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AYSI - Picked up some shares at $0.99 and will add more at this level. Its trading at a P/E of 4 with $0.26 of cash on their balance sheet. Ex-cash thats a P/E of 3...
This was the resignation of a CEO that had been on the job for 2-3 months. If it was Gene who was leaving the company, maybe I would understand the reaction!
A P/E of 3 ex-cash for a non-Chineese company in the growing iron-ore industry in Western Australia is a steal any day...
Good luck to all...
AYSI - Not sure why the CEO resigned as the PR really didnt go into any detail. I'll try and send an email out to Gene to try and get some clarity. Will let you know what I find.
At this point I'm still holding all my shares and might pick up a few more if the reaction is too severe...
Good luck to all
There is no way that the shares will disappear and that you will be left with nothing. We own common shares in the company. Those common shares represent a percentage ownership in the company. A company can choose where it lists it's common shares and on which market. The company has previously listed it's shares on the OTCBB and more recently on the pink sheets. These markets are generally loosely structured with minimal corporate governance rules. The company can choose at any time to move it's shares to another market, so long as it meets the markets listing standards. You see it all the time with companies moving up to the NASDAQ from the OTCBB. This move is not any different. The shares you currently own will then be traded on the ASX when they complete the move. You will still have your shares.
It's also possible that they keep the listing they have here on the Pink Sheets and have an offering of additional shares that are listed on the ASX. It's too early to tell at this point.
To answer your other question, yes it's possible to trade and own foreign listed companies. I own another ASX listed company, Sundance Energy, SEA.AX, that also has it's shares listed on the Pink Sheets under the symbol SDCJF.PK. They are actually looking to upgrade their Pink Sheet listing to higher exchange here.
Hopefully this has helped. Please let me know if you have any other questions.
Swick
It's certainly possible that the company could have a dual-listing structure. There are several ASX-traded companies out there that have a listing on the pink sheets for US investors.
I would expect the story and the company to have more traction over in Australia than here on the pink sheets, which would hopefully result in potential analyst coverage / institutional ownership / greater liquidity / higher valaution multiples.
I have always been a fan of Alloy listing on the ASX. I view this as a positive and look forward to hearing more details on their plans. The goals / targets excite me and speak to the potential of the product and company.
Good luck to all...
AYSI - Gene Kostecki is a nominee for the Ernst & Young entreprenuer of the year award in Australia...
Some key tidbits to point out:
-Gene’s financial goal is to increase sales to $300 million by 2015.
-Looking to list on ASX. To this end, the company has appointed an independent chairman and board and is in the process of establishing a new corporate governance system consistent with ASX principles.
-Gene intends to build a factory to allow ASI to achieve its growth aspirations, which will be funded by a mix of debt and equity. He plans build up a substantial manufacturing hub in Indonesia, while maintaining his Australian operations, and using Australia as a research and development base.
We could be looking at something special here if the board, Gene, & company play their cards right...
http://eoy.ey.com.au/www/595/1001127/displayarticle/1609840.html
Gene Kostecki invented the world’s most wear resistant fused alloy steel plate, in the process creating a $30 million company.
Gene was already working in the West Australian mining industry when he was asked to look at a fundamental, yet reoccurring, wear problem affecting plant equipment. The issue was conventional weld plate methods, which have been in use within the industry for over 60 years, have significant drawbacks such as an uneven surface finish and under-bead cracking.
After five years of experimentation, including developing a prototype machine for the manufacturing process, Gene invented the recipe for AcroPlate: a homogenised alloy overlay that can be smoothly bonded with a 100% metallurgical bond between the alloy and the mild steel – without the residual stresses that are associated with weld overlay wear plate. As a result, the ArcoPlate product is able to withstand the highest degree of impact.
In 1991, Gene made his first commercial sale, yet still continued to research and modify the manufacturing process to produce a better product. After almost ten years of perfecting AcroPlate, in 2000, he listed Alloy Steel International (ASI) on the NASDAQ, offering the mining industry the world’s most wear resistant fused alloy steel plate.
Today, AcroPlate is used extensively throughout the global mining industry, with exports to 14 countries. Arcoplate's world patented manufacturing process guarantees hardness, microstructure and surface finish of a far superior quality, wearing up to eight times longer than traditional plates. The result significantly reduces downtime and lost production across the mining and mineral processing industries.
Gene’s financial goal is to increase sales to $300 million by 2015. Having recently come off NASDAQ, he is looking to list on ASX. To this end, the company has appointed an independent chairman and board and is in the process of establishing a new corporate governance system consistent with ASX principles.
The company has just completed an Indonesian land purchase in a manufacturing estate, funded out of cash flow. Gene intends to build a factory to allow ASI to achieve its growth aspirations, which will be funded by a mix of debt and equity. He plans build up a substantial manufacturing hub in Indonesia, while maintaining his Australian operations, and using Australia as a research and development base.
Some key tidbits to point out:
-Gene’s financial goal is to increase sales to $300 million by 2015.
-Looking to list on ASX. To this end, the company has appointed an independent chairman and board and is in the process of establishing a new corporate governance system consistent with ASX principles.
-Gene intends to build a factory to allow ASI to achieve its growth aspirations, which will be funded by a mix of debt and equity. He plans build up a substantial manufacturing hub in Indonesia, while maintaining his Australian operations, and using Australia as a research and development base.
We could be looking at something special here if the board, Gene, & company play their cards right...
Gene Kostecki is a nominee for the entreprenuer of the year award...
Gene Kostecki invented the world’s most wear resistant fused alloy steel plate, in the process creating a $30 million company.
Gene was already working in the West Australian mining industry when he was asked to look at a fundamental, yet reoccurring, wear problem affecting plant equipment. The issue was conventional weld plate methods, which have been in use within the industry for over 60 years, have significant drawbacks such as an uneven surface finish and under-bead cracking.
After five years of experimentation, including developing a prototype machine for the manufacturing process, Gene invented the recipe for AcroPlate: a homogenised alloy overlay that can be smoothly bonded with a 100% metallurgical bond between the alloy and the mild steel – without the residual stresses that are associated with weld overlay wear plate. As a result, the ArcoPlate product is able to withstand the highest degree of impact.
In 1991, Gene made his first commercial sale, yet still continued to research and modify the manufacturing process to produce a better product. After almost ten years of perfecting AcroPlate, in 2000, he listed Alloy Steel International (ASI) on the NASDAQ, offering the mining industry the world’s most wear resistant fused alloy steel plate.
Today, AcroPlate is used extensively throughout the global mining industry, with exports to 14 countries. Arcoplate's world patented manufacturing process guarantees hardness, microstructure and surface finish of a far superior quality, wearing up to eight times longer than traditional plates. The result significantly reduces downtime and lost production across the mining and mineral processing industries.
Gene’s financial goal is to increase sales to $300 million by 2015. Having recently come off NASDAQ, he is looking to list on ASX. To this end, the company has appointed an independent chairman and board and is in the process of establishing a new corporate governance system consistent with ASX principles.
The company has just completed an Indonesian land purchase in a manufacturing estate, funded out of cash flow. Gene intends to build a factory to allow ASI to achieve its growth aspirations, which will be funded by a mix of debt and equity. He plans build up a substantial manufacturing hub in Indonesia, while maintaining his Australian operations, and using Australia as a research and development base.
http://eoy.ey.com.au/www/595/1001127/displayarticle/1609840.html
MEDH - The adjusted EPS number of $0.31 excludes the benefit of the large legal credit. So in other words, its a clean number.
MEDH - Purchased some MEDH this morning at an average price of $10.70. The company posted adjusted EPS of $0.31 on the quarter and guided for EPS of $1.26 to $1.33 per share for the full year, so the company should be posting good results going forward. I wouldnt be surprised to see them beat this result as margins should improve going forward as they continue to send work overseas.
Based on the current trading price of $10.95, the company trades for about 8.5x next year's earnings. As a comparison, a smaller competitor, TRCR, trades at a forward P/E of 18.4x... I think this stock is significantly undervalued given its strong free-cash flow generation. Management has proven its ability to integrate acquisitions and quickly delever the company with strong cash flow. They will not be paying cash taxes for the next few years with their NOL utilization and high tax amortization expense.
I think fair value for MEDH is closer to $15.00 - $20.00 and will continue to accumulate on weakness.
MedQuist Holdings Reports First Quarter Results
FRANKLIN, Tenn., May 16, 2011 (GLOBE NEWSWIRE) -- MedQuist Holdings Inc. (Nasdaq:MEDH - News), a leading provider of integrated clinical documentation solutions for the U.S. healthcare industry, announced its financial results for the three months ended March 31, 2011.
Operating Results
Net revenues increased 31% to $111.2 million for the first quarter of 2011, including $31.0 million in net revenues contributed by the acquisition of Spheris compared with $85.1 million for the first quarter of 2010. The Spheris acquisition was closed in April 2010. Volumes improved versus prior year same quarter due to the impacts of the Spheris acquisition as well as approximately 3% of organic growth unrelated to the impacts of the acquisition. Additionally, volumes improved to 866 million lines for the current quarter representing an improvement of 2% versus the fourth quarter of 2010.
Adjusted EBITDA for the first quarter of 2011 was $26.8 million, or 24% of net revenues, compared with $13.8 million, or 16% of net revenues, for the first quarter of 2010. The year-over-year increase in Adjusted EBITDA and margin is the result of higher utilization of offshore resources and higher percentage of volume edited post speech recognition, as well as synergies realized from adding volumes from the Spheris acquisition to our scalable platform. Adjusted EBITDA for the first quarter of 2011 versus the fourth quarter of 2010 reflects the seasonal variations in volumes and higher employer taxes, as well as movement of volumes to the Company's global production facilities.
Adjusted net income for the first quarter of 2011 was $16.4 million, or $0.31 per diluted share -- adjusted for the IPO and exchange offer, compared with $8.7 million, or $0.17 per diluted share -- adjusted for the IPO and exchange offer, in the first quarter of 2010. Net income attributable to common shareholders for the first quarter of 2011 was $2.3 million, or $0.05 per diluted share, compared with $1.4 million, or $0.04 per diluted share, reported in the first quarter of 2010.
During the three months ended March 31, 2011, we recorded net restructuring charges of $5.4 million including approximately $3.2 million from a reduction in workforce and a charge of $1.5 million representing future lease payments on MedQuist Inc.'s former corporate headquarters in Mt. Laurel, New Jersey, and former data center in Sterling, Virginia, offset by estimated sublease rentals. The future minimum lease payments on the Mt. Laurel facility total $2.5 million. In addition, we recorded non-cash stock compensation charges of $0.7 million due to the acceleration of stock option vesting and the extension of the stock option exercise period for terminated employees. The benefits from these restructuring efforts are not expected to be fully realized until 2012.
The Company also recognized $9.7 million of income associated with the termination of its customer accommodation program, offset by $1.8 million in charges of related litigation costs and $0.4 million of fees incurred in connection with the minority shareholder litigation associated with our exchange offers.
Peter Masanotti, Chief Executive Officer of MedQuist Holdings, said, "We are off to a good start to 2011 and in line with our plan for the year. The sequential and year-over-year volume improvement came from organic growth and our ability to stabilize the Spheris book of business. The sustained increase in post speech recognition editing continues to enhance our productivity and our focus on achieving integration savings is significantly reducing our direct costs.
"Customers' demand for our offshore resources continues to accelerate, and we are building a sizable inventory. Given the size and complexity of this new work, we are executing a very conservative rollout of these conversions. The strong demand gives us increased confidence that we can reach our goal of 50% offshore by the end of the year."
Liquidity and Capital Structure
As of March 31, 2011, the Company had $75.6 million in cash and $269.5 million in debt and capital lease obligations. During the first quarter of 2011, the Company paid its scheduled $5 million term loan payment plus an additional $20 million in optional prepayment amounts on its senior facility, thereby satisfying its principal amortization obligations on its term loan through the first quarter of 2012. Free cash flow for the first quarter of 2011 increased to $13.3 million compared with $8.8 million in the first quarter of 2010. The first quarter capital expenditures were higher than expected average quarterly expenditures for the remainder of the year due to costs associated with integration work. In the second quarter, the Company expects to pay an additional $12.0 million related to the IPO and exchange offers.
The Company's high level of cash generated as compared to its Adjusted EBITDA reflects its continued ability to utilize available tax attributes to absorb current period taxes. At December 31, 2010, the Company had federal net operating loss carry forward amounts of approximately $102 million with approximately 80% available through 2014 to help off-set future period taxable income amounts. Additionally, the Company had approximately $194 million of capitalized tax intangibles, of which approximately 60% are expected to be amortized for tax purposes over the next five years. Utilization of the net operating loss carry forwards and intangible amortization amounts are subject to annual limitations in future years but are anticipated to result in low cash tax amounts paid in the near term.
In accordance with the terms of a Settlement Stipulation entered into in connection with the settlement of MedQuist Inc. shareholder litigation and subject to final approval of the settlement by the Court, the 3% of remaining issued and outstanding shares of MedQuist Inc. not already owned by MedQuist Holdings Inc. are to be exchanged on the same terms as the public exchange initiated on February 3, 2011, through a short-form merger that is expected to be completed by the end of the third quarter of 2011. In connection with this short-form merger and to immediately reduce duplicate costs of being a public company, MedQuist Inc. delisted its common stock from NASDAQ. Subsequent to completing the short-form merger, fully diluted shares outstanding will increase to approximately 52 million.
Performance Goals for 2011
Based on the first quarter results, the Company has updated its previously issued performance goals for 2011 as noted below:
Total clinical documentation volume: 3.5 billion to 3.7 billion lines
Adjusted EBITDA: $113 million to $116 million
Adjusted Net Income: $1.26 to $1.33 per diluted share --
adjusted for the IPO and exchange offer
Commenting on the 2011 outlook, Mr. Masanotti added, "I'm pleased with the improving outlook for the year and confident the integration work will allow us to have one set of goals and objectives across companies, driving efficiencies that will allow us to reduce costs in accordance with our plan and provide better service to our customers. The current market environment also continues to play to our strengths as smaller clinical documentation providers are struggling to compete with our ability to provide end-to-end clinical solutions combined with speech recognition and offshore resources."
Any chance you'll get back in now that we're back in the $0.80's? I just picked up half my position at $0.85.
Well done Stanley, I got out at $1.20 for LTUM, $.49 for AMLM, and $.395 for LIEG.... Well that was fun...
Joined you in LTUM in the $.40-$.50 range and also bought some of AMLM and LIEG at $0.40 to diversify the play. I'm not talking bit dollars here but should still be fun to play...
Call me an optimist, but it looks like they will be working on more than just one new expansion project. Should bode well once they begin those projects.
"delayed investment decisions for several key Western Australian resource expansion projects"
Here's an updated as to what's going on in Aussie land now regarding iron ore expansion:
BHP Billiton is currently spending A$1.85 billion on its Rapid Growth Project 4, aimed at increasing its annual iron ore output to 155 million tonnes. To achieve this, upgrades to both mines and port facilities are necessary. The project is scheduled for completion by 2010. As a follow-up, Rapid Growth Project 5, with a budget of A$4.8 billion, targets a further production increase of 50 million tonnes annually. Additionally to upgrades at the mines and ports, it will also include duplication of existing railway lines and is scheduled for completion in late 2011. The Jimblebar mine is part of another expansion project, launched in 2010 and aimed at increasing production from the Pilbara mines to 240 million tonnes of iron ore annually by 2013. The expansion of Jimlebar, together with an expansion of the inner harbour at Port Hedland and works on the duplication of rail tracks is estimated to cost A$2.15billion. The project is titled Rapid Growth Project 6.
Rio Tinto declared its intent to expand the Hope Downs mine, spending a further A$1.78 billion on its new Hope Downs 4 project, scheduled to produce 15 million tonnes of iron ore annually by 2013. Rio has commenced construction on its new Western Turner Syncline project. Rio Tinto allocated a further A$1.24 billion in early December 2010, to expand the Brockman 4 mine to 40 million tonnes per annum, from 22, as well as develop its Western Turner Syncline project, raising planned production there from 6 to 15 million tonnes, with the aim of increasing the Pilbara production to 283 million tonnes per annum by late 2013. The expansion would make Brockman 4 Rio Tinto's second-largest mine in the Pilbara. The company has also begun further construction at the port at Cape Lambert, which is scheduled to undergo a further expansion, to be completed by 2012. The new expansion is scheduled to cost A$276million. The expansion is part of a plan to raise Rio's annual production from the Pilbara from 220 to 330 million tonnes annually by 2016. To achieve this, the Cape Lambert port capacity will be expanded to handle an additional 100 million tonnes annually.
Plans by the Fortescue Metals Group to increase production from 39 million tonnes to 55 million tonnes through a U$220 million upgrade of the Cloud Break mine had to be abandoned in October 2009 because of funding difficulties through its Chinese investors. Instead, Fortescue decided to develop its Christmas Creek mine, at a cost of U$360 million, by building a mine and process plant there and linking it to its existing rail network. Christmas Creek is scheduled to produce 16 million tonnes of iron ore in its first year of operation. Fortescue plans to reach an annual production of 95 million tonnes of iron ore by 2012, downgraded from an earlier target of 120 million.
At Cape Preston, CITIC Pacific Mining is currently, as of 2010, in the process of constructing a 27.6 million tonnes per annum magnetite iron ore mine, named the Sino Iron Project.
Lumpy is right. The results were definitely not bad, but I think given the huge Q4 performance, people had their expectations a bit higher... Although, I think investors pretty much expected a fall off from Q4 levels, given that the share price remained below $2.00.
The quarter included $60k of one-time currency moves, which on would typically back out (Still results in EPS of $.05)As they mention and as we know, Q1 is typically their seasonally slow quarter. Australia just about shuts down for a few weeks for Christmas...
They mention weakness in results related to a few customers delaying capital investment decisions. Given all the expansion news coming out of Western Australia, one has to think this delay was just temporary (but again, little clarity was given). I will continue to hold and may add more tomorrow if the price justifies it. It just means that I won't be tempted to sell and will be able to hold to capture long-term capital gains status...
On the positive side, you mentioned the large cash position. In addition, they increased cash while also increasing the fixed asset balance by another $1.5 million. They issued a press release for quarterly results as they said they would, so thats encouraging given a lot of people were beginning to doubt that any information would be provided...
Looks like expansion plans in Australia are still being considered and evaluated and that they continue to prepare themselves to be able to deliver on higher product demand:
"Further, the Company continues to optimize its Australian production facilities to ensure increased demand can be satisfied from available capacity. The Company continues to evaluate the development of expanded capacity in Australia and new capacity in Indonesia."
Expansion of Australian facility? Interesting little tidbit of information I found in the 2010 audited results:
The Company leases its office and manufacturing space from a related party for approximately $279,000 per annum plus certain expenses (as defined in the agreement). The lease expired on June 30, 2010, however the lease continues on a month-to-month basis due to the possibility of expansion plans.
Perhaps we'll hear more about this soon, or perhaps not... Although it's quite annoying that we haven't heard from them yet on Q1 numbers, I'm confident business remains strong given the strength in the Western Australia mining industry and strong comments from mgmt in the annual financial release.
Good luck to all...
More expansion news out of Australia and BHP... Now if only they would report their Q1 numbers...
MELBOURNE, Australia (AP) -- BHP Billiton Ltd. will invest almost $10 billion on expanding iron ore and coal mining operations in Australia, the world's biggest miner announced Friday.
The Melbourne-based Anglo-Australian giant will spend $6.6 billion on expanding its iron ore operations in Western Australia state, $2.5 billion on expanding three metallurgical coal projects in Queensland state and $400 million on an energy coal project in New South Wales state, it said in statements to the Australian Securities Exchange.
BHP Billiton said the company and its partners would spend $7.4 billion on developing the Jimblebar iron ore mine and improving rail and port facilities in the Pilbara region of Western Australia. The mine will start producing in 2014 and lift the company's iron ore production in the region to more than 246 million tons (220 million metric tons) a year.
The company also approved spending $2.5 billion on three coking coal projects in the Bowen Basin in central Queensland that will add 5.5 million tons (4.9 million metric tons) of annual production capacity.
BHP Billiton metallurgical coal president Hubie van Dalsen said the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.
"Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal," he said.
BHP Billiton said it would spend $400 million to expand the Hunter Valley Energy Coal mine in New South Wales to increase coal production by 4.5 million tons (4 million metric tons) to about 27 million tons (24 million metric tons) a year.
"The emergence of demand for coal in the key growth markets allows us to get product to market quickly, ahead of further coal preparation plant expansions," BHP Billiton energy coal president Jimmy Wilson said.
BHP Billiton has plenty of cash to spend, having reported a first-half net profit in February of $10.5 billion for the six months to Dec. 31.
LEA.V - I added to my position this morning at $1.01 or so. Their Q1 ending March is seasonally their strongest quarter so I'm expecting a pickup in sales from $8 mil plus in their Q4. I think you're estimates are pretty much in line with mine, except I have Q4 net income coming in at $2.1 million and EPS of $0.15. Q4 will still have a lower share count in the range of 15-16 million. In Q1, I'm expecting somewhere around $2.5 million in net income, which would be about $0.13 in EPS assuming 19 million shares out.
Another point to consider is that they have a $40 million NOL to offset taxes for the next several years... That alone should be worth $10 million or $0.50 per share as long as they can utilize it...
SMTX - I'm expecting around $0.15 as well for EPS. I'm hoping SMTX was able tO sidestep some of the issues KTCC and SGMA. I am holding my full position into earnings and hopefully won't be burned again when I held through KTCC. Lets hope we get a positive surprise instead! I figure $0.15 per quarter should be worth $5.00 plus...
Good luck to all....
That is an impressive brochure... I definitely did not expect something of such high quality and is a significant improvement compared to previous marketing materials. They also posted the new director news and indemnification agreements as they said they would. They definitely seem to have turned a corner in terms of responsiveness and overall PR quality. Press releases are professionally written, compared to the previous 8-k updates we used to get that were written by Gene. Everything is looking good, just need to get those first quarter results...
PCCC - Hweb, MALL has been going nuts and actually trades at almost double the EBITDA multiple of PCCC, even though it has lower margins and is smaller in size!
If PCCC traded at MALL multiples, the price of PCCC would be $11.50 - $13.00!
Hopefully it gets notice here soon...
PCCC - SSKILLZ, when I look at the value of a business I tend to look at more that just P/E multiples. I feel that Enterprise Value to EBITDA multiples are a more relevant and accurate valuation tool than P/E multiples.
When looking at PCCC in terms of enterprise value (EV), the company has a cash position of $35.4 million, which is actually artificially low because the company used a bunch of cash last quarter to pay down payables, so their working capital levels were a bit high at the end of the quarter. When looking at the value of a company's equity, I take into into seasonal and other one-time adjustments to working capital levels to get to normalized levels. I figured they are $15 to $20 million to high currently, which equate to an additional $15 to $20 million of additional cash at normalized working capital levels. So in terms of EV, the company is worth $175 million. In terms of EBITDA, they have trailing twelve month EBITDA of $44.1 million, so a multiple of 3.95x. Annualizing the last quarter's EBITDA would be $52.0 million of annual EBITDA, a multiple of 3.37x.
When looking at PLUS in terms of EV, you actually have net debt of $46.9 million. In terms of working capital, they also seem to be about $10-15 million higher than normal, so adjusted net debt is more like $31.9 million. So in terms of EV, the company is worth $268.5 million. In terms of EBITDA, they have trailing twelve month EBITDA of $48.5 million, so a multiple of 5.54x. Annualizing the last quarter's EBITDA would be $62.0 million of annual EBITDA, a multiple of 4.33x.
So as you can see, PCCC trades at a lower trailing twelve month and forward multiple. Its also important to note, that even though PLUS's margins are higher, they spend $10 million more a year in capex. So in my opinion, the benefit of higher margins are offset by higher capital spending needs, which is why I feel they should trade at a similar multiple.
So if you used PLUS's current multiples for PCCC, you would get a share price of about $10.30 to $10.80, which is why I'm buying PCCC instead of PLUS...
The issue I have with P/E multiples is that they ignore the company's cap structure.
Good luck to all...
PCCC - Picked up a bunch of PCCC this morning in the $8.25-$8.35 range on the selloff. Not sure why this one is trading so much lower after reporting earnings of $0.26 per share for the Q4. I think this one should be valued similarly to PLUS and I see it moving up to the $10 range by next earnings.
Agreed. It's always nice to have a direct connection with one of your largest customers...
AYSI News - New CEO and Directors
Impressive set of new Directors and CEO.
The new CEO, Mr. John Cleland is leaving a $2.0 billion plus sales company, WestNet Infrastructure Group Ltd. to join Alloy. This should definitely be viewed as good news for AYSI shareholders.
Here's some information on his prior company, WestNet:
WestNet Infrastructure Group Ltd., along with its subsidiaries, provides asset and project management services to infrastructure clients in gas and electricity fields in Western Australia. It offers engineering, procurement, project management, operational, and maintenance services, as well as legal, human resources, information technology, and finance services. The company also provides overhead and underground electricity cabling services and manages natural gas pipeline expansion projects. In addition, it operates and maintains rail infrastructure in the southern half of Western Australia, as well as acquires, manages, and operates various energy transmission and distribution, and transport infrastructure assets in Australia and internationally.
They were formerly a public company and were purchased by Babcock & Brown among others in a consortium back in 2007. I believe they moved Mr. Cleland up to CEO from the WestNet Rail subsidiary.
Share Listing Experience - It's also important to note how the directors have previous experience with listing shares. Dr. Mofflin was a Director of WorleyParsons for more than 10 years, playing a key role within the company during its public listing. Mr. McMaster's experience includes numerous reorganizations and turnarounds including being instrumental in the recapitalization and listing of 12 Australian exchange-listed companies.
I continue to believe that it is in the best interest of the company to list it's shares on the Australian stock exchange where it would get the most attention/respect from the investment community and command the highest valuation.
I remain a long-term holder in AYSI and am excited to see what the next few years bring!
Alloy Steel International Announces Appointment of New Board Members and Chief Executive Officer
PERTH, Australia, Feb. 25, 2011
PERTH, Australia, Feb. 25, 2011 /PRNewswire/ -- Alloy Steel International, Inc. (Pink Sheets: AYSI) announced today the appointment of three new Board Members and a new Chief Executive Officer (CEO). The new Board Members are Michael Minosora, David Mofflin and Brian McMaster. Mr. Minosora has been appointed as Chairman and replaces Mr. Gene Kostecki. Mr. Kostecki has resigned as Chairman of the Board and CEO, but remains as a member of the Board and Technical Director. Mr. John Cleland has been appointed as CEO. Descriptions of the new Board Members and new CEO are outlined below.
Mr. Kostecki stated, "The Company is cautiously optimistic of its growth prospects in the wear plate market with its range of Arcoplate products. We have identified these new Board Members and CEO to help grow the Company and become a significant supplier in the world market for wear plate and anti hang-up material. These talented individuals provide a mix of technical and commercial resources, as well as experienced governance skills. I look forward to my new role in the Company and working with the new Board and CEO.
"The Alloy Steel International Team has done an excellent job to date and the new Board and CEO will provide independent guidance for the Company's future development."
Mr. Minosora, age 52, has more than 20 years experience in providing corporate advice to some of Australia's largest companies. He was previously the Chief Financial Officer of Fortescue Metals Group, Managing Director of Azure Capital, and Chairman of the Ernst & Young Global Business Advisory Services' service line and member of the Ernst & Young Global Audit Executive Committee. Mr. Minosora has extensive experience in advising on significant corporate transactions both in Australia and overseas and in particular in the resources sector. Prior to that, he had senior roles with Ernst & Young in Australia and the Oceania region.
Dr. Mofflin, age 53, has extensive experience in the successful growth and management of businesses, both within Australia and internationally. He has spent over 30 years in the engineering sector, covering areas including overall business management, strategic planning, technology commercialization, project management, construction, research, and design. Before joining Evans and Peck (a business and project advisory firm) in September 2010, Dr. Mofflin was a Director of WorleyParsons for more than 10 years, playing a key role within the company during its public listing, as well as being a supporter of major new growth initiatives for over 20 years.
Dr. Mofflin's strengths include clear strategic thinking, a strong understanding of the major drivers and new emerging technologies within the engineering sector, and the ability to work with and motivate others. These skills have especially been applied over the last three years working with a major international engineering company as he focused on identifying and capturing business opportunities created by the global trend to enhanced sustainability.
Career achievements of Dr. Mofflin include overseeing the establishment of an infrastructure business in WorleyParsons and growing the business at an average rate of 40 percent per year over a 10-year period. Dr. Mofflin also played a key role in developing the initial strategy for WorleyParsons in the mining sector, leading in the acquisition of a minerals and metals business that acted as a springboard for WorleyParsons in that sector.
Dr. Mofflin is currently the non-executive Director of several firms in the engineering sector that are involved in technology commercialization. Dr. Mofflin has a Ph.D. from the University of Cambridge and a First Class Honours Degree in Civil Engineering from the University of Western Australia. He is actively involved in the broader engineering profession and is currently Chair of the WA Centre for Engineering Leadership and Management, and a WA Division Committee member of Engineers Australia.
Mr. McMaster, age 39, is a Chartered Accountant and has almost 20 years experience in the area of corporate reconstruction, and turnaround performance improvement. Mr. McMaster is currently a partner in the national firm of KordaMentha. Prior to joining KordaMentha, Mr. McMaster was a Partner with Ernst & Young's Corporate Finance practice.
Mr. McMaster's experience includes numerous reorganizations and turnarounds including being instrumental in the recapitalization and listing of 12 Australian exchange-listed companies. Mr. McMaster's experiences include significant periods in the United States, South America, Asia and India.
Mr. McMaster presently holds several executive and non-executive Director roles in a variety of industries including mining and resources, hospitality and funds investment.
Mr. Cleland, age 43, has extensive experience in CEO and other senior management and finance roles in a range of industries in Australia, Indonesia and the United Kingdom. Mr. Cleland was previously CEO of WestNet Infrastructure Group, CEO of WestNet Rail and General Manager Finance of Australian Railroad Group, on secondment from Wesfarmers Limited. During his 11 years with Wesfarmers Limited, Mr. Cleland also spent time in the corporate Business Development division, with Wesfarmers Transport in Perth and Indonesia and with Wesfarmers Landmark.
Before joining Wesfarmers, Mr. Cleland spent three years with KPMG in Sydney and two years with various financial institutions in the United Kingdom. Mr. Cleland has a Bachelor of Economics and a Diploma in Financial Management from the University of New England and is a member of the Institute of Chartered Accountants in Australia, a fellow of the Financial Services Institute of Australasia and a member of the Australian Institute of Company Directors.
Indemnification Agreements entered between the Company and the Board Members will be available at www.alloysteel.net.
Letter from the Chairman and 2010 Annual Financial Statements
As indicated in our year-end earnings release on January 28, 2011, a letter from the former Chairman, audited year-end financial statements and supplemental information are now available for review by shareholders and other interested persons at www.alloysteel.net.
Share Listing Experience - It's also important to note how the directors have previous experience with listing shares. Dr. Mofflin was a Director of WorleyParsons for more than 10 years, playing a key role within the company during its public listing. Mr. McMaster's experience includes numerous reorganizations and turnarounds including being instrumental in the recapitalization and listing of 12 Australian exchange-listed companies.
I continue to believe that it is in the best interest of the company to list it's shares on the Australian stock exchange where it would get the most attention/respect from the investment community and command the highest valuation.
I remain a long-term holder in AYSI and am excited to see what the next few years bring!
Impressive set of new Directors and CEO.
The new CEO, Mr. John Cleland is leaving a $2.0 billion plus sales company, WestNet Infrastructure Group Ltd. to join Alloy. This should definitely be viewed as good news for AYSI shareholders.
Here's some information on his prior company, WestNet:
WestNet Infrastructure Group Ltd., along with its subsidiaries, provides asset and project management services to infrastructure clients in gas and electricity fields in Western Australia. It offers engineering, procurement, project management, operational, and maintenance services, as well as legal, human resources, information technology, and finance services. The company also provides overhead and underground electricity cabling services and manages natural gas pipeline expansion projects. In addition, it operates and maintains rail infrastructure in the southern half of Western Australia, as well as acquires, manages, and operates various energy transmission and distribution, and transport infrastructure assets in Australia and internationally.
They were formerly a public company and were purchased by Babcock & Brown among others in a consortium back in 2007. I believe they moved Mr. Cleland up to CEO from the WestNet Rail subsidiary.
The $2.0 billion sales figure is based on results from 2007.
LEA.V - Leader announces closing of financing transaction. Also releases preliminary revenue of $26 million for 2010, which translates to $8.3 million for the Q4! Last time they announced a $8 mil plus quarter, they reported EPS of $0.15! Also noted that YTD 2011 revenues are coming in higher than expected. All in all great news! Thanks again to Hank for bringing this to our attention. I'm looking for $1.50 - $2.00 by mid April when earnings are released. Trading will resume at 12:00 EST, what does everyone expect?
Leader Energy Services Announces Closing of $15 Million Financing
CALGARY, ALBERTA--(Marketwire - Feb. 18, 2011) - Leader Energy Services Ltd. ("Leader" or the "Company") (TSX VENTURE:LEA - News) is pleased to announce that it has completed its previously announced three-year secured debt facility agreement in the principal amount of $15,000,000. The facility bears interest at an annual rate of 12% compounded and payable quarterly, and is repayable at any time without penalty subject to the approval of its senior lender. Under the terms of the financing, the lender was issued 4 million share purchase warrants exercisable at $0.65 for three years. Leader will use existing working capital and proceeds from the new facility to refinance its existing convertible debt.
As previously announced, Leader reached an agreement with holders of its 10% convertible subordinated debentures to repurchase 95.4% of the total amount outstanding. Leader issued $15,000,000 of debentures on February 28, 2007, of which $13,160,000 was outstanding as of January 25, 2011. The debentures were convertible at $0.40 per share and would have matured on March 31, 2012.
Leader will pay $12,560,000 of debenture principal plus $1,400,000 of deferred interest at 110% of face value, for a total of $15,356,000. Additionally the Company will pay interest owing per the debenture agreement up until February 18, 2011 totalling approximately $755,000. As of February 18, 2011, a total of $2,140,000 of debentures was converted to common shares of the Company.
Whitehorn Merchant Capital Inc. provided financial advisory services to Leader with regards to the new debt facility and in addition to cash compensation, received 250,000 share purchase warrants exercisable at $0.60 for two years.
Leader continues to experience robust demand for its services. Revenue for the year ended December 31, 2010 will approximate $26 million. In addition, revenue for the current year to date is higher than previously expected. In 2011, the Company is planning a modest capital expenditure program including new coiled tubing, nitrogen, and fluid pumping equipment. Leader anticipates releasing fiscal 2010 results during the third week of April 2011.
Further information can be found under the Company's listing at www.sedar.com and on the Company's website at www.leaderenergy.com. The number of common shares issued and outstanding at the date hereof is 18,698,000.
Great news from the company. They sure have made significant progress in a short period of time prepping the company for the next stage of growth. I'm also very glad to see Gene staying on with the Company in a very important role as the head of technical development. It definitely fits his strongsuit and the Company will continue to benefit from his innovation.
They have set this up to be a smooth transition and I very much look forward to the names of the individuals who will be leading this company going forward. The company will be much stronger and better equipped to take advantage of growth with this new expanded management team and board. Congratulations to Gene and I wish home the best going forward in his new role.
Good luck to all...
AYSI - Over the weekend I decided to run some numbers for Alloy based on the latest quarter's financial results to see what potential upside remained in the company.
The company is currently running 2 mills in Australia at the moment. These two mills have the potential to generate $8.8 million in sales per quarter, based on the Q4 results, which equates to $35 million or so in sales per year.
Assuming margins remain consistent with Q4 results (EBITDA margin of 35% or so), the company could produce EBITDA of $12.3 million per year on two mills. That boils down to net income of about $7.7 million (based on a 35% tax rate). Using 17.5 million share O/S, thats $0.44 per share in after-tax earnings for two mills using assumptions based off Q4 results.
Q1 is generally a slower quarter due to the holiday period and vacation time thats taken in Australia. So, it's possible that Q1 might come in a bit lower than the just release Q4 results. But for the full year fiscal 2011, I would expect $0.40 per share in earnings to be somewhat of a base case expectation.
Keep in mind that is all based on the current layout of two mills operating. The fact is, though, that they are expanding out into Indonesia. They have not shared with us how many mills they plan on operating.
The following set of assumptions are based on an extra two mills running full-speed in Indonesia. Just to be clear, I don't expect this to happen overnight and think it will take a year or two to get there.
With four mills working at full capacity, sales would be approximately $70 million ($35 million for two mills X 2).
I'm assuming they would be able to improve EBITDA margins to 37.5% based on overhead costs being spread over a higher revenue base. I'm not assuming anything significant in terms of improvement (only 2.5%).
That equates to about $26.4 million of EBITDA for four mills running full capacity for a year, or approximately $16.5 million of net income per year. Using 17.5 million shares outstanding, that totals approximately $0.94 per share in EPS!
So obviously the potential is there if they can take advantage of their sweet spot in the market and their expansion plans. Again, I'm not saying this is going to happen overnight, but it gives us long-term holders a sense of the potential.
I believe a few years back there was some discussion as to the size of the steel plate overlay market and I believe its about $2 billion per year, so $70 million a year still represents a small portion of the total market.
Any comments or questions on the above are welcome.
OK... The market is officially insane. Who in their right mind would be buying now???
That's quite an impressive move! How many shares did you have? Well done.
PS. After the reverse split and the price at $15, there would only be 12 million shares, so it would be worth $200 mil. Not quite $2 billion but quite impressive nontheless. I'm sure those private placement investors are thrilled, a $3.6 million investment is now worth $300 million at the current price of $2.50...
Insane... Such a move based solely on a person's name and reputation!
They definitely can and eliminate the need to dilute existing shareholders. Definitely a more accretive way to access capital.
Stock is looking strong and looks like it could move past $2.00 today or early next week.
Good luck to all...
You definitely can and they have been. Plant 2 was built solely using proceeds from operating cash flows. I believe the capital costs to construct a mill are relatively low, as they were able to add plant 2 at a time where quarterly sales and profits were half of the September 30, 2010 quarter. They have plenty of cash on balance sheet and should continue to generate more given their strong margins. I believe there is no current need for additional outside capital.
Good luck to you...
The agreement can be found in the 6/30/2010 10-Q as Exhibit 10_1. The final payment for the land is technically due January 2011. So the paid for the land as of today's date. After they paid for the land, they have a maximum of 24 months to have the first stages of a plant under construction. My understanding is they could begin construction after they had paid for the land and received the necessary permits.
AYSI - A key point to note on these expansions is that they are not just 1-year plans. These expansions will continue until 2013-2015.
Thats several years worth of strong demand for AYSI product only in its home market of Western Australia. It's difficult to imagine what kind of results we would see if they increased their international sales and began supplying to miners for projects outside of Western Australia. I think Gene and management have realized these implications and that is the primary reason behind their purchase of land in Indonesia. This is from the 8-K they released with the expansion news:
"The new facilities will also better enable the Company’s ability to service increasing client requirements and growth from emerging countries, including Latin America, Russia, India, China and Africa. The Company’s patented modular plant design augurs well for scaling production capacity in line with the anticipated increased demand.
The current Western Australian plant will continue to service the Australian market and the new capacity will supply the rest of the world.
The purpose built plant in the Cilegon industrial estate is expected to also improve operating margins and shorten delivery times to customers. A steel mill is located within the industrial estate, which will provide efficient and cost effective raw materials for the Company. A deepwater port within the industrial facility provides efficient access to the Company’s international customers. Furthermore, there are ample skilled and cheap labour available whilst the computerised plant machinery can be controlled and monitored remotely from anywhere in the world, ensuring consistent quality control."
I am hoping that they are taking the incredible cash flows generated over the last quarter and using that cash to pay down the purchase price of $2,820,240. Heck at 9/30/2010, they had over $3.5 million in cash and $5.6 million of receivables from which to collect cash.
It wouldn't surprise me if AYSI already has people on the ground building the facility now.
Just took a look at the 9/30/2010 balance sheet a little closer and noticed that Property, Plant, & Equipment jumped to over $6.6 million from $4.4 million at 6/30/2010. Thats a $2+ million investment in PP&E in 3 months, some of which is likely the facility over in Indonesia. Shoot, it could be possible that the company had almost fully paid for the Indonesia land by 9/30/2010 and still had $3.5 million to spend on building the mill...
The more and more I look at the numbers and the industry potential, the more comfortable I get with AYSI and a price target well above the current share price.
Refresher on the tailwinds supporting AYSI's growth and continued production increases.
BHP - BHP Billiton is working to substantially expand its iron ore production capacity in the Pilbara. BHP is seeking to lift output to 240 Mtpa, from 125 Mtpa currently, via its Rapid Growth projects 4, 5 and 6.
http://www.heraldsun.com.au/business/big-get-bigger-bhp-geared-for-growth/story-e6frfh4f-1225988027719?from=public_rss
Fortescue - Fortescue Metals Group is to spend $8.4bn to triple iron ore iron production to 155m tonnes a year as Australia’s third-biggest exporter of the commodity seeks to benefit from growth in Asian markets led by China.
The aggressive expansion plans will be funded by a combination of debt and internal cash flow, with investments in port, rail and mining operations staggered over close to three years.
Fortescue last month raised just over $2bn after selling five-year bonds but analysts have forecast it might need to raise roughly four times that amount to fund its expansion over the next six to seven years.
Andrew Forrest, Fortescue’s founder and chief executive, is pressing on with the expansion in spite of his fierce opposition to the government’s watered-down “mineral resources rent tax”.
Fortescue, and its bigger rivals Rio Tinto and BHP Billiton are investing billions of dollars in their iron ore operations in the Pilbara region of Western Australia.
Iron ore supply and demand fundamentals are highly favourable for Australia’s mining industry which has the advantage of being close to Asia’s growth markets. Analysts believe supply will struggle to meet demand at least until 2013.
Rio recently said it would invest an additional $3.1bn to expand its port and rail operations, lifting to $6bn the amount of capital it had approved for investment in the Pilbara since July.
Rio is targeting annual iron ore production of 283m tonnes by the second half of 2013, up from 220m tonnes in 2010. By 2015, it hopes to reach 333m, while Brazilian miner Vale’s annual output is already close to 330m tonnes.
Fortescue has earmarked $4.6bn to expand its existing port, train unloader and rail network in its Solomon mining area, while $1.5bn will be spent on increasing production at its Cloudbreak and Christmas Creek mines to 90m tonnes per annum.
It has also budgeted an additional $2.3bn to develop a new mining hub at Solomon.
Mr Forrest said the next phase of Fortescue’s development had been years in the planning and that the miner had a proven ability to ramp up production quickly.
Fortescue reached a production rate of 42m tonnes per annum in its 2009-10 financial year and is due to hit an annualised rate of 55m tonnes in February.
“This decision will enable Fortescue to leverage its existing infrastructure and its massive land holding across the Pilbara to exponentially increase product sales within key markets of Asia, Europe and Australia,” Mr Forrest said
http://www.ft.com/cms/s/0/900706ec-f3a5-11df-901e-00144feab49a.html#axzz1CucubQcV
Rio Tinto - Rio Tinto has forcefully declared that it is back in expansion mode.
The miner has detailed plans for $US14.8 billion ($15.3bn) of iron ore spending in the West Australian Pilbara region.
The world's third-biggest miner is also back on the hunt for "small or medium-sized" multi-billion-dollar acquisitions after clearing debt problems that had hamstrung growth from the start of the global financial crisis to well into this year.
In a London investor briefing due to be repeated in Sydney today, Rio iron ore boss and executive director Sam Walsh said that despite rising development costs, Rio's scale and track record meant it could deliver the lowest-risk and highest-return expansions in the region.
At the Friday night briefing, Rio took the unusual step of giving a detailed breakdown of $US10.4bn it plans to spend on yet to be approved expansions of mines, rail and ports as part of its plans to boost Pilbara capacity from 220 million tonnes a year now to 333mtpa by 2016.
It has already approved $US4.4bn of port and rail expansions to bring its infrastructure capacity to 283mtpa.
A further $US3.5bn will be spent on developing remote Pilbara mines to boost mining capacity to 283mtpa, while the remaining port, rail and mine spending to get to 333mtpa will cost $US6.9bn.
The average cost of the expansion is about $US130 a tonne, up from a pre-GFC estimate of $US100 a tonne.
http://www.theaustralian.com.au/business/mining-energy/resurgent-rio-bets-on-iron/story-e6frg9df-1225962392977
SYBR - From what I read, PHS Group, one of the subsidiaries that is filing Chapter 7, owns 100% of Quality Food Brands (QFB) and is a sub of PHS Group. Given that QFB will continue to operate as a going concern, the assets at QFB will be safe from creditors. The QFB business operating as a going concern, though, will be available to creditors. I think the way the Ch 7 will work is that the company will sell all its assets, including QFB, to pay back creditors. At the end of last Q, total debt was $28.1 million. So as long as all the assets at PHS, including the ongoing QFB business, is worth more than $28.1 million, equity holders of SYBR should get some value.
Besides the QFB business, Synergy has a 20% stake in an online travel company, ITT, which could be worth a couple million, given their share of the equity income from the investment was $370k last year.
Will take some time to bear fruit and a bit risky but should be profitable in the long run...
SROE - $2.50 Big boost in reserve value announced today...
HOUSTON & COVINGTON, La., Jan 31, 2011 (BUSINESS WIRE) -- Saratoga Resources, Inc. (SROE) ("Saratoga" or the "Company") today announced that year-end 2010 proved reserves, computed in accordance with Securities and Exchange Commission ("SEC") guidelines, totaled 108 billion cubic feet of gas equivalent ("BCFE"). The SEC case net present value of future cash flow, discounted at 10% ("PV10"), at year-end 2010 totaled $316 million, a 41% increase from the previous year. Using NYMEX strip pricing at close-of-business on December 31, 2010 and Society of Petroleum Engineering ("SPE") methodology, the year-end 2010 PV10 of Saratoga's proved reserves totaled $438 million. Including probable and possible reserves and using SPE methodology and NYSE strip pricing, the year-end 2010 PV10 of Saratoga's total reserves ("3P") amounted to $1,245 million.
Year-End 2010 SEC Reserves
Saratoga's year-end 2010 SEC case proved reserves consisted of 7.9 million barrels of oil ("MMBO") and 60.9 billion cubic feet of gas ("BCFG"), or 108 BCFE. Proved developed reserves comprised 19% of year-end 2010 reserves. Year-end 2010 probable reserves totaled 4.2 MMBO and 38.0 BCFG, or 63 BCFE, and possible reserves totaled 13.1 MMBO and 101.7 BCFG, or 181 BCFE. In summary, Saratoga's year-end 2010 SEC case 3P reserves amounted to 352 BCFE.
For year-end 2010, SEC reserve calculations were based on the average first day of the month price for the prior 12 months. The prices utilized for the year-end 2010 reserve report were $79.43 per barrel of crude oil and $4.38 per Mmbtu of natural gas.
Year-End 2010 SPE Reserves
Using SPE methodology and strip pricing, Saratoga's year-end 2010 proved reserves consisted of 8.0 MMBO and 62.6 BCFG, or 111 BCFE. Using that same pricing and methodology, year-end 2010 probable reserves totaled 4.2 MMBO and 38.2 BCFG, or 63 BCFE, with PV10 of $241 million, and possible reserves totaled 13.2 MMBO and 109.4 BCFG, or 189 BCFE, with PV10 of $575 million. Saratoga's 3P reserves, computed using NYMEX strip pricing at December 31, 2010 and SPE methodology, amounted to 363 BCFE.
December 31, 2010 reserve estimates were prepared by the independent reserve engineering firm Collarini & Associates, Inc. in accordance with SEC and SPE guidelines.
Saratoga has approximately 109 active producing wells in 12 fields and a development inventory of 54 proved developed non-producing ("PDNP") and 92 proved undeveloped ("PUD") opportunities, as of January 1, 2011.
SYBR - Took a flier on SYBR and bought 50k @ $0.11. The sale of the company's assets should result in positive equity value for holders of SYBR. But again, I'm not quite sure... It seems the value of Quality Food Brands alone would be enough to pay back all debtholders...
Any other opinions out there?
AYSI - Well, if you annualize the $0.108 quarter, you get full year EPS of $0.43 or so, which is closer to a 3x P/E at the current price of $1.30...
But I do agree that AGM is undervalued...
Good luck to you.