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Black Diamond, Inc. Message Board

  • bronkonagurski1908 bronkonagurski1908 May 11, 2010 9:39 AM Flag

    I'm holding for higher price--nice buy

    I will hold my position as I think the value is not being reflected in the stock price. I would think $8-9 is a good starting point and then we'll see what the combined companies can do.

    I like the deal on the whole.

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    • Very true the multiple will likely take into account the significant growth at the company but I think you will agreee 22% margins is a bit optimistic and EBITDA is a big driver on the end price when using a multiple. One of my big concerns is how much did WK overpay for Gregory because I'm nearly certain he did

    • Bob:

      You make excellent points.

      On the multiples though, what is your point of reference. Are you talking about ttm multiple, which I think ought not apply as that is/was the past. Similarly, the $ 115 annual revenue was for last year, 2009, correct ? Let's all agree that 2009 was a pretty crappy year for most industries. This year, 2010 and then going into 2011 should be significantly better, would you not agree.

      On the sharecount, my error / typo - you're right it will be 21.6 million.

      Regardless, as I posted already - it really does not matter what I think but how the market will react when the new listing comes out and whenever we will see our first quarterly eps report with, hopefully, some type of guidance from Metcalf.

    • Well, I will show you my model on request but there are several issues with your valuation tex.

      First you can't assume WK bought a $25M EBITDA business just because that has been his aim for last 10 years. With a $135M purchase price for both assets you are basically saying it was just barely over a 5x EBITDA multiple - unlikely since one asset WK is paying himself(Gregory) and I'm sure he wouldn't settle for 5x. Additionly the combined assets have $113M revenue, so you are implicitly asserting a 22% profit margin(25/113)! We will be lucky for 15%! This is even more outragous when you consider that they are in relatively same industries and WK paid BD approx 1x rev and Gregory approx 2x Rev (not too big of a surprise).

      Another issue is you can't apply earnings after adjusting for NOL. These are finite assets and are not applicable to a potential acquirer when most of the valuation is locked up in terminal value past NOL expirations -this type of valuation would simply be incorrect to do.

      Again, if you think you will get 12 - 15X multiple on this company you are dreaming. You should ask yourself why would the BD CEO sell BD for 5x w/ 22% margins & double digit topline growth - especially if its not far from a 12 - 15x valuation. Quickly you will realize that he wouldn't do that deal and come a few weeks we will see that he didn't.

      Last but not least. Check your share count - that is also wrong even the press release said 21.6M not 20.4 (and I'm not sure if that estimate even factors for when WK and his execs have options in the money)

      "is expected that the Company’s Directors and officers will together own approximately 35% of the approximately 21.6 million shares of Clarus common stock outstanding at the closing of the transactions."

    • Bob:

      This is all purely an academic exercise and really will not mean anything until such time that Metcalf ( CEO and President ) will provide any kind of guidance for eps in 2010 and if possible into 2011. Then, and only then will we see what p/e multiple the market will give this company.

    • If you look at Armor, you will notice that it was formed through many acquisitions. Doubt we are stopping at two here.

 
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