Amerigon ( ARGN - Nasdaq ) - Follow-up Report

Amerigon (ARGN $9.75) reported excellent on target Q3 results.  Earnings advanced 120% to $.13 a share, excluding non cash stock option expense.  Sales climbed 65% to $30.5 million.  Unit volume rose 60% to 429,000 vehicle seats.  Total revenues included a modest amount from initial shipments of the company's new bed product line.  North American auto sales increased 26% in the period, indicating that Amerigon continued to expand its share of the overall market.  Fourth quarter results are expected to be similar to the Q3 level.  For the entire year we estimate income will finish around $.45 a share on sales of $110 million.  Overhead costs will increase in upcoming periods.  Amerigon plans to buy out the 15% of its BSST research subsidiary that it already doesn't own.  Once that happens it will have to recognize all of those costs, not just the 85% it's been expensing up 'till now.  As those products hit the market, of course, Amerigon will own 100% of the revenues.  That probably won't happen until 2012, though, so R&D costs will climb approximately $.02 a share next year.  The company also is beefing up sales and marketing efforts in Europe and the Far East.  Those costs will impact performance in the short term, although higher sales could result down the road.  For now we are raising our 2011 earnings estimate by a nickel to $.55 a share.  Sales could attain $135 million, bolstered by the addition of several new models carrying the company's heated and cooled seats.  A stronger showing is possible if the overall car market gains momentum.

(Click on table to enlarge)