Savvy Trades and Investments

[abh3vt]

There was a question in the CPS call about these retroactive price settlements. It seems that the company recorded them as revenue in Q3 even though it was clearly from prior quarters. It would appear that they treated this as pure profit, so the GMs on those settlements was 100% and this inflated GM and EBITDA in the Q3. That's why I think using the full 9 month period is a little more realistic in terms of what they might report in Q4 and going forward.

YTD, the pretax loss (adjusted for one times) was around (43MM). To be fair, they are likely to be replacing some lines of business with higher margin sales in FY24. This is a tough, low margin biz. Even the best, like MGA (Magna) report GMs around 13-14%. I think CPS is probably lower than that. My guess is that a realistic GM for CPS is closer to 11%