NORTHVILLE, Mich., Oct. 27 /PRNewswire-FirstCall/ -- Amerigon Incorporated (Nasdaq: ARGN), a leader in developing and marketing products based on advanced thermoelectric (TE) technologies, today announced record revenues and a substantial increase in net income for the third quarter and nine months ended September 30, 2010. This year's third quarter marks the Company's fifth consecutive quarter of record revenues.
Product revenues for this year's third quarter increased to $30.5 million, up 65 percent from $18.4 million in last year's third quarter, and up 6 percent sequentially from $28.8 million in the 2010 second quarter. The increase in revenues primarily resulted from a much improved automotive marketplace which resulted in higher vehicle production levels on existing vehicles offering the Company's Climate Control Seat® (CCS®) systems. New model introductions, especially in the Asian markets, also contributed to higher revenues. CCS systems include both TE-based heated and cooled systems and heated and ventilated seat systems.
Amerigon President and Chief Executive Officer Daniel R. Coker said, "It appears that the industry has begun to recover after the disruption the global automotive market experienced in 2008 and early 2009, although it is currently well below previous levels. The record results we have produced have been achieved by successfully penetrating existing vehicle lines and growing our business through new vehicle introductions and new applications outside of the automotive industry. We expect this growth in revenue and profitability to continue."
Automotive production was significantly higher during this year's third quarter as compared to the prior year period. Production of light vehicles in North America increased by 26 percent to 3.0 million during this year's third quarter from 2.3 million during the prior year period.
Gross margin as a percentage of revenue for the 2010 third quarter was 29 percent compared with 25 percent in the third quarter of 2009. The year-over-year increase was primarily attributable to a favorable shift in the mix of products sold, lower raw material costs and higher coverage of fixed cost at the higher volume levels. Net income attributable to Amerigon Incorporated for this year's third quarter was $2.7 million, or $0.12 per basic and diluted share, compared with net income attributable to Amerigon Incorporated in the prior year third quarter of $1.1 million, or $0.05 per basic and diluted share.
For the first nine months of 2010, product revenues increased to $83.5 million, up 112 percent from $39.3 million in the prior year period. Gross margin as a percentage of revenue for this year's first nine months was 29 percent compared with 24 percent in the first nine months of 2009. Net income attributable to Amerigon Incorporated for this year's first nine months was $6.6 million, or $0.31 per basic and $0.30 per diluted share, compared with a net loss attributable to Amerigon Incorporated in the prior year period of $0.7 million, or $0.03 loss per basic and diluted share.
The Company entered into the next major market arena outside automotive seating for its TE technology with the September launch by Mattress Firm, Inc., one of the nation's leading specialty mattress retailers with more than 580 locations across 22 states, of a new suite of actively heated and cooled luxury mattresses. The mattress which uses Amerigon's TE technology to actively heat and cool each side of the mattress independently via two wireless remotes is currently available in retail locations in Austin, TX, and was successfully unveiled with initial units sold at the State Fair of Texas which took place September 24 through October 17.
Coker added, "This is the first time technology such as thermoelectrics has been introduced to the bedding industry. The initial response to the launch has been positive. Consumers have been amazed at the level of heating and cooling that is achieved through the mattress surface. We believe this unique mattress system will set new standards of year-round sleeping comfort. We began shipping initial inventory orders of our technology for this application during the third quarter and look forward to the nationwide roll out expected early next year."
The Company continues to work towards expanding its TE technology to other major market arenas. The Company's objective is for its unique technology to occupy an important place in the value chain of a new class of solid state energy conversion systems that replace existing electromechanical devices in a number of potentially large market sectors, including other automotive applications, stationary temperature management, aerospace and defense, waste heat harvesting and primary power generation.
The Company's balance sheet as of September 30, 2010, strengthened with total cash, cash equivalents and short-term investments of $35.4 million, total assets of $77.9 million, no bank debt and shareholders' equity of $56.3 million.
CCS systems are currently offered as an optional or standard feature on 49 automobile models produced by Ford, General Motors, Toyota, Nissan, Honda, Hyundai, Kia and Jaguar/Land Rover. New vehicles equipped with CCS systems and launched since the third quarter of 2009 included the Ford F-250, Nissan Patrol, Infiniti QX56, Kia Mohave, Kia Borrego, Kia Sportage, Kia Optima, Hyundai Tucson and the Hyundai Sonata.
Unit shipments of CCS systems for the 2010 third quarter and first nine months were 429,000 and 1.2 million, respectively, compared with 268,000 and 565,000 units for the year-earlier periods. As of September 30, 2010, the Company had shipped more than 6.5 million CCS units to customers since 2000.
The 2010 third quarter and nine-month results include a year-over-year increase in net research and development expenses of $1.0 million and $2.3 million, respectively, primarily due to the advanced TE materials program at ZT Plus. In March 2010, Amerigon purchased all of its partner's 50 percent interest of ZT Plus and became the 100 percent owner of that operation. The Company is also developing new products, such as a heated and cooled cup holder and cold storage box, and improving the current CCS system. The costs associated with these projects increased during this year's third quarter as several of the projects near the commercial launch phase of development, including the September launch of the heated and cooled mattress. The cup holder is expected to be launched in the automotive market before the end of the year.
Selling, general and administrative expenses for this year's third quarter and first nine months increased $0.5 million and $1.1 million, respectively, due primarily to an increase in the number of sales professionals. The Company increased its resources in order to support increased selling activities in South Korea, Europe and China. In addition, the increase for the nine-month period included higher stock option expense.
The Company expects product revenues in the 2010 fourth quarter to be flat to marginally down compared with the 2010 third quarter due to the holiday schedule, representing a significant increase from the 2009 fourth quarter product revenue of $21.6 million. Revenues for 2010 should be more than $100 million, up from $60.9 million in 2009. Net income for the 2010 fourth quarter and full year is expected to increase substantially over the prior year periods.
As previously announced, Amerigon is conducting a conference call today to be broadcast live over the Internet at 11:30 AM Eastern Time to review these financial results. The dial-in number for the call is 1-877-941-1429. The live webcast and archived replay of the call can be accessed in the Events page of the Investor section of Amerigon's website at www.amerigon.com.
Amerigon (NASDAQ-GS: ARGN) develops products based on its advanced, proprietary, efficient thermoelectric (TE) technologies for a wide range of global markets and heating and cooling applications. The Company's current principal product is its proprietary Climate Control Seat® (CCS®) system, a solid-state, TE-based system that permits drivers and passengers of vehicles to individually and actively control the heating and cooling of their respective seats to ensure maximum year-round comfort. CCS, which is the only system of its type on the market today, uses no CFCs or other environmentally sensitive coolants. Amerigon maintains sales and technical support centers in Southern California, Southeast Michigan, Japan, Germany, England and Korea. For more information, visit the Company's website at www.amerigon.com.
Certain matters discussed in this release are forward-looking statements that involve risks and uncertainties, and actual results may be different. Important factors that could cause the Company's actual results to differ materially from its expectations in this release are risks that sales may not significantly increase, additional financing, if necessary, may not be available, new competitors may arise and adverse conditions in the automotive industry may negatively affect its results. The liquidity and trading price of its common stock may be negatively affected by these and other factors. Please also refer to Amerigon's Securities and Exchange Commission filings and reports, including, but not limited to, its Form 10-Q for the period ended September 30, 2010, and its Form 10-K for the year ended December 31, 2009.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
Cost of sales
Research and development
Research and development reimbursements
Net research and development expenses
Selling, general and administrative
Total operating expenses
Operating income (loss)
Interest income (expense)
Loss from equity investment
Earnings (loss) before income tax
Income tax expense (benefit)
Net income (loss)
Plus: Loss attributable to non-controlling interest
Net income (loss) attributable to Amerigon, Inc.
Basic earnings (loss) per share
Diluted earnings (loss) per share
Weighted average number of shares – basic
Weighted average number of shares – diluted
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
Cash & cash equivalents
Accounts receivable, less allowance of $799 and $292, respectively
Deferred income tax assets
Prepaid expenses and other assets
Total current assets
Property and equipment, net
Patent costs, net of accumulated amortization of $651 and $490, respectively
Deferred income tax assets
Other non-current assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Deferred manufacturing agreement – current portion
Total current liabilities
Pension Benefit Obligation
Deferred manufacturing agreement – long-term portion
No par value; 30,000,000 shares authorized, 21,805,247 and
21,486,309 issued and outstanding at September 30, 2010 and December 31, 2009, respectively
Accumulated other comprehensive income
Total Amerigon, Inc. shareholders' equity
Total shareholders' equity
Total liabilities and shareholders' equity
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
Net income (loss)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization
Deferred tax provision (benefit)
Stock option compensation
Defined benefit plan expense
Loss from equity investment
Changes in operating assets and liabilities:
Prepaid expenses and other assets
Net cash provided by operating activities
Purchases of short-term investments
Maturities of short-term investments
Purchase of ZT Plus assets, net of cash acquired
Cash invested in corporate owned life insurance
Purchase of property and equipment
Net cash used in investing activities
Proceeds from the exercise of Common Stock options
Net cash provided by financing activities
Foreign currency effect
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosure of cash flow information:
Cash paid for taxes
Supplemental disclosure of non-cash transactions:
Issuance of Common Stock under the 2006 Equity Incentive Plan
Contribution to equity investment
SOURCE Amerigon Incorporated