Earnings Transcript for AMMX - Q2 Fiscal Year 2021

Operator: Greetings, and welcome to the AmeraMex International Second Quarter 2021 Conference Call.

[Operator Instructions] As a reminder: This conference is being recorded.

It is now my pleasure to introduce your host, Marty Tullio.:

Thank you, Marty. You may begin. :

Marty Tullio: Thank you, Paul. Good morning, everyone.

Before we begin today's call, I have to do the obligatory forward-looking statement. And it's important for everyone to understand that statements made in this conference call that relate to future financial results, the company's market size or growth plans are forward looking and involve certain risks and uncertainties associated with demand for the company's products and services and development of markets for the company's products and services. The actual results, events and performance may differ materially. Conference call participants are cautioned not to place undue reliance on these forward-looking statements, which speak only as the date of this conference call. AmeraMex is not obligated to release publicly any revisions to these forward-looking statements that result in an unanticipated event after today's call.:

Now I'd like to turn the call over to AmeraMex' CEO, Lee Hamre.:

Good morning, Lee. :

Lee Hamre: Morning, Marty. Thank you. Thank you all for joining us this morning for our second quarter conference call.

With me today by phone is our CFO, Hope Stone; and Board member Marty Tullio.:

Our sales, administrative and accounting employees are all currently working in our corporate headquarters. Our facilities are open to our customers and our shop employees, our servicing contracts and refurbishing equipment. While California has relaxed COVID-19 guidelines, the spread of the COVID variant could cause California's governor to provide stricter guidelines again.:

We have had a great first 6 months and have announced contracts in excess of $16 million through the end of July. These orders will all be delivered actually before the end of this quarter, the third quarter. Our current pace for sales indicates a great year for the company.:

I would like to turn the call over to our CFO, Hope Stone, so that she can provide an overview of our year-end financials. :

Hope Dilbeck-Stone: Thanks, Lee. And good morning, everyone.

Let's begin with an overview of the statement of operations for the second quarter and the period ending June 30, 2021.:

Revenue for the second quarter was approximately $6.3 million compared to revenue of $1.8 million for the second quarter of 2020. As Lee mentioned earlier, revenue was down in the first half of 2020 due to the COVID-19 issues and restrictions, but as we reported during our end-of-year conference call, we had a tremendous rebound of revenue in the second half of 2020. Revenue for the 6-month period was approximately $10.3 million compared to revenue of $3.2 million for the same period in 2020. This is a $7.2 million increase in revenue.:

Gross profit for the second quarter was approximately $970,000, with a gross profit margin of 15%, compared to gross profit of $430,000 and a gross profit margin of 24% for the second quarter of 2020. Our profit margins can have significant fluctuations based on product mix, sales of new equipment versus refurbished equipment. Gross profit for the 6-month period was $2.1 million compared to gross profit of $874,000 for the 6-month period of 2020. Gross profit margins were 21% compared to gross profit margins of 27% for the 6-month period of 2020.:

Net income for the quarter ending June 30, 2021, was approximately $780,000 (sic) [ $78,000 ] compared to net profit of negative $440,000 for the 2020 quarter. Net income for the 6-month period ending June 30, 2021, was $444,000 compared to a net loss of $568,000 for the comparable 6-month period of 2020.:

The balance sheet overview is total assets for the 6-month period were $11.6 million, a decrease of approximately $900,000 when compared to total assets of $12.5 million for the year ending December 31, 2020. This was due in part to a reduction in our rental equipment pool. Total liabilities for the 6-month period were $9.5 million, a decrease of $1.4 million when compared to total liabilities of $10.9 million for the year ending December 31, 2020. This is due in part to a $1.3 million reduction in the company's line of credit.:

I wanted to give you a quick update on our SBA status. On April 7, 2021, we were offered and accepted an increase to the COVID economic injury disaster loan from $150,000, which was received last year, to $500,000. The remaining $350,000 has been approved and is expected to fund at any time. We are in the process of applying to the United States Small Business Administration and United States Department of Agriculture for 2 separate loans with concurrent terms having a combined maximum loan amount of $10 million. Please keep in mind that there is no assurance that we will receive a loan, but we meet all qualifications. If the loan is obtained, the $10 million will be used to refinance all of our debt into a long-term lower-interest-rate loan with an embedded revolving line of credit to be used to purchase new and used equipment to be leased or sold to our customers. This will reduce our monthly operating costs and increase our ability to obtain the equipment our customers need on a more timely basis and with better terms.:

I would like to turn the call back to Lee. :

Lee Hamre: Thanks, Hope.

We announced a couple of weeks ago that we entered into a dealer agreement with KOVACO Electric. It's a division of KOVACO company, headquartered in Slovakia. KOVACO has been in the equipment industry for 28 years, and they've been manufacturers of the world's first all-electric skid steer loader, Elise 900; and a compact loader called the MiniZ. This is exciting to us, as they are the first electric loaders in the industry and, with 40-plus attachments, also one of the most versatile machines in the industry. We've already been demonstrating the equipment to new and existing customers. KOVACO Electric's line of 0-emission, 100% electric skid steer loaders will allow our sales team to expand into exciting new markets, which in turn will increase our sales and our territorial reach.:

2021 is going to be a notable revenue year, one that will allow us to return to profitability after incurring some large onetime charges and expenses during 2019 and 2020.:

Operator, we could begin the question-and-answer period. :

Operator: [Operator Instructions] Our first question comes from [ Stephen Klois ], private investor.

Unknown Attendee: Lee, it's [ Stephen Klois ].

Lee Hamre: Yes.

Unknown Attendee: First, I want to congratulate you. Very, very impressive 6 months. Second, Lee, I was curious. With this infrastructure package that's working its way through Congress, do you feel that this is going to have a positive impact on AmeraMex?

Lee Hamre: It certainly should. There's a lot of infrastructure projects scheduled in California, Northern California. Our highways are falling apart, and all the interstates -- I mean everything needs work. I'm not sure where we're going to get the money to pay for all that, but that's a different subject. I think it will be a significant, noticeable change, although something like that came out -- if it's in Congress now, we're probably looking at 12 months from now before they actually put a shovel in the dirt anywhere. So it's going to depend [ a lot on the ] economy from now until then and who has the equipment when it's time. Right now, if a contract goes out for bid, the majority of the contractors that will bid on it don't even have enough equipment to do the job. And delivery time from all the manufacturers for new equipment is 12 to 24 months, so it's really, really questionable how it will go when they start handing out all those contracts. It will probably be rental equipment. And that is the one place that we will prosper the most with this bunch of work for infrastructures by renting the equipment that we have to people that don't have what they need.

Unknown Attendee: Fantastic. Second question

Lee Hamre: It looks pretty good. I'm ready for it to be the best year we've ever had...

Unknown Attendee: Well, you're heading in that direction. I was just curious what you might have cooked in domestically and internationally moving forward.

Lee Hamre: A lot. And that's about all I will say.

Unknown Attendee: Good, got it. Keep up the good work.

Lee Hamre: [ You bet ].

Operator: Our next question comes from [ Elliott Henman with SNH Finance ].

Unknown Attendee: Sales were great. Ongoing work seems okay, but the pink elephant in the room is the volume and new investors. And I touched on this with Lee, but we kind of cut it short because it was some place where we really couldn't talk, but what is the plan? I mean [ there's days that this thing pays ] 150 shares. I mean, what's -- what does everybody think might be a plan going forward?

Lee Hamre: I'd have to refer that to Marty, is -- that's not something that I'm real educated in. I do my job selling machines. And I'm surprised we haven't had more activity than we have also. Marty, can you help with this one?

Unknown Attendee: I'm still here.

Operator: Marty? Is the line muted maybe?

Lee Hamre: Yes, yes. Marty...

Marty Tullio: Can you hear me now?

Lee Hamre: Yes.

Operator: Yes.

Marty Tullio: Yes. Can you hear me? Okay...

Lee Hamre: Yes.

Unknown Attendee: Yes, I can hear --- we're -- hear you.

Marty Tullio: Okay, good. Let me just get started again here. We've tried several endeavors over these last 12 months. And we have found that we've -- we haven't had a lot of success with the virtual conference calls. And we've tried 3 of them now, and they're extremely expensive. We've done a marketing campaign with [ Maxim ], and the stock did increase up to around $0.70 a share at some point of time. We need to come back online and reinitiate that particular marketing plan because it has helped significantly. What we've noticed -- we don't spend money with investor relations. We just don't. Equipment have -- has gone up significantly this year. And while we've planned a budget for investor relations, we've had -- our equipment prices on used equipment for refurbishing and resale has gone up. I don't know. I think it was something like 20%. So that money, instead of going to investor relations, is going to purchasing new equipment and used equipment for revenue, so we're going to have to sit down and get a strategy together with a budget so that we can go forward with an investor relations program, which we have not put in place. Did I answer your question all right?

Unknown Attendee: Yes, to an extent. Is there anything out there where we see a group of new buyers coming or somebody that might want to stabilize this market? [ Or are shares available ]?

Marty Tullio: Well, we've been talking with -- there are shares available. There are shares available now, and I believe we will see some new buyers in the stock. We're talking to a good number of people, but unless we aggressively go out and search for new buyers, we're just -- we're another small stock which has -- we have a great story. We've provided great revenue. It's been a tough year for everyone, but we -- our focus has always been our top line. We need those revenues, and for that, we need cash. So we have to be able to set aside some cash because these programs are from $5,000 to $10,000 a month, for some of the investor programs, to reach out and get our name in front of new potential investors. And we have to be very cognizant of the fact that the SEC and the OTC marketplace really look at the people we deal with, and we have to be careful when we're selecting a company to work with.

So we -- Lee and I were just talking about that before the call, tremendous news. Stock doesn't trade, but we -- somebody has to know about us first. And until we have the cash to do that, I'm -- I think that we've been talking to enough people. I think we'll begin to see some increase in the stock price, which will hopefully get the volume going. Because we have about 14 million shares, a little over 14 million; and over 52% of that is [ free trading ]. So we do have the stock out there. Any other questions? :

Unknown Attendee: Okay. So I've been -- you've given forth -- that's it, Marty. It's enough because you've been pretty forthcoming with [ frees. You're set ]. It's, if somebody doesn't understand what you just said, too bad for them. You're just allocating funds where you feel that are going to do the best for the company. And maybe right now wasteful money on investor relations won't help the rental pool, won't help the purchase of new equipment and won't help the sales force get out there. I mean that's kind of what I got out of what you said.

Marty Tullio: That's correct, Elliott.

Unknown Attendee: All right, well, you guys, good luck. And I hope things move forward.

Marty Tullio: Thank you.

Lee Hamre: Yes. Thank you.

Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.

Lee Hamre: We'd like to thank all of you for participating in the call and for your continued support. We look forward to talking with you when we announce our third quarter financial results.

Thanks again. :

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.