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John Rolfe  

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  • Is China Media Express a Top Tier Company? You Decide [View article]
    Nice comprehensive writeup.
    Jan 18, 2011. 07:02 AM | 1 Like Like |Link to Comment
  • Xerium Technologies: A Recurring Revenue Business at 4x Cash EPS [View article]

    Sorry for the delayed response, just noticed your post. Yes, you are correct, the comment about a sale of the company was just one of three "options" Light listed. I didn't mean to imply that was his primary focus. I asked him about possible strategic alternatives/outcomes over the coming couple of years, it was a fairly open-ended question. "Sell the company" was the first he mentioned, but his reply was more stream of consciousness than a listing in order of likelihood. His other two were 1) "acquisition", with likelihood in Asia to address their relatively low density there, and 2) "find somebody to marry"...further commented on overcapacity in NA and Europe. Also made a general comment that they're not in any hurry to do anything right now, they're going to take their time to assess the marketplace and make sure they do the right thing at the right time.

    Nov 10, 2010. 08:26 AM | Likes Like |Link to Comment
  • Xerium Technologies: A Recurring Revenue Business at 4x Cash EPS [View article]

    I don't have line item detail on the corporate office move. It was part of the larger restructuring undertaken in conjunction with the bankruptcy filing, so was lumped in. Steven Light (CEO/Chairman) can certainly give you addl detail if he is willing.

    Primary clothing brands are Huyck Wagner (Europe, Asia, S. America) and Weavexx (N. America). Roll coverings are produced by the Stowe Woodward division, rolls themselves are produced by the Mount Hope division. Rolls are produced under the SmartRoll brand name.

    Largest competitor in clothing is Albany Internation (ticker: AIN). Voith AG (private) and Metso (public) produce both clothing and roll covers.

    I would suggest visiting Xerium's website. There is good production information, as well as some investor presentations, posted there.

    Nov 8, 2010. 08:09 AM | Likes Like |Link to Comment
  • Xerium Technologies: A Recurring Revenue Business at 4x Cash EPS [View article]

    I completely agree. Hudson Securities used to cover the company, but dropped coverage when they filed for bankruptcy. The Hudson analyst also covers AIN. The Hudson analyst has spoken with Steven Light post-emergence, and likes how they've shaped the business up, but it sounds to me like he's somewhat stretched currently so coverage launch probably isn't in the near future for them.

    I spoke with Light recently, and it sounds like they're getting more proactive on the IR front. Basically, he feels like for the last couple of years they haven't really had much to speak with investors about given the negative operating trends and the bankruptcy filing, but he feels as if they've finally turned the corner and have a good story to tell. Management is going to be doing some one-on-ones later this month that have been set up by Citi (the lead on the credit agreement). It's a start.

    Nov 6, 2010. 10:20 AM | Likes Like |Link to Comment
  • Xerium Technologies: A Recurring Revenue Business at 4x Cash EPS [View article]

    To your primary point, its easy to disagree on what fair value for this name is. That's one reason I didn't put a target price out there. It certainly looks a lot cheaper on an cash EPS basis than on an EBITDA basis, which clearly isn't unusual for a highly levered business. My sense is that as they pay down debt over time the market may move from looking at them on an EV:EBITDA basis to more of an EPS-based valuation. At least that's what I'm hoping.

    With respect to consolidation, when I spoke with Steven Light about the Company's options moving forward, the first thing he mention was selling the Company. I think these guys are definitely sellers at the right price, however, given AIN's public comments about cash cowing their clothing business I would be surprised if they were a buyer. After AIN and XRM, the business appears to be pretty fragmented so candidly I don't know who the purchaser would be. There are clearly some large equipment suppliers to the industry, but I'm not sure they would be logical buyers as presumably any clothing/roll cover manufacturer doesn't want to be viewed as allied with any one equipment company.

    Nov 5, 2010. 07:00 AM | Likes Like |Link to Comment
  • Sparton: An Undiscovered Turnaround [View article]
    Thanks Andy. As always, you're way ahead of the curve on the government contract grants.
    Nov 4, 2010. 07:14 AM | Likes Like |Link to Comment
  • Primoris Services: High Return, Highly Cash Generative Company [View article]
    The stock traded off in May after the company showed a relatively material decline in their gross margins from the prior 3 quarters. Management does not provide specific guidance, so for some the decline was a surprise. Gross margins from the Jun - Dec 2009 period were exceptionally high, in part as a result of the company being in the late stages of several projects (which boosts margins b/c the start-up costs are all behind them). That said, while management doesn't provide specific guidance they had indicated during the period of exceptional gross margins that the results were not indicative of a new normal and were likely to revert at least somewhat towards historical levels. Longer-term, the JCG acquisition provides meaningful new scale which gives the company a stronger ability to leverage its operating expenses and, I believe, will help them show margin expansion post-2010. Shorter-term, the JCG acquisition has been instrumental in helping the company grow its backlog; integration has been very smooth as the company lets its acquired subsidiaries operate in a relatively independent manner.
    Sep 30, 2010. 07:30 AM | Likes Like |Link to Comment
  • PNI Digital's Rapid Growth Potential [View article]
    Revenue per transaction is certainly something to keep an eye on. Mgmt guidance seems to implicitly assume there will be some pressure in this regard over time, as they target 15-20% transaction growth, but only 10-15% revenue growth.
    Sep 21, 2010. 01:57 PM | Likes Like |Link to Comment
  • Debt-Free Ikanos Communications Is a Bargain [View article]
    It's probably relevant to point out that the brutal reaction to the Jun Q earnings release didn't have much to do with the $400k revenue miss; it was a result of the 3Q guidance for a 25% sequential revenue decline, and a revenue run-rate that even with the announced cost cuts will at best take them to breakeven. There's a decent chance that given the complete overhaul of the management team they decided to take all their medicine at once and sandbag guidance, but its pretty rare that a revenue/earnings miss of this magnitude is resolved in just one quarter.
    Aug 12, 2010. 08:37 AM | 1 Like Like |Link to Comment