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Grizzly Bear

 
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  • Why I (Still) Believe Swisher Hygiene Will Decline Dramatically [View article]
    Here is a link to Swisher's original prospectus. http://1.usa.gov/YfeZq7

    I'm going to go out on a limb and guess you haven't been through it.

    There are eight years of analyzable financials. The business has never been profitable.

    How is a debt free balance sheet in any way related to management's focus on the operations?

    This isn't rocket science. It's soap selling and toilet bowl cleaning.
    Mar 27 10:43 AM | 2 Likes Like |Link to Comment
  • Why I Believe Swisher Hygiene Will Decline Dramatically [View article]
    Here is my take away from the update. I am still short the stock. This isn't a recommendation to buy or sell any securities.

    I hadn't previously appreciated how much cash these guys are burning. On 9/30/11 Swisher reported $84MM in cash, and around $63MM in debt ($48MM in long term debt, $13MM in short term obligations and a $2MM shareholder loan). So that means they had $21MM in net cash. The company received $123MM from the sale of Choice Environmental and today they have roughly $70MM in net cash, including the $12.5MM hold back (it offsets the remaining debt). So that means from 9/30/11 through today they burnt over $70MM ($21 + $123 - $70). This is really remarkable when you further consider that for most of this time frame Swisher owned and operated the waste collection business, which I believe generates around $8MM/yr in cash flow. By this math the core business burnt almost $80MM in five quarters. What's really amazing is that on the Q3 2011 earnings call, Berrard said "we are starting to become cash flow positive". An investor pressed him by asking "Okay all right. Well, so, I mean so just the final thing, so, when you talk about cash being cash flow positive next year, that is cash from ops less than the $35 million to $40 million of CapEx, correct?" Berrard responed, "That's correct." But it wasn't. Not even close. I find it very hard to believe that Mr. Byrne will meet his goal of being cash flow positive by Q3 (not to mention the fact that his guidance does not account for necessary capital expenditures).

    The other thing that surprised me was that run rate sales have declined over 8% from the company's exit 2011 guidance, despite forecasting double digit organic growth. They attribute the decline to a loss of two customers. These were big, likely profitable, customers that the company lost. So much for cross selling.
    Jan 16 03:02 PM | 1 Like Like |Link to Comment
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