Flying high with AYSI
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Quite the pleasant surprise for a sleepy January 12th! I must have checked ihub minutes before the PR and I was just happy with the small pps bump. My guess is that AYSI and Gene were swamped approaching the holidays (aren't most of us), got the 10K out just before the shutdown, took a well deserved break, and are now trying (not as polished as some would like, but certainly something new for AYSI) to provide some additional detail to reassure the investors who were understandably disappointed by the 10K. I was tempted to send Gene an email expressing my dismay at the lack of discussion in the 10K because I thought past year's reports were better. Gene is human after all and I am sure he can't get everything done he would like to, just like most of us. If he managed to increase market share from 20-80%, then I contend he was focused on the right priorities. My investment will benefit from that focus in the long run. Thanks for the update Gene and the AYSI family for their hard work. My confidence in this company is at an all time High!
Mat
Dave,
Thanks for your DD, I was thinking about asking you if you heard back from Gene this morning and I find this. As usual, you are a few steps ahead of the rest of us. Since the third mill is in construction I expect earnings to suffer a bit for the foreseeable future, but portends an even greater future if demand remains strong.
I am still baffled at the 10-K and the minimal detail. It seemed to be much less detail than past AYSI 10-K. May have to buy more...
Mat
DOW 9500, Oil 94, Gold 1,300
10-K, my thoughts:
Definitely a disappointment, but not a complete surprise either since we knew there would be startup costs, margins were not expected to be ideal, and the two mills were only operating during part of the quarter.
"This is a significant technological breakthrough which will see this plate be specified consistently in new mining projects and become the norm for replacements in upgrades for existing mining operations." is a positive note consistent with past PR.
"We anticipate incurring increased expenditures in connection with our marketing activities." This should indicate decreased margins for now and going forward.
"We are, however, confident that the continuing development of our alloys and subsequently our product range will allow us to hold and increase our presence in the market place." Good statement regarding competition and growing presence.
"We employed 38 persons on a full-time basis as of December 1, 2009, including two executive directors, fourteen administrative personnel, three marketing personnel and nineteen manufacturing personnel. " Compare to last year of 33 employees and projection for 3 more.
Risk analysis is sobering, but not unexpected.
"The gross profit percentage decreased to 34.8% in 2009 from 51.6% in 2008 due to the adoption of more favorable pricing policies for larger orders and tenders during the year, this was caused by all the companies in the industry chasing limited orders and purchasers shopping on price not necessarily quality. " Definitely had markdowns as expected, it would be nice to know how much markdown is involved in the BHP strategic supply agreement.
"We do not believe there is a need for a provision for doubtful accounts as of September 30, 2009." coupled with an Accounts Receivable increase of ~1M hopefully means a bump this quarter.
Current ratio is still near 2, stockholders equity up a bit,
Antsy is the word, they spoiled us with early reporting last year and I was expecting more of the same this year. Hopefully it is taking longer to add up all those revenues and profits! Although the most important information will be any discussion of current and future operations/mills/JV. Standing, pacing, patiently....
I have been lurking with my investment unchanged, but I think it is 50/50 whether the 10K will have a positive impact on the short term price, but the long term information (margins, mills, Indonesia, product demand through this ongoing quarter, other) will have a huge impact on 2010. Based upon how AYSI has been managed for the last couple of years, I am extremely optimistic.
Mat
Based upon the last two releases of information, $2.50 is an excellent entry point for AYSI. I am so tempted to buy some more, but I have no free cash and already own 80K shares of AYSI.
Mat
Nice. AYSI continues down a path of growth that should reward shareholders handsomely. More detail would be nice, but I am sure Gene doesn't want to provide too much detail, especially since things are progressing so quickly and the trend has been to be conservative on what is reporting and then over-deliver. It is a much better scenario than what is followed by many other small companies.
Mat
Dave,
Thanks for your efforts to accumulate the questions. Are you the one driving the price up today? I wonder who is so interested in getting in? Maybe there is pending news that Alan and Gene know will answer some of the questions? Regardless, it is nice to see the strength.
Mat
I will go with the Jets.
Thanks,
Mat
Good questions, how about some other easier ones
What was the total cost for construction and testing of Mill #2 and are 3 and 4 expected to be comparable?
Are there any plans for additional JV?
Will the new mills be only for superacroplate, or are there thoughts to restart the piping product line?
Thanks,
Mat
Can I have Dallas please?
A trading range around $2.5 while we await additional good news works just fine for me. I wouldn't be surprised if we drop lower since it will be awhile before I expect we will hear more. I was tempted to unload a few at $2.7, but the future is too bright and we could get another blockbuster PR and I would hate to miss out. Good luck to any who are hoping for a dip to buy more. I hope the market cooperates with you.
Mat
I will go with Chicago
Gilead,
I agree with your analysis 100%. AYSI does not look particularly good to someone who is not familiar with the overall story. Someone is clearly accumulating and they must believe AYSI is headed much higher to continue at this steady rate. It will be very interesting to see where we stabilize out since we still have ~3 mo for the next report. Another nice PR in another month would be nice to keep things moving up until #s are out would be ideal. Regardless, the true believers are being rewarded for their faith and patience.
I am thankful to be a member of that group.
Mat
I will go with Green Bay
All participants are welcome. It would be nice to rocket past $5 in the next couple of months and be comfortably in double digits by this time next year.
Mat
For anything over $5, I think we should plan to meet at the next Annual meeting. Maybe we could even buy Gene and some of the other key company leaders a beer at that point. Sounds like at least 3 of us would be interested.
Mat
16.6% paper return for the week. Not bad after the big pop last week. I was hoping the run yesterday was a prelude to more news, but it looks like that is not the case. It would be great to establish a trading range above $2 until the next bit of news or report. I for one will be happy with anything over .05 for the current quarter, but I wouldn't be surprised to see AYSI hit twice that amount. Hopefully the report will provide additional discussion on the plans for mills 3 and 4 and it would be great to see an estimate based upon the costs recently incured for mill #2. The future looks bright!
Mat
Minnesota please.
I will go with Phily.
Thanks
Good discussion, but the negative cost impacts include:
Delivery and recognition of revenue may cause larger swings in when the revenue is realized in the quarterly reports.
In-progress inventory will most certainly be higher
Costs of mills will affect profit margin.
My intention on my guestimate was to provide a lower end to the expectations. Good to see the volume of posts and discussion on the future.
Mat
I agree that conservatively AYSI should be able to generate $7-8M/qtr which I would hope would result in net income north of .10/shr. If the two new mills are constructed using existing cash flow like the last one was, I would hope AYSI can stay steady around .10/shr until the next mill is functioning. It would be nice to know the costs of the second mill. Property and equipment costs this year were ~100K/qtr and the last two years were between 500-650K/yr. The costs of the second mill were not particularly evident in the numbers as I saw them.
I hope the next two mills are funded through either short term debt or existing cash flow and that dilution is not necessary. The lack of dilution by AYSI has been a significant factor in my confidence of management and the company.
Looks like the longs are holding tight. It would be nice to stabilize out around $2 until the next bit of good news arrives.
Did you try the email at the bottom of the PR yesterday? I originally sent an email through the AYSI website a year ago and received responses from Alan and Gene shortly after. I have the email addresses at home and sent a congratulatory email to Gene last night. Will advise if I receive a response.
Mat
What a pleasant surprise! Just expecting to check on my biggest holding for the day and to see this... Christmas is coming early this year, up >$75K for the day. Sometimes it pays to hold on a POS, in the words of RAW. Whoever picked AYSI in PSL will be a runaway leader after this. Thanks to littlefish and the other regulars who have discussed this stock and stuck it out since the downturn, our faith and patience are starting to pay off and the next year or so may be even more rewarding! A congratulatory email to Mr. Kosteci is certainly in order.
Mat
AYSI is also my biggest holding and I am upbeat on prospects for the future. I have bought a few more shares under .50 and am planning to monitor progress over the next couple of quarters. Best of luck to all.
Mat
Although I was hoping for a profitable quarter, I am happy to see the investment and demand related to the second mill. A couple more orders like this initial $3.2M and AYSI will be right back on track. Hopefully we will see a reduction in the inventory commensurate with the increased orders and revenue.
Mat
Unless the historically conservative AYSI management approach has changed dramatically, this news means either demand has increased or testing indicates the new mill provides a better product at a reduced/equivalent cost. It would be great to know if the existing mill is operating at capacity, or it is being placed into standby. This increases my confidence in this investment dramatically and I am glad I am loaded up on AYSI. I don't expect a great 10Q, but if AYSI can continue to be profitable, the future looks bright!
Mat
Good thoughts. Hopefully it is all of those variables and some additional good news (increased orders, commissioning second mill) to foretell an even better future.
Nice finish, any ideas why?
That would be a good guesstimate. Way too much uncertainty with how the economic struggles have impacted the company for me to guess. I would be very happy with .01 and some positive discussion of future orders. It would be nice to get enough volume to operate the second mill.
Mat
Wow, administration with a capital A, now that is ominous...
Yes, I have dumped my small position on this one.
Note to Raw: Here is a company that absolutely qualifies as a POS!
I see, that would definitely be more painful and probably change how I invest in a stock like AYSI.
Thanks,
Mat
I never said I want to see foreclosures and I agree 100% with restructuring loans to extend the terms, decrease the interest, some lease to buy back in the future option, or a business decision by the bank or future owner to sell at a loss. However, I disagree with a program that mandates principle reduction. It has nothing to do with cutting off ones nose to spite ones face. Unfortunately there is some percentage of homowners who live in a house that they can't afford and that is just a fact.
Mat
Laz,
Besides "principle reduction" is EXACTLY what the banks are getting in 98% of the foreclosures and "short sales."
Although reality may dictate that the bank is taking a principle reduction, the former homeowner is also punished by losing the property and not rewarded by retaining the property and the potential for future gains. I completely disagree with a principle reduction program.
Mat
I don't see it that way, I see it as someone trying to promote some panic selling to get some cheap shares. This is made easier because the overall volume is horrible and there is low expectations for the immediate future. Kind of like exagerating posts to play on investor emotions (either to the positive or negative) to support your own personal profit. Just my opinion.
Mat
No, I have an overall order that is getting partially filled with each 100 share order. I only pay one commission for the overall limit order that hopefully will be completely filled before all is said and done. I may be slow, but not so slow that I would put in a 100 share order for a stock at this price.
Mat
Someone is persistently trying to drive AYSI down to .25. My order is still out there, but only filling in 100 share increments.
Mat