Pivot Technology Solutions Inc. T.PTG

My Biggest Issue with Last Quarter

[Detailoriented1]

if you look at the press release you can see that 30 million was a one time sale to a non major client. So it wont repeat this quarter and it was likely at higher margins than much of the other sales as we all agree that the major clients are the ones that drive down pricing. This quarter could be another big drop in revenue without a new sale to replace that one. We are all anxiously waiting for Smart Edge to deploy and bring in revenue. If it is delayed or if the sales cycle is longer than anticipated then the dividend may be in jeopardy. If there was lots of cash they would be buying back shares like they did at this time last year but they are not. Hopefully all goes well but if sales are down significantly this quarter then they are unlikely to be profitable and there are likely to be covenants on their line of credit around profits and the payment of dividends, etc. That 30M disclosure in the last quarter has me worried . Am I wrong? GLTA

[lscfa]

Yeah, you’re wrong. Co. has stated many times that large customers are lower margin than small customers. And you still don’t get the biz model - if you don’t buy it they don’t build it so profit margins can’t go negative. That’s why 18 consecutive quarters of dividends paid.  

[Detailoriented1]

Actually you are proving my point. Since this was stated as a non major client it was likely higher margin so if they cant replace it this quarter then you deduct the margin on this order and things dont look as good. I understand the model, Gross margin.cant go negative but net margin certainly can and without them having more overhead to cut, it just might later this year if they dont get sales

[lscfa]

You should sell your shares and move on.      May 16/19 cc said: Just now taking new expanded services capabilities to market   Expect services growth to occur in H2   Services profitability increasing   

[Dumpinvestor]

yes..yes...i agreed..If there was lots of cash they would be buying back shares like they did at this time last year but they are not. i sold all my shares (90000)..took a loss..and move on

[JasonBilly]

Well, you didn't move on did you? If you moved on you wouldn't bother coming on here to tell us you sold everything. So, what's your real purpose in posting the above? I can guess.

[Dumpinvestor]

hi. yes..i did..the reason i still check..because i want to know...did i make a right decision or not?. initially, i bought ptg because of divident, low market cap, high revenue. the reasons i sold. low volume...easy to manupulate the share price..hard for for me to sell number of shares. if they have money...why dont they buy back the shares at current price.

[screamer99]

We're in a transition phase.  Good news last quarter was that LTD decreased to $98m which is expected as the revenues decline, but Q2 being the highest LTD balance historically means we can expect a further decrease in Q3.  Helps our equity value assuming earnings hold up. Other than the last quarter, quarterly EBITDA ranges from $3m - $5m since Q2-18 (and I'm deducting lease

[PatiencePays123]

Doesn't it make sense for them to draw on their credit line to repurchase shares? At these levels they would forgo paying a 12% dividend yield on the shares they buy back and instead pay a 4% interest or so on the borrowed funds. Let's do some quick math. Say the company buys back 1000 shares at 1.40. They would save paying $160 in annual dividends and instead pay $56 in annual interest

[Capharnaum]

Buying back shares by using debt increases the leverage on the balance sheet with no effects on EBITDA, so the company gets closer to their debt covenants. Before buying back shares with debt (which may not even be part of the lending agreement, lenders frown at debt being used to buy back shares as it increases their risk), they should instead consider lowering the dividend to pay even more debt

[sbucksgrande]

I believe the company did state their priorities in terms of the use of capital are 1. securing the dividend 2. paying back debt 3. buying back shares.  The company has a very large amount of debt and I prefer to see them strengthen the balance sheet rather than increase leverage for a higher share price.   While they probably won't match their profitability last quarter it is

[narmac]

,,,,no flies on you sbg,,,,,,,,,,,,,,,,,,,well put together that post,,,,,,,nails the plan that Pivot is looking forward to,,,,,,,,,,,,,,,,,plan your work and then work your plan,,,,,,,as they say,,,,,,,,,,,thumbs up...............