Also, CASH is down and there is a huge debt maturity in 2016What worries me even more than earnings is the dwindling cash and the debt maturities in 2016.
First, cash is down from 53.4 million in December 2014 to only 27.5 million as of June 2015. I understand that a lot of that was due to the payment of the high dividend. As I just mentioned, I think it will be reduced considerably. Consider that if the company breaks even next quarter, it will still burn most of its cash just to pay the dividend... makes no sense..
Secondly, the company has (Page 19 of latest report) $174.3 million of long term debt coming due in September 2016. Add to this the long term debt interest and the lease obligations, you have financial liability of $228.1 million in 2016.
Now, in my opinion, barring a real credit crunch or a massive deterioration in the core business, this long term debt should be easily refinanced... But, I guarentee you that the terms of the new financing will call for a reduction in the dividend. That is without a doubt.
At some point, after the dust settles, the company will be a good buy for the long term. But honestly, as of right now, there is just too much bad news to be expected in the next year to make this a compelling buy.
I expect the analysts to hit this company hard at the conference call and to lower estimates accross the board.
The thing that makes me most upset is that management causes these roller coaster rides by being too aggressive. They could have avoided much of this by simply being conservative and growing slowly, and not gunning the dividend so high.