Is Execute On Your Christmas List?
If you were to analyze at Execute Sports Inc. (OTCBB: EXCS) as a consumer-minded investor looking to put a few ducats on the table, you would likely be impressed. After all management announced today that the company's 2007 water sports sales increased nearly 37% over the prior year.BUT if you were to look at EXCS as a corporate investor looking only for numbers and cycles, you would be even more impressed. Take into consideration the fact that EXCS stated that '08 water sports sales should improve at least another 40% on a year-over-year basis (and peak season- wise, they are just getting started), and you have an opportunity for every palette.
Why The Sudden Sales?
While this time of year may not strike you as the best time to buy summer sports equipment, it happens to be the best time of year to sell it. Retailers are establishing inventory and putting in their large orders months in advance. So while pool toys and swimsuits may be a bit more scarce this season, for EXCS summer has already started.
Making It With The "Who's Who's"
With big names like Kawasaki not ordering but RE-ORDERING and Execute products prominently featured on major television outlets including MTV, ESPN, and the E channel, the company is gaining widespread recognition for their brands just in time for the hungry summer customer.
Execute's aggressive executive sales team has placed their products with just about every conceivable action sports retailer but in actuality, they have only scratched the surface with regards to the average consumer. Sales are growing but mainstream recognition is on the agenda. In the meantime, however, capital is necessary to put Execute on the Christmas list of every 14 year old watersports enthusiast.
So in the spirit of diversification (and no-brainer income generation), it looks like they have also facilitated a large amount of growth on the OEM side of things. So even if OEM sales do not do much for market recognition, it not only cushions EXCS's bottom line but also puts them in the rolodex of watersport industry leaders. However, if TV channels and sports industry giants like Kawasaki aren't enough to make you go "hmmm", it will comfort you to know that Execute Sports products are selling quite well in both the online and in brick & mortar locations of leading retailers including: The Sports Authority, Dick's Sporting Goods, Joe's Outdoors, Sport Chalet, Modell's and MC Sports.
Just Acquire An Income Stream
In addition to a rapidly emerging water sports business, the recent acquisition of Sugar Sand Boats should help transition EXCS from a one-trick pony into a potential multi-million dollar aquatic sport conglomerate. Execute now lays claim to a pair of business units that provide more future sales potential than the company has been exposed to since its inception.
Remember, Challenger Powerboats Inc. has already received a 114, $2.4M order for Sugar Sand boats, most of which will be shipped during 2008. Sugar Sand's sales/distribution network, helped the company churn out 381 jet boats in 2006 and benefits from an elite market image born from stellar third-party reviews.
By aligning with Sugar Sand, EXCS now has access to a completely new group of consumers to which it can cross sell their rubber products. As we all know, boats in most regions must be equipped with one personal flotation device (PFD) for each passenger. That should equate to another nice new revenue stream for EXCS going forward, making the deal even more lucrative for the company.
My oh-so-Humble Opinion on Future Water Sports Sales
Based on data that I have compiled over the past couple of years of coverage on Execute, historical estimates from the company, as well as statements and expectations announced by the company today (not to mention a few assumptions I made after speaking with management during the summer of 2006), I have put together a little "hypothetical" scenario.
During the summer of 2006, I believed that water sports sales accounted for 44% of total annual revenues. So here's my thought process:
In 2006, EXCS water sports sales totaled $959,200 (44% of $2.18M);
In 2007, EXCS water sports sales totaled $1,314,104 (959,200 X 37% + 959,200);
In 2008, EXCS water sports sales total $1,839,746 with 40% growth ($1,314,104 X 40% + $1,314,104).
* These estimates, of course, come with the caveat that they have not been verified by the company.
Heading into 2008, Execute Sports Inc. appears to be better positioned for growth than ever before. Now sporting two solid business segments that hold the potential to bring 2008 revenues into the $10 million range (as previously stated by management) EXCS may bring a new hot streak to company profits and shareholders alike. So while it may not be the most logical time to stock up on Execute's wide array of watersports products, it may very well be the most productive time to load up on Execute stock.
As we are not likely to be communicating via newsletters over the next few days, we wanted to wish all of our faithful subscribers a wonderful Holiday Season and a joyful and abundant New Year!
2008 stands to be a good one!
Labels: Action Sports, Boating, Execute Sports, Execute Sports Inc., Water Sports
posted by "Staff" at
9:32 AM
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