RE:RE:RE:RE:RE:Q4 results - shaking my headI don't know how low this will go. From what I can estimate, between actual cash costs and provisions, asbestos claims are costing the company $7m over each of the last 3 quarters ($4m cash costs, $3m provisions).
They didn't hit the $90m revenue mark I discussed earlier, but it seems like one order would have put them over the edge. For the next quarter then, I think we need to see revenues of $100m+ for this to begin to turn around ($90m + $10m order that will be recorded next quarter but was close to being recorded this quarter).
But I don't think this is possible because the backlog for the next 12 months is only $340m and is the same it was a year ago. The backlog for 12 months+ is also declining vs. last year but this is understandable because of some deferred orders/shipments building up last year because of COVID delays.
Their product isn't cheap and it isn't light. I bet if you dig into the freight costs, you'll see a higher than expected figure relative to sales. This may subside in the coming quarters but there are a few headwinds that are keeping me from getting back in although I'm watching this with interest - really only to see how it plays out.
They suspended their dividend this quarter. They seem to be getting pinched.
ST is holding out for an eventual sale or privatization, but I don't see the appeal at this time. If he were to unload his position (or others) for any reason, expect more downward pressure on the SP because the trading volume is so low recently.
I look at this very simply. Ignoring the debt on the books, come up with a quarterly EBITDA figure. I don't know what the right answer is - $5m for argument's sake which I don't think is far fetched over the next twelve months. $20m for the year. 10x EBITDA multiple (which I think is very generous). $200m for the company. Per share, it's $9. Deduct the debt, it's $8.
All depends on the quarterly EBITDA and you can also get there by assuming annual sales of $x ($350 - $400m?), gross profit of y% and (EBITDA only) admin expenses of $z.
The issue is with the admin expenses and I keep circling back to the asbestos claims. One day, the company may show improved admin costs because the cash they pay towards the claims will be recorded against the provision on the balance sheet instead of on the income statement, but this is still cash being sucked out of the company not available to investors let alone to sustain day to day operations.
Any way you slice it, I don't see a higher share price a year out from now and investors have less information now than they did a year ago to assess the operations of the company. Time will tell.