Amira Nature Foods: Only In America (Under The JOBS Act) [View article]
Thank you Don.
Here are some more troubling facts: Amira only launched its branded rice product outside India in 2011 and in India in 2009. Less than $4M has been spent on advertising and promotion since 2009. This equates to less than 0.5% of sales. This is next to nothing for a company that is seeking to build an international brand. Annie’s (BNNY) spent 4.3% of sales or $6M in 2012 alone. If Amira were to be in-line with other branded consumer products companies, it would have needed to spend $16M, wiping out almost all of the LTM earnings.
Amira states it current has capacity of 24 MIT/ hour, a fraction of that of the peers as represented in the table above. In order to grow, management has stated they are planning to build at a new facility and bring capacity to 60 MIT/ hour by 2015. This will cost $50-75M. Meanwhile Amira only has $33M of cash on the balance sheet and is consuming cash. Despite all this required future capex, Amira has reported less than $5M of D&A over the last three years. Yet another reason why historical earnings significantly understate the future economic earnings of the business. Management states they will not need to raise additional equity (they are likely tapped out on debt which is already running at a 12% interest rate), but don’t provide a reconciliation of the numbers.
Professional Diversity Network: Time To Find A New Career [View article]
What is even more troubling is the lack of active job postings on its sites, particularly its main site, http://www.ihispano.com. When I tried to view a posting it said "Job posting no longer exists!" I literally couldn't find a single active posting. No wonder page views are down so much. They don't have a marketplace or network at all.
Management has stated publicly several times that they see little benefit to being public and would prefer to be private for financial and competitive reasons (largely having to disclose margins/ pricing). They have hired a new banker in Cantor Fitzgerald after Gleacher somewhat mismanaged the process last year.
The most logical buyers are Corizon (formed from the Vilatas - ASGR merger), Correct Care Solutions and Wexford. All are larger private operators that could buy CONM and slash SG&A. CXW should be included with GEO. Healthcare service providers MD, PRSC and LHCG are potential suitors as well. Obviously will be quite appealing to private equity given the revenue visibility, cash flow profile and growth prospects.
Budget constraints at the municipal and state level is actually a positive for CONM since it serves as an impetus for facilities that are internally managed to seek lower cost external providers. There are some political hurdles here, but CONM can offer inmate hc at approximately half the cost of an internal medical group. With 30-40% of local governments handling care themselves, there is a significant opportunity for CONM.
Hastings: Worth More Than It's Selling For [View article]
Rental depreciation is the cost of rental sales, otherwise a rental business would have nearly 100% gross margins. Check Rent-a-Center's financials as an example. Regardless, if you add it back as you are, then you need to also include it in your capex number. These DVDs they rent out are not free for HAST.
Hastings: Worth More Than It's Selling For [View article]
Got you, but D&A is $17.1M, you are including $12.1M of rental asset depreciation which is an operating expense (thus not captured in capex). FCF based on your method is actually -$1.1M.
Hastings: Worth More Than It's Selling For [View article]
Net income has actually turned negative (-$5.3M LTM) as has FCF (-$4.8M). You also have to consider the large lease obligations ($170M).
LTM EBITDA: $11.1M less cash taxes: $2.9M less capex: $15.5M LTM Unlevered FCF = -$4.8M
Basically the company has crossed a level where sales no longer cover fixed costs. Rental is effectively gone and Amazon is taking CD, books and games at an accelerating rate. Now HAST is saddled with large footprint stores. Sales and gross margins would have to recover for the the equity to have any value, very unlikely given the secular trends.
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
I am not talking about timers, but the fact that anyone can produce higher quality images with current digital camera technology. These cameras now cost less $150. One can become a CPI tech/ photographers after just a few hours of training, demonstrating this point. The contrived portraits with fake backgrounds reminiscent of elementary school picture-day that these studios provide are comical. Add the fact that the product is highly discretionary and you have a business in rapid decline.
Even if sales somehow stabilize, CPI is still EBITDA and cash flow negative. I encourage you to look more closely at the numbers and less at the stock chart.
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
New camera technology has without a doubt eroded CPYs position. You should listen to the Q&A from their call from last week, they are in a very challenging spot and have few options.
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
That article is dated, the economics of the business have changed. I am looking at the present state of the business and its prospects, you seem to be focused on the past.
SCHS: Impaired Business With Bleak Prospects [View article]
I agree. It seem apparent that they are running out of options.
I see little interest from larger strategics given SCHS's lack of product differentiation. What ultimately would someone be buying? A fragmented distribution network that lacks scale and any competitive advantages? I see even less interest from a financial buyer given the poor cash flow profile. Regardless, SCHS is still trading at over 10x EBITDA, well above where even stronger companies have sold in the space.
The Brick Offers A Unique Deep Value Opportunity [View article]
The Brick reported a strong quarter earlier today with 17% EBITDA growth and 1.3% comps sales increase with over 1% EBITDA margin expansion. Still trading in the below 5x EBITDA with a mid-20s FCF yield despite the performance and following catalysts:
-Announced plan to repurchase high cost 12% notes w $175M in excess cash -Adding 10-11 franchise stores and likely new corporate stores in 2012 -Repurchase program for 5% of shares out, only 10% complete so far -HSBC credit card program expansion to capture $50M-80M in additional sales in 2012 -Former CEO of Walmart Canada taking over CEO role Jan 1 (been COO since Feb 2010) -New IT/ distribution platform to reduce SG&A and potentially increase op margins by 1-1.5%
Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
HAST has $170M in total future lease obligations. If you capitalize these commitments back at 10%, the present value is $125M. This should be thought of as debt (in addition to the existing balance sheet debt of $46M) if you are valuing the enterprise on EBITDAR.
Assuming yesterday's closing price of $2.05, the current EV/ LTM EBITDAR-capex multiple is 7.0x - very high for a company in this position. Given the trajectory of margins and sales, this multiple will likely expand to 9x for CY2011.
Amira Nature Foods: Only In America (Under The JOBS Act) [View article]
Here are some more troubling facts: Amira only launched its branded rice product outside India in 2011 and in India in 2009. Less than $4M has been spent on advertising and promotion since 2009. This equates to less than 0.5% of sales. This is next to nothing for a company that is seeking to build an international brand. Annie’s (BNNY) spent 4.3% of sales or $6M in 2012 alone. If Amira were to be in-line with other branded consumer products companies, it would have needed to spend $16M, wiping out almost all of the LTM earnings.
Amira states it current has capacity of 24 MIT/ hour, a fraction of that of the peers as represented in the table above. In order to grow, management has stated they are planning to build at a new facility and bring capacity to 60 MIT/ hour by 2015. This will cost $50-75M. Meanwhile Amira only has $33M of cash on the balance sheet and is consuming cash. Despite all this required future capex, Amira has reported less than $5M of D&A over the last three years. Yet another reason why historical earnings significantly understate the future economic earnings of the business. Management states they will not need to raise additional equity (they are likely tapped out on debt which is already running at a 12% interest rate), but don’t provide a reconciliation of the numbers.
Professional Diversity Network: Time To Find A New Career [View article]
For Value Investing, Look To Small-Cap Food Stocks [View article]
http://seekingalpha.co...
Conmed Presents Appealing Risk-Reward Opportunity [View article]
http://bit.ly/Hu2XMv
Conmed Presents Appealing Risk-Reward Opportunity [View article]
The most logical buyers are Corizon (formed from the Vilatas - ASGR merger), Correct Care Solutions and Wexford. All are larger private operators that could buy CONM and slash SG&A. CXW should be included with GEO. Healthcare service providers MD, PRSC and LHCG are potential suitors as well. Obviously will be quite appealing to private equity given the revenue visibility, cash flow profile and growth prospects.
Budget constraints at the municipal and state level is actually a positive for CONM since it serves as an impetus for facilities that are internally managed to seek lower cost external providers. There are some political hurdles here, but CONM can offer inmate hc at approximately half the cost of an internal medical group. With 30-40% of local governments handling care themselves, there is a significant opportunity for CONM.
Hastings: Worth More Than It's Selling For [View article]
Hastings: Worth More Than It's Selling For [View article]
Hastings: Worth More Than It's Selling For [View article]
LTM EBITDA: $11.1M
less cash taxes: $2.9M
less capex: $15.5M
LTM Unlevered FCF = -$4.8M
Basically the company has crossed a level where sales no longer cover fixed costs. Rental is effectively gone and Amazon is taking CD, books and games at an accelerating rate. Now HAST is saddled with large footprint stores. Sales and gross margins would have to recover for the the equity to have any value, very unlikely given the secular trends.
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
Even if sales somehow stabilize, CPI is still EBITDA and cash flow negative. I encourage you to look more closely at the numbers and less at the stock chart.
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
CPI's Bleak Q3 Points To Dark Days Ahead [View article]
SCHS: Impaired Business With Bleak Prospects [View article]
I see little interest from larger strategics given SCHS's lack of product differentiation. What ultimately would someone be buying? A fragmented distribution network that lacks scale and any competitive advantages? I see even less interest from a financial buyer given the poor cash flow profile. Regardless, SCHS is still trading at over 10x EBITDA, well above where even stronger companies have sold in the space.
The Brick Offers A Unique Deep Value Opportunity [View article]
-Announced plan to repurchase high cost 12% notes w $175M in excess cash
-Adding 10-11 franchise stores and likely new corporate stores in 2012
-Repurchase program for 5% of shares out, only 10% complete so far
-HSBC credit card program expansion to capture $50M-80M in additional sales in 2012
-Former CEO of Walmart Canada taking over CEO role Jan 1 (been COO since Feb 2010)
-New IT/ distribution platform to reduce SG&A and potentially increase op margins by 1-1.5%
Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
Hastings Entertainment: Potential 5 Bagger, Deep Value Stock With A Special Situation [View article]
Assuming yesterday's closing price of $2.05, the current EV/ LTM EBITDAR-capex multiple is 7.0x - very high for a company in this position. Given the trajectory of margins and sales, this multiple will likely expand to 9x for CY2011.