Making good investments is all about spotting value, very early in the generative stages.
This also applies to turnaround stories, at the time when strategic moves have just been made and/or are planned for imminient implementation.
Inter-tape Poly is a great example of this, and has been a multiple bagger for many astute investors...including myself...who spotted a great turnaround story.
Such is the case for GLV, which traded as high as $8.50 just a year or so ago.
All of the ingredients are in place, if new management are successful in their cost compression ( always the first step and already underway ) and business optimization ( which is in process ).
Revenues are not a problem..............guidance is for $600 to $650 million this fiscal year.....nor is backlog, with $350 million.
The balance sheet is decent, with $26 million in cash and hard book is about $4.50 per share.
GLV operates in over 20 countries with about 2300 employees.
GLV operates in 3 segments.................water treatment ( Ovivo, the largest at $400 million ), pulp and paper, and industrial manufacturing.
The latter two segments are doing quite nicely.
It is the water treatment business ( Ovivo ), that needs optimization.
To this end, in June/12 , GLV took the first steps in this segment,by bringing in new management.
Since then, new steps have been taken to return Ovivo to sustainable profitaility.
Following changes to the company's leadership team at Ovivo, announced in June, 2012, Ovivo management reviewed its business strategy and is in the process of adopting the following business strategy:
- Simplify and refocus global operations on markets where Ovivo is recognized as a leader and where profitability has generally met management targets, namely the energy, electronics and metals (formerly called microelectronics), and municipal segments in North America, Europe, the Middle East and Africa;
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- Maintain operations solely in regions with a solid business base and performance record for certain segments such as food and beverage processing;
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- Accelerate development in aftermarket services, particularly in regions with a significant pool of operating equipment for which the company is the original equipment manufacturer;
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- Refocus efforts on contracts offering products and solutions without a construction component for all operations, except for a few entities with a proven record in managing such projects.
This repositioning will reduce the work force by approximately 10 per cent for all of the group's subsidiaries, generating annual savings of about $8-million.
"GLV is undergoing a major shift during this quarter with the announcement to refocus its water treatment operations (Ovivo), targeting four promising markets. I'm confident that this repositioning will spearhead a return to sustained profitability for the corporation and its long-term development," said GLV's president and chief executive officer, Richard Verreault.
If these changes in business model and cost compression measures are successful, we should see GLV return to its former levels of profitability.
That is, we should see a 4 or 5 bagger here over the next year or two.
In the meantime, with a market cap of just $70 million, and revenues in excess of $600 million per year, GLV stands out as a strong buyout candidate.