Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
hweb re:fonr-I picked up a few shares at the open.
NAII-any guesses on the earnings release date? Tonight? Tomorrow?
If you look at a chart of Shiller 10 (price earnings ratio which is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio), we are reaching some rare levels at 28.5. There are two periods on the chart where we reached higher levels. One was just before the great depression (~30) and the other was at the end of the dot.com bubble (~44).
GRVY running again. I jumped off the gravy train this morning.
QTM
I started a position this morning. The Company announced preliminary results of .02 GAAP and .03 Non GAAP. Based on the management comments, it appears that momentum is continuing into the next quarter.
"We ended the quarter with excellent momentum across all product categories, and we start our fiscal fourth quarter with a strong backlog and solid funnel. Therefore, we feel very confident in our ability to deliver year-over-year revenue growth again in the current quarter and exceed our annual revenue and profitability guidance for fiscal 2017."
CUO lawyers will always tell their client that they can have grounds to appeal. That is how they continue to get paid. I'm pretty sure between the original contract and the court ruling that they have enough information to make a very accurate estimate of the obligation they are facing.
I presume their argument is that if they can overturn on appeal and face a jury that some of the rulings may turn out in their favor. That's a lot of hopes and prayers. At this stage, my interpretation is that they've met the GAAP requirements for recording a loss contingency.
CUO results are out. .62 with a before tax charge of 632k.
They did not accrue a loss for the unpaid royalties based on the adverse court ruling. I'm surprised that their accounting firm would sign off on that decision. In adddition to that, Valco has filed three new counterclaims with damages in excess of $5.9m.
8. On September 15, 2016 a Partial Summary Judgment was issued regarding the Company’s previously disclosed litigation, Continental Materials Corporation v. Valco, Inc., Civil Action No. 2014-cv-2510, filed in the United States District Court for the District of Colorado. The suit regards a sand and gravel lease between the Company and Valco, Inc. (“Valco”) that calls for the payment of royalties over the life of the lease on an agreed 50,000,000 tons of sand and gravel reserves. In the suit the Company sought, among other things, to reform the sand and gravel lease in regard to the agreed amount of sand and gravel reserves and to recover approximately $1,282,000 of royalty overpayments included in other long-term assets. The Partial Summary Judgment resolved many of the Company’s claims in Valco’s favor, but the Company’s claim for the return of royalty overpayments made during the statutorily allowed period is still pending. The Company has concluded that recovery of the overpayments in excess of approximately $650,000 is not likely due to the statute of limitations and has therefore recorded a $632,000 write-down to the long-term asset during the third quarter of 2016. The Company and its legal counsel believe there are grounds to appeal the Partial Summary Judgment regarding this and the other claims of the suit as the court improperly resolved factual issues that should have been decided by a jury. The Company and its legal counsel believe there is a likelihood that some, or all, of the issues resolved by the Partial Summary Judgment may be reversed on appeal and remanded for trial by jury although there can be no assurance that an appeal will result in reversal. The Company paid royalties on approximately 17,700,000 tons, including the overpayments, of the 50,000,000 tons of sand and gravel reserves through the end of the third quarter of 2014. The impact of these proceedings could have a material effect although the Company does not believe that there is a reasonable basis for estimating the financial impact, if any, of the final outcome of these proceedings and accordingly no accrual or reserve has been recorded in compliance with accounting principles generally accepted in the United States of America. In addition, on September 30, 2016 Valco filed a motion seeking to add three new counterclaims alleging damages in excess of $5,900,000. The Company has vigorously opposed the motion which has not yet been ruled upon.
re:NAII
The quarter is definitely supportive of the current share price, but the increase and SGA hurt the quarter.
In the prior q, they had 35.7m in revenues and gross margins were at 23.5% and sga was 3.709m.
This q they had revenue of 34.1m but margins fell a full % point to 22.5% and SGA increased to 4.133m.
As unprecedented as that 9 day stretch has been, the percentage decline has been fairly muted at ~3%.
hweb I haven't covered any yet. Thanks for pounding the table on this one.
There is rumor that wikileaks going to dump 30k emails later today or tomorrow.
re:SNYR
I thought it was amusing that they released their earnings this am.
I looked at their products, and they seem to be of the snake oil variety. They sell a multivitamin (Focus Factor) advertised as a brain booster. Flat Tummy Tea which they advertise to kick that bloated & sluggish feeling and flatten that tummy! A hand cream that reduces lines and wrinkles etc.
re: SCKT
I did listen to the call, and I did not hear them mention the amount of the license fee.
researcher re: STS
I was casually listening as well. It definitely sounded like revenues would be no more then the backlog level which is 58m and analyst were expecting 72m. I plan to hold for lower levels as well. Thanks to hweb for bringing this to the board.
Hweb it seems to be getting harder to get borrows through Ameritrade. I've been shut out on a number of stocks recently.
Good call on TAYD. I tried to short this morning, but couldn't find any shares.
Thanks for the replies on CMT. I'm considering jumping in as well.
re: CMT
CMT put out a press release yesterday regarding a breakthough in ultra low density smc. I have no idea if this annoucement has any correlation to the recent strength in the stock price.
https://finance.yahoo.com/news/core-molding-technologies-announces-breakthrough-124500117.html
Any thoughts on whether this is a financially significant development?
Good find swick. I was trying to find the agreement, but hadn't gone that far back yet. It is possible that the rate is up to .5 per ton based on this line in the most recent 10q related to a write off regarding this lease.
...$401,000 of prepaid royalties related to the minimum annual royalties paid during the period of operation.
mermelstein re: CUO
You don't spend millions in a lawsuit to recoup $1.5m in royalty over payments. I may be wrong, but my interpretation is that this was primarily about rescinding the lease and the Company's obligations under that lease. The $1.5m in royalty over payment was just a portion of a larger issue.
The primary question is what are the lease termination provisions in the contract? If the 50m tons in royalty payments was guaranteed then this is a significant development.
re:CUO
This may be a more significant development then it appears to be. Without the lease contract and the details of the lawsuit it is difficult to discern how significant this is for the Company.
What we do know is that CUO halted the mining operations at the leased property back in 2014. At that time, they had paid royalties on 17.7m tons of an agreed upon 50m tons total.
The Company has been seeking to rescind the lease. If rescission wasn't granted then is the Company obligated for the royalties on the 32.3m tons that have yet to be mined?
I really wish the Company had provided more clarity as to the potential reserves faced as a result of this ruling.
Yellen has mentioned a couple of times that current policy is providing modest accommodation. What would be her definition of extreme accommodation?
I fear Yellen is Captain Edwards and were all on the titanic.
cliff I may be wrong, but I believe the rule is that you need to file within 10 days of the end of the month in which that occurs.
re: JVA They had a healthy gain from hedging activities. It looks to have added about .06 in the quarter.
re: CYBE I joined you on the short side this morning.
skillz re:CUO There is definitely a cyclical nature to this industry, but a sustained stretch of higher margins does have precedent. I only went back to 1997.
1997 23%
1998 25%
1999 27%
2000 25%
2001 24%
2002 22%
2003 22%
I don't blame you for holding. I think the stock should continue to do well. I wouldn't be surprised to see it make a run on these numbers.
If the higher margin products take off this stock has the potential to post some big results.
wade one other point about your analysis. Although lumpy, large projects are a recurring event for this company. I'm not sure why you want to discount them entirely as part of your valuation analysis. There will be more large projects in the future.
wade re:CUO
First, you are ignoring the principle of overhead absorption on increased sales. Second, the competitive bidding process in the construction industry doesn't support your narrative that large projects lead to higher margins.
But even if the windwill project had higher margins, your numbers don't compute. Just to illustrate the point. Lets assume that the windmill project had an unusually high margin of say 30%. If you back that out the margins for the quarter would still be 22%.
Royalty revenues don't have a cost of goods sold component. Royalties are derived from licensing your technology to a separate company. They normally pass through to the bottom line. I believe the callers analysis is accurate.
re:CSPI
I was considering picking some up shares after hours, but I held off. After listening to the CC, I do have some reservations about chasing the stock.
First, the profitability was almost entirely the result of the royalties from the three E-2D planes.
The HPP division had $5.6m in revenue and $1.6m in operating income. The E2-D royalties were roughly $2m. If you back out the royalties, the HPP division had a loss of roughly (400k).
The Tech division had revenues of 21.3m and 300k in operating income.
Management also gave some guidance regarding expense ratios going forward. Engineering and Development is expected to run 3.5% of revenue, SGA is expected to run 17.8-18.2%, and taxes are expected to be 38%. All of these ratios are higher then the current quarter.
The stock should still do well tomorrow, but I would caution against annualizing the 3rd q results.
re:CUO
This is straight from the 10q.
Even though concrete prices have increased, the market remains sharply competitive especially on large construction projects.
There is definitely going to be some overhead absorption margin benefit from higher sales, but the bidding process of large construction projects does not tend to result in higher margins.
Diesel fuel is another significant component. The lower cost of fuel is benefiting their results. The company has not hedged fuel costs, so the lower fuel prices are increasing margins.
wade another company you can use from the concrete industry is EXP.
I think you're way over analyzing the windmill project. The concrete industry is way too competitive for a large scale project that undergoes a bidding process to have margins that are out of line with the current industry. I agree with littlefish the margins on the project were probably below the average for the area in order for them to win the bid.
wade
Cemex is a publicly traded concrete company that is traded on the NYSE and it carries a PE of 49.49. Take a look at their chart and you will notice a steady uptrend that started at the beginning of this year. This chart gives validation to the industry turnaround that littlefish is referencing.
wade CACS is a pretty competitive industry. I doubt a company could win the bid if their margins were out of line with their competitors.
Great call on CUO littlefish. Thanks for bringing it to the board.
re:mhh With the down market, it is interesting that it is experiencing a pickup in volume today. Several of my stocks are acting like they've been halted for the day.
SSNT 1.97 posted a strong quarter. Net income .12.
https://finance.yahoo.com/news/silversun-technologies-reports-profitable-second-195720756.html
slgd had a rough q. -.05 before tax