AmeriQuest IPO: Search For Something Else

| About: AmeriQuest (AMQ)

Summary

Based in Cherry Hill, New Jersey, AMQ provides technology-based solutions for B2B financial processes such as procurement, accounts payable, accounts receivable, and asset management.

AMQ is set to price its Nasdaq IPO today. Lead Underwriters: Raymond James & Associates and Stephen Inc.

We are hesitant on AMQ largely due to a poor market environment for going public. In addition, we are cautious on the firm's flat recent growth and reporting weakness.

AmeriQuest Incorporated (NASDAQ: AMQ) expects to raise $63.6 million in its upcoming IPO. Based in Cherry Hill, New Jersey, AMQ is a company that provides technology-based solutions for B2B financial processes such as procurement, accounts payable, accounts receivable and asset management.

AMQ will offer 6.15 shares at an expected price range of $11 to $13.

AMQ filed for the IPO on November 9, 2015.

Lead Underwriters: Raymond James & Associates and Stephen Inc.

Underwriters: Robert W. Baird Inc. and William Blair Inc.

Business Summary: Provider of Solutions for Business-to-Business Financial Processes

AmeriQuest provides technology-based solutions for businesses to streamline financial processes such as asset management, procurement, accounts receivable and accounts payable. The company's product portfolio offers procurement solutions such as direct and indirect procurement, spend management solutions, accounts receivable and accounts payable automation solutions, and asset management solutions comprised of remarketing and asset financing solutions.

AmeriQuest offers CorConnect, a centralized billing program, and COR360, a cloud-based accounts payable automation software. In addition, the company offers truck financing solutions, transportation services and truck leasing services.

These two programs provide AmeriQuest's clients with options such as credit and collections management, e-invoicing, reporting analytics and working capital management.

AmeriQuest originated as a provider of fleet management and procurement solutions within the transportation industry, and recently the company has expanded its products and services into other industries. They note in their SEC filing that their solutions are highly scalable and can be acquired in an a la carte manner for easier customization.

For the year ended December 31, 2014, AmeriQuest had over 2,250 clients, including the University of Florida, Daimler Trucks North America, Dot Transportation and Cardinal Logistics Management Corporation. They processed $12.2 billion in volume and 9.2 million transactions for their clients in 2014.

Executive Management Highlights

Douglas Clark is founder, CEO, President and Director of AmeriQuest. He also serves as CEO of NationaLease Inc. and CEO and President of Corcentric Collective Business System Corp. His previous experience includes senior positions at Amtralease, Brind Truck Leasing and Drexel Firestone. He is a Certified Public Accountant. Mr. Clark earned BA in Accounting from the University of Miami and MBA in Finance from Drexel University.

CFO and EVP Mark Joyce has served in his position since 2006. He previously held senior financial positions at NationaLease, Goeken Group Corporation and McGladrey & Pullen. Mr. Joyce is a licensed Certified Public Accountant in the State of Illinois. Mr. Joyce received his B.S. from John Carroll University and his MBA from DePaul University.

Potential Competition: Ryder Fleet Management, Genpact, Ariba and Others

Automating financial services between businesses is a highly competitive industry. PayStream Advisors, a research and consulting firm, estimates that U.S. companies generated approximately 16.5 billion invoices across 10 million companies.

AmeriQuest faces competition from financial automation companies such as Ariba (NASDAQ:ARBA), Genpact (NYSE:G), Basware Corp., Bottomline Technologies (NASDAQ:EPAY), Kofax Ltd., SciQuest (NYSE:SCI) and ReadSoft. They also face competition from fleet management service providers such as Ryder Fleet Management Solutions.

Financial Overview: Relatively Flat

AmeriQuest provided the following figures from its financial documents:

Nine months ended September 30, 2015:

2015

2014

Total Revenue

$65,155,000

$63,859,000

Net Income

$4,613,000

$4,236,000

Click to enlarge

As of Sept. 30th, 2015:

Total Assets

$255,432,000

Total Liabilities

$220,412,000

Stockholder's Equity

$26,676,000

Click to enlarge

Conclusion: Investors Should Consider A Different Quest Amid a Volatile Market

We are hesitant on AMQ. The 2016 IPO market has barely begun due to high market volatility, and with a less illustrious underwriting team AMQ may not receive enormous attention. We also are lukewarm on its generally flat financial growth and a noted reporting weakness.

Additional risks include exposure to customers' credit risk, unpredictable sales cycles, and reliance on few customers for large portion of revenue and cash flows.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.