Based in North Wales, Pennsylvania, Sabre Industries (proposed SABR) is scheduling a $91 million IPO with a market capitalization of $169 million at a price range mid-point of $13 for Thursday May 26, 2011. Full IPO calendar includes seven others for this week, totaling $3.25 billion
SUMMARY -- SABR provides towers, poles, etc for the wireless and electric infrastructure markets. For the nine months ended January 31, 2011, compared to the year earlier period
. Sales were up 4% to $201 million
. Profits declined 78% to $600,000
. Gross profit declined to 18% from 22%
VALUATION -- SABR presented weak nine month results going into the IPO. The company is tryng to sell 54% on the IPO. Such a high percentage is usually a warning sign.
Annualizing the nine months ended January 30, 2011, SABR's P/E multiple was 211 and the price to tangible book value was 4.4. SABR is a prosaic company with a low gross margin (18% for the nine months ended January 2011) and doesn’t deserve a high price-to-earnings multiple.
BUSINESS -- SABR provides towers and poles for the wireless communications and electric infrastructure markets. Products include towers, monopoles, transmission structures, wood pole equivalents, shelters and ancillary components.
CUSTOMER CONCENTRATION -- The top ten customers accounted for 54.6% and 44.3% of revenues for the year ended April 30, 2010, and the nine months ended January 31, 2011, respectively.
Verizon (NYSE:VZ) accounted for 15.2% and 10.2% of net sales for the year ended April 30, 2010, and the nine months ended January 31, 2011, respectively. In addition, U.S. Cellular accounted for 10.3% and 8.1% of net sales for the year ended April 30, 2010 and the nine months ended January 31, 2011, respectively
COMPETITION -- Within SABR’s targeted industry segments, SABR competes with a large number of product manufacturers and service providers, including Fibrebond Corporation, FWT, Inc., Oldcastle Precast, Inc. and Valmont Industries, Inc. (NYSE:VMI). In the highly fragmented electric T&D infrastructure industry, SABR’s primary competitors include FWT, Inc., Thomas & Betts Corporation (TNB) and Valmont Industries, Inc.
USE OF PROCEEDS -- Shareholders intend to sell 500,000 shares. SABR intends to sell 6.5 million shares to net $74 million, to repay debt