry. AETI offers M&I Electric™ power distribution and control products, electrical services, and construction services.
AETI is headquartered in Houston and has global sales, support and manufacturing operations in Beaumont, Texas; and Rio de Janeiro, Macaé and Belo Horizonte, Brazil. In addition, AETI has minority interests in two joint ventures, which have facilities located in Xian, China and Singapore. 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 anticipated future domestic and international demand for our products, and other future 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 30, 2016. 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 | |||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net sales | $ | 8,673 | $ | 13,780 | $ | 28,415 | $ | 41,393 | |||||||
| Cost of sales | 9,124 | 11,219 | 27,549 | 34,505 | |||||||||||
| Gross profit | (451 | ) | 2,561 | 866 | 6,888 | ||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 145 | 276 | 864 | 504 | |||||||||||
| Selling and marketing | 466 | 546 | 1,759 | 1,642 | |||||||||||
| General and administrative | 1,587 | 1,523 | 3,914 | 4,046 | |||||||||||
| Total operating expenses | 2,198 | 2,345 | 6,537 | 6,192 | |||||||||||
| Income (loss) from operations | (2,649 | ) | 216 | (5,671 | ) | 696 | |||||||||
| Net equity income (loss) from foreign joint ventures’ operations: | |||||||||||||||
| Equity income (loss) from foreign joint ventures’ operations | 215 | 225 | 367 | 625 | |||||||||||
| Foreign joint ventures’ operations related expenses | (53 | ) | (103 | ) | (202 | ) | (310 | ) | |||||||
| Net equity income (loss) from foreign joint ventures’ operations | 162 | 122 | 165 | 315 | |||||||||||
| Income (loss) from operations and net equity income from foreign joint ventures’ operations | (2,487 | ) | 338 | (5,506 | ) | 1,011 | |||||||||
| Other income (expense): | |||||||||||||||
| Interest expense and other, net | (78 | ) | (93 | ) | 200 | (157 | ) | ||||||||
| Foreign transaction gain | - | (134 | ) | - | - | ||||||||||
| Income (loss) before income taxes | (2,565 | ) | 111 | (5,306 | ) | 854 | |||||||||
| Provision for (benefit from) income taxes | 59 | (93 | ) | 50 | (171 | ) | |||||||||
| Net income (loss) before dividends on redeemable convertible preferred stock | (2,624 | ) | 204 | (5,356 | ) | 1,025 | |||||||||
| Dividends on redeemable convertible preferred stock | (89 | ) | (87 | ) | (265 | ) | (261 | ) | |||||||
| Net income (loss) attributable to common stockholders | $ | (2,713 | ) | $ | 117 | $ | (5,621 | ) | $ | 764 | |||||
| Earnings (loss) per common share: | |||||||||||||||
| Basic | $ | (0.33 | ) | $ | 0.01 | $ | (0.68 | ) | $ | 0.09 | |||||
| Diluted | $ | (0.33 | ) | $ | 0.01 | $ | (0.68 | ) | $ | 0.08 | |||||
| Weighted - average number of common shares outstanding: | |||||||||||||||
| Basic | 8,327,009 | 8,252,396 | 8,294,268 | 8,236,212 | |||||||||||
| Diluted | 8,327,009 | 8,252,396 | 8,294,268 | 9,277,929 | |||||||||||
| American Electric Technologies, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands, except share and per share data) | ||||||||
| September 30, 2016 | December 31, | |||||||
| (unaudited) | 2015 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,903 | $ | 7,989 | ||||
| Restricted short-term investments | 507 | 507 | ||||||
| Accounts receivable-trade, net of allowance of $257 and $225 at June 30, 2016 and December 31, 2015 | 7,272 | 6,853 | ||||||
| Inventories, net of allowance of $73 and $60 at June 30, 2016 and December 31, 2015 | 1,472 | 1,325 | ||||||
| Cost and estimated earnings in excess of billings on uncompleted contracts | 5,339 | 2,302 | ||||||
| Prepaid expenses and other current assets | 205 | 324 | ||||||
| Total current assets | 17,698 | 19,300 | ||||||
| Property, plant and equipment, net | 7,453 | 7,915 | ||||||
| Advances to and investments in foreign joint ventures | 10,805 | 11,104 | ||||||
| Intangibles | 529 | 218 | ||||||
| Other assets | 18 | 49 | ||||||
| Total assets | $ | 36,503 | $ | 38,586 | ||||
| Liabilities, Convertible Preferred Stock and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Revolving line of credit | $ | 1,500 | $ | 1,043 | ||||
| Current portion of long-term note payable | 300 | 300 | ||||||
| Accounts payable and other accrued expenses | 8,965 | 4,031 | ||||||
| Accrued payroll and benefits | 879 | 476 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 341 | 1,629 | ||||||
| Total current liabilities | 11,985 | 8,355 | ||||||
| Long-term note payable | 4,050 | 4,200 | ||||||
| Deferred compensation | 272 | 305 | ||||||
| Deferred income taxes | 2,913 | 3,064 | ||||||
| Total liabilities | 19,220 | 15,924 | ||||||
| Convertible preferred stock: | ||||||||
| Redeemable convertible preferred stock, Series A, net of discount of $645 at June 30, 2016 and $671 at December 31, 2015; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at June 30, 2016 and December 31, 2015 | 4,369 | 4,329 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock; $0.001 par value, 50,000,000 shares authorized, 8,438,630 and 8,385,929 shares issued and 8,292,753 and 8,254,001 shares outstanding at June 30, 2016 and December 31, 2015 | 8 | 8 | ||||||
| Treasury stock, at cost 145,877 shares at June 30, 2016 and 131,928 shares at December 31, 2015 | (863 | ) | (792 | ) | ||||
| Additional paid-in capital | 12,411 | 12,032 | ||||||
| Accumulated other comprehensive income | 204 | 310 | ||||||
| Retained earnings; including accumulated statutory reserves in equity method investments of $2722 at June 30, 2016 and December 31, 2015 | 1,154 | 6,775 | ||||||
| Total stockholders’ equity | 12,914 | 18,333 | ||||||
| Total liabilities, convertible preferred stock and stockholders’ equity | $ | 36,503 | $ | 38,586 | ||||
| American Electric Technologies, Inc. and Subsidiaries | |||||||||||||||
| Non-GAAP Financial Measures and Reconciliations | |||||||||||||||
| Computation of Earnings on Continuing Operations , Including Net Equity Income from Foreign Joint Ventures, Before Interest, | |||||||||||||||
| Dividends, Taxes, Depreciation and Amortization ("EBITDA") | |||||||||||||||
| Unaudited | |||||||||||||||
| (in thousands) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net income (loss) attributable to common stockholders | $ | (2,713 | ) | $ | 117 | $ | (5,621 | ) | $ | 764 | |||||
| Add: Depreciation and amortization | 216 | 214 | 660 | 673 | |||||||||||
| Interest expense | 70 | 93 | 173 | 157 | |||||||||||
| Provision for (benefit from) income taxes | 59 | (93 | ) | 50 | (171 | ) | |||||||||
| Dividend on redeemable preferred stock | 89 | 87 | 265 | 261 | |||||||||||
| EBITDA | $ | (2,279 | ) | $ | 418 | $ | (4,473 | ) | $ | 1,684 | |||||
| The Company is disclosing EBITDA, which is a non-GAAP measure, because it is used by management | |||||||||||||||
| and provided to investors to provide comparability of underlying operational results. For more discussion of the | |||||||||||||||
| use and limitations of EBITDA, see the 2015 10-K which was filed on March 30, 2016. | |||||||||||||||