Footnote 3. If that debt was termed out over a 15,20,25 year period, I'd agree. But almost all of it is due within the next four years. And, for a company in a highly cyclical industry, carrying a 30 - 40% debt to equity load is about right. Beyond that is a stretch. So, what happens if a nice contract comes in, but the company needs specialized equipment to complete the work?
I'd rather see them put a concerted effort into finding longer-term financing on their facility. That $4.2 M maturing in 2018 puts a real pinch in their financial flexibility. If they could get that debt termed out over the next 25 years, instead of a balloon within 4, then maybe there could be room for a dividend boost. Until then though, best to hold cash, focus on debt repayment. IMHO.
But, what the heck do I know? I think WSCI should be a $7 to $8 stock now, on its way to $9+ within the next year. It's not even close. So, obviously, I'm clueless.
A dividend rise would not be wise. Once they start paying cash taxes, then cash flow declines appreciably. And too, this is a highly cyclical industry. Best to strengthen the balance sheet right now, pay down some more debt.
The shares from the offering are supposed to be posted into our accts today. If anyone has seen those shares posted, please indicate here and the brokerage you're dealing with. I am curious as to whether this is done uniformly across all brokerage firms, or whether there can be lags of 1,2,3 days, depending on your broker.
Unless there's something that has not been communicated to us, WSCI is anywhere from 20 - 50% undervalued right now. I can't see why we shouldn't be assuming EPS to be in the .50 - .60 range in FYE 2015. Can you? Just one more piece of business and .50 - .60 could be conservative. It could be higher. Put a reasonable 15 PE on the .50 - .60 though and we should be trading between $7.50 and $9.
So what's driving the sellers to let this stock go so cheaply? What information do they have that the rest of us don't yet see or understand?
The math is a little more complicated than you think. The average ratio of oversubscription shares requested to shares from original rights exercised was about 3.1 to 1. If your request had a higher ratio than 3.1 to 1, you'll get less than 1/2 of what you requested. If you're about at 3.1 to 1, you'll get about 1/2 what you requested. If less than 3.1 to 1, you'll get more than 1/2.
sec-bubba, it appears you requested about 8500 shares compared t the 1428 you got from exercise of original rights. That's a ratio of about 5.95 to 1. I suspect you'll get somewhere between 30 - 40% of your request. That's just an educated guess on my part and I could be wrong though. But, it will be interesting to find out. So, let us know.
This is why I'm so upset about the lack of disclosure on any expenses associated with the April/May recall. We know that about 80 to 100 motorcycles were involved. The problem was insufficient gap between crankshaft and crankcase. We know the motorcycles could not be ridden. Customers had to find a way to transport them back to a dealer for inspection and repair. So, there were transport, inspection, new part, and repair labor costs. And there's no telling how many other parts in inventory had to either be junked, or re-worked. Even if WSCI only incurred $300 or $400 K in costs associated with this recall, that's still around 7 cents a share. If we knew this, we could discount the 7 cents into their results. It would be then reasonable to see this last quarter as a .17 quarter if not for this one-time event. And, it would be reasonable again to assume that on average, the company could be earning about .14 - .18 per quarter x 4 = .66 per year, going forward. Put a 15 PE on that and you have a $9+ stock !
Instead, we know nothing about the recall costs. We assume that they will only be doing about .10 x 4 = .40 a year x 15 PE ... $6 stock.
The lack of disclosure could easily be costing us 50% upside on the current price of the stock.
This is why disclosure is Sooooooo important. And we aren't getting enough disclosure here. Paul and Ben are to blame. And if I was sitting on the BOD, I'd be ripping them a new a**h*le and taking away bonuses. There's no excuse for keeping shareholders in the dark over important issues like this.
With all the Aerospace work going around these days as a result of $BA pushing the envelope in production, you'd think that WSCI could break into that market. It will happen. And when it does, it will come out of left field. And it only takes one contract to send this business soaring. And ironically, even a $30, $40, $50 M piece of work would be peanuts to the likes of a $BA, $UTX, $TGI, $HON, et al., but be absolutely massive to WSCI.
But that brings up another critical issue that this mgt team never addresses. Where does WSCI stand in terms of capacity utilization of their plant and labor?
e9wood, next time you talk with Paul, ask him why they don't disclose this key piece of operating data. And see if you can find out where they stand on this. Thanks for your help and contribution to this board e9wood.
e9wood - Yeah, but how's the WSCI / Polaris relationship these days given the April/May recall? Ask Paul next time you talk with him.
Their energy business did not grow this past year, while domestic shale drilling and rig counts were hitting all-time highs. So, if it didn't grow this past year, I don't think we can count on it growing next year. Domestic drilling will fall in 2015 because of the weakness in oil prices.
Energy is such a minor part of WSCI's business anyway. And, I suspect that WSCI is only being used as a secondary producer of energy part(s). The primary is likely a low labor cost Chinese vendor who ships the slow boat to the US. If the boat doesn't arrive on-time, a call is made to WSCI for quick delivery. More and more, that's the primary role that domestic machining companies play. Either that, or a roll like WSCI plays with Polaris .... quality and JIT (just in time delivery) are key to customers like Polaris.
Don't get me wrong. I am long WSCI and have high hopes for them into 2015. But, I suspect much of today's weakness is coming from a lack of communication from WSCI. We still heard nothing about the April/May product recall. OK, so maybe it had no or little financial impact on WSCI. But, did it impact their relationship with Polaris? It was a tremendous disappointment that they have still not addressed this issue.
When I look at my IB acct, the GAB is either indicated as GAB.EX - shares for rights exercised, or GAB.OS - oversubscription shares. Again though, these are markers only. They can not be traded. They simply serve to offset the fact that cash has been removed from my acct and sent to Gabelli. But, that does not assure that I will receive all the shares I asked for in oversubscription.
Fidelity is not so elegant. They simply remove the cash and use no markers. So, on a temporary basis, it appears that my account value has declined in value by the amount taken and sent to Gabeilli for rights exercise. Those shares likely won't show up though until next week.
Yeah, I suspect you are just looking at a placeholder in your acct that signifies that you've made the request. It's an offset to the fact that the cash for your entire request has left your acct and gone to Gabelli. Once Gabelli crunches the numbers, you'll get the shares and any cash back for shares that did not get allocated to you. I think we'll hear the results late today, or tomorrow via a press release from Gabelli. But it's likely that the shares won't hit the acct until next week.
FYI - My Fidelity account, where I bought rights and exercised, does not reflect shares today. My IB acct, where I made an oversubscription request, shows only a placeholder.
You sure you got all, or are you just looking at a placeholder in your account until your brokerage firm gets confirmation back from Gabelli?
I seriously doubt that Gabelli could process the requests that fast. I suspect it will not be until Wednesday at some point that you'll get final word. But, I could be wrong.
Well, that stinks. I was expecting today (Monday) to be the last day of trading in the rights. Was looking to pick up some if they traded at fractions of a penny near close.
I was wrong. Rights stopped trading on Friday.
Your focus is on Welfare?
In 2012, the last time the IRS reported these statistics, the top 400 earning Americans made an AVERAGE of $263 Million in annual income. Yes, you read that right. And they averaged ONLY 18.1% federal income taxes. $263 Million and paid 18.1% federal income taxes.
A married teacher and firefighter, middle-aged, probably make about $100 K combined a year. Their incremental federal income tax rate? 25%. The average income tax rate paid by Americans with Adjusted Gross Incomes of $250 K to $1 Million? 23.6%.
The super rich are taxed at 18.1%
Upper class Americans at 23.6%
Middle Americans at 25%
You tell me ... where's the Welfare?
President Obama as tried time and again to re-write the tax code and make it fair. Each and every time, he is stopped by the GOP. They protect the ultra wealthy, by throwing up smokescreens like the one you are whining about now.
Please, just #$%$ and go away. You are clueless as to what is REALLY going on in America. The ultra rich are robbing the middle class, and laughing all the way to the bank, thanks to the GOP.
#$%$ son, you're clueless.
If you examine the Labor Statistics in detail, you'll notice that the private sector has created over 4.2 Million jobs during the Obama Presidency. However, government jobs are DOWN by almost 4 Million ... Local, State and Federal. So, I ask, what are you complaining about? You want MORE government workers? If you hate Obama so much, you must be a Republican. Yes? And you're coming on this board to complain about there not being enough government jobs created?
I love all you clueless GOP mouthpieces, talking yourselves into a corner, winding up looking foolish in the process. Son, you're an idiot. Now, please #$%$ and move along.
Yes. If you buy rights on Monday, you will be able to exercise those rights to buy GAB at $5.75. You will need 7 rights for each share of GAB that you want to buy @ $5.75. Follow the simple math in my earlier post to understand what you will be paying for each share of GAB.
Now, here's the VERY IMPORTANT thing to do prior to buying rights on MONDAY ... call your brokerage. Ask them to give you their very specific deadline (time of the day) for exercising GAB rights.
The rights STOP trading at 4 pm MONDAY. The exercise of rights must be reported to Gabelli by 5 pm. Most retail brokerage firms have deadlines before 4 pm. For example, Fidelity's deadline is NOON. Interactive Broker's deadline is 11 am. Those deadlines however are deadlines to the point that they will guarantee that your exercise of rights will happen. After those internal deadlines and before 4 pm, most firms will STILL allow you to buy and exercise, but they will only be doing so on a "best efforts" basis. Meaning they will try their best to meet the 5 pm deadline of reporting your exercise to Gabelli, but if something falls through the cracks, it's not their fault.
So to re-cap. On Monday
Market open up to Brokerage Firm's Internal Deadline - you can buy rights and exercise, be guaranteed of your transaction going thru.
Brokerage Internal Deadline up to 4 pm Market Close - you can still buy rights and exercise, but on a "best efforts basis only". If something goes wrong in the process, you can not hold your brokerage firm accountable.
Here's how the math works kruggerand. The rights closed Friday @ .0258 per right. If I want 1 share of GAB, I'd have to buy and exercise 7 rights. Therefore, my cost per share for GAB would be as follows:
$5.75 cost when exercising 1 share of GAB + .1806 cost to buy 7 rights @ .0258 each needed to buy 1 share of GAB at $5.75 = $5.9306 per GAB share.
Simple enough to understand, right?
You should not be looking at the current 6.43 NAV. The fully dilution, post offering NAV is now only 6.35. That hit to NAV will not get reflect until the offering closes, later this week, or early next.