2242749 Ont Ltd. AIIFF

News just gets better....these guys can't do anything right!

[Thethruthhurts]

On Thursday, Armtec Infrastructure declared weaker-than-expected second quarter with adj. EBITDA of $1.98 million compared to our estimation of $10.48 million and Street’s consensus of $8.76 million. We notice that adj. EBITDA records for the impairment of assets. The miss derives particularly from (a) the pessimistic influence of weather, (b) the influence of competitive Construction and Infrastructure Applications (CIA) product pricing, and (c) delays of new project award in the market. We observed that $140 million noncash impairment expense was suffered in second quarter due to a goodwill impairment test. A $110 million goodwill expense was due to three of the operating segments together with a additional expenses of $30 million allocated versus specific property, plant, and equipment, and intangible assets. Since 2006, company has made twelve acquisitions for a total cash consideration of $428 million. We also notice that more or less $112 million was accounted to goodwill (26% avg. premium paid) and $131 million to intangibles. Engineered Solutions (ES) division accounted revenues of $49.5 million in second quarter, indicating a hike of 2.9% from second quarter, 2013. The division backlog at end of second quarter was roughly $110 million. Construction and Infrastructure Applications (CIA) division revenue was $73.8 million, indicating a hike of 2.8% from the same period in 2013. We have reduced our third quarter and 2014 EBITDA forecasts to $17 million and $51 million from $18 million and $54 million, correspondingly, to indicate: (a) anticipated weak level of Construction and Infrastructure Applications work in second half, (b) persisted presence of lower-margin projects within the Engineered Solutions backlog anticipated up to second half (2015), and (c) a poorer-than-expected recovery in residential, commercial, and industrial construction markets. We have fairly grown our fourth quarter EBITDA forecast to $12 million from $11 million to indicate the moderate gain in backlog margin. We have reduced our price target to $2 from $4. Our new target price shows anticipated operational weakness from margin strain. Our target is derived from 5 times EV/EBITDA on our 2015 estimated. At the recent price level, we expect company’s share price risk prevails over shareholders’ possible return. September 15, 2014 Anthony Bryden published in the Cooper Mirror