I have owned this stock in the past and am tempted again except for the balance sheet going forward. It used to be in good shape until the buyback of shares from thier customer/investor. With that and the new plant expansion in Mexico, the balance sheet will look much different. I am expecting a long term debt to equity ratio of over 75% and annual interest expenses to be over $1 million. This will be easily handled if things pick up but that is certainly not a given in this economic environment. Also, don't forget the ever present retirment benefits liabilities. Any thoughts or comments?
The move to Mexico resulted in the company replacing a facility in Ohio that was financed via an operating lease, with a plan in Mexico that was financed with debt.
Accounting wise, the balance sheet looks more leveraged.
But fundamentally, an operating lease is really not very different than a wholly owned plant financed with debt. In each case you've got fixed expenditures which consist of depreciation and interest; but the balance sheet treatment is different.
Also, gross margins hit all-time highs in 4Q09- that is the impact of the Mexican plant.