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Black Diamond, Inc. Message Board

carne8ielaker 82 posts  |  Last Activity: Aug 21, 2014 8:31 AM Member since: Jul 24, 2012
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  • WAC's stock price continues to be affected by both the investigation woes befalling OCN, as well as the heightened regulatory scrutiny (and costs) of the industry. Yet the cross dealing issues at OCN are not an issue for WAC and the heightened regulatory scrutiny (and costs) are actually an ADVANTAGE for WAC. Smaller players who do not have the scale (or operational expertise) will continue to exit the business by selling MSRs. Yet the price PAID for said MSRs will have to drop, since the costs to service have risen (unless you have scale). So going forward, WAC is in the catbird seat since there will still be anxious sellers; the price will have dropped; and more than likely OCN will be boxed out of the bidding...and of course, in a rising rate environment, the value of MSRs goes up, as prepayment rates decline.

    Sentiment: Strong Buy

  • carne8ielaker carne8ielaker Aug 18, 2014 10:43 AM Flag

    my bad...I used the wrong word...IRDM is the "preferred" provider of satellite M2M service for CAT. Orbcomm still has equipment in CAT product, therefore IRDM cannot be considered "exclusive"...but it appears that CAT is moving towards IRDM and in a few years time should have the lions share of the M2M equipment on CAT vehicles

  • Reply to

    IRDM moat

    by jackstormer Aug 15, 2014 3:34 PM
    carne8ielaker carne8ielaker Aug 16, 2014 11:46 AM Flag

    stock has also been acting very well...I believe that there were/are some big institutions that saw/see all of the positives that are there (including the valuation metrics you cite) and have been slowly accumulating shares. They were originally waiting (IMO) for the secondary/dilution to be done, and then also waiting for confirmation of continued operational progress. Now that all of the boxes have been checked, much of the fundamental downside risk has been removed (there is always market risk) so these institutions have been increasing their positions. Interestingly, however, some of the biggest firms (ie Fidelity) have insignificant share holdings. Maybe some are waiting for the first of the new constellation to be launched next year, but if subscriber growth continues, the stock will be higher by the time the first new "bird" flies.

  • Reply to

    Its all about the coverage of "glass"

    by carne8ielaker Aug 14, 2014 9:53 AM
    carne8ielaker carne8ielaker Aug 15, 2014 10:24 AM Flag

    I think you also have to remember that the BEST people for UDC to hire, will never be found via a job posting, since they are looking for PhD's with specific experience in material sciences. This is where the company's relationships with USC, U of Mich and Princeton are so valuable. Not only do they get the work of those PhD's when they are at the Universities (at a very effectively cheap rate), but they can also try and cherry pick the best ones to come work for UDC. I am pretty sure that the 10K (and maybe even the Qs) cite the number of employees who are PhDs...a good measure of "growth" (much better than pure employee count!!)

  • carne8ielaker carne8ielaker Aug 15, 2014 10:13 AM Flag

    I think you are going to see SMD be more aggressive in selling their displays to others...If they can keep production rates high, then they can get close to LCD pricing, and the Chinese would love to differentiate their offerings with an AMOLED screen. While we UDC shareholders want Samsung to be healthy enough to invest in OLED production, we are somewhat indifferent as to where the screen ends up...after all "its all about the coverage of "glass"

  • Reply to

    Solid numbers across the board

    by carne8ielaker Jul 31, 2014 7:45 AM
    carne8ielaker carne8ielaker Aug 15, 2014 9:18 AM Flag

    you might get a plan that costs you more per minute, but very little (if anything) per month if you are not using it.

    The amazing operating leverage of IRDM comes down to the relatively "few" subscribers they have today...whether it be voice or M2M, the subscribers are in the 100s of thousands (not the millions), and given that the variable cost of the incremental user is basically zilch, the majority of revenue growth will fall almost completely to the bottom line.

    So to complete the investment case...IRDM is levering up to build a new constellation...if subscriber growth (including the all important M2M component) continues to grow at a low double digit rate, the additional debt service will be easily handled, and come 2018 (when capital spending is reduced to a trickle) there will be prodigious cash flow to "return" to shareholders (dividends, share repurchase, debt reduction etc.). This also assumes that AIREON is successful. SO THAT IS WHY it is important to monitor how things like Maritime, M2M and other subscriber metrics are doing....

  • Reply to

    Solid numbers across the board

    by carne8ielaker Jul 31, 2014 7:45 AM
    carne8ielaker carne8ielaker Aug 15, 2014 9:10 AM Flag

    hey Dave...sorry it took me awhile to see this...M2M is the "machine to machine" part of IRDM's business that is growing the fastest. For example, IRDM is the exclusive provider of satellite M2M service for CATapillar. So when there is a bulldozer operating in the Congo or a front end loader in Alaska (places where terrestrial cellular service doesn't work), the M2M equipment will be able to track where the vehicle is; what RPM it is running; what the oil pressure is etc. Think of M2M as the ability to send and receive text messages with machines. M2M can also be used for buoys in the ocean to monitor currents or wave height; pipeline valves to commumicate pressure; the DoD (that would be the Dept of Defense) is starting to put M2M equipment on soldiers (they already put it on most DoD vehicles). Some people refer to this entire movement as the Internet of Things. If you invest in IRDM a big part of the thesis is that the M2M business will continue to grow at a double digit rate....If I had said Q3 and Q4 you probably would have understood...H2 is merely the second half of the year...finally GO is not financial jargon, but rather a product that IRDM launched. Basically it is a portable "hot spot" that enables you to use up to 5 devices (ie your smartphone, tablet, laptop...anything via bluetooth) to utilize the IRDM network. I personally believe that this type of product will be very popular with the "outdoor" type...going hunting? take a GO with you, and yet all of your smartphone contacts will be on your phone. Deep sea fishing? Back country skiing? The beauty of GO is that it will come with very attractive pricing plans, both for heavy users as well as for those who don't plan on using it a lot (in other words, as an "emergency" phone). If you are hiking the Appalachian Trail, you might buy an all you can eat plan for your GO (for the 3 months you will be hiking), but if you own a boat that periodically goes out into the ocean, (to be continued)

  • Reply to

    Single layer

    by qtmmnutcase Aug 14, 2014 10:29 AM
    carne8ielaker carne8ielaker Aug 14, 2014 10:38 AM Flag

    I agree...its a virtuous circle...if this technology is viable, not only does UDC get paid for it, but it brings down the cost of production; leading to more m2 being produced which then accelerates the sale of emitters and host...

  • Reply to

    Its all about the coverage of "glass"

    by carne8ielaker Aug 14, 2014 9:53 AM
    carne8ielaker carne8ielaker Aug 14, 2014 10:33 AM Flag

    The patent lifetime of most of the materials that UDC is now selling into the market are "young", so while the market is clearly "concerned" about that, IMO I think that is an overblown fear. Page 8 of the Presentatin Deck also highlights "future" revenue streams from innovations they are developing already. For example,if UDC can get their single barrier encapsulation technology "production grade", then not only will they get paid for that, but that kind of production breakthrough will accelerate the use of emitters that they can sell.

  • Reply to

    Its all about the coverage of "glass"

    by carne8ielaker Aug 14, 2014 9:53 AM
    carne8ielaker carne8ielaker Aug 14, 2014 10:21 AM Flag

    No...you cant double count the SMD royalty, since the $40 million is in the 2013 revenue and the $50 million is in the 2014 projection. And of course, if SMD were to really ramp up production next year, the license revenue would not change from the $60 million that is probably imbedded in the LT agreement. (in other words, license rev from SMD will grow by 20% next year, but materials usage may grow more or less than that). And as you know, Sid used to joke that DisplaySearch used the same numbers every year for the past decade, they would just push the same projections further out, so "the Market" is probably taking a jaundiced eye at these projections. But the bottom line is that IF (capital letter IF) production does indeed follow the DisplaySearch path (and as far as UDC is concerned, they really don't care what the end product is, they only care about the m2) then revenue for UDC will follow, and of course given the fantastic operating leverage imbedded in the UDC business model, a large percentage of that incremental revenue will fall to the bottom line.

  • If you look at the August Investor Presentation deck, on page 7 is a chart that shows the square meters (m2) of OLED panels that were produced in 2013 as well as the predicted m2 for 2014 through 2018 (the source being DisplaySearch) you will see a strong correlation between the m2 of glass covered and the revenue of UDC. In 2013 1.43 million m2 were covered and UDC had revenue of $146.6 mil. In 2014 the prediction is for 2.109 million m2 of glass covered and UDC is estimating revenue will come in at $205 million. For those who don't have the chart in front of them, the m2 prediction for '15-18 is 3.359, 4.670,6.357 and 9.163 respectively. Now we can debate whether mobile m2 area will really flatten out, or whether TVs will grow as fast and as large as DisplaySearch says (and of course there is no lighting in these m2 predictions) but if the correlation holds true, where UDC receives about $100 per m2 of glass covered, then in 2018 (without any contribution from lighting) UDC is on track to have revenue of over $900 million...

    The strength of the UDC business model is that the company does not have to put up huge amounts of capital in order to grow revenues like that; but the weakness is that UDC is dependent upon others to not only invest in fabs, but also to get those fabs to produce economically viable product to sell.

    So as the title of this posting says...its all about the coverage of "glass" (or in the future, "plastic")...if the production is anywhere close to the predictions, UDCs revenue will follow.

  • Reply to

    new customers and LG ramping

    by carne8ielaker Aug 7, 2014 6:08 PM
    carne8ielaker carne8ielaker Aug 8, 2014 10:22 AM Flag

    DCA...thanks for the shout-out on the inventory build...I cant take credit for the observation, however, a smart friend pointed it out to me...

  • carne8ielaker carne8ielaker Aug 8, 2014 8:48 AM Flag

    I'm not clear what you mean...

  • carne8ielaker by carne8ielaker Aug 7, 2014 6:19 PM Flag

    If my system is correct, the regular trading volume for the day was about 612k shares...as I write this at 6:16 there have been about 628k traded...so a mere 14k shares traded (and I was 500 of them)

    So it looks like we will have to wait for the "big boys" to show up tomorrow...(unlike some Qs where AH trading was in the millions of shares!)

  • Reply to

    Conference Call

    by dsrptvnvstr Aug 7, 2014 5:57 PM
    carne8ielaker carne8ielaker Aug 7, 2014 6:14 PM Flag

    I wouldn't read much into that...clearly SMD had some softness in sales, so they asked UDC for a slight break...you have 2 choices...tell your largest client to go pound sand ("a contract is a contract!!) or you can accrue some major league good will that might pay you back 20 fold...I would think that this is merely a one quarter thing....if end-market sales are gangbusters, then I think UDC gets their contract price...

  • carne8ielaker by carne8ielaker Aug 7, 2014 6:08 PM Flag

    As was pointed out by someone else, if you look at the Q where they do a geographic breakdown, it shows that they sold $3.798 million to "other" locales (other than South Korea and Japan). Obviously this is up from a meager $87k last Q2, but in Q1 of this year it was $658k so a substantial $3 million sequential increase.

    If you look at the customer concentration table (where Samsung is "A"; host sales through Japan are "B" and LG is "C" we can see that LG bought almost $9 million in the Q (14% of 64.1 mil is $8.974 mill) what is curious about this, the receivable from "C" is $8.384 million)...so either LG is a slow payor, or they were buying heavily towards the end of the Q.

    Finally, UDC has been building inventory again...as Sid has said many times, when you earn squat on your cash balances, you are better off making sure you have product when the customer wants it. Nevertheless, a 40% sequential growth in inventory is a pretty good precursor to Q3 sales (one would think)

  • carne8ielaker carne8ielaker Aug 4, 2014 5:12 PM Flag

    you should always allow your head to turn around...if the premium on the call is too fat...sell the put down about the same spread as the call you were thinking of, either to just earn the premium, or to pay for the call you want to buy...obviously "riskier" than just buying the calls (since you may have to buy the stock if it craters), but if you think the stock is heading higher, and the balance sheet is such that the stock is unlikely to go down and stay down, good way to not get hosed on the premium...

  • Reply to

    another high multiple deal

    by billyjoerobidoux Jul 30, 2014 1:29 PM
    carne8ielaker carne8ielaker Jul 31, 2014 6:16 PM Flag

    If you did not listen to the conference call, this is the pertinent language re New Breed (their latest acquisition) Brad Jacobs speaking:

    "For the past 10 years, New Breed has achieved compound annual growth rates of 16% for revenue and 19% for adjusted EBITDA. The sophisticated nature of their services drive high contract renewals and mitigates cyclicality. New Breed's contractual revenue renewal rate for the past 3 years has been about 99%, so it's a very stable business. In the great recession, New Breed's EBITDA went up 38% in 2008 and was up 45% in 2009. New Breed has a very attractive model. It's non-asset based and generates a very high return on capital and free cash flow conversion. For 2013, New Breed's return on capital was approximately 38% and free cash flow conversion was approximately 71%. New Breed's CapEx is used mainly for developing proprietary IT. And in 2013, their CapEx was just 4.2% of revenue. Both XPO and New Breed have an intense commitment to cutting-edge technology"

    In addition, the seller of New Breed is not only coming over to XPO to run that part of the biz, but is plunking down $30 million to buy XPO stock.

    So you have a high growth, high margin business, with a high ROC and strong cash conversion. This business can be cross-sold to current XPO clients, and their client base can be cross-sold other XPO services. You did not pay an investment banker to source this deal, and while you are paying 8X Ebitda for it (CapEx is only 4% of Revs) and you can fund the transaction with debt, that will probably come in under 5%.

    As Jacobs says, this is a transformation acquisition...short at your peril.

  • carne8ielaker carne8ielaker Jul 31, 2014 1:58 PM Flag

    The answer I got when I asked the Q about TV methods (or at least the conclusion that I came to): The LG white w color filter needs to be "brighter" since the color filter masks some of the light, so one would think that would automatically be better for UDC (and it might be) but the offset to that is that this method only uses UDC yellow and florescent blue...If usage were 1/3 1/3 1/3 for RGB and white was effectively 2/3 Yellow and 1/3 blue, then one would think that UDC would be better off (ie same amount of materials if R+G=Y) plus more of it since it needs to be brighter. But we know from Samsung that with RGB, they use a lot more Green than they do Red...(or course both methods need to use florescent blue since there is no phosphorescent blue...yet). So we really don't know how the yellow/blue mixture is proportioned. And when Sid says that "we don't know" one should take him at his words...since UDC is selling them Yellow emitter, but UDC might not know the proportion of yellow v blue. And of course, there is strong evidence that the UDC host is superior to other green hosts, and so the SMD panels will have UDC host sales ...but we really don't know if UDC's yellow host is superior to the competition.

  • carne8ielaker by carne8ielaker Jul 31, 2014 7:45 AM Flag

    M2M and evidence that Maritime is back on track were the two things I was looking for, and both were solid. New products will provide a little juice to H2 now that GO is available.

    Sentiment: Strong Buy

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