American Electric Technologies (AETI)

[timhyma]

P/E eval comes to $6, imo.

They do have an increase in backlog from TP&S: $14mil, and stated about half that will be realized next quarter, so- look for better numbers going forward.

E&I backlog increase also: $16mil, and one third will be realized next quarter.

http://biz.yahoo.com/e/070814/aeti10qsb.html

The outlook provides hints of possible dilution, imo.

Outlook for Fiscal 2007

The Company's revenues reflect an increase over the prior year period although the rate of growth has moderated from the previous several years. The increase in growth is partially attributable to the consolidation of the AAT segment's operating results as a result of the May 15, 2007 merger. Management expects the increasing trend to continue throughout 2007 based on existing backlogs and bidding activity as well as the AAT merger. The moderation in rate of increase, particularly in the TP&S segment, is associated with the slowdown in drilling activity in North America. This trend has been widely reported by other companies whose revenues are influenced by oil and gas drilling. The Company has reported lower operating margins during the current period due to several contracts that experienced underestimated expenses as well as higher infrastructure costs in information systems, administration and sales and marketing. The Company expects operating margins to improve in the second half of the year. Due to the sale of a majority of the marketable securities held by the Company, we experienced a non-recurring gain during the current period.

AETI has experienced a substantial increase in its working capital needs that it has been able to finance through existing cash balances and utilization of its revolving credit facility. This trend will increase as the Company's operating levels continue to increase. The Company believes its existing cash, working capital and unused credit facility combined with operating earnings will be sufficient to meet its working capital needs for the next twelve months.

Effects of Inflation

AETI has experienced significant price increases in its crucial raw materials, particularly copper, steel and aluminum since the beginning of 2005. At this point, the Company has been generally successful in recovering these increases from its customers in the form of increased prices. As a result, the Company has not experienced margin erosion due to inflationary pressures. We cannot be assured that the competitive environment will enable us to recover these cost increases in the future.