Eurocontrol Technics Ord EUCTF

RE:RE:RE:RE:market doesn't seem overly impressed

[shawshank]

Cash cow is the fuel addtive supply business which EUO retains of..this is the recurring revenue part of their model-supplying the fuel addtive which their SWISS partner becomes the sole customer of and EUO the sole supplier thereof.

This is a definite win for Eurocontrol all the way around.

The semi conductor sector is where I always...and ALL WAYS expected these guys to push towards and push into erstwhile that recurring revenue stream from supply of fule additiive AND their additional 5% royatly stream will keep adding to their income base...love this deal.

SS

nathan007 wrote: ...just crunching some numbers to wrap my head around what's going on...

The sale of GFX:
Sale price = $16m
Conservative yearly royalty total over 6 years = $9.6m
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Total baseline purchase is $25.6m


Aggressively assuming GFX subsidiary duplicates last quarters revenues of $1.6m over 1 year = $6.4m, then assuming a conservative year over year increase of 40% (they grew 40% 3/15 VS 3/14):
Year 1 - $6.4m
Year 2 - $8.96m
Year 3 - $12.54m
Year 4 - $17.56m
Year 5 - $24.59m
Year 6 - $34.42m
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Total = $104.47m
EUO 5% royalty of above total = $5.22m

...so my thinking is that the Swiss paid a 2x premium in royalty...

My question is this:
1) GFX is 83% of EUO 2015 revenues according to their financial statements - let's say this deal closes and they're cash rich, what now?  This is where the stockholders are really counting on the management team to do something as great if not greater.
2) Why sell of a business that generates 83% of your revenues?  Either it was a deal so rich that they couldn't refuse, or they see risks in future business and would rather trade the risk for  money off the table with the Swiss and then leverage it for better risk/reward in current/future subsidiaries.

Thoughts SH board?