Fuel-System Maker Enjoys Stock Rise Despite Losses.THE losses are piling up at Impco Technologies Inc., and investors are excited about it. The Cerritos-based manufacturer of fuel systems for alternative-fuel engines has posted three consecutive quarterly losses -- with a fourth projected -- but the stock has risen more than 80 percent since the beginning of the year. Despite the losses, three "buy" ratings have been issued on the stock in recent months, driving the stock from a 52-week low of $9.75 a share in December to $22.50 as of last week. What's so hot about this money loser (jargon) loser - An unexpectedly bad situation, program, programmer, or person. Someone who habitually loses. (Even winners can lose occasionally). Someone who knows not and knows not that he knows not. ? Analysts say the company is making good money in its core market -- providing fuel systems for natural gas and other alternative-fuel engines. The losses are primarily due to stepped up R&D expenditures aimed at gaining a technological lead in the exploding market for fuel cells, an odds-on bet to eventually replace the combustion engine. "It's the steak in the sizzle siz·zle intr.v. siz·zled, siz·zling, siz·zles 1. To make the hissing sound characteristic of frying fat. 2. To seethe with anger or indignation. 3. ," said Eric Prouty, an analyst with Robertson Stephens. "It has a core existing business which is profitable -- their alternative-fuels business -- but it also has the sizzle of the fuel-cell arena." Impco, which began making alternative-fuel delivery systems upon its founding in 1957, struggled through the early 1990s under a heavy debt load after a buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. . However, with air-quality regulators worldwide looking to reduce pollution, its performance has been strong in recent years. Revenue more than doubled from $52 million in fiscal 1996 to $113 million in the fiscal year ended April 30, 2000, as it developed its niche technology of fuel storage, metering and delivery while expanding to Mexico, Europe, Japan and Australia. "We provide the enabling technology," said Robert Stemmler, company president, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and chairman. "If you try to be all things to all people, you fail." The company's Irvine research center employs about 20 percent of the company's more than 800 employees. A $53.5 million equity offering last July allowed the company to hike its R&D spending to $13.2 million in the first two quarters of this fiscal year, more than twice the amount spent in the year-earlier period. And it is that increased expense that accounts for the company's losses, confirmed company CFO See Chief Financial Officer. Brian Olson. "We are at a point in time where the company can accept its opportunity or go about its business, status quo [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. ," Olson said. "We decided we wanted to (reach beyond the status quo and) capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the investments going into fuel-cell technology. We made a deliberate decision to step into the red." The company reported a net loss of $1.4 million (13 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the second fiscal quarter ended Oct. 31, compared with net income of $1.5 million (17 cents per diluted share) in the like year-earlier quarter. Second-quarter revenues were $25.4 million, vs. $27.4 million in the year-earlier period. Third-quarter results are due out in early March. Company officials won't comment on them, but analysts are projecting a net loss of 22 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Analysts also are high on the company because of its aggressive moves to either offer its technology to or form strategic alliances with other companies with an interest in alternative fuels or fuel cell technology, including General Motors Corp. and Ford Motor Co. Last year, for example, Hyundai hired Impco to develop a fuel-storage-and-delivery system for its prototype Santa Fe Santa Fe, city, Argentina Santa Fe, city (1991 pop. 341,000), capital of Santa Fe prov., NE Argentina, a river port near the Paraná, with which it is connected by canal. fuel-cell powered SUV. Moreover, a key competitor in the hydrogen fuel storage business, Thiokol, a subsidiary of Alcoa Inc., formed an alliance last year with Impco to develop fuel tanks for the automotive fuel-cell market. Stephen Wing, an analyst with Auerbach, Pollack pollack: see cod. pollack or pollock Either of two commercially important North Atlantic species of food fish in the cod family (Gadidae). and Richardson, said that these alliances, along with company patents, are critical in emerging technology. Once one company breaks out into the lead, it's hard for others to catch up. "They can possibly put up extreme barriers to entry to anybody else, and once you get to a certain size and capture a certain part of the market, there is a certain amount of momentum. You can spread your R&D costs out," Wing said. "This is a company that could be a $1 billion company over the next 10 years. And for a $100 million company -- that's saying something."
Impco Technologies Inc.
YEAR (Dec. 31) 2000 1999
Revenue (millions) $112.8 $86.8
Operating Expenses (millions) 66.0 48.8
Operating Income (millions) 46.8 38.0
Net Income (millions) 3.1 6.3
Earnings Per Share $0.33 $0.46
SUMMARY Business: Systems for the alternative fuels market Headquarters: Cerritos CEO: Robert M. Stemmler Market Cap: $231.2 million Dividend Yield: N/A [*] Total Liabilities: $20 million P/E Ratio P/E ratio Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings. : N/A [*] Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. : $7.95 million (*.) Impco Technologies does not pay dividends and has not reported any earnings for three successive quarters. |
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