I finally found time to talk with Jim White, who handles SIRN's investor relations, to obtain more information on the company. He was very helpful and forthcoming. (If anyone else has questions, his phone number is 562-437-0655. You also can obtain an investor's package by calling this number.)
Here's a summary of what I learned (all words are my own, not Mr. White's):
1. SIRN is in the process of incorporating Apparel Technologies' new digital printing technology into its production lines after a very successful test of the system. (See the press release referenced with a link in the opening post for this thread). Although the new system will not have much impact on profits for the current quarter (which is 4th quarter of fiscal year 1998, ending this June), SIRN expects to start seeing tangible benefits from this new technology after the 1999 fiscal year begins in June. SIRN apparently has a jump on the competition because it is one of the first apparel manufacturers (if not the first) to adopt this innovative, cost saving system. However, it does not have any exclusive rights to the system and other manufacturers could, if they want, also install the system.
2. Most of SIRN's production is from its own facilities in California and Mexico. SIRN has been enjoying increased cost savings from its Mexican plant, which it expects to continue. In addition, it likely will begin to increasingly rely on outside contract manufacturers due to its higher sales and broader product line, and thus could start enjoying added cost savings due to the effect of the so-called Asian flu on off-shore production costs.
3. SIRN recently has taken a number of steps to minimize the seasonality in profits which it previously experienced, and expects to start showing tangible benefits from those efforts during this quarter. For example, it has been successfully adding new product lines which will show profits during those times of the year when it previously did not do as well.
4. SIRN has strong management in place (with a new CEO who came on board about nine months ago), has been very successful at getting costs under control and increasing margins. More importantly, SIRN expects those treads to continue.
5. SIRN is very optimistic about the current quarter and expects to show continued "good" results that are consistent with the strong results reported for the last quarter. The next quarterly report likely will come out sometime around the end of June, but there is no firm date at this time.
6. I was surprised at how open Mr. White was about the company's very optimistic expectations for future quarterly earnings. He indicated that the last quarter (which exceeded expectations by over 80%) was not a fluke, but the result of efforts that have just begun to pay off, and will continue to pay off, in future quarters.
I hope this helps.
Bottom line: I think we have a winner here and we should expect to see continued strong earnings.
Also, for what it's worth, I routinely review the charts and the fundamentals for several hundred companies each week. SIRN (along with HAUP and NMGC) remain among the strongest companies I can find when looking at both the technical factors and the fundamentals. |
