RE:RE:RE:RE:RE:Q2 out.brutalshawshank2 wrote: 1) impairments have been huge. Saying it is not important is not accurate as those are parts of business that been deemed no longer viable 2) you should both have a look at their debt structuring much of which is secured with strict covenants. I would assume they have been in breach of some which is a game of russian roulette for equity holders. 3) usa covid #s are not fairing well and employment #s have barely gained any positive momentum. So far the recent impairments/ share price crater has been from roughly a month of shutdowns. With such a strong tie to small businesses how do you think this business model with fair in a prolonged recession/ or worse? Come monday the market may disagree especially being so illiquid however so far the business model has performed poorly in a stress test which may be a precursor for something much worse. And when will divy return?? Good luck to all
1- Unrelated to Q2... There's no impairment charge in Q2. Anyway, impairments are usually not included in covenants calculation and they don't impact cashflow. Plus, market cap has plunged by over $75M while impairments and other charges have been about $25M.
2- They have exactly the same debt at the end of Q2 2020 that they had at the end of Q4 2019. Despite the circumstances, they haven't added any debt. Their operating margins were higher in Q2 2020 compared to Q2 2019. With same level of debt and higher operating margin, why would that trigger covenants that weren't triggered in 2019?
3- You say the business has performed poorly when the business numbers for Q2 2020 were stronger than those for Q2 2019... Sure, business has been bad in Q1, but did it really warrant losing 50% of the market cap? That's the question. Is the uncertainty really worth another $50M? If business is so bad now, why did they have better operating results for this quarter than they did last year?
4- I also don't get your obsession over a dividend? Dividend is just returning money to shareholders. If the company doesn't pay a dividend, instead it accrues the value of the stock. Since they had better business operating margins in Q2 2020 compared to Q2 2019, based on your arguments then they shouldn't have paid a dividend either back in Q2 2019?