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Integrity Incorporated (ITGR) Message Board

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  • Rincon_PR Rincon_PR Mar 1, 2001 12:04 PM Flag

    News

    It was a solid quarter and the outlook is bright.

    <<<Sounds like Board needs to secure new credit line before they can announce "shareholder initiative".>>>

    Yes, based on this statement in the release:

    "Integrity has entered into discussions with several banking institutions that are interested in refinancing these credit lines and providing expanded credit facilities to the Company. Integrity is seeking a bank that will be a financial partner to support its long-term growth initiatives and its strategies for enhancing shareholder value."

    I'm now wondering if they're more likely to grow via debt financed acquisitions, which they mentioned in the last call. Unless the stock runs up, I'd prefer to see a share repurchase. We should hear more on the call, and I'm sure you'll ask all the good questions!<G>

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    • Well, Rincon ol' pal, here are my thoughts. The earnings met my expectations and I project $.36 in 2001 ,a nice 20% gain.At the estimated $10 million EBITDA that Coleman forecast, we are selling at 2 times cash flow at a time when long term debt is almost wiped out.Obviously something has to give. I believe Integrity is attempting to put together a substantial new credit line ,after receipt of which they will announce a share buyback.However, I would absolutely not rule out a going-private scenario.Coleman did not rule that possibility out when he was asked about it and I would be surprised if AG Edwards has not been exploring that as an option. I really do believe management should have had more to say on this after 4 months of retaining Edwards but it is VERY clear that something is indeed in the works. And with the fundamental outlook so rosy, that can only be good news when it is announced. Sounds like RJ Falkner will be VERY aggressive in bringing new buyers to stock over next 90 days. So based on only a 3.5 times cash flow valuation (absurdly low in its own right),the stock will likely trade at $6- $6.50 within 120 days.I am again on the record! RUDY P.S Nice to see Integrity's Time Life album debuting at a remarkable #62 on Billboard's album chart this week!

      • 2 Replies to reallyrudy
      • <<<I project $.36 in 2001, a nice 20% gain.>>>

        I agree. Based on management's comments, I think there's a good chance any deviation from this will be to the upside.

        <<<At the estimated $10 million EBITDA that Coleman forecast, we are selling at 2 times cash flow at a time when long term debt is almost wiped out. Obviously something has to give. I believe Integrity is attempting to put together a substantial new credit line, after receipt of which they will announce a share buyback.>>>

        The stock is dirt cheap, no doubt about it. This has to be very frustrating for managment and the board, and I think they are going to act aggressively to improve this soon. Some may have been disappointed that they didn't announce a share repurchase yesterday, but the reality is they need to secure the new financing first. Obviously cash flow will support a sustantial credit line, and this additional financing will be from a lender that will support their share repurchase and possible acquisition initiatives. Both would fuel growth.

        <<<However, I would absolutely not rule out a going-private scenario. Coleman did not rule that possibility out when he was asked about it and I would be surprised if AG Edwards has not been exploring that as an option.>>>

        Although they're probably looking at this scenario, I still don't believe this will happen anytime soon. Your question and inference regarding R.J. Falkner was a good one. That ITGR hired this firm and hopes the stock will benefit as a result argues against managment planning to go private at this time. Why would they try to boost the stock just before they try to buy the firm?

        I also think that they have ruled out selling the company at this time, which I believe would include selling to themselves. Going private would put ITGR in play, inviting many other firms, some of which have rich stock to use as currency, to outbid management. I think there would be considerable interest in ITGR if it were put up for sale or was in play.

        <<<I really do believe management should have had more to say on this after 4 months of retaining Edwards but it is VERY clear that something is indeed in the works. And with the fundamental outlook so rosy, that can only be good news when it is announced.>>>

        I agree, but it takes time to do the analysis, have managment and the board review the options, negotiate the financing, and finally announce what they're going to do with the newly available financing. The writing is on the wall - something is going to happen soon.

        <<<So based on only a 3.5 times cash flow valuation (absurdly low in its own right), the stock will likely trade at $6- $6.50 within 120 days. I am again on the record!>>>

        I won't bet against you on this!<G>

      • WOW Green is due out March 20. Better than expected continuity program results for both Integrity and Time Life. Royalty checks don't start to roll in until this quarter. Access to Time Life mailing list and the benefit of they're financing the advertising.

        Say they grow at 15%, the low end of their estimate and earn $.35 the midpoint of their estimate. The market normally assigns a 15 pe for growth of 15% on their year ahead earnings, that would be $5 1/4. The high end of their growth estimate puts the price at $7 1/2. This is doable. The Naz drops from 5k to 2k and ITGR rises from $3 to 4. This is no fluke: Integrity is growing a lot faster than the P&W market anyhoo.

        Btw, Shout to the Lord actually came in at #67 but like they said, we should expect more Integrity sightings on the BB200 as Time Life continues.

 

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