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Integrity Incorporated (ITGR) Message Board

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  • Rincon_PR Rincon_PR Oct 24, 2000 6:40 PM Flag


    <<<$8.5 million-$9 million for the full
    year would be fine for 2000.>>>

    As I
    recall, management estimated EBITDA of $8.4 to $8.5
    million for this year using their guidance for the
    December quarter. This estimate was about $2 million
    higher than what they said 1999's EBITDA was ($6.5
    million), which appears to have excluded product masters
    amortization (PMA) of $3.5 million for 1999.

    If all the
    above is true, then EBITDA for 2000 including the PMA
    will be much higher than $8.5 to $9 million. Afterall,
    EBITDA including PMA for the 6-months through June was
    about $5.9 million. So it looks to me like EBITDA
    including PMA for 2000 could be around $12.2 million, or
    $2.00 per share. That means I bought more shares at 1.7
    times EBITDA this morning! This is very cheap given
    ITGR's healthy growth in cash flow and conservative
    balance sheet.

    I got the impression that they
    revised downward their estimates to be on the
    conservative side, and so there's a good chance they'll be on
    the high end of the guidance range. If so, cash flow
    will support leveraging up the balance sheet. I
    believe I caught a hint of this on the call. The most
    obvious reasons to increase debt would be (1) a share
    repurchase, (2) acquisition, or (3) significantly increase
    new product development. AG Edwards' analysis will
    help the board determine the best return on investment
    for shareholders, and I look forward to hearing the
    decision early next year. And if the balance sheet is
    leveraged via a junk bond private placement, I'm sure AG
    Edwards is hoping to win the business.


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