I was surprised no one brought this up on the board, I found this real interesting. On March 8, CCL Industries bought a Mexican specialty packaging company for 8x 2017 EBITDA (If you include CCL Capex commitment).  The Application of this to IFX is where it gets interesting, here’s why;
 
Valuation
 
We all know that the IFX management team is ultra conservative with their guidance, but using my 2017 numbers I get to 88M in Revenues and 9.3M in EBITDA.
 
Putting that same valuation target of 8x EBITDA gets me to 1.50/share. Keep in mind, this doesn’t even include the upside optionality of Shine N’ Ripe XL/Advaseal development which is much more valuable given the higher margin profile of the product line.
 
  
Geographical Similarities

Eerie how similar theses two businesses are… Treofran Americas had aprox. 65% of its revenues generated in the US and the remaining generated from Latin America.

Vs

IFX for the first 9 months of 2017 had 66.4% of revenues generated in the US with the remaining generated in Canada and momentum seen in Brazil for its Shine N’ Ripe XL product.
 
Even more.... Treofran sales office and distribution centre is located in North Carolina. Where is Imaflex US operations based out of? Thomasville North Carolina. You think there might be some synergies that could be generated between combining these companies. I think so.
 
 
CCL Industries stated on their last call that valuations looks expensive on larger companies hence their latest acquisition of this smaller Mexican packaging company at 8x adj EBITDA makes a lot of sense. A follow-on deal and synergistic opportunities that would present themselves with an IFX acquisition would make a lot of sense.
 
With IFX trading at <5x 2018 EBITDA makes its vulnerable to larger players as an acquisition target.
 
Personally, I would like to see them stay independent because the upside to Shine N’ Ripe XL/Advaseal rollout could be huge as an independent company. Especially to gross margin and EBITDA!!!!
 
US tax reform will be huge for these guys in 2018 when you look at cashflow or P/E. On my 2018 numbers of 98M Revenue and 11M in EBITDA using that same 8x EBITDA target I get to a share price of 1.75/share.
 

LONG