% | $
Quotes you view appear here for quick access.

Flotek Industries Inc. Message Board

  • sabinfigaro1980 sabinfigaro1980 May 16, 2013 11:47 AM Flag

    Going forward

    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

    SortNewest  |  Oldest  |  Most Replied Expand all replies
14.54+0.36(+2.54%)Sep 30 4:02 PMEDT