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ZAGG Inc Message Board

  • snipaho snipaho May 3, 2012 7:37 PM Flag

    ZAGG Reduces Debt by nearly 40% In Q1 2012

    Per the conference call:

    Out of ZAGG's ~$69.6 mil in long term debt, they paid off $27 mil for a balance around $42.6 mil. A reduction of around 38.8% in one quarter.

    This sound fiscal management reduces the risk of default and shows that ZAGG is on the path to be debt free. It also takes yet another support beam out of the short's house.

    Good job to our CEO and CFO!

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    • The shorts would shat themselves if we are debt free by the end of the year!

      I wonder if eliminating the debt is a high priority going forward? Would they hold back on that because of pre-payment penalties?

      • 1 Reply to snipaho
      • Revolvers don't have prepayment penalties - their larger debt might.

        The impact of this is tremendous. I believe on the CC they noted their interest rate was around 7.5%. To be conservative let's assume 5%.

        Impact on EPS as follows:

        27MM x 5% / 4Q = 338K per quarter interest expense savings

        338K / 31.9MM o/s shares = .011

        By retiring this debt, they just added about a penny in EPS each quarter. And saved about a million in expense for Q2 - Q4.

        If interest is 7.5%, increase the EPS/savings to .0153/1.5MM

        More telling, this says a lot about the quality of their earnings. IF ZAGG was fraudulent, and their earnings were 'fake', they would not have had the available cash flow to pay down the debt at these levels.

        Record sales. Strong cash flow. Reduction of a third of their outstanding debt. Walmart penetration. HZO in the wings. Smartphone / tablet explosive growth. All great signs that the future is bright for this company, despite SA articles alleging fraud.

    • This also reduces debt servicing payments per quarter moving forward. All be it not a ton, but I bet over the coarse of a year thats a few pennies in earnings.

    • I agree that this is a huge bit of news that has not been digested yet.

    • A good job I agree. This is a well run company.

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