Yes disappointing indeed. My first though was, oh no, we'll be down 10-20% come Monday. But then the company came out with a second press release with management's commentary. They maintained guidance and listed five major cost savings coming most of which had not kicked in by 8/31/16. They are;
1. $1.5 million annual savings in shipping
2. Lower cost of inventory, this will improve the gross margin even more
3. $4.2 million of new technology to reduce labor and other costs, most recently implemented
4. New work hours will significantly reduce overtime
5. Other cost savings provided by a large outside logistics consultant
Revenues beat and earnings miss. The earnings miss was due to unusual items, but some of theses items are semi recurring. My guess is the stock will be down today, but on the whole, not so bad.
There is no new dilution. The stock compensation was granted 30 months ago. The reason the payout now is because how successful the company has been since. They hit the $2 million operating income milestone. The great news is they expect to hit the $3 million and $4 million milestones this year. Since there is little interest expense, $4 million in operating income is about $0.15 in operating EPS. That is EPS excluding the stock comp that then goes away after the $4 million milestone.
3D patent? Who cares about that?
Revenues up big. Earnings held down by what looks like a one time stock comp expense. Would have been $0.08 to $0.10 without the stock comp expense. I believe this is a non-recurring expense but will listen to the cc to confirm. Revenue guidance raised, but I thought it would be a little higher. Still looking for $120 million this year.
Too early to talk about selling. If GNW can keep knocking out $0.25 quarters, this will be a $8-10 stock next year.
A decent quarter should really move the stock. Things are starting to move Genny's way. Longterm rates have come off their bottom. MTG, the big mortgage insurer, reported a big beat. The economy has started to pick up. The only real issue remains LTC and I am confident, at least over the next year, rate increases will exceed the rate of higher policy payments.
The real test will be earnings either next week or the following week. Should be a decent showing, my guess $0.03-0.04. The big one should be the current quarter where my guess is $0.08 to 0.10. That's when all those new contracts kick in.
I take this report as a wash. As always, the promise is there. Need to hear the cc to see what impact the plant closing has going forward. For now, it's wait til next time again. I do believe we are undervalued at $8.18. I think we'll creep up from here.
A big one for KTCC. Years of under delivering. But the last few quarters have shown promise. Now they need to prove it. $0.19 or better with guidance of $0.20-.25 will juice this stock. The early earnings announcement may be an omen.