Things are going to get real interesting going forward. The recent acquisition should be very accretive for the shareholders. While I don't think you see a huge impact on the top line, the real value is the increased gross profit % since FTK now owns the inputs (costs) to a major portion of it's business. So basically taking money from one pocket and putting in the other. Looks like Florida Chemical has about a 25%'ish gross profit, which should drop straight to the bottom line, net of the interest on the debt for the acquisition. And I would bet, given the size of FTK, they only have a few suppliers (maybe just Florida Chemical) so much of their COGS is directly related to a few suppliers (or one). Seems the Florida Chemical business is very cyclical given that revenue range from $66M to $145M since 2010, but seems the low year is also consistent with FTK and the economic environment at that time. So the hurdle is whether this acquisition will produce more value than the $3.5 - 4M of interest paid a year and I think the answer is yes, given the historical net incomes produced each year. There is the dilution of shareholder value for the 3M of additional shares but in the grand scheme of things, a relatively small impact. And who knows, maybe we caught Florida Chemical in business trough, family wants out of the business, and we paid a good price (unlike the Teledrift acquisition). We give them $100M in value and I see $40M in net income in just 3 years as reported... Positive, very positive. Good luck
reading your post and using some of the numbers, 40mil. net - 3.5 mil cost of debt gives call it 37mil net
shares outstanding will be 47.7 mil + 3.3mil giving 51 mil s/o
this would result in additional income per share of approx $0.73 / year or $0.18 / qtr.
am I thinking right?