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AMERITYRE CORP (AMTY)·Q4 2015 Earnings Summary

Executive Summary

  • AMERITYRE delivered its first profitable quarter in company history: Q4 2015 net income of $39,000 on sales of $1.22M, with net income attributable to common shareholders of $14,000. Sales rose 43.9% year over year; gross profit increased to $396,000 from $132,000. Bolded: first profitable quarter and YoY revenue/gross profit surge .
  • Profitability was driven by higher-margin product focus and cost realignment; G&A fell 49.2% YoY, aided by much lower stock-based compensation. Management emphasized “Profitability as a Mindset” and continued sales/marketing initiatives to drive sustainable margin improvement .
  • FY2015 improved materially: net loss narrowed to $299,361 from $1,269,663; gross margin improved as cost of revenues fell as a percentage of sales, despite higher direct labor. Preferred stock dividends of $100,000 reduced net loss to common to $399,361 .
  • No formal guidance or earnings call transcript was provided for Q4 2015; Street consensus estimates via S&P Global were unavailable for this OTC micro-cap.

What Went Well and What Went Wrong

What Went Well

  • Record milestone: “our first profitable quarter,” with earnings of ~$39,000 before preferred dividends; sales grew to ~$1.2M from ~$0.9M. CEO highlighted strategic focus on higher-margin products and cost realignment as drivers of profitability .
  • Operating expense discipline: General & administrative expense cut by 49.2% YoY in Q4 (to $182,000 from $360,000), including stock-based compensation down to $5,068 from $56,207; gross profit expanded to $396,000 (200% YoY increase) .
  • FY2015 structural improvements: Gross profit up 68.5% to $1.279M; other expense declined ~99% as unsecured notes were paid off in 2014, removing cost of debt in FY2015 .

What Went Wrong

  • Customer order shortfall earlier in FY2015: A long-term customer did not place customary orders in Q2–Q3, pressuring revenue and delaying positive operating cash flow; partly offset by growth in agricultural pivot tires .
  • Forklift elastomer product line below expectations: Ongoing reformulation due to component availability; commercialization pushed into 2H FY2016, delaying traction and revenue in that segment .
  • Continued preferred dividend drag: Q4 preferred dividend of $25,000 and FY2015 total of $100,000 reduced net income available to common shareholders (Q4: $14,000; FY2015 net loss to common: $399,361) .

Financial Results

Quarterly performance progression (oldest → newest)

Metric ($USD Thousands)Q2 2015 (Dec 31, 2014)Q3 2015 (Mar 31, 2015)Q4 2015 (Jun 30, 2015)
Net Revenues$1,349 $1,191 $1,222
Cost of Revenues$1,035 $852 $826
Gross Profit$314 $339 $396
Research & Development$58 $58 $45
Sales & Marketing$167 $141 $130
General & Administrative$218 $190 $182
Other Income/(Expense)$0 $0 $0
Net Income (Loss)$(128) $(50) $39
Preferred Stock Dividend$25 $25 $25
Net Income (Loss) Attributable to Common$(153) $(75) $14

Q4 year-over-year comparison

Metric ($USD Thousands)Q4 2014 (Jun 30, 2014)Q4 2015 (Jun 30, 2015)
Net Revenues$849 $1,222
Cost of Revenues$717 $826
Gross Profit$132 $396
General & Administrative$360 $182
Net Income (Loss)$(633) $39
Net Income (Loss) Attributable to Common$(658) $14

Segment breakdown (FY2015 context)

SegmentFY2015 Revenue Mix (%)
Closed-cell polyurethane foam tires74.7%
Polyurethane elastomer forklift tires1.0%
Agricultural tires23.3%

Balance sheet KPIs

Metric ($USD Thousands)FY2014 (Jun 30, 2014)FY2015 (Jun 30, 2015)
Cash$729 $456
Total Current Assets$1,940 $1,465
Total Assets$2,695 $2,175
Total Current Liabilities$634 $452
Total Liabilities$687 $506
Stockholders’ Equity$2,008 $1,669

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company guidanceQ4 2015 / FY2015Not providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2015)Previous Mentions (Q3 2015)Current Period (Q4 2015)Trend
Agricultural pivot tire growthIdentified two leading global distributors; patent received; segment growing Significant increases in pivot tire sales partly offset customer shortfall Continues to demonstrate revenue growth; product improvements and distribution build-out Improving trajectory
Forklift elastomer product refreshReintroduced; market acceptance slow; reformulation underway Reformulation continues; below expectations New formulation expected 2H FY2016; marketing relaunch planned Delayed execution, targeted relaunch
Cost structure & margin focusTerritory sales approach; pricing discipline; targeting profitable sales Positive EBITDA in Q3; reduced net loss; “Profitability as a Mindset” First-ever quarterly profit; margin improvement via higher-margin product mix and lower G&A Sustained margin focus paying off
Customer order shortfallQ2 revenue fell short due to a large customer not ordering Continued shortfall in Q3; offset by pivot tire growth FY2015 commentary anticipates future sales as client restructures product line Temporary headwind easing
Liquidity actionsPursuing line of credit; licensing; factoring; sufficient to meet minimum needs Factoring agreement; still no line of credit; sufficient minimum liquidity Extended lease; continued vendor term management; licensing/factoring optionality maintained Stable but constrained liquidity

Management Commentary

  • “Our fourth quarter results validate the strategic changes implemented by our management team… We have focused our efforts on the development and sale of higher margin products, as well as the realignment of our cost structure. The profitable 4th quarter is a historical milestone for Amerityre Corporation…” — Michael F. Sullivan, CEO .
  • Company emphasis: “proper product pricing and new marketing campaigns has driven more profitable sales… During the fourth quarter 2015 Amerityre achieved net income for the quarter for the first time in Company history, supporting our goal to establish ‘Profitability as a Mindset’.” .
  • Segment focus reiterated: closed-cell foam remains majority of revenue; forklift elastomer reformulation targeted for 2H FY2016; agricultural pivot tires showing growing acceptance and IP protection via design patent .

Q&A Highlights

  • No Q4 2015 earnings call transcript was available; therefore, no analyst Q&A highlights can be provided based on primary sources.

Estimates Context

  • Wall Street consensus estimates via S&P Global for Q4 2015 and FY2015 were unavailable for AMTY; as a result, no beat/miss analysis versus estimates is included.

Key Takeaways for Investors

  • The Q4 2015 profit marks an inflection point driven by product mix shift and sharp G&A discipline; monitoring whether margin gains are sustainable into FY2016 is critical .
  • Agricultural pivot tires are the near-term growth lever; watch distribution build-out, manufacturing improvements, and patent-backed product differentiation to sustain revenue momentum .
  • Forklift elastomer reformulation is a 2H FY2016 catalyst; successful relaunch could diversify revenue mix, but execution risk remains until commercialization .
  • Liquidity remains adequate for minimum needs but constrained; absence of a line of credit and ongoing preferred dividends create a drag—licensing opportunities and factoring provide optionality without equity dilution .
  • With cost of debt largely eliminated, operating leverage to sales should improve; continued adherence to pricing discipline and expense control could support positive EPS trajectory once scale grows .
  • Near-term trading implication: micro-cap with a clear profitability milestone and margin story; lacking formal guidance/Street coverage means headlines around segment progress (pivot tires, forklift relaunch) and additional profitable quarters are likely to drive stock moves .