Sunday, May 27, 2007
Advanced Materials Group (ADMG) quick check
ADMG, ADVANCED MATERIALS GROUP, INC., website, sec, yahoo, chart
In my first pass through the Pink Sheets (mid 2005 to early 2006), I had three levels of filtering. Lately I've been acting more like there's only two layers of filtering: rather than quickly going through everything passing layer 1, I'm diving into them all in detail. This isn't going to work since it's too slow.
10-K
Long running industrial products company focused on making stuff from a raw material base of flexible components. Foams, foils, films, adhesive composites into components and finished products. They're in Dallas.
They're trying to expand into foreign markets such as Ireland and Singapore.
This is a lot like Epolin that I had invested in for a while. Epolin may still succeed. Or they might just languish forever. I don't know.
Strong competition and low barriers to entry. So ADMG has focused on patentable and proprietary products. I wonder if that's like the drunk stumbling around at night under a streetlight looking for his keys because the light is better there than where he lost them.
57 employees.
Revenues up 15.4% (new customer and more sales from existing customers). The Singapore strategic manufacturing venture declined slightly.
The bulk foam stuff is getting killed by increasing shipping costs, so ADMG moved operations to Singapore in a joint venture in 2003.
27.8% gross margin (up from 23.7%).
Big NOLs due to losses up to 2004.
Results are expected to get better in 2007. Product development and selling expenses will increase, however.
Corporate salaries are quite reasonable.
Some sort of fund owns 25% of the compay.
The chairman owns 22%.
Executives and directors own 64%.
Financial Statements:
Half of net income is due to income tax benefit.
Operating margin is 8.2% (was about 1.5% in 2005).
$4 million in total assets! most is current as AR, inventory, and deferred tax assets of $634K.
Not much PP&E, good.
$856K drawn on line of credit.
$2.55 million equity.
Operating cash flow matches earnings without the tax benefit ($628K).
Low capex much less than depreciation.
Paid back half a million in debt.
Free cash flow is probably a bit less than $600K. 4.6 cents per totally diluted share (see Q1 for share count).
Q1 Results:
12.1 million shares on April 10, 2007, 435K outstanding options. Assume 13 million totally diluted shares.
Revenues up 8%.
Gross margin 19% (down from 28% partly due to the introduction of "Nundies", see below).
Operating margin 4.6% (down from 7.7%).
More than half of net income is income tax benefit.
Adjusted net income is $104K, 0.85 cent per diluted share (prior year was over 1 cent).
Inventories are up a bit.
Some cash burned in operations vs small amount gained in prior year.
Small capex (half of depreciation).
Repaid some debt.
Singapore revenue continued to decrease.
And here's something interesting:
Distribution is almost non-existent.
Of course is this takes off, the stock will probably go to the moon. I think that's extremely unlikely.
The stock is probably worth at least 70 cents. The current price is around a dollar. It had been around 65 cents. It was well below 25 cents less than two years ago.
UPDATE next day:
For an interesting view of the SEC tracking down suspicious behavior, here's an interesting example. The SEC got really riled up over this one (see the "sec" link and UPLOAD documents).
AECC, AMERICAN EDUCATION CORP. (THE), website, sec, yahoo, chart
I started looking into it, but it got too complicated and I didn't have time. Perhaps sometime later.
In my first pass through the Pink Sheets (mid 2005 to early 2006), I had three levels of filtering. Lately I've been acting more like there's only two layers of filtering: rather than quickly going through everything passing layer 1, I'm diving into them all in detail. This isn't going to work since it's too slow.
10-K
Long running industrial products company focused on making stuff from a raw material base of flexible components. Foams, foils, films, adhesive composites into components and finished products. They're in Dallas.
They're trying to expand into foreign markets such as Ireland and Singapore.
This is a lot like Epolin that I had invested in for a while. Epolin may still succeed. Or they might just languish forever. I don't know.
Strong competition and low barriers to entry. So ADMG has focused on patentable and proprietary products. I wonder if that's like the drunk stumbling around at night under a streetlight looking for his keys because the light is better there than where he lost them.
57 employees.
Revenues up 15.4% (new customer and more sales from existing customers). The Singapore strategic manufacturing venture declined slightly.
The bulk foam stuff is getting killed by increasing shipping costs, so ADMG moved operations to Singapore in a joint venture in 2003.
27.8% gross margin (up from 23.7%).
Big NOLs due to losses up to 2004.
Results are expected to get better in 2007. Product development and selling expenses will increase, however.
Corporate salaries are quite reasonable.
Some sort of fund owns 25% of the compay.
The chairman owns 22%.
Executives and directors own 64%.
Financial Statements:
Half of net income is due to income tax benefit.
Operating margin is 8.2% (was about 1.5% in 2005).
$4 million in total assets! most is current as AR, inventory, and deferred tax assets of $634K.
Not much PP&E, good.
$856K drawn on line of credit.
$2.55 million equity.
Operating cash flow matches earnings without the tax benefit ($628K).
Low capex much less than depreciation.
Paid back half a million in debt.
Free cash flow is probably a bit less than $600K. 4.6 cents per totally diluted share (see Q1 for share count).
Q1 Results:
12.1 million shares on April 10, 2007, 435K outstanding options. Assume 13 million totally diluted shares.
Revenues up 8%.
Gross margin 19% (down from 28% partly due to the introduction of "Nundies", see below).
Operating margin 4.6% (down from 7.7%).
More than half of net income is income tax benefit.
Adjusted net income is $104K, 0.85 cent per diluted share (prior year was over 1 cent).
Inventories are up a bit.
Some cash burned in operations vs small amount gained in prior year.
Small capex (half of depreciation).
Repaid some debt.
Singapore revenue continued to decrease.
And here's something interesting:
During the first quarter of 2007 the Company launched "Nundies," a new women's undergarment product owned by the Company. This product is being sold through retailers and is available for direct purchase at mynundies.com.Here's the website's description
Nundies is a one-time use, disposable "pa*nty" that adheres to the inseam inside of a woman's pants. This tulip-shaped "pa*nty" is intended for use as an alternative to wearing traditional underwear. Made from a nylon/lycra blend, Nundies are as soft as your conventional under*wear, but they take up less space and don't leave embarrassing pa*nty lines.The "*"s were added so I don't get a zillion website hits from the wrong sorts of readers (I'm still getting silly hits for this article).
Distribution is almost non-existent.
Nundies are currently available at: Neiman Marcus: Dallas (Downtown, NorthPark, and Willow Bend); Los Angeles, CA; and Las Vegas, NV. Lingerie Store: Sheers, The Bodywear Bar and specialty boutiques throughout the United States! On-line at the popular www.HerRoom.com, www.blissworld.com, or www.mynundies.com.The retail cost is $3 each. If I understand how these, um, "fit", it seems to me that they don't cover a lot of area (rather than being some new material that doesn't show a line).
Of course is this takes off, the stock will probably go to the moon. I think that's extremely unlikely.
The stock is probably worth at least 70 cents. The current price is around a dollar. It had been around 65 cents. It was well below 25 cents less than two years ago.
UPDATE next day:
For an interesting view of the SEC tracking down suspicious behavior, here's an interesting example. The SEC got really riled up over this one (see the "sec" link and UPLOAD documents).
AECC, AMERICAN EDUCATION CORP. (THE), website, sec, yahoo, chart
I started looking into it, but it got too complicated and I didn't have time. Perhaps sometime later.
// posted by Bruce @ 10:06 AM 
