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Iteris, Inc. Message Board

  • bbarberayr bbarberayr Jul 26, 2011 10:30 AM Flag

    Vehicle Division Sale

    This division had $7.5 million in revenue and was sold for $14 million.

    Given the stock trades at P/S of 0.75, this was triple the value (on average) of this division in the company.

    This division had losses of $700K and $900K the last 2 years, so if I take the $700K off, this adds about $0.02 per year in EPS.

    What I don't know (and I emailed, but they said to wait until tonight's earnings call) is how the balance sheet was affected by this transaction. If I assume the effect on the balance sheet is the same ratio as the P/S, it would increase the BV by $0.20 to $1.75 and give a P/B of 0.75.

    Based on this analysis, I added to my position this morning at $1.31.

    Will be interesting to see the results and new balance sheet tonight.

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    • Did Bendix buy this division on future growth of the sensors for Audiovox's aftermarket products, due out in the next few quarters? The cash and future royalties will be good.

      • 1 Reply to sidneydane
      • Still no SEC filing, but they said in the con call, the transaction will add $12 million in cash and reduce assets by $6 - $7 million including about $5 million in goodwill.

        They will use NOL to minimize federal tax payable, but California tax will be payable as they have suspended NOL due to their budget deficit.

        So the net benefit to the balance sheet should be around $0.17 depending on how much they get above $12 million and how much tax is payable. This bumps the BV up to $1.72 and also hardens the balance sheet by getting replacing about a quarter of the goodwill with cash.

        P/B gets down to 0.75 range.

        The next key will be to see improved revenue and margins in the remaining business given the stronger focus on this.

2.20+0.09(+4.27%)3:58 PMEST