A rare event! A news item about Fantom. An earnings estimate too!
DJ Fantom Tech Plans News On New Pdts Within 30 Days
By Deborah Gardner
TORONTO (Dow Jones)--Fantom Technologies Inc. (FTMTF) will be announcing within 30 days more information on the two new products it expects to introduce as early as next spring, Allan Millman, president and chief executive, told Dow Jones.
As reported, one new product will be in the water-treatment field and the other will be a floor-care product, he said. He declined to offer any other information on these products.
"We would never simply come out with a product that is similar to anyone else's or (a product that simply does) what other products do," Millman said about the new products. "We're looking to capture technological high ground."
Robert Alonso, an analyst at Groome Capital Advisory Inc., believes the water-treatment technology will be a success because of Fantom's past successes with new technology.
Fantom has obtained the rights to several products developed by Omachron Technologies Inc., a company that develops patentable ideas for both civilian and non-civilian projects, and develops them into products for consumer use. Omachron and Fantom have been partners since August 1998.
Fantom then contracts industrial-design companies to create a product design of mass-market appeal. From the design, Fantom's engineers create working models and produce the product in either its Welland, Ont. plant or its newer West Columbia, S.C. facility. Fantom acquired South Carolina plant in 1998.
"It is because of that model that I think this (water-treatment technology) cannot fail," he said.
Vacuum Cleaners Started The Turnaround
After years of red ink when it was known as Iona Appliances Inc., Fantom started to turn things around with the introduction of a premium-priced line of dual-cyclonic vacuum cleaners. The technology uses proprietary dual-cyclonic technology, eliminating the vacuum bag, to capture dirt. This system provides constant peak cleaning power, compared with conventional vacuum cleaners where the cleaning power often declines as the bag fills up.
The company changed its name to Fantom Technologies in May 1997 and the line now consists of four vacuum cleaner models - the Fury, the Thunder, the Lightning and the newest model, the Cyclone XT.
In an effort to get the new products in retail stores and to build brand-name recognition, Fantom launched a 30-minute infomercial in the U.S. in the fall of 1993. Within a year, 44% of Fantom's sales were generated from the infomercial. However by 1998, most of the sales were generated from retail outlets and direct-response sales made up only 9% of total revenues.
The company continues to air four infomercials in the U.S. In Canada, the lack of available airtime forces the company to rely on 60-second commercials.
Although the products are advertised and sold on the Internet, online sales play a small role. But Millman said the Internet is still in its infancy and "as time goes on and as more people have access to the Internet and we do up more sophisticated ways to drive people into our Web site, (sales) will increase."
Since 1995, Fantom has seen record-breaking fiscal year-end sales and earnings. In the fiscal year ended June 30, 1998, the company posted net income of C$10.3 million or C$1.18 a basic share, compared with year-earlier net income of C$7.4 million or 88 Canadian cents. Fiscal 1998 sales were up 18% to C$177.6 million.
9 Mos FY1999 Sales Ahead Of Entire FY1998 Level
Results so far in fiscal 1999 show continued gains. Net income for the nine months ended March 31 was C$10.9 million or C$1.21 a basic share, up from C$7.2 million or 83 Canadian cents a year earlier. Sales for the nine months of C$180.7 million were up 45% from a year earlier and are already ahead of sales for all of fiscal 1998.
Alonso predicts earnings of C$1.51 a basic share for fiscal 1999 and C$1.73 a basic share for fiscal 2000.
Fantom's vice-president and chief financial officer, Stephen Doorey, said Alonso's earnings forecast for fiscal 1999 seems reasonable but he declined to comment on the projection for fiscal 2000.
Millman said Fantom plans to launch a "minimum of two new products each year" for the next three to five years, with several products in the household-applicance category now under development. Each product will feature a new, defining technology, he said.
He said the new products will initially be launched in Canada and the U.S but the company is examining international marketing opportunities. Millman he hopes that marketing opportunities, such as finding distribution partners, will present themselves once the products are on the market.
Alonso said his "fairly conservative" target for the stock is C$23 over the next 12 months. He said he expects the stock to rise when the company's water-treatment technology receives third-party verification.
Doorey said such verification will likely come earlier than the fall, which was the original expectation. However, he couldn't provide more precise timing.
In Toronto trading Thursday, the stock is up 0.50 to 18.00 on about 12,000 shares.
-Deborah Gardner; 416-306-2100 |
