SEYCHELLE ENVIRONMENTAL TECHNOL (SYEV) research, news, and more from GeoInvesting

Company description

Sat, 19 Nov 2011 05:00:00 GMT

A worldwide leader in the development, assembly and sale of a proprietary filtration system for portable water bottles.

Research

Thu, 16 Jun 2016 14:44:49 GMT

SYEV ($0.54) is a company that designs, assembles, and distributes water filtration systems worldwide.

We initially looked at Seychelle about one year ago and informed our members that we sold our position in March of 2016 after unexpected management changes. We went long in July 2015 when the stock was trading at $0.35 and sold our long position in March 2016 at $0.50.

Here are the instant alerts we sent out via our website and premium Twitter:

The company issued Fiscal 2016 numbers today which were decent, but still under the company's own guidance.

Sales of $10.9 million vs $4.3 in the prior year (Guidance was for $11.0 to $11.5)
EPS of $0.04 vs a loss of $0.05 in the prior year (Guidance of $0.07 to $0.08)

More importantly, the company issued weak Q1 2017 guidance in an alarmingly vague fashion in this morning's 8-K:

Q1 FY 17 Guidance is for a decrease in sales and net income versus the prior year Q1 in FY 16.

Interestingly, management did not state in its 8-K why Q1 would be weak. Herein lies the information arbitrage opportunity if investors don’t pick up on the language in the 10-K which explains why sales in Q1 and all of next year will be challenged. The company has lost all of its business from its largest customer (33% of revenue) and goes into more detail about this only in its 10-K. We found the language this morning that states:

The likelihood of this customer continuing to purchase our product is remote. The Company has agreed to replace any filters for this customer. While the Company believes it is adequately reserved for any potential future returns, there can be no assurance that future returns will not exceed our estimate.For the year ended February 28, 2015, we had four customers that accounted for 66% (7%, 33%, 12% and 14%) of our total sales. As of February 28, 2015, the Company had four customers who accounted for approximately 76% of net accounts receivable (37%, 14%, 13% and 12%, respectively).

Our most significant customer in fiscal 2016 appears to have ceased business and will presumably no longer be available to purchase our products. The loss of business from this customer could have a materially adverse effect on our revenues in the short term and in the long term if these revenues are not replaced by new products and other existing or new customers. There may be some decreases in sales to other customers in the subsequent year as well, but this will have to be offset by planned new products and sales to both current and new customers.

We now have reason to believe that the unexpected management changes may have had something to do with product returns. We will continue to monitor SYEV for updates moving forward.

Comments & Business Outlook

Mon, 29 Feb 2016 16:16:56 GMT

SYEV ($0.45) issued updated forward guidance for EPS for the fiscal year ended February 29, 2016 to the $0.07 - $0.08 range and Annual Revenues to the $11.0 - $11.5 million range vs. a negative ($0.05) EPS and $4.3 million in Annual Revenues in the prior fiscal year. For the fourth quarter:

Sales to be $2.7 to $3.2 million vs $1.1 million in the prior year
EPS to be $0.02 to $0.03 vs a loss of $0.02 in the prior year

The company states, it “anticipates that this recent trend will continue into the next fiscal year and beyond.”

Research

Wed, 13 Jan 2016 16:21:07 GMT

SYEV ($0.52) reported third quarter 2016 results:

Sales of $3.2 million vs $1.2 million in the prior year
EPS of $0.01 vs a loss of $0.01

Management sees this high level of revenue continuing for the foreseeable future. Quotes from management:

“The increase in sales to $3.2 million during the three months ended November 30, 2015 from $1.3 million during the three months ended November 30, 2014 an increase of 152% and is primarily due to one customer that has developed a private label pitcher and bottle, and significantly increased its distribution line, with sales increasing from $45,000 during the three months ended November 30, 2014 to $1,363,000 during the three months ended November 30, 2015.

We anticipate maintaining current sales levels during the balance of this fiscal year, and in the subsequent fiscal year as we continue our distribution of the pH2O product line and continue to strengthen relationships with existing customers.”

We are happy to see managment obtain these level of revenues and that they will be able to sustain them for at least the next several quarters. We will reach out to management to determine what catalyst can propel the company from the current revenue levels to even higher levels of sales growth. See our spotlight research notes here, from our initial speculative bet on July 13, 2015 to our adds to our long position on July 17, 2015 and October 12, 2015.

Comments & Business Outlook

Mon, 30 Nov 2015 16:30:45 GMT

SAN JUAN CAPISTRANO, Calif.--(BUSINESS WIRE)--Seychelle Water Filtration Products, a DBA of Seychelle Environmental Technologies, Inc. (Seychelle) (OTCQB: SYEV), a worldwide leader in the development, assembly and sale of proprietary portable water filtration bottles made several announcements today relating to the fiscal quarter about to close and issued updated forward guidance for Q3 Revenues compared to Q2 Revenues which were $2.7 million and Q1 which were $2.3 million.

The increase in Q3 Revenue Guidance is primarily due to continued increases in the demand for private label products; targeted sales toward the emergency & disaster preparedness market, the success of which we attribute to increased worldwide awareness of the importance of preparedness due to highly-publicized natural disasters during the year; and the launch of our pH20 product line which increases the alkalinity of tap water to between 8.0 and 9.5 pH.

Research

Mon, 12 Oct 2015 15:41:42 GMT

May Look To Add to Our Speculative Long Position In SYEV ($0.40)

The GeoTeam has gained more confidence that Seychelle (SYEV), a company that has over promised and under-delivered in the past, is finally on track and executing its strategy to consistently grow sales and earnings.

On Friday, after the close, SYEV filed its second quarter 201610-Q. The company just issued its press release. SYEV reported another blowout quarter:

Sales of $2.7 million vs $767 thousand
EPS of $0.02 vs $0.00
Guides for Q3 2016 revenues of $2.8 million to $3.0 million

On July 13, 2015, we stated that we initiated a small speculative position as the stock was breaking out of a flat line chart pattern and nearing its 52 week high of $0.45, coupled with strong Q1 2016 results. After further due diligence, on July 16th, we added to our long position stating if the company can maintain its Q1 2016 EPS level over the next several quarters we felt shares could eclipse $1.00 (P/E of 15 on EPS run rate of $0.08). Sales have been getting a boost from 3 phases:

New product line - “the launch of our pH2O product line, which increases the alkalinity of municipal water to between 8.0-9.5 pH. Sales during the three months ended August 31, 2015 of this product line were approximately $866,000, compared to zero in the comparable period of 2014.”
Private label pitcher and bottle - “significantly increased its distribution line, with sales increasing from $60,000 during the three months ended August 31, 2014 to $643,000 during the three months ended August 31, 2015.”
Other core products - The hire of a national sales manager in Q2 2014 has increased the customer base and expanded distribution channels lifting overall sales in many product lines. Sales from other core products were $1.2 million vs $700 thousand in the prior year.

Research

Fri, 17 Jul 2015 15:05:00 GMT

Added to our long position in SYEV

Yesterday via premium tweet we stated that after further due diligence we added to our SYEV position. On July 13, 2015 we stated:

“SYEV looked to be breaking out of a flat line chart pattern and nearing its 52 week high of $0.45 (shares went on to hit a new high of $0.53). With its recent strong financial results, a strong chart and positive commentary from management, we will once again look to take a small speculative position.”

If the company can maintain its Q1 2016 EPS level over the next several quarters we think shares could eclipse $1.00 (p/e of 15 on $0.08 annual EPS run rate).

As we stated before, the company has reported a few one quarter wonders in the past.

However, after more research , we believe the company’s new sales distribution channels and increased awareness of the perceived benefits of its water bottle filtration product may make the strong results of Q1 2016 sustainable in the near term.

Research

Mon, 13 Jul 2015 15:03:16 GMT

Taking a small speculative position in SYEV

SYEV is breaking out of a flat line chart pattern and nearing its 52 week high of $0.45. With its recent strong financial results, a strong chart and positive commentary from management, we will once again look to take a small speculative position.

We have tracked the SYEV story on and off for the past 3 years. The company has a history of over promising and under delivering, however, we are once again interested as the company just reported what on the surface looks to be a breakout quarter. On Friday, via a 10-Q only, the company reported strong Q1 2016 results:

Q1 2016 sales of $2.3 million vs $1.1 million in the prior year period
Q1 2016 EPS of $0.02 vs $0.00 in the prior year period

They followed their 10-Q up with a press release issued this morning. Commentary from the 10-Q suggests this strong sales momentum may continue:

“As we expand our distribution of the pH2O product line, and continue to strengthen relationships with existing customers, we anticipate improvement in sales volume to continue into subsequent quarters.”

The following commentary from press release has us mildly concerned that the quarter may not be the new norm due to its emergency & disaster product line:

“The increase in sales to $2.3 million is primarily due to significant increases in demand for private label products; targeted sales toward the emergency & disaster preparedness market, the success of which we attribute to increased worldwide awareness of the importance of preparedness due to highly-publicized natural disasters during the year”

The stock is nearing its 52 week high of $0.45. Our new position is based on the company’s recent strong financial results, a bullish chart and positive commentary from management. We will update our members as we continue our due diligence process.

The company would earn $0.08 for its current fiscal year ending February 28, 2016 if it can at least hold its Q1 performance. In this scenario we could see the stock trading between $0.80 (short-term) and $2.00 (by end of fiscal year). This represents P/E multiples of 10 and 25 times $0.08.

Please note that the company has reported a few one quarter wonders in the past.

Research

Mon, 06 Jan 2014 05:00:00 GMT

Seychelle Envtal Tech (OOTC:SYEV) ($0.88) - SYEV is a worldwide leader in the development, assembly and sale of a proprietary filtration system for portable water bottles. In our 9/30/2013 email we mentioned our reasons for tracking:

After several years of no growth, annual revenues stuck around $5 million, and net income at break even, it appears that the company may be entering a new phase of growth.
The company is expanding its product offerings and increasing its global penetration.
Costco, a current customer, has shown interest in carrying the company�s new product lines in its stores.
Michelle Obama has recently begun a movement urging Americans to drink more water through the �Drink Up� campaign.
Announced its plans to aggressively expand into China, where water quality is a huge issue.

Stock has been hitting new highs again. We have not established a position yet, but may soon look to do so soon based on strong revenue guidance and management commentary regarding taking growth to a new level. We plan to nibble at the stock, even though the company is not overly profitable yet; it�s more of a momentum/positive sentiment play. Recall, SYEV first entered our radar on our new high screen from 11/28/2011 when the stock was trading at $0.43.

Comments & Business Outlook

Mon, 30 Sep 2013 04:00:00 GMT

Carl Palmer, Founder, President and Chairman, just returned from a three week trip to China and Japan and said, �We are now ready to capitalize on the growing awareness consumers have about the quality of their drinking water with portable filter systems that remove up to 99.99% of water borne contamination including radiologicals such as cesium 137, plutonium, radium and uranium; as well as new pH enhanced filters that improve hydration. He said that he "spent time visiting with potential new customers in seven major cities in China and Japan.� Mr. Palmer also indicated that he met with major distributors who sell to hospitals, medical clinics and pharmacies as well as large retailers, catalog houses, merchandisers, distributors and TV Infomercial marketers."

As a result of this trip, he said that: "Seychelle will launch on several fronts including the creation of a TV Infomercial in Japan with our Joint Venture partner, Sterling Global HRC, featuring radiological filters in our new 20 oz pull-top sports bottle. We believe that this is the fastest way to penetrate the market and increase public awareness. Based upon the success of our TV efforts, we feel that retailers will be more than anxious to stock our products. Mr. Palmer went on to say that he �also spent time looking for new product ideas and production sourcing opportunities in China and Japan so that, when we start selling in those markets in the third quarter, we can achieve economies of scale by producing some bottle parts locally; thereby reducing long-distance freight charges."

Dick Parsons, Chief Executive Officer, announced that: "We began test marketing our new 20 oz pull-top sports bottle in the US two months ago with a direct TV sales program. The new bottle design is such that you can hold it vertically, squeeze and drink while walking, riding a bike or driving a car and keep your eyes on the road! It comes in Clear FDA approved plastic in four different colors. The initial test market was for two weeks and produced over $114,000 in sales. Reorders for additional TV shows featuring this new bottle have exceeded $140,000 to date. Based upon the success of this test, we are considering making an Infomercial in the US for this bottle as a faster way of going-to-market."

Mr. Parsons added: "We also have had new distributor inquires from companies in India, Russia, Brazil and the Czech Republic. We are currently exploring those opportunities."

With Seychelle portable water filtration, consumers can drink, with complete confidence, perfectly filtered water that is great-tasting from a variety of sources � the tap, rivers, streams, ponds or creeks. The regular filter works for water from the tap while the standard and advanced filters are needed for most outdoor uses. The proprietary Seychelle Ionic Adsorption Micron Filtration (IAMF) has been tested extensively by Independent Government Laboratories in the US and throughout the world to strict EPA/ANSI protocols and NSF Standards 42 and 53 by Broward Testing Laboratories.