I was afraid there would be margin pressure and there was, although I think for reasons somewhat different than I had guessed (input costs). One thing seems clear, the sales growth is there. It really comes down to whether they can make good on getting back to 20% margins by the end of the year as they're saying. If they can do that, this will run. It might even do so in the intervening quarters solely on sales ramping up so much. The other wild card that could rear its head is what kind of financing they decide/need to do in order to generate production capacity in Europe. Fred said they're in the stage of exploring the options of sourcing it, buying a plant, buying land and building a plant and it sounded like they're about 9 months out on deciding what path to take. Whatever they do though will take money and they'll have to raise it. That will almost certainly mean dilution. Will it matter if by that time Seymore is going flat out at 80 million lbs a year and they're doing an annual run rate north of $50 million in sales? Your guess is as good as mine.
All in all, I feel pretty good about where they're headed. I liked Fred's comment that they see 2010 and 2011 as transition years and the sales guidance they're giving would bear that out. This might not do a lot this year but by 2012 if they're selling what they say they will and have another plant cranking up then there will be no way this will still be in the single digits.
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