Bluestem Group Inc. (BGRP)

[Olmsted]

First glance looks like decent performance.

$30M AEBITDA and $22M FCF, but of course that includes what looks like $6.4M of CRE income.

When looking at the strong NI number, it is important to keep in mind that it includes $14M negative expense from 'gain on company's derivatives' - essentially marking their warrant liability down as the stock price got hit.

Some surprises, to me at least. Strong topline at Bluestem and Orchard. I was projecting $425-$450M, came in at $475.

Also, looks like there was more net CRE on the books than I thought. The presser states there is $74.9M, vs. what I thought was $53M at the last conference call (but it was a bit muffled). I'll try to clarify.

Additionally, I believe I was being conservative on working capital and that most of the $164M cash is at the holdco.

Margins a bit weaker than I projected. Looks like main contributor is retail interest from $8.7M to $13.9M, plus integration costs. Retail interest may be due to full Q of Orchard – I will verify. Integration costs I'm less worried about b/c if management is competent those ought to be translating into run-rate cost reductions to e.g. G&A.

All in all looks like things on track. Financials still a bit muddy but we should start to see the FCF generation shine through, especially in Q4.