My 2012 Earnings EstimateI thought I would attempt my own earnings estimate from the available data. I would appreciate any critique in my numbers or opinions on estimates, etc. I am just trying to get a handle on this.
I will start with the estimates given by Fortress on Page 27 this presentation:
https://www.fortresspaper.com/pdf/Fortress_Paper_Powerpoint_Nov_2010.pdfIt indicates that they hope to produce a little over 200,000 tonnes of dissolving pulp. At a price of $1,600/tonne ($1,556 mill price) their Cdn Revenue will be $311 M (200,000 x $1,556) and EBITDA = $205.2 M.
Now they indicate in their news release of Oct. 4 and Oct. 7th, that they have locked in a minimum price of $1,200 per tonne and a maximum of $1,600 per tonne on 84,000 tonnes and a minimum price with no maximum price on an additional 72,000 tonne, leaving an extra 44,000 tonnes to be sold at todays spot price of $2,350. This is where it gets difficult since they don't give a price on that last 72,000 tonnes, but I will use $1,600. I figure it is a least this when spot prices are at $2,350.
There has also been about a 5% decline in the value of the $US that needs to be factored in as well.
I will then add $1.50 EPS for profit on their bank note and wallpaper divisions, however I think this may be a little conservative also.
So here we go:
On all the production I will start with FTP EBITDA number of:
$205.2 M
-$15.6 (minus currency exch. difference of $311M x 5% = $15.6M change in exchange rates)
+$31.4 ADD extra income above $1,600 on 44,000 tonnes not contracted yet. That is $2,350/tonne spot price = $2350-$1600 = $750 x 44,000 tonnes = $33M minus (5% currency exch) = $31.4M
= $221 M EBITDA
- $5.9M interest on Quebec Gov't loan of $102.4M and $15M convertible debentures
- $10 M depreciation (wild estimate. not much to depreciate since they obtained everything so cheap)
Pre-tax profit = $205.1 M
minus 30% tax = $61.5 M
After tax profit from Thurso = $143.6 million divided by 13.9 million shares =
EPS of $10.33 plus $1.50 from other divisions =
2012 EPS of $11.88 per share.
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So in numeric order:
$205.2 M (Fortress estimate)
- $15.6 M (exchange rate difference between now and then)
+$31.4M (extra amount above $1,600 per tonne on 44,000 tonnes not yet contracted)
- $5.9 M (interest expense)
-
$10 M (non cash depreciation expense)
$205.1 pre-tax profit from thurso
-$61.5 M (corporate taxes at 30%)
$143.6 M after tax profit
= $10.33 per share (13.9M shares fully diluted)
+ $ 1.50 per share from other divisions
$11.88 per share estimate for 2012 earnings