AI
Monday, February 08, 2010 5:18:37 PM
I kind of had the same feel to the report as you, mildly disappointed especially with revs.
Going in I think we both had bigger ideas of what they would do. The Q was solid but was kind of on the downside of my expectations.
At first I thought maybe interest expense in the Q rpeort was one time for some reason and would be highly reduced going forward. That would potentially add a few cents going forward if they reduced it.
But it was confusing to me the way they explained the interest expense as I recall.
Which was that the interest charge is a somewhat normalized run rate due to the factoring agreement. I'll have to go back and relisten when I get time.
Does that mean they are charging the diff between actual AR face value and the amount paid from factor and recording the difference as interest expense?
I'm not very familiar with factoring agreements and the way they operate. But the interest expense was a negative to me I wanted to get tied down.
I was actually thinking interest expense would be reduced substantially going forward because of the paydown on debt.
Overall I felt lukewarm ot the report but some positives and since this is a medium position for me (although easily my #2 position) I have decided to hold off buying more unless it drops back around $5.5.
Was hoping they'd do $0.22- $0.25 EPS or so on revs of maybe $38-$39 mill and hang around $5.7s or $5.8 level on the news with CEO reiterating revs guidance for the fiscal year.
But that didn't happen so I am taking a pause on adding too.
It also reduces my initial expectations of this being an easy call. It is up some but I think the upside now is more modest for 2010 of around $8-$9 so not as easy of a call to me.
All that said, they have an improving balance sheet, improving margins, some recent acquisitions that should be about digested, new product lines into solid margin heavy duty alts and starters to help continue growth along with the acqs, trade well below book value, have a large market position in a high entry barrier biz category that is somewhat recession proof.
We have some reason to believe a floor underneath would form not too much lower with a potential buyback and the CEO's comments that he thought current valuation is cheap enough to do such a thing.
I may add if we pull back a bit but otherwise will ride what I have.
PS- MikeDD is onboard? That's good to know. He is a smart cookie and does good work. Don't always agree with him but no one in investing agrees with someone else all the time unless they don't do their own independent DD
Thanx for the input.
Going in I think we both had bigger ideas of what they would do. The Q was solid but was kind of on the downside of my expectations.
At first I thought maybe interest expense in the Q rpeort was one time for some reason and would be highly reduced going forward. That would potentially add a few cents going forward if they reduced it.
But it was confusing to me the way they explained the interest expense as I recall.
Which was that the interest charge is a somewhat normalized run rate due to the factoring agreement. I'll have to go back and relisten when I get time.
Does that mean they are charging the diff between actual AR face value and the amount paid from factor and recording the difference as interest expense?
I'm not very familiar with factoring agreements and the way they operate. But the interest expense was a negative to me I wanted to get tied down.
I was actually thinking interest expense would be reduced substantially going forward because of the paydown on debt.
Overall I felt lukewarm ot the report but some positives and since this is a medium position for me (although easily my #2 position) I have decided to hold off buying more unless it drops back around $5.5.
Was hoping they'd do $0.22- $0.25 EPS or so on revs of maybe $38-$39 mill and hang around $5.7s or $5.8 level on the news with CEO reiterating revs guidance for the fiscal year.
But that didn't happen so I am taking a pause on adding too.
It also reduces my initial expectations of this being an easy call. It is up some but I think the upside now is more modest for 2010 of around $8-$9 so not as easy of a call to me.
All that said, they have an improving balance sheet, improving margins, some recent acquisitions that should be about digested, new product lines into solid margin heavy duty alts and starters to help continue growth along with the acqs, trade well below book value, have a large market position in a high entry barrier biz category that is somewhat recession proof.
We have some reason to believe a floor underneath would form not too much lower with a potential buyback and the CEO's comments that he thought current valuation is cheap enough to do such a thing.
I may add if we pull back a bit but otherwise will ride what I have.
PS- MikeDD is onboard? That's good to know. He is a smart cookie and does good work. Don't always agree with him but no one in investing agrees with someone else all the time unless they don't do their own independent DD
Thanx for the input.
I don't mind stealing bread from the mouths of decadence... But I can't feed on the powerless when my cup's already overfilled.
-Temple of the Dog
