Just started disecting the report and transcript and can't believe the PBY management team pulled the wool over everyone again. I will say for the first time O'Dell did a great job on CNBC. Someone is finally coaching him. The mention of a 3% increase to date in same store sales for first quarter with about 70% of the quarter in the bank almost guarantees a 2.5-3.5% same store sales increase for this quarter. I suspect that is the real driver in the stock holding since O'Dell crashed the stock when he reported 4th quarter sales were in the tank oin conference call last quarter. Here's my concerns for last quarter and this is a quote from conference call:
"On a GAAP basis net earnings for the fourth quarter of 2009 improved $2.2 million or $0.04 per share. This is versus a net loss of $33.3 million or $0.63 per share for the same period last year, a swing of over $35 million. Fourth quarter 2009 pre-tax earnings include the reversal of inventory accruals of $1 million established in the fourth quarter of last year related to the EPA inquiry which has been settled. The fourth quarter 2009 net earnings also include a $1.2 million tax benefit resulting from a change in the company’s tax planning strategy.
The prior year fourth quarter results include an $8 million accrual for increased legal and inventory related charges, a $4.4 million asset impairment charge, a $1.2 million debt prepayment costs and $600,000 associated with cost cutting initiatives."
Now if you read the above slowly, you find that ENTIRE IMPROVEMENT of $2.2 million on a GAAP basis was $1.2 million tax credit and $1.0 million inventory accrual reversal which they could have taken last quarter but waited to fudge the numbers this quarter IMVHO.
The below is another quote where they had a net gain of $7 million this year on gains that had nothing to do with operational management:
"Taking into consideration the unusual items in both years it is easy to see the significant improvement made in the current year as compared to the prior year. Specifically, the items that impact 2009 on a pre-tax basis include a $6.2 million gain from the retirement of debt, a $2 million reduction in inventory related accruals, a $1.2 million gain from the sales leaseback transactions and a $700,000 gain from an insurance settlement partially offset by the $3.1 million asset impairment charge"
I also want everyone to think back to last year. I wanted to research to confirm since I've been on a cruise boat for 7 days till this morning but last year in 4th quarter is where they wrote off $19,918,000 for pensions in 2008 while only putting in $440,000 in 2007. To date, they are showing ZERO DOLLARS paid in 2009 for pensions. You can go back to my postings 12 months ago where I pointed out they could have made money the year before. They really did $20 million better last year and $20 million worse this year. The dumb analysts don't understand anything. Add that $20 million to all the other extraordinary gains in 2009 and we need to be concerned IMVHO. I am currently bondholder not stockholder. The other little nugget I plucked was on slide #13 of the upcoming investor presentation. If you look closely retail customer satisfaction was up to almosy 80% and crashed December-January to just above 70% while service also dropped slightly after going up. I suspect it dropped because they cut payroll to the bone to also make the numbers this quarter. When these clowns brag about managing expenses, the #1 controllable expense is payroll. However, it also appears they "made" the numbers by cutting advertising $6.1 million in the quarter.....think about that for a minute. They would have lost several million if they hadn't cut advertising. Also, probably a prime reason sales were down......or a statement to the effect they don't have an advertsing program that actually works. The slides also point out that PBY compared to retail stores and service providers is still only one fourth to one third that of either in operating margins. Less than 3% operating profit........so, in conclusion, if you back out $20 million for pensions, $14.2 million in extraordinary gains, $1.2 million tax credit, $1.0 million inventory value reversal and $6.1 million in less advertsing.....that's $42.5 million of their "improvement". I am not impressed......or you? I suspect the dog and pony show will push price close to $11.50-$12.00.........and I would be selling. GLTA. DaninFW