AmeraMex International Inc. (OTCPK:AMMX) Q4 2015 Earnings Conference Call March 25, 2016 1:00 PM ET
Marty Tullio - IR
Lee Hamre - President & CEO
Tracie Hannick - CFO
Alan Cowen - NC Financial
Good day and welcome to the AmeraMex International Year End Conference Call and Shareholder Update. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Marty Tullio. Please go ahead.
Good morning, everyone. Before we begin today's call, I'd like to make the following statement. Except for the historical information contained herein, statements discussing sales and revenue projections are forward-looking and may pursue until Safe Harbor Provisions of the Private Securities Litigation Act of 1995 as amended. These statements involve risks and uncertainties that could cause actual results to differ materially from any forward-looking statements made herein.
I'd like now to turn the call over to Mr. Lee Hamre, CEO of AmeraMex International. Good morning, Lee.
Good morning, Marty. Good morning, everybody. Thanks for joining us this morning for our 2015 year end conference call. With me today we have Mike Maloney our Chief Operating Officer, Tracie Hannick our Chief Financial Officer and Marty Tullio who you just heard from, she's our board secretary.
Before we provide an update and answer shareholder questions, I would like Tracie to provide an overview of our year-end numbers. Tracie?
Good morning everyone. Before I begin, we are pleased to share with you that the preliminary review for our financials for 2014 and 2015 will begin in 2 weeks. The money has been set aside and once the review is finalized which is expected to take approximately 2 weeks, we will move forward and retain the auditor for the SEC audit. Once retained the auditor will give us an estimate as to the documents will be submitted to the SEC for review. Before I discuss the year end numbers, please remember that all numbers discussed today are approximate. As announced earlier today, revenue for the year ending December 31, 2015 was $8.3 million compared to the revenue of $7.3 million reported for 2014.
Gross profit as a percentage of sales for the year was 49%, almost identical to these gross profits for the 2014 year ends. Net income for the year was $1.1 million, a 40% increase when compared to the net income of $800,000 for 2014. Our balance sheet for the year showed increased cash and cash equivalent with a nice increase in inventory. Total liabilities increased for the comparable year by approximately $1.2 million. This increase is due to financing of much needed inventory and in note owed to our CEO, Lee Hamre.
I would like to now turn the call back to Lee to provide the project update.
Okay, before beginning the project and pipeline updates, I would like to say that we are pleased to report our eighth consecutive profitable quarter in a row and our fifth consecutive profitable year. In 2010 we reported a loss of $322,000 and from 2011 to 2015, net income from a $135,000 to the current $1.1 million from 2015. It has taken a lot of scrambling, planning and hard work. I would like to take this opportunity to thank all of our employees, our customers, loyal shareholders and everybody else that's puts up with me being gone as much as I have to.
Okay, let's begin the project pipeline updates. On the subject of me here, we have been working as you all know on this truck project for a couple of years. I know some of you getting a little tired of hearing about it, but it just takes time. These countries are real difficult to deal with and when you get government involved, what I managed to do is the bank that wants to help us in Niger is the Ecobank. Ecobank does have a branch in Beijing, China. The trucks that we are talking about supplying are built in China. We have now figured out a way to eliminate the need for the government. Ecobank will provide initial funding to trucks into Niger and will Ecobank will handle the financing of each individual truck for each individual buyers and Ecobank China is talking to Ecobank Niger.
At the current time, they just had an election and they have a new president in Niger, the last year to 18 months, a lot of the reason nothing happened was because the president on his way out didn't really care about big projects. The president on his way in wants to do big projects because it's his term that he is just starting. I hope that makes sense to you but our contact at Ecobank is Muhammad Islami, I speak to him on a regular basis and I am trying to get this done. I can't promise that the deal's going to happen yet but I think I finally found an avenue to getting around some of the big problems we ran into.
So please don't take this as a commitment that the deal is done, it just is a commitment and I haven't given up and I am still working on it. Core business in Africa, we do have our partner in the republic of Congo, Jean-Noel Makaya is working on several projects in the Congo and a couple of big ones in Angola. I was recently in Angola, the capital of Luanda, a very progressive city and country; they are doing very well, quite well for an African country. We are responding to request for proposals and developing relationships with potential partnering companies. There appears to be much potential in both, the Republic of Congo, The Democratic Republic of Congo and Angola.
One of the top ten richest countries in Africa, we still have conditional equipment orders from Nigeria. These orders are in limbo until the new president of Nigeria has got a good solid footing. He has been in office about 4 or 5 months and he is the next thing that has to happen to start putting the deals together in Nigeria. He has to have a Minister of Finance which has now been appointed. He is organizing the money exchanging procedures which all has to be done prior to us selling as we don't want to be paid in Nigerian Naira. We want U.S. dollars so that delays things a little bit although the buyers ready to go.
We have the two machines in inventory that he wants to buy. These two machines will take about six to eight weeks for us to get them ready to go here in California, then they will go to Houston and put on a ship. Our partner in Nigeria owns a construction company there in addition to this business and we expect to be doing some orders for construction equipment also. The equipment we shipped during 2015 to Mali is now on site and working. The same buyer has discussed a second order for another approximately $1 million. We talk weekly and he is not quite ready to place the order but I anticipate he will do so in the next few upcoming weeks.
He is looking for some large dozers and road graders in addition to the excavators and other equipment that he has already bought from us. The quote for the equipment has been provided and we speak to the management like I said on a weekly basis. Today the order has not been awarded so, we do have a competition on the project. Most, everything we do we have somebody to compete with but we believe we have a good relationship with the company and the owner. I meet with him personally every couple of months and we essentially have shipped him equipment, we have sites in for the future deals for the quality equipment we sent and the good job we did.
As previously discussed the same company was awarded the contract for low cost housing in the Ivory Coast to our knowledge request for proposals has not yet been issued. They are just organizing how many homes and where they will be located. It's in the area of 10,000 low-end homes that they are going to build that will take quite a bit of equipment if it all comes together. Regarding the crane that we discussed in past calls, that Chevron on Nigeria who's buying, we bid on the order along with other companies and today the award has not been given out. I don't know why but we are in the running with the other people that have also quoted.
When it's buyer like Chevron, even if it's Chevron of Nigeria, we are not the only American company that gets asked to bid so, that's what I can't really give you a gut feeling on although I do know people on both ends supply and buyers that we have relationships with. To get more competitive in Africa and to open the door to opportunities, more easily finance, we are putting together an agreement with a tactical vehicle manufacturer that AmeraMex will have a dealer in contract with soon, to market specific types of vehicles that we will be able to sell in the West African countries.
I will start with Nigeria. We hope to have our dealership agreement signed by sometime in May. This is important to AmeraMex as it expands not only our product line but potential customer base. As core business, a wrap up, currently our pipeline for core business contains potential U.S. business, U.S. Government proposals, International Proposals for Africa and Central America and we believe the new product line would allow us to explore additional opportunities that require military type equipment and provide a pricing edge.
One additional product that we have signed a contract to be the distributor for is called a Menzi-Muck Spider Excavator. It's a very special machine and whenever you want to see what it looks like and operates, you can look on Google and look up Menzi-Muck and there's about a dozen videos showing that machine in operation. I suggest is some of you are interested and want to know more about what we do, bring that up on Google and look at it, it's pretty impressive.
Before we begin our question and answer session, I would like to share with you that we are very happy now that we have been able to provide health insurance for the employees again. That's something that we had to stop when the recession started but we now as of January 1, we have got health insurance for employees. We are also excited with the prospect of beginning with the SEC audits. We did try and do that one time in the past and it didn't work out. We're prepared now and we have set aside the money to pay for the audits and we have an auditing company I'm very impressed with and I think we are going to have positive results.
Our CFO, Tracie, has finished the conversion from our old computer system to Quicklooks. It's much easier to use Quicklooks. Our old system was something that was a new system in 1989 when we started using it. So, now we are updated modern computer system and it's much easier to do audits and the auditor was very happy to see the system we are using. Fully audited and reporting AmeraMex will benefit all of you folks as well as and of course our employees. We look for growth, we use our money wisely and after we are reporting we will be more active in the marketing of AmeraMex to the financial community.
We do have opportunities that with the influx of funding we can make massive changes in our gross sales, gross profits and with that said we would like to begin the question and answer session of today's call
[Operator Instructions] We will take our first question from question from Alan Cowen from the NC Financial.
Hi everybody, Lee terrific job, thank you very much for all the hard work you have put in. We sincerely appreciate it. My question Lee is right now the company's being valued at roughly $6.6 million, if you figure $0.01 a share, 665 million shares outstanding, if that stock price were to go to $0.15 per share we would be a $100 million company. You see that happening? Do you see that much growth to support that kind of growth in the company or would we have to be merged or taken over? Or do something different to attain that kind of growth, that level?
Good morning Alan, its Marty. I will be talking with you. We actually were sitting here last night discussing, what we could potentially see with the growth of the company. What we don't have is visibility now to the shareholders, to potential new shareholders, we can reach out to our retail shareholders and we do it as we receive them, you held black but once we are an audited company we have the ability to more easily reach out to small funds and some brokerage firms who can't possibly or recommend it so that it becomes easier to buy.
So, I think that it's not, if we can continue to show growth and we can continue both top and bottom line growth, expand our customer base and become more predictable in our revenue productions, I don't see why -- I've been looking at other companies that are even trading on NASDAQ and on New York TCB [ph], we couldn't be a $0.15 company. And people talk about also maybe during a reverse split, it's something that every company always keeps the door open to that but you don't want it unless you're doing it for the very, very best reasons; perhaps be listed on NASDAQ or to be listed on a different exchange, that's again more exposure.
It almost seems inevitable to me that that has to happen at some point.
It has to be at the right time. If we decide to do that it will have to be at the right time to be able to make a move that we want to make. I am involved in several large possible expansions so we can get involved in as a company and not something that we can discuss yet but in my opinion it is absolutely possible that we could raise the value of the company to get to $0.15 or $0.20, I have no doubts.
Lee, remember a while ago you talked to us a coffee deal that you weren't able to effect, that you didn't have the cash to layout. Is that something in the near future you think that you will be able to attend?
Those deals are available to us at any time and what it is, is our West African countries have products they export. The people I know in each of these countries are willing to work with us and I do know potential buyers or projects like that. I haven't pursued them yet, we are using our money like I said in my, what I just announced for you, we are trying to use our money as wisely as we can for whatever will help us grow the best. But to answer your question, yes those projects are out there and available and if one comes along that we can handle quickly and put money into it, get money out of it, profit, yes I would be interested in pursuing that and I look forward to doing a lot of that down the road.
Lee, thank you very much and keep up the good work guys.
All right, thank you.
[Operator Instructions] And we will take our next question from Nicholas [ph], private investor.
How are you doing Lee, Nick here?
Doing fine, how about yourself?
Good, you just said that you are confident that price will raise $0.15 a share at $0.12, would that be post or pre reverse, what you were talking about or do you think the current share structure would support that?
We are not talking about the reverse split something that we want to do at all. We are just saying that it's always a possibility if there's a reason for it and if there is a good reason. So, we are not talking about doing that, please take a note, what we are saying at all like we are leaving that way. As far as the value of the company yes, I am working on projects that we can't discuss yet that could easily make the company worth $0.15 or more.
That's with the current share structure?
With the current share structure, I believe that the potential's there. I mean the recession has held us back for the last 7 years where we struggled pretty tough there in the beginning of the recession, things have gotten a lot better. And we are busy and I see a lot of potential. So no -- I am not concerned we can't get there, that doesn't concern me at all.
Thanks, one more question. When the truck deal starts, what are the plans for that, to reinvest? Maybe issue a small dividend to the long time shareholder, can you elaborate on any of that at all?
Our primary target right now, I would love to see us to be able to do dividends but we haven't thought about that, it's a possibility. But what we are talking right now is the rental lease increased in Northern California where our main office is situated, we have one competitor who has about 200 cubby machinery pieces in their rental fleets and we can compete with them very well, we could add machines to the rental fleet and basic scenario with the rental machine in this business in Northern California, whatever you pay for machine, if its properly bought, is in good condition, two rental seasons which is normally April through November. By the end of two rental seasons that are a total of about 18 months, you can have that machine completely pay it off, sell it, the margins would go back into buying more rental equipment and we grow the rental fleet which creates a steady cash flow which we desperately need.
So, we can target numbers, we can tell you what we can do, we can plan so much better with an active large rental fleet, we have to get away from that at the beginning of the recession. Well, two things we needed to sell the equipment out of the inventory that keeps things going and there were no rental customers out there to rent things because everybody was out of work. So, now that's starting to come back, it's a huge opportunity for us and I intend to pursue it on the local basis.
Thank you I appreciate all your efforts and question answers.
You bet, thank you.
[Operator Instructions] And it appears that there are no other questions at this time.
Okay well, we would like to thank all of you for participating in the call today and for your questions and your continued support. We look forward to speaking with you at the end of the first quarter when we do our next call, we intend to this once a quarter after our quarterly financials are completed and if there are no more questions than thank you very much.
Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.
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