Today’s release (below) from the American maker of ballistic and mine protected vehicles, Force Protection (OTCBB: FRCP), trumpets an order for 15 more Buffalo vehicles for the military. This most recent contract is valued at $10 million—likely more with parts and spares.
By my calculation, that means that Force Protection has secured in excess of $40 million worth of orders in the first 9 months of 2004. Revenue for all of fiscal 2003 was just over $6.2 million.
With a current market cap of around $40 million, risk-oriented investors who do the math will likely conclude that at 22-23 cents, the shares appear very compelling and should therefore be accumulated at these levels.
Assuming that half of those orders—about $20 million-- make it into this year’s business that leaves a roughly $20 million backlog to begin 2005 --even if no further orders materialize in fiscal 2004. But, gentle reader, the year isn’t over yet. It seems that the more contracts FRCP secures, growth simply continues to accelerate. Now that’s some decent horsepower for a small company.
Small for now, apparently.
As you read this, Friday, CEO Michael Watts is hosting “South Carolina Strikes Back’ at the company’s South Carolina HQ. Various influential politicians and military folk will be in attendance as well as having a facilities tour and Q&A for shareholders. We mentioned this event in our previous piece on August 25th. At that time—a mere two weeks ago-- the shares were trading at around 15 cents. On Tuesday last, trading volumes began to swell and on Thursday the stock traded 4.5 million shares by the close. The share price closed at 21 cents after having hit 24 cents mid-day.
Force Protection has gained the ear of the government and its products appear to be becoming critical to the war on terror and the war in Iraq. The vehicles have seen action in those areas and have taken numerous hits with no serious casualties and have been put quickly back into service. With the proliferation of roadside bombs and other escalating insurgent weaponry, the vehicles have performed as advertised. New –and larger--orders from the military attest to the keen interest of the military as well as the safety attributes of the vehicles in hostile situations.
American made. Enough said.
By the way, these state of the art, customized vehicles are completely designed and built in the USA. The company recently announced expanded production facilities in South Carolina that allow it to build up to 500 vehicles a year as opposed to 180 in their previous facility. At the rate contracts are appearing, the increased facilities couldn’t have come at a better time.
By now, it should be apparent that FRCP’s share price has lagged the company’s progress. With a price to sales ratio of roughly 1:1, there seems a decent amount of upside, even if no more contracts are booked this year, which is highly unlikely in our opinion. An expansion of that price to sales number to say a modest 5:1 puts the shares at roughly $1. Even half of that move would be a very acceptable return.
We believe that the next 6-12 months should be great for both Force Protection and those risk-oriented investors who want exposure, now, to the outstanding growth of the company both year-to-date and beyond.
Force Protection, Inc. Announces New Request for Additional Armored Vehicles
Ladson, S.C. - Sept. 10, 2004 – Force Protection, Inc. (OTCBB:FRCP - News), the leading manufacturer of mine-protected vehicles for military and security users, has received a request from an existing customer for an additional 15 “Buffalo” vehicles, to be put under contract as soon as possible. Deliveries are planned for the first quarter of 2005.
The configuration of these Buffalos will be essentially the same as the configuration of the 21 Buffalos currently being produced for the U. S. Army. The order has a value of about $10 million, although a related spares order, which has not yet been finalized, may push the total somewhat higher.
“This request underscores the critical need that Force Protection’s vehicles continue to meet,” said CEO Michael Watts. “We employ the most advanced ballistic and mine protected technology in the world and are clearly becoming the manufacturer of choice for those who want to protect and save lives. That the Buffalos in the field have done their job very well is of paramount importance.”
The Buffalo combines advanced protection against landmines, IEDs (roadside bombs) and other blasts as well as small arms fire with state-of-the-art automotive components. It has multiple mission configurations and can be repaired in the field; it has been deployed with the U.S. Army in Iraq and Afghanistan. The Buffalos have taken numerous hits from landmines and IEDs but no serious casualties have resulted and the vehicles have been placed back into service. In addition, 14 Cougars have recently been committed for use by the U.S. Marines in Operation Iraqi Freedom II. The Cougar is also protected against mines, IEDs and small arms fire. The Cougar is smaller than the Buffalo and has been specifically configured to meet the needs of the Marines.
The additional Buffalos will be produced at the company’s 225,000 square foot facility in Ladson, near Charleston, S.C.
About Force Protection, Inc.
Force Protection, Inc. manufactures ballistic and mine protected vehicles through its wholly owned subsidiary, Technical Solutions Group (TSG). These specialty, protected vehicles are protected against landmines, hostile fire, and Improvised Explosive Devices (IEDs, commonly referred to as roadside bombs). Force Protection's mine and ballistic protection technology is among the most advanced in the world. The vehicles are manufactured outside Charleston, S.C.
For more information, visit forceprotectioninc.com
This release contains forward-looking statements, including, without limitation, statements concerning our business, future plans and objectives and the performance of our products. These forward-looking statements involve certain risks and uncertainties ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Technical complications may arise that could prevent the prompt implementation of the strategic plan outlined above. The company cautions that these forward looking statements are further qualified by other factors including, but not limited to, those set forth in the company's Form 10-KSB filing and other filings with the United States Securities and Exchange Commission (available at sec.gov). The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise, except as required by law.
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CONTACT
Policy Impact Strategic Communications
Jeff Child, 202-661-6372 (Media Contact); cell 202-412-1567
jchild@policyimpact.com
Force Protection, Inc. Investor Relations, 843-740-7015, Ext 233 investorrelations@forceprotectioninc.com
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