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AC

AMERITYRE CORP (AMTY)·Q3 2016 Earnings Summary

Executive Summary

  • Amerityre delivered its first profitable quarter of FY2016, with net income of $34,656 before preferred dividends ($9,656 to common after $25,000 preferred dividends), driven by cost discipline despite a 21.4% YoY revenue decline; gross margin expanded to 34.0% from 28.5% YoY .
  • Sales fell to $936,612 (down from $1,190,841 in Q3 FY2015) amid continued agricultural market weakness and FX headwinds; closed-cell foam tires were the primary driver .
  • Management cited a leaner cost structure, freight policy changes, and raw material/overhead savings as key profitability drivers; no formal numeric guidance was issued, but expectations call for minimal agricultural tire sales in Q4 and a forklift tire relaunch in Q4 FY2016 .
  • No Wall Street consensus estimates were available via S&P Global for Q3 FY2016; therefore, no beat/miss context can be provided. Consensus unavailable (S&P Global).
  • Potential stock reaction catalysts: sustained margin improvement via cost controls and upcoming forklift relaunch offset by ongoing ag demand softness and FX pressure .

What Went Well and What Went Wrong

What Went Well

  • Achieved profitability in Q3 FY2016 despite lower sales, reflecting successful restructuring and cost control: “Sales revenues were less than planned, but our efforts to restructure the company to a leaner and more focused organization allowed us to earn a profit during the quarter.” — CEO Michael F. Sullivan .
  • Gross margin expanded to 34.0% (vs. 28.5% YoY), supported by lower raw materials, overhead, depreciation, and modified freight policy savings (~$32,000 in Q3) .
  • Sales & Marketing expense fell 61.8% YoY (to $53,639), and G&A declined 9.5% YoY, reflecting disciplined OpEx management .

What Went Wrong

  • Revenue declined 21.4% YoY to $936,612 as agricultural tire demand remained weak and FX strength dampened international sales; pivot tire expectations did not materialize .
  • R&D expense was roughly flat YoY (part-time chemist retained) while top-line pressures persisted, limiting operating leverage .
  • Liquidity remains tight; cash fell to $103,319 at quarter end, and management continues to pursue financing options (line of credit not yet established) and receivable factoring as needed .

Financial Results

Quarterly Trend (oldest → newest)

MetricQ1 FY2016 (Sep 30, 2015)Q2 FY2016 (Dec 31, 2015)Q3 FY2016 (Mar 31, 2016)
Revenue ($USD)$1,013,933 $914,888 $936,612
Gross Profit ($USD)$247,157 $218,217 $318,246
Gross Margin (%)24.4% 23.9% 34.0%
Operating Income (Loss) ($USD)$(128,952) $(176,140) $35,498
Net Income (Loss) ($USD)$(129,478) $(177,039) $34,656
Basic/Diluted EPS ($USD)$(0.00) $(0.00) $0.00
Preferred Dividend ($USD)$25,000 $25,000 $25,000
Net Income to Common ($USD)$(154,478) $(202,039) $9,656

Year-over-Year Comparison

MetricQ3 FY2015 (Mar 31, 2015)Q3 FY2016 (Mar 31, 2016)
Revenue ($USD)$1,190,841 $936,612
Gross Profit ($USD)$339,153 $318,246
Gross Margin (%)28.5% 34.0%
Operating Income (Loss) ($USD)$(49,502) $35,498
Net Income (Loss) ($USD)$(49,402) $34,656
Basic/Diluted EPS ($USD)$(0.00) $0.00
R&D Expense ($USD)$58,146 $56,839
Sales & Marketing ($USD)$140,573 $53,639
G&A Expense ($USD)$189,936 $172,270

Operating Expenses by Quarter (oldest → newest)

Metric ($USD)Q1 FY2016Q2 FY2016Q3 FY2016
Research & Development$53,605 $55,962 $56,839
Sales & Marketing$97,664 $68,595 $53,639
General & Administrative$224,840 $269,800 $172,270

Balance Sheet Snapshot

Metric ($USD Thousands)Jun 30, 2015Mar 31, 2016
Cash$456 $103
Total Current Assets$1,465 $1,291
Total Assets$2,175 $1,912
Total Current Liabilities$452 $470
Total Liabilities$506 $534
Stockholders’ Equity$1,669 $1,378

Cash Flow (Nine Months Ended Mar 31)

Metric ($USD Thousands)FY2015FY2016
Net Cash Used in Operating Activities$(325) $(272)
Net Cash Used in Investing Activities$(46) $0
Net Cash Used in Financing Activities$(77) $(80)
Net Decrease in Cash$(448) $(352)

Segment Breakdown

  • The company discusses three focus segments (closed-cell polyurethane foam tires, polyurethane elastomer forklift tires, and agricultural tires) but does not disclose segment revenue detail for the quarter in filings .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Agricultural tire salesQ4 FY2016Not providedMinimal agricultural tire sales expected due to depressed farm income and FX headwinds Lowered expectation
Forklift tire product lineQ4 FY2016Not providedRelaunch planned in Q4 FY2016; expect sales to increase as products gain market acceptance Initiated/restart
Formal financial guidance (Revenue, margins, OpEx, tax)FY2016Not providedNot provided in Q3 materials Maintained “no guidance” stance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Agricultural market demandQ1: Weak pivot sales; expected increase later but caution on crop prices/weather . Q2: Expected Q3 increase did not materialize; ongoing softness .Continued depressed farm income; minimal ag sales expected; FX headwinds dampen international sales Deteriorating/weak
Closed-cell foam tiresQ1/Q2: Primary sales driver; positive response to pricing/marketing .Primary driver in Q3; backlog maintained Stable/positive driver
Forklift tires (elastomer)Q2: Formulation development; reintroduction targeted second half FY2016 .Relaunch planned in Q4 FY2016; expect sales to increase Improving pipeline
Cost structure and freight policyQ1/Q2: Freight policy modified; savings realized .~$32k freight savings; lower raw materials/overhead; margin expansion Improving margins
Liquidity/financingQ1/Q2: Pursuing lines of credit; receivable factoring available; no facility yet .Continued pursuit; sufficient for minimum needs; factoring option retained Unchanged constraints
FX impactQ1/Q2: Not highlighted.Strong USD negatively impacts international sales Emerging headwind

Note: No earnings call transcript was found for Q3 FY2016 in the filings catalog.

Management Commentary

  • “Our third quarter results, achieved despite a very challenging economic environment, reflect the success of our organization in executing our business plan. We continue to push forward with the development and sale of higher margin products, while remaining vigilant in controlling our costs.” — CEO Michael F. Sullivan .
  • “The Company’s emphasis on proper product pricing and new marketing campaigns has driven more profitable sales… We believe our program to establish ‘Profitability as a Mindset’ is a success and we are committed to continuing these efforts.” .
  • On outlook and product focus: three segments targeted with premium pricing opportunities; forklift tires relaunch in Q4; agricultural demand expected to remain challenged; strong USD a continued international sales headwind .

Q&A Highlights

  • No public Q&A documented; no earnings call transcript located for Q3 FY2016 in the filings catalog.

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 FY2016 EPS and Revenue was unavailable; Amerityre appears to have limited analyst coverage. Consensus unavailable (S&P Global).

Key Takeaways for Investors

  • Margin execution: 34.0% gross margin and positive operating income reflect tangible cost improvements (raw materials, overhead, freight), even with sales pressure — a key near-term driver for share reaction .
  • Demand mix risk: Continued agricultural weakness and FX headwinds constrain top-line; closed-cell foam remains the mainstay — monitor pivot tire demand and international orders .
  • Pipeline catalyst: Forklift tire relaunch slated for Q4 FY2016 offers incremental revenue potential; assess early adoption and margin contribution .
  • Liquidity watch: Cash at $103k and reliance on receivable factoring/credit extensions indicate tight resources; financing progress and working capital discipline are critical .
  • OpEx discipline: Sustained reductions in Sales & Marketing and G&A underpin profitability; ensure these savings are sustainable without impairing growth .
  • No formal guidance/estimates: Absence of consensus and numeric guidance increases uncertainty; investors should anchor on operational metrics (gross margin trajectory, backlog, cash conversion) .
  • Narrative trajectory: Company’s “Profitability as a Mindset” strategy is showing up in results; near-term investment case hinges on maintaining margin gains while gradually re-accelerating revenue via product relaunches and targeted segments .