Gains in Forecast Gross Margins will benefit Debt Paydown Kellam has set a target of increasing gross margins to the 35-40% range by exit 2021.
Gross margin was 30% in Q1/21.
Assuming that gross margin will increase to at least 35% at exit 2021 implies an average gross margin of 32.5% for the last 3 quarters of 2021.
Revenues for the last 3 quarters will probably be in the $190-$195 m range.
A gross margin of 32.5 % would add about $4.5 million to incoming cash flows.
If 40% gross margin is achieved, added cash flows in 2021 will be near $10 million.
These cash flow gains in the last 3 quarters of 2022, if achieved, could reduce senior debt to the $15 million level