Amerigon: Turning a 19th century idea into a 21st century product
Amerigon Inc. (Nasdaq: ARGN)
Northville, Michigan
http://www.amerigon.com
52-week low / high: $9.04 / $22.35
Shares Outstanding: 21.75 million
Market Capitalization: $376.08 million
Using the most innovative technology you’ve never heard of, Amerigon Inc. (Nasdaq: ARGN) has created what well may become a billion dollar business within the space a generation.
Amerigon is the leading manufacturer of electronically heated and cooled seats, sold under the brand “Climate Control Seats” (CCS). CCS is the only system on the market that allows drivers and passengers to actively heat or cool their seats individually at any time of the year.
Amerigon’s core technology is based on the “thermoelectric effect,” which was first identified by two European scientists (Peltier and Seebeck) working independently in the 19th century. Essentially, the thermoelectric effect generates an electrical field from differences in temperature of non-conductive, solid materials. In reverse, the thermoelectric effect uses electricity to generate heat or cold.
The company’s offering is built around its highly efficient, solid-state (thermoelectric device or TED) and is completely independent of the automobile's heating and air conditioning system. What’s more, it does not reduce power available to the engine and emits no CFCs or other gases.
The company began sales to the automotive market in 1999 and now supplies the world’s leading manufacturers, including Ford, Land Rover and Jaguar, GM, Toyota, Hyundai, Nissan and Infiniti. More than 3.2 million units were sold through October 2007.
The company’s research arm, BSST, a wholly owned subsidiary, works to adapt (and license) its technology to novel applications, in a variety of industries, including aerospace, naval and battlefield defense, telecommunications, computers and biomedical. BSST is also actively pursuing the development of power generation applications from waste heat, such as exhaust.
Revenues for the third quarter ended Sept. 30 rose 25% from a year earlier to $15.9 million. For the nine-months, revenues were up 32.6% to $47.2 million.
Earnings before taxes for the third quarter increased to $2.0 million from $1.5 million, up 36%. For the nine months earnings before taxes were $6.2 million, up from $4.0 million.
Net income for the third quarter was $1.3 million, or $0.06 per basic and diluted share. That’s up from $900,000, or $0.04 in 2006. For the nine months, net income was $3.9. million, or $0.17 per diluted share, up 56% from $2.5 million, or $0.11 per diluted share in 2006.
Analysts see Amerigon on track to generate $63.17 million in total revenues through the end of 2007. Sales for 2008 are estimated at close to $90 million. KeyBanc initiated its coverage of Amerigon with a “Buy” rating and a price target of $24, based on estimated annual sales growth of 25% over the next two to three years. The company has a solid balance sheet with cash, cash equivalents and short-term investments of $20.4 million, no bank debt and shareholders' equity of $40.1 million.
All in all, pretty spectacular results for a 19th century idea and 21st century innovation.
Note: Amerigon Inc. (Nasdaq: ARGN) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Amerigon displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.
About the Author
Greg Contreras is a freelance writer in New York, with a background in international sales and marketing, and management consulting.
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