PSEC continues to:
For the quarter, PSEC delivered solid numbers, and appears to be well-situated to continue its trend of gradually increasing its dividend and growing book value for the quarters ahead.
Highlights
We are pleased with the overall credit quality of our portfolio, with many of our companies generating year-over-year and sequential growth in top-line revenues and bottom-line profits. None of our loans originated in approximately five years have gone on non-accrual status.
The fair market value of our loan assets on non-accrual as a percentage of total assets stood at approximately 1.5% on September 30, 2012, down from 1.9% on June 30, 2012 and 3.5% on June 30, 2011.
Our debt to equity ratio stood at less than 45% (and less than 35% after subtraction of cash and equivalents) at September 30, 2012.
Disclosure: I am long [[PSEC]]. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
]]>PSEC continues to:
For the quarter, PSEC delivered solid numbers, and appears to be well-situated to continue its trend of gradually increasing its dividend and growing book value for the quarters ahead.
Highlights
We are pleased with the overall credit quality of our portfolio, with many of our companies generating year-over-year and sequential growth in top-line revenues and bottom-line profits. None of our loans originated in approximately five years have gone on non-accrual status.
The fair market value of our loan assets on non-accrual as a percentage of total assets stood at approximately 1.5% on September 30, 2012, down from 1.9% on June 30, 2012 and 3.5% on June 30, 2011.
Our debt to equity ratio stood at less than 45% (and less than 35% after subtraction of cash and equivalents) at September 30, 2012.
Disclosure: I am long [[PSEC]]. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
]]>This note presents a method for predicting the quarterly revenues of Freeseas Inc. (FREE, FREED) prior to earnings release. This method is shown to be unbiased (i.e. no systematic overestimation or underestimation of revenues), and accurate to with +/- 5% of FREE’s actually quarterly revenues. It is the hope that readers will be able to apply this method to other shipping companies, and ultimately estimate other aspects of a shipping company’s balance sheet (e.g. quarterly free cash flow, earnings per share, etc.).
2. Method
The following steps are based on actual numbers from FREE’s 4^{th} quarter of 2009.
Step 1. Create a new spreadsheet and add all ships and their charter rates in units of dollars per day. FREE’s current charter rates are found on their webpage and their subsequent updated charter rates are provided via press releases. The first set of rates were the charter rates as of 9/1/2009.
09/01/09 | |
Destiny | 10000 |
Envoy | 7900 |
Goddess | 12500 |
Hero | 14500 |
Impala | 8750 |
Jupiter | 25216 |
Knight | 8300 |
Lady | 51150 |
Maverick | 9500 |
Neptune | 15000 |
Step 2. Every time FREE updates its charter rates, update the spreadsheet accordingly. Be sure to note the date of the press release at the top of the column. For example, during Q4 2009, FREE updated its charter rates two other times during the quarter – 11/19/2009 and 12/15/2009.
09/01/09 | 11/19/09 | 12/15/09 | |
Destiny | 10000 | 9075 | 14000 |
Envoy | 7900 | 7200 | 7200 |
Goddess | 12500 | 12500 | 12500 |
Hero | 14500 | 11500 | 11500 |
Impala | 8750 | 11500 | 13500 |
Jupiter | 25216 | 25216 | 25216 |
Knight | 8300 | 7000 | 15000 |
Lady | 51150 | 51150 | 51150 |
Maverick | 9500 | 10000 | 14000 |
Neptune | 15000 | 20000 | 16000 |
Step 3. Calculate the number of days between charter changes, and make sure the total number of days sum to the total number of days in the quarter. For example, in Q4 2009:
# days 9/1 – 11/18 | # days 11/19 – 12/15 | # days 12/16 – 12/31 | total |
49 | 27 | 16 | 92 |
Step 4. Multiply the number of days by the appropriate charter rate and sum over all ships. For example, in Q4 2009:
| cummulative revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Step 5. Sum all of the cumulative revenue values:
| 16 | 224000 |
Step 6. In order to calculate the total revenues, we need to multiply the total from step 5 by the utilization rate. The utilization rate is essentially the percentage of time that FREE’s ships were actually earning revenues (i.e. transporting goods). I assumed an utilization rate of 0.94, which was pulled from the previous quarter’s earnings report. The estimated quarterly revenues then become: 0.94 x 15.32 = 14.25 million.
This is a simple method for estimating FREE’s quarterly revenues.
Verification
I applied this method to Q409, Q110, and Q210. The table below highlights my performance.
forecast | actual | % off | |
Q4 2009 | 14.2456 | 14.5 | -1.8 |
Q1 2010 | 15.1076 | 15.66 | -3.5 |
Q2 2010 | 16.9608 | 16.5 | 2.8 |
Conclusion
This method can be used to estimate a shipping company’s revenues prior to an earnings release. The drybulk company, Freeseas, was used as an example since it operates in the spot market and updates its charter rates often. It should be noted that sometimes charter terms include a ballast bonus. These are one-time fees earned that must also be added to the quarterly revenue estimate. Future comments will provide methods for analyzing other aspects of Freeseas balance sheet.
This note presents a method for predicting the quarterly revenues of Freeseas Inc. (FREE, FREED) prior to earnings release. This method is shown to be unbiased (i.e. no systematic overestimation or underestimation of revenues), and accurate to with +/- 5% of FREE’s actually quarterly revenues. It is the hope that readers will be able to apply this method to other shipping companies, and ultimately estimate other aspects of a shipping company’s balance sheet (e.g. quarterly free cash flow, earnings per share, etc.).
2. Method
The following steps are based on actual numbers from FREE’s 4^{th} quarter of 2009.
Step 1. Create a new spreadsheet and add all ships and their charter rates in units of dollars per day. FREE’s current charter rates are found on their webpage and their subsequent updated charter rates are provided via press releases. The first set of rates were the charter rates as of 9/1/2009.
09/01/09 | |
Destiny | 10000 |
Envoy | 7900 |
Goddess | 12500 |
Hero | 14500 |
Impala | 8750 |
Jupiter | 25216 |
Knight | 8300 |
Lady | 51150 |
Maverick | 9500 |
Neptune | 15000 |
Step 2. Every time FREE updates its charter rates, update the spreadsheet accordingly. Be sure to note the date of the press release at the top of the column. For example, during Q4 2009, FREE updated its charter rates two other times during the quarter – 11/19/2009 and 12/15/2009.
09/01/09 | 11/19/09 | 12/15/09 | |
Destiny | 10000 | 9075 | 14000 |
Envoy | 7900 | 7200 | 7200 |
Goddess | 12500 | 12500 | 12500 |
Hero | 14500 | 11500 | 11500 |
Impala | 8750 | 11500 | 13500 |
Jupiter | 25216 | 25216 | 25216 |
Knight | 8300 | 7000 | 15000 |
Lady | 51150 | 51150 | 51150 |
Maverick | 9500 | 10000 | 14000 |
Neptune | 15000 | 20000 | 16000 |
Step 3. Calculate the number of days between charter changes, and make sure the total number of days sum to the total number of days in the quarter. For example, in Q4 2009:
# days 9/1 – 11/18 | # days 11/19 – 12/15 | # days 12/16 – 12/31 | total |
49 | 27 | 16 | 92 |
Step 4. Multiply the number of days by the appropriate charter rate and sum over all ships. For example, in Q4 2009:
| cummulative revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Step 5. Sum all of the cumulative revenue values:
| 16 | 224000 |
Step 6. In order to calculate the total revenues, we need to multiply the total from step 5 by the utilization rate. The utilization rate is essentially the percentage of time that FREE’s ships were actually earning revenues (i.e. transporting goods). I assumed an utilization rate of 0.94, which was pulled from the previous quarter’s earnings report. The estimated quarterly revenues then become: 0.94 x 15.32 = 14.25 million.
This is a simple method for estimating FREE’s quarterly revenues.
Verification
I applied this method to Q409, Q110, and Q210. The table below highlights my performance.
forecast | actual | % off | |
Q4 2009 | 14.2456 | 14.5 | -1.8 |
Q1 2010 | 15.1076 | 15.66 | -3.5 |
Q2 2010 | 16.9608 | 16.5 | 2.8 |
Conclusion
This method can be used to estimate a shipping company’s revenues prior to an earnings release. The drybulk company, Freeseas, was used as an example since it operates in the spot market and updates its charter rates often. It should be noted that sometimes charter terms include a ballast bonus. These are one-time fees earned that must also be added to the quarterly revenue estimate. Future comments will provide methods for analyzing other aspects of Freeseas balance sheet.