HOUSTON, April 9, 2008 (PRIME NEWSWIRE) -- American Electric Technologies, Inc. (Nasdaq:AETI), the premium supplier of custom-designed power distribution and control solutions for the traditional and alternative energy industries, today released the 2007 annual report and the following letter to stockholders from the company's president, CEO and chairman, Arthur G. Dauber. The American Electric Technologies 2007 Annual Report can be viewed online at www.aeti.com.
Dear Fellow American Electric Technologies Stockholders:
When I introduced American Electric Technologies, Inc. to the investing public less than a year ago, I gave a brief introduction to our company. Today, I would like to tell you more about who we are and where we are going.
AETI was formed in May 2007 by the merger of M&I Electric Industries and American Access Technologies. We have grown from a regional provider of electrical products and services focusing on the U.S. Gulf Coast marine, industrial and energy markets, to a global provider of custom-designed power delivery systems for the largest energy companies in the world. We are headquartered in Houston with manufacturing operations and service centers in Houston and Beaumont, Texas, Florida, Mississippi, Singapore and China to serve global power distribution, drives and control needs of the traditional and alternative energy industries.
We can deliver customized, complex products for the toughest environmental conditions and which meet the broadest set of domestic and international regulatory certification standards. We have a worldwide sales, service and support team evidenced by more than 500 employees in the U.S. and an additional 200 employees via our international joint ventures. Our custom power delivery solutions and products include low-voltage and medium-voltage switchgear and motor control centers, AC and DC variable frequency drives, automation and control products, high voltage services, and electrical and instrumentation (E&I) construction services.
We have recognized the importance and superior growth rates of international markets and have developed strategic relationships in key energy markets such as China, Southeast Asia, the Middle East, South America and Canada.
In China, we have partnered with the largest Chinese provider of oilfield equipment, Baoji Oilfield Equipment Company (BOMCO) to create a joint venture to supply the growing drilling and marine markets. BOMCO is owned by China National Petroleum Company.
In Singapore we have partnered with Oakwell Industries to create M&I Electric Far East (MIEFE) to focus on the Southeast Asia market.
2007 was a particularly challenging period for the company, as we not only completed our merger with American Access Technologies to form American Electric Technologies, but we continued to pursue other growth opportunities at the same time. The success we achieved this past year is evidenced by our impressive sales growth and record backlog heading into 2008. In our recently published annual report, we reported $55.7 million in sales in 2007 compared to $45.4 million in 2006 and $34.9 million in 2005. In addition, we have increased the depth of our management team and enhanced our organizational structure to further position the company for growth.
Our joint venture in China reported 2007 sales of $49 million that are not consolidated in our financial results. We did add equity income of $1.4 million to our 2007 bottom line which represents the income resulting from our 40% ownership in the joint venture.
Our Singapore joint venture reported 2007 sales of $5.7 million that are not consolidated in our results. In addition, as part of our Singapore investment, we received gross proceeds of over $1.2 million and recognized realized gains of approximately $1.1 million from the sale of marketable securities of Oakwell Engineering, Ltd. for the year ended December 31, 2007. The Company recognized approximately $0.3 million in equity income from its 49 percent interest in MIEFE and received a $0.3 million dividend in 2007.
In 2007, the company made significant changes for future growth:
We became a publicly-traded company via the merger with
American Access.
We added new management.
We expanded into new markets and products.
We upgraded and installed new information systems.
However, these initiatives had a challenging impact on our 2007 operating margins. The entry into the commercial construction business, the introduction of new high-technology drive products as well as the integration of new people and a new organizational structure to support our future growth impacted our net income in 2007. We believe that each of these factors has been addressed and that the negative cost impacts should not recur.
Heading into 2008, solid execution of our business plan will be the key to our success. We are pleased with the substantial progress we have made to successfully integrate the two merged companies and are excited about our domestic and international growth prospects. We look forward to a promising 2008, as we are well positioned across our business segments. We concluded 2007 having set a company record with a backlog of $34 million, a 22% increase over 2006. We expect to set a company record for sales in 2008 excluding any revenue that may come from potential acquisitions. We also expect our earnings before taxes to return to the 2005-2006 levels of 5-8% of revenue by mid-year 2008. I am confident our team will continue to build on our momentum, optimize our assets, and deliver greater shareholder value.
We are not immune from local and global economic trends in the markets we serve. While demand for our products and services has benefited from recent high demand and prices experienced by our customers in the oil and gas industry, a decline in demand or prices for oil and gas will likely cause a decrease in demand for our products and services. However, we anticipate that increasing worldwide demand for energy will continue in 2008 and have set our plans accordingly.
For the remainder of 2008, we will focus on several key business objectives:
Alternative energy -- We will continue to pursue alternative energy markets, capabilities focusing initially on wind, biomass and geothermal energy, by leveraging our expertise in power distribution and control, drive products, high voltage services and construction.
International expansion -- We will continue to participate in the international energy and marine demand growth, particularly in China, South East Asia, India, Canada and the Middle East. In addition, we recently announced our new joint venture in Indonesia. Our 2006 investment in China (BOMAY) has been a success, setting the foundation for our excellent future growth prospects in that fast growing market. We also expect continued progress in Singapore where we hold a 49 percent interest in M&I Electric Far East, Ltd. (MIEFE), a joint venture with Oakwell Engineering, Ltd, a company listed on the Singapore Stock Exchange.
Product development -- We will advance technology in new and existing products and applications through research and development efforts and strategic relationships as we continue to identify and develop technology-based customer solutions.
Manufacturing rationalization -- We will continue with our manufacturing rationalization plan associated with our four domestic and two international manufacturing facilities for both capacity and cost effectiveness.
Management -- We will augment the depth of our management team and enhance our organizational structure to further position the company for sales growth.
Acquisitions -- We will seek to increase our sales and margins by evaluating and integrating new business development opportunities via synergistic mergers and acquisition targets from a technical process, operational and strategic fit perspective.
AAT -- We will add upgraded production equipment to American Access for capacity and productivity improvements.
I encourage you to view our company website, www.aeti.com, for more information about our business and operations and to keep up to date on current news and activities. I think you will be intrigued by our latest power point presentation posted in our investor relations section.
I want to thank our employees for their dedication and hard work; our customers for their confidence in our products and services; and our stockholders for their support. We believe 2008 will be an outstanding year for American Electric Technologies.
Sincerely,
Arthur G. Dauber CEO and Chairman, Board of Directors American Electric Technologies, Inc.
American Electric Technologies, Inc. (Nasdaq:AETI) is the premium supplier of custom-designed power delivery solutions to the traditional and alternative energy industries. AETI offers M&I Electric(tm) power distribution and control products, electrical services, and E&I construction services, as well as American Access Technologies zone enclosures, and Omega Metals custom fabrication services. South Coast Electric Systems L.L.C., a subsidiary, services Gulf Coast marine and vessel customers.
AETI is headquartered in Houston and has global sales, support and manufacturing operations in Beaumont, Texas, Keystone Heights, Fla. and Bay St. Louis, Miss. In addition, AETI has minority interests in two joint ventures which have facilities located in Xian, China and Singapore. AETI's SEC filings, news and product/service information are available at www.aeti.com.
Forward Looking Statements
This press release contains forward-looking statements, as defined in Section 27A of the Securities Exchange Act of 1934, concerning our anticipated future revenues, profits, plans and objectives. While the Company believes that such forward-looking statements are based on reasonable assumptions, there can be no assurance that such future revenues, profits, plans and objectives will be achieved on the schedule or in the amounts indicated. Investors are cautioned that these forward-looking statements are not guarantees of future performance. Actual events or results may differ from the Company's expectations, and are subject to various risks and uncertainties, including those listed in Item 1A of the Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. The Company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future events make it clear that any of the projected results expressed or implied herein will not be realized.