Sterling's construction equipment has a basis of $167,888,000, which includes $16,000,000 of land and buildings. The $87M you refer to is the book value, not fair market value of assets. The land and building alone cover 60% of the loan.
I deal with equipment financing companies. They are currently lending at 4.5-6.0% fixed for securitized leases with 5 or 7 year terms.
Why do you bother writing such garbage all the time. Go to the WM message board. They enjoy garbage.
At 12/31/14, Sterling has $144 million in cash, receivables and unbilled work - offset against $67 million in AP or net cash equivalent of $77 million. PPE at cost is 50% depreciated at $87 million (book value). Tangible equity of $86 million or $4.78 per share.
The company has been profitable each year except for 2013. Revenues have grown nicely from $249 million in 2006 to $672 million in 2014. If the company is able get realize 4% operating margins on the $767 million in backlog, they will earn $30 million pre-tax. With the NOL carryforwards, they would pay some AMT tax but still have net income of $25 million. This equates to $1.38 EPS. This is obviously the upper end of earnings potential, but shows the great upside.
The balance sheet should give Sterling the opportunity to find another lender at same or lower interest rates.
Sterling should benefit from this.....
The Senate has approved a $15 billion transportation revenue package that includes an incremental gas tax increase of 11.7 cents over the next three years.
The chamber passed the revenue bill Monday on a 27-22 vote and negotiations with the House will begin.
Under the 16-year plan, the gas tax would increase in three stages: a 5-cent increase would take effect this summer, a 4.2-cent increase would follow next year, and then a final 2.5-cent increase would take effect the following year.
The Senate proposal includes more than $8 billion for road projects across the state and puts money toward transit and local rail projects, as well as bike paths and pede
I can't believe I am wasting my time, but for those who don't know what NET WORTH or TANGIBLE NET WORTH is. WE need a refresher course in Accounting 101.
Sterling accurately stated that their tangible net worth is $69.6 million. For WE who don't know. The calculation is Stockholder's Equity less (Goodwill & Intangibles). For WE who can't subtract Sterling's $124.4 million Equity - $54.8 million Goodwill = $69.6 million.
Therefore, the company's tangible net worth of $69.6 million is equal to its market cap.
Next lesson will be on net working capital.
Nice analysis: Let me add two more.
1) CEO and COO abruptly leave the company with no explanation. BAD.
2) Secondary offering of 2.1 million shares last year at 6.90. The unprofitable contracts were known then. I assume "smart money" purchased the stock. GOOD
My opinion is that Sterling will come out of this okay. The company has $90 million in tangible equity, solid quick and current ratios and less than $1 million in current debt. It is frightening that the stock continues to fall.
The couple of troubled projects that hurt STRLs results were well known for at least a year. Is there more to read behind the CEO and COO "resigning" within a few days of each other recently? I can see one being the fall guy, but not both and not so long after the event.
It would be helpful if they quantify the percentage of completion downward revisions in 1Q that would assume to be recognized in 2Q.
I'm encouraged that they still believe their backlog will generate 6% gross margins.