Linus, I would recommend that everyone listen to today's call. It may not be up yet, but once archived its well worth the listen.
The non-cash charges are explained very thoroughly, as are the growth drivers that the company expects to benefit from in the second half of the fiscal year.
It would appear to me that they have reduced top line estimates for Q4, with operating eps roughly the same. They exceeded their revenue estimate for Q2 07, but had lower than expected GM because of revenue mix. Their seasonal items didn't sell through as well, and this cost them around 200-300 basis points in margin. Mazzuto did say on the call that the current quarter was going well due to the colder weather and they expected to improve margins going forward.
All guidance numbers are given in terms of 13.9MM fully diluted shares, although the Q states that the actual fd total is closer to 12.9MM as of February 14. They did say on the call that 1MM shares were going to be issued as part of the investment in the Chinese JV, so perhaps a mid range of 13.5MM is more appropriate for the full year?
EBITDA numbers are estimated to be around 1.22+, but that includes 2.4MM in one-time gains. That would be around 0.17, so ex-items, the EBITDA fd eps number is expected to be 1.05 for the full year (FY07).
I will leave others to determine what the appropriate multiple would be for that measure of company profitability, but I think it should be higher than the current 5.4x.
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