Update: Ironclad Performance Wear Q2 Earnings & Private Placement With Insiders

Aug.27.14 | About: Ironclad Performance (ICPW)

Summary

Shares of Ironclad Performance Wear have shot up 50% since coverage on June 4, 2014.

On August 6, the Company announced revenues of $4.8 million in its fiscal 2014 second quarter, up 6.6% from the same period last year.

On August 25, Ironclad announced it had completed a private placement of common stock to certain officers and directors totaling approximately $610,000.

Reiterating price target of $.50 to $.75 in 2015.

Since publishing An Ironclad Opportunity With Under-Followed Gem, Ironclad Performance Wear (OTCQB:ICPW) on June 4, 2014, Ironclad shares are up approximately 50% to $.31 a share, buoyed by a solid 2nd quarter earnings report on August 6 -- the Company reported increased Net Sales for the quarter of $4.8 million, a 6.6% increase from $4.5 million in the second quarter of 2013 -- and growing confidence in recently-appointed CEO Jeff Cordes and his team's plan to ramp the business. With the stock trading between $.20-.21 at the time of publication, the article stated, "I estimate a fair value for Ironclad today at approximately $.32/share," and encouraged investors to "consider scooping up any available shares under $.26 in the short term, and add more to their positions as the story progresses in the coming quarters."

"While it is always good to see improving numbers, we have not deviated from our focus communicated at the start of this year. We continue to see 2014 as a rebuilding year at Ironclad. There are many changes underway within the Company, each of which is being made to better position Ironclad as we enter 2015. We are pleased with the progress our teams are making and the response of customers, vendors, our team and shareholders," Cordes stated in the Q2 financial results press release.

Shortly after the Q2 report, Ironclad, which sells high-performance task-specific performance work gloves, announced on August 25 that it has entered into definitive agreements for the sale of common stock to certain officers and directors in a private placement totaling approximately $610,000. The Company issued 2,124,691 restricted shares at a price of $0.2871 per share, a price that reflected a 10% premium to the trailing ten-day average closing price. The private placement was done to allow the Company's directors and officers to increase their ownership of Ironclad's common stock in accordance with the Company's Equity Ownership Guidelines, and included lock-up agreements prohibiting sales of these shares for a period of one year.

Commenting on the insider financing round, Vane Clayton, Ironclad's Chairman of the Board said, "We want to encourage and facilitate the purchase of Ironclad stock by our team. … Given our limited daily trade volume, it is difficult to purchase significant levels of Ironclad shares. Offering the one-time private placement of Ironclad common stock to our officers and directors provides a more efficient process through which to invest today in our Company."

There are few better signals of a stock's likely direction than insider buying, and the purchase of ~2.1 million shares of ICPW stock by various officers and directors at a price above the market is a phenomenal vote of confidence. I'm reiterating my price target of $.50 to $.75 on this "under-followed gem."

Disclosure: The author is long ICPW.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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