Basic EGCT DD for newcomers:
Shares Outstanding 24,482,824 a/o Jun 23, 2011
Float 3,400,000 a/o Jul 30, 2009
Authorized Shares 75,000,000 a/o Jun 23, 2011
Ecologic Car Rentals will make car rental company acquisitions with the intent to convert the fleets over to green-friendly cars. Financing for the LOI's will be handled by the Bank of Montreal (BMO NYSE/TSX), which is one of the world's largest financial institutions.
The Company announced on February 15, 2011 this engagement with BMO Capital Markets Corp. to act as the Company's Investment Banker and sole financial advisor. Since that time, the Company has undertaken the following:
-- Executed Non-Disclosure Agreements with three regional car rental companies ranging from $20 million to $100 million of revenue and conducted preliminary due diligence on all three.
-- Issued Letters of Intent to Purchase on two of these targets. The Company is negotiating valuation issues related to real estate on the second target.
Highlights from March conference call:
". . . the companies that we are currently talking to range in size from between $25 million of revenue towards to several times that. I would prefer not to give a lot more detail out about those targets, but these are not your local store down at the corner. These are not 500 car fleets. These are companies that run, you know, in round numbers between, you know, anywhere between 25 and call it 75 million."
"What we believe is that we can—if you look at the industry, the current industry, we will be able to perform at or above the industry levels on overall margins in both gross and net, and there’s a couple of reasons for that. One is, that there is a tremendous opportunity when you’re growing the business to operate at a higher margin than when you’re maintaining the business. And, I will tell you that I believe this is a growth story, not just we’re going to buy these companies and run them the way they are being run. And, if you look at the industry in general, you will find that when they, you know, when they are growing, they perform both on the EBITDA line and the pretax line significantly better then—in terms of the upward mobility, that’s number one.
Number two, I think our positioning and our branding and our marketing opportunities and branding opportunities are going to give us a significant lift on the financial performance. There are market segments out there that are available to Ecologic that are not necessarily available to everyone else who only has maybe some cars that are environmental, and I think that there’s a big opportunity for growth on both the revenue side and on the margin side from that point of view.
"Clearly, after we get this platform and the appropriate regional size where we think we can have revenues, you know, as I mentioned, the smallest was 25, and you know, we believe we can derive revenues, they could range from 75 to $150 million, if you look at some of the targets. Maybe even higher.
"I think the question, and I’m sure everybody would love for me to tell them what are the targets, but the real question is, what’s the growth once we get that core business going? And, I think the opportunity there is to look at two pieces of growth. In the airport market, if you look at the overall US market, if we were able to expand into—our brand into other airports than the ones the targets are operating, and we would have forecast that we could reach the same market share that both the targets are performing, and I think will be relatively conservative, you are looking at a 2.5% to 3% of the airport market share. That’s a number that depending on how many airports we go into, would drive significant growth over the next three to five, five to 10 years.
AI
