They already declared the dividend based on the last financial release. It is payable 7/1 to shareholders of record 6/3, which means it goes ex-dividend on 6/1. FYI
I think the market will reward NEW customers more than enhanced or continued relationships with existing customers. JMHO
You don't have a clue. Very few people would short at $.34 because the collateral required to make that short, combined with limited availability of shares meant that even if it went to zero in a year it would not be a good investment. What you saw at $.34 and those kinds of prices were longs who read the company's announcements and understood they were heading to Chapter 11 and that it would mean the shares would ultimately be a zero, so they just sold.
Sadly you have aroused great hope with your MISunderstanding of what happens in bankruptcy court. Dur to the letters sent to the court by Ditman, Gothal, Smolin (and perhaps more in the future) and given that Gothal attached a list of shareholders accounting for 8+mm shares, the judge (in order to be complete and fair) has ordered a hearing at which the creditors can present information as to why this would be a waste of the "estate"'s assets. You popped a Viagra and shot your load a bit prematurely. Means nothing and is completely procedural, as the judge would be remiss if he did not do this. If the creditors demonstrate a preponderance of evidence that the formation of an equity committee would waste assets for the creditors then it will not happen. If the judge feels that the creditors have NOT presented a convincing argument, then it there will be a committee formed. That would be the time to at least have more hope than now. Even then it is unlikely that the current shareholders will share in the fruits of the "new" Sun Edison when it emerges from Chapter 11.
I agree that his background would lead one to think he will certainly keep an acquisition of the company on the table; however, his compensation package (and all EVOL compensation packages are VERY reasonable compared to most other companies) does not skew heavily towards incenting him to this result. If I were the BOD I would give him 300,000 or 400,000 options at $7 or $8 that vest over 6 years, but vest immediately upon a "change of control" transaction. That would certainly light a fire under him towards being acquired at a good price.
I am less sanguine than you are shorter-term. I love the company for its simplicity, transparency and the fact that they are extremely shareholder-friendly. It doesn't hurt that even in a #$%$ quarter, and taking a huge "one-time" expense, they still make money the old fashioned way (GAAP). However, I was less than impressed with the conference call. Thekkathala even made an ugly math error when describing the "service" model relative to the "one-time" sale model, and the only analyst asked a generalized industry question. I am also not very excited about Q2 and Q3 this year and feel that it may take till Q4 and then 2017 for EVOL to show its enormous operating leverage (with a 78% gross margin and taking out a huge amount of fixed expense). I believe the stock is "dead money", but as you pointed out, we do get paid quite well to wait. I could see the stock drifting back closer to $5 as Q2 results approach. I already have too large a position in this relatively illiquid stock, so while I think that $5.60 is an attractive buying price, it would take a lower price to entice me to add more, just based on overall safety and diversification for my portfolio. Also, I am not sure that a microcap like this can gain much "sponsorship" and still believe that the future gains in this stock will be based on increasing dividends as they gain traction in 2017 and the possibility that someone like a Synchronoss or a RedKnee will find them attractive for their customer relationships and the fact that with the cash availability that they have, a profitable acquisition would be accretive (by definition, since cash is earning close to zero right now.)
You were on the mark and I was too optimistic. That being said, I don't see the bookings and backlog translating to revenue as rapidly as I expected EVEN WITH THE "service" model than the one-time fee. I also find it curious that they put the payment date as July 1, which implies to me that they are trying to meet certain covenants for June 30 cash, working capital, current assets, ratios etc. Last year the dividend was pad around June 1. Just a subtle, but perhaps meaningful tipoff.
I think that Q1 will be the last "meh" quarter for EVOL and much of their new billings and backlog will start to kick in more heavily in Q2 and throughout the year. I look for about $8mm in revenue with $1.3mm in "operating income". That will be before at $1-$1.1 "one time" restructuring charge. I expect an $.11 dividend to be declared payable before June 1.
In about another 40 days they will have the record date for the next $.11 dividend. Seems curious anyone would just throw away $.11??
Each company has a different definition of bookings, but for EVOL it is:
"Bookings are defined as sales orders expected to be recognized as revenue during the following 12 months."
This covers both licenses and services.
Your broker is quicker on the credits than Schwab, who waited till 4 hours after the market closed before mine was showing up; however, no matter, as you point out, we "double dip" for the $.22 if bought early enough.
The buyer should go to the institutional desk of his broker and see if they can line up a cross with a motivated seller who might have that large of a position.
They will pay their dividend around 4/1 to shareholders of record 3/28 (due to intervening weekend, that would imply to shareholders who bought by 3/23). They SHOULD pay another dividend around 6/1 (which will be announced with their Q1 report). Thus a new shareholder will have a $.22 "cushion" against their purchase price within around 67 days of their purchase on 3/23.
1.) Will be moving part of their business towards a service contract model which smooths revenues over longer period of time rather than taking one up-front fee; but presumably MORE total revenues and clearly less "lumpiness"
2.) As prior posts noted, they will be taking $1mm charge in Q1, but that, combined with the $533k charge in Q4 will ultimately save $3.5mm pre-tax and based on one of the analyst's questions, most of that will fall to the bottom line.
3.) New term loan is at prime + 1% which currently is 4.5%; clearly a very favorable borrowing rate.
4.) Their projections for the future, combined with the terms of the loan leave them, IN THE OPINION of the CFO, capable of continuing the dividend (that is no guarantee, but it is comforting!)
5.) COO seemed to feel that 100% revenue growth over the next five years was feasible. My calcs say that if they can generate 100% revenue growth, they can generate MUCH higher bottom line growth
6.) Also, as prior posts noted, tax rate was projected as being lower in the future. My comment is that the NOLs from 6thSense would not be the primary ingredient in that, as due to change of control regulations, the use of those NOLs would be around a maximum of $300k/year going forward.
Reasons for weakness:
1.) As you duly noted, quarter will probably be a "clear the decks" and not show much organic revenue lift. Many may not look past that when the earnings are released to then look at backlog and bookings, as well as management's comments during the CC.
2.) Concern that 1.) above, combined with new loan agreement may have them dramatically cut the dividend in the short term.
I think micro-caps in general have grossly underperformed the market since it became "shaky" during last summer. EVOL's performance will be much more driven by their performance on a current basis as well as their bookings/backlog which are strong indicators of their future performance. The simplicity and transparency of their business and their financial reporting provide one with a lot of confidence if their outlook is positive.
They filed an 8-k which details a new credit agreement. Based on my reading they are getting a term loan for $6mm with monthly p & i repayments to start 1/1/2017 for 3 years till 1/1/2020.
HOWEVER they must repay their TWO $5mm revolvers with the same bank. Thus their cash balance will go down by around $4mm in the short term. There are also restrictive covenants. One of them which relates to leverage uses quarterly EBITDA and one which relates to "minimum fixed charge coverage ratio" uses trailing twelve month EBITDA. What is quite interesting is the last sentence in the following clause:
"“EBITDA” means with respect to any fiscal period an amount equal to the sum of consolidated earnings before interest, taxes, depreciation and amortization, stock compensation, foreign exchange gains or losses, and non-cash gains or losses. For purposes of calculating financial covenants, the following are permitted to be added back to consolidated EBITDA: $696,000 in second quarter 2015, $711,000 in third quarter 2015, $533,000 in fourth quarter 2015 and up to $1,000,000 in first quarter 2016."
This might imply that Q1 2016 could be soft?? Also, as I still feel that they may change their dividend policy to align more with their earnings performance over the near term. fwiw