TEXQ------INSIDE
The Meyer Group, Inc.
Telephone: 732-264-3433
Email: EdMeyerJr@aol.com
NEW STOCK!
TEQX (OTC-BB) Texas Equipment Corporation operates eight John Deere
Dealerships in West Texas and Eastern New Mexico, specializing in the
distribution, sale, service and rental of equipment, primarily supplied by
Deere & Company, to the agricultural industry. TEXQ recently announced sales
of $68 million for the twelve months ended December 31, 1998; a 17% increase
from $58 million for the twelve months ended December 31, 1997. The increase
is the result of additional sales of approximately $12 million from
acquisitions of the Artesia, New Mexico, Tornillo and Amarillo, Texas stores.
These additional sales were offset in part by a decrease of $2 million in
comparable store revenues (stores with full year revenues in 1997 and 1998),
which was the result of competition from other John Deere dealers and
unfavorable market conditions caused by the severe drought in 1998 in the
Northern Panhandle of West Texas.
Gross profit as a percentage of total revenues increased to 14.5% for the
twelve months ended December 31, 1998 from 13.4% for the same period in 1997.
This increase is the result of the shift in revenue mix between wholegoods
sales and parts and service revenues and slightly higher margins on wholegoods
sales. The Company's highest gross margin is derived from its parts and
service revenues. The Company continues to focus on increasing its parts and
service revenue by increased marketing of these products and giving close
attention to the needs of its customers.
Net income from continuing operations increased to $952,635 for the twelve
months ended December 31, 1998 from $815,370 for the same period in 1997. The
increase is primarily the result of increased sales and improved gross
margins. Because of the increase in net income, earnings per share from
continuing operations for the twelve months ended December 31, 1998 increased
to $0.04 per share compared to $0.03 for the twelve months ended December 31,
1997.
TEQX hit the Internet when it recently establish a large storefront in
AgriMall.com and list used equipment inventory valued at approximately $15
million. Texas Equipment is the largest John Deere agricultural dealer in
Texas and the second largest publicly traded dealer in the United States.
Texas Equipment operates eight dealerships in West Texas and Eastern New
Mexico, specializing in the distribution, sale, service and rental of
equipment, primarily supplied by Deere & Company (NYSE: DE - news).
According to Paul Condit, President and CEO of Texas Equipment, ''The Internet
is fast becoming a new distribution channel for agricultural equipment. After
the complete implementation of our new AgriMall.com storefront, we will
effectively create a much broader multi-state agricultural equipment sales
force.''
The Meyer Group believes that TEXQ is a diamond in the rough and is
recommending a Strong Buy! TEQX reported EPS of $0.03 in 1997 and $0.04 in
1998. Based on earnings TEQX should be selling at much higher prices TEQX
does not promote itself to the Financial Market and is a long term buy and
hold.
See the attached Financial Information.
TEXAS EQUIPMENT CORPORATION
1305 Hobbs Hwy, Seminole, Texas
SELECTED FINANCIAL AND OPERATING DATA
Twelve Months
Ended December 31,
Income Statement Data: 1998 1997
Revenues $ 67,998,233 58,366,746
Cost of sales 58,099,531 50,541,118
Gross profit 9,898,702 7,825,628
SG&A 7,880,552 6,150,298
Operating income 2,018,150 1,675,330
Other income (expenses) (537,525) (287,458)
Income from continuing operations 1,480,625 1,387,872
Provision for income taxes 527,990 572,502
Net income from continuing operations 952,635 815,370
Discontinued operations:
Loss from discontinued operations
(net of tax) --- (540,398)
Net income $ 952,635 274,972
Net income (loss) per share
Basic
- continuing operations $ 0.04 0.03
- discontinued operations --- (0.02)
Total $ 0.04 0.01
Net income (loss) per share
Diluted
- continuing operations $ 0.04 0.03
- discontinued operations --- (0.02)
Total $ 0.04 0.01
Weighted average shares outstanding
Basic 24,686,178 24,695,641
Diluted 24,921,308 24,823,766
December 31 December 31
Balance Sheet Data: 1998 1997
Working capital $ 5,933,567 $ 5,543,312
Inventories $ 39,241,714 $ 21,039,882
Total assets $ 47,845,617 $ 28,528,585
Floor plan payables $ 30,139,947 $ 15,235,375
Total liabilities $ 39,781,784 $ 21,782,618
Stockholders' equity $ 8,063,833 $ 6,745,967
Operating Data:
Stores open at beginning of period 6 6
Stores acquired 2 ---
Stores consolidated --- ---
Stores open at end of period 8 6
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