Silver Wheaton Corp. Message Board
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Last night a read most of BTU's 2012 annual report. The thing I was wondering most about was whether BTU could avoid bankruptcy as they grind through this low volume low margin period. I concluded that they had made roughly $500 million in balance sheet improvement over the course of CY'2012. Accordingly, I think BTU will be one of the survivors after this wash out period. One, or more, of the coal companies has to wash out yet though.
Coal consumption may be flat in the U.S. for a while, but it is going to grow massively worldwide. Also, costing out "all in" costs for natural gas, the breakeven point is in the vicinity of $7/mcf. These gas finds are not going to change the peak oil story. Liquid gas has become more expensive in recent years. BTU has its production in the PRB, ILB, and Australia. PRB coal is at breakeven point with natural gas at $2.60/mcf gas prices. ILB coal is at breakeven with natural gas prices at a gas price of $3.50/mcf. Natural gas is now at $4.20/mcf. Natural gas prices are going to be a lot higher as we go forward in time. This means coal, even in the U.S. will be burned, because we like cheap.
Short term, BTU could go down lower, who knows maybe even $10. But if it does, it will be a great long term buy. Longer term, BTU will be a lot higher than $18,70. So buy it when its cheap, hold on, and sell someday at a much higher price.
I personally think BTU will go below $15, simply because global growth is slowing. Commodity companies generally built too much capacity. Now with slowing global growth, they will produce down to variable cost levels for a while as the weak producers get washed out. A bit of a cleansing process if you wish.
BTU is the best publicly traded coal company, so long term BTU will more than likely prove to be a great investment. Remember though, things take time. -
2.375% Note Due 2015 - $287,500,000
3.25% Note Due 2015 - $536,162,000
Term Loan Due 2016 - $540,000,000
9.75% Due 2018 - $500,000,000
6.00% Due 2019 - $800,000,000
6.25% Due 2021 - $700,000,000
This is a whole lot of debt not due very far into the future. World growth is slowing. Volumes and margins are going to be weak for the next 2-3 years or so. It appears ANR is flirting with Chapter 11. I wish it wasn't so, but it looks that way. -
What a tragic event. We as a country need to pull together. We need to think logically and not over react immediately. I hope the government can find and punish the responsible parties, who ever they are and where ever they are. My heart reaches out to everyone in Boston.
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Full Gold Productions Cost is $1300 per Ounce and growing 10% every Year = VERY LIMITED DOWNSIDE POTENTIAL
by A Yahoo! User •Feb 28, 2013 1:51 PMThe supply, demand, and the manipulation control gold prices.
Production costs have nothing to do with the price of gold. -
buckeye, what are the 3 major catalysts? HeRO Graft? PerClot? BioGlue? Other?
What do you think are the major catalysts? Thank you. -
You will find an April 7, 2013 article from The Atlanta Journal-Constitution. The article was written by Lois Norder. It amplifies on the previously discussed FDA warning letter.
I'm wondering whether the FDA warning letter is actually more serious than SA made it appear during the last conference call. Also, I'm wondering whether the PerClot clinical trials are being delayed in part because of all this other FDA stuff. I know SA said in the last CC that the FDA enforcement and FDA clinical trial groups were separate tracks. Maybe, but you have to wonder about his answer. The recent HeRO Graft approval would argue in his favor on this though, but who knows for sure?
Also, this again gets back to the question of whether CRY should entirely exit the cardiac and vascular tissue businesses. If SA isn't careful, the no/low profit cardiac and vascular cost centers are going to sting CRY with a big liability judgement similar to the Brian Lykins one in 2001. These two cost centers don't appear to be profitable, so why run the liability risk?
There appear to be two cases where potential problems with the manufacture of BioGlue many have been present. BioGlue is generating most, or all, of CRY's current net operating income. If CRY would have their BioGlue sales impacted in a serious way, who knows how low the stock price might fall? Obviously, this would be a great time for the executives to sell more of their free option grant shares.
Google the article. Read it. Draw your own conclusions. You are responsible for your own due diligence. -
May 2012: CRY paid $17 million to acquire Hemosphere. Also, there is the possibility of some sort of milestone payment for $4.5 million. When acquired, Hemosphere’s trailing 12 month revenues were $5.3 million. Hence, CRY paid roughly 3.2x trailing 12 month revenue. The HeRO Graft’s gross profit margin is about 65%. This profit margin is high enough to contribute nicely to EPS growth, assuming sales grow rapidly.
I agree with buckeye, and see the HeRO Graft gaining traction as CRY moves into late CY 2013 and beyond. It appears to be a needed product with low liability risk. If only they would increase the selling price of tissue products 15% to 20% across the board, then maybe they would make this part of their business profitable too.
For CY 2013, CRY is estimating HeRO Graft sales of $6 to $7 million. It seems reasonable to expect future revenues to be roughly as follows. CY2014 sales of $9.5 million, CY 2015 sales of $13 million, CY 2016 sales of $18 million, and CY2017 sales of $23 million.
HeRO Graft CY 2013 Quarterly Estimates:
Q1 2013 = $1,200,000
Q2 2013 = $1,400,000
Q3 2013 = $1,800,000
Q4 2013 = $2,200,000
Back of the envelope calculation: $20 million in sales would probably generate roughly $0.15 EPS ($20 million times 65% less GA of 6 million reduced by 40% tax rate divided by 27.3 million outstanding shares = approximately $0.15 EPS). Annual sales are nowhere near $20 million yet though, but they might be at this level by late 2016.
Also, a lot can happen as CRY careens down the road.
All of the above was just a guess on my part.
Do your own due diligence. -
Right now, an investor can't be sure that BTU will avoid bankruptcy. Once it becomes certain that they can avoid it, then BTU will be worth a lot more. Right now, low volumes coupled with low prices. PRB coal is so cheap that it is difficult to generate much cash flow from it. China's steel production is slacking off, so coaling coal prices and volumes are apt to be weak for quite some time. At the end of the day though the world needs and will burn ever increasing amounts of coal. Nattie gas really is only profitable above $8/mcf. Hence, in due course, we either burn coal or pay a lot more to have our lights come on. Liquid oil prices will spike soon, unless world growth gets put in the crapper. The average Bakken well produces less than 60 bpd. Most Bakken wells deplete to this level in about 3 years. Nattie gas is not going to make the U.S. independent of foreign imports. That brings up the point that world oil exports are declining, get that folks? DECLINING!!! We are not going to have very good world growth going forward. Growth is slowing for many reasons, but perhaps the BIG 3 reasons are too much total debt in every developed country, a demographic that points toward slow growth hitting bottom in the mid 2020's, and a liquid oil crisis that is not distant in time. This will spike oil prices, Nattie prices, and along with it coal prices. The big problem for BTU right now is they have to be able to cash flow until both coal prices and coal volumes start to swing in their favor. Once a person is sure they can get through 2016, load the boat. IF the world economies in the aggregate do grow at roughly 3.5%, volumes and prices should turn positive by mid 2015. I think when the market itself gets ugly, and it does every once in a while, BTU will go from cheap to cheaper.
(Dollars in millions) 2011
Term Loan 469,000,000
Loan Facility 1,000,000,000
5.875% Note due April 2016 218,000,000
7.375% Note due Nov. 2016 650,000,0 -
I just didn’t see that a lot happened last quarter, except CRY was still trying to get the FDA monkey off their back.
Cardiac Sales = $7,200,000 estimate – Low gross margin and high regulatory fixed costs likely make this cost center marginally profitable at best.
Vascular Sales = $8,500,000 estimate – Low gross margin and high regulatory fixed costs likely make this cost center marginally profitable at best.
Revascular Technology Sales = $2,050,000 estimate – What is important here is that CRY start showing reason QoQ growth.
HeRO Graft Sales = $1,200,000 estimate – What is important here is that CRY start showing reason QoQ growth.
BioGlue/BioFoam Sales = $13,620,000 estimate – The only cost center generating meaningfully profits. Slow continuing growth for nest 12 to 18 months. After that, we will be able to determine if Tenaxis Medical sales of ArterX are cutting into CRY’s BioGlue sales. BioFoam = $300,000/quarter = not meaningful.
PerClot Sales = $925,000 estimate – Sales may drop from last quarter because last quarter there was a large Russian sale. Generally slow sales growth for now. The real issue here is can CRY secure FDA approval; and, second can successfully defend against Medafor’s patent. No answer on this until 2015. Once the litigation is finalized, CRY will have either won big, or lost big. I consider this a coin flip outcome.
Other Product Sales = $120,000 estimate – Not meaningful.
Estimated Q1-2013 EPS: $0.05 - $0.06 – Remember the analyst projections from two years ago. As I recall, they had EPS numbers roughly double these numbers. It could be argued that CRY’s current stock price is roughly one half of what it would have been had SA not gone crazy with some of his decisions during the 2008 and 2009 time frame. That's just my opinion though. But, who knows for sure?
Do your own due diligence. -
Well we need to fix tort reform plus a lot of additional things as well. Not going to happen though, because that means goring someone's ox, and we can't do that. The system is bought and paid for and nobody cares about civic responsibility anymore. So the system will burn and crash. Debt de-leveraging has years to run, there is a bad demographic (boomers and older), bonds are in a bubble (thank you Ben), equities are in a bubble (thank you Ben), and there are now critical resource shortages too that are slowing growth. In the end, the market, not the Fed, will prevail. The sins of the past 40 years need to be paid. Valu Line hasn't built that into their forecast. This does not just apply to CRY, it applies to all equities.
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Yes, I agree, but there are a lot bigger issues/problems. Insurance companies should not exist. The private sector is a proven case of failure when it comes to providing national health care. Insurance companies serve no useful purpose. A single payer system is needed. One with tough, fair, but sometimes flexible rules. One that can adjust for differences in geographic areas. One set of rules, one set of codes, everyone knows they have the coverage of the basic (but not perfect) plan. If other countries can do a "pretty good" job of delivering health care to everyone, why can't the rah rah bigger and better U.S. do it? Other countries have plenty of problems too. Greed up and down the line in the U.S. A food industry that feeds us #$%$ and turns us all into fatty pork chops. People that don't want to be accountable for their own health. We are a bunch of diabetic pork chop pigs, yea rah rah U.S.A. Insurance companies give us a million plans, all differ, all designed to confuse us, all designed to screw us, all in the name of corporate profits. Plus we have a financial system that is an ever growing black hole.
I agree about tort reform, but that is perhaps 2% of the cost problem. Definitely worth doing ASAP though. -
The U.S. health care system is a product of WW II. At the time, employers were prohibited by law from directly raising wages, so they did it indirectly by offering benefits, medical benefits in this case. This way they could attract better workers. Thus they set a precedent that picked up speed and became the norm. Hence, the U.S. health care system was never planned, it just happened. This is why the U.S. is the only country in the world with an employer based health care system. The problem is that our existing system is broken, and there is an open question if it can be fixed.
In 1960 5% of GDP went to health care. This increased to 14% in 2000 and has further increased to 18% of GDP today. Further complicating the problem is that we have an aging demographic, resulting in health care costs going up faster than household incomes. If you assume we stay on the existing track, health care would take 100% of GDP in about 80 years. No food, water, shelter, etc. and we would all be dead, so it is clear the system will be changed.
Why is it that the U.S. spends twice as much per capita and 50% more as a share of GDP than other industrialized nations?
Politically, there is no consensus on health care, so it will be impossible to fix it. One would think though that it should be available to everyone on a fair and equitable basis. A very low end Blue Cross Blue Shield type benefit program perhaps. Those with more money could then buy premium coverage.
Any system that would work though is going to have to be a central payer system, using tough fair rules, and a low cost end of life treatment (pain and nausia). In this environment insurance companies (except for premium plans) should not exist. There should be no tort system, but instead something like a workers compensation system where an person who did not receive standard of care treatment would get a nominal payment based upon a grid schedule.
Perhaps more on this later. -
IMO the tax issue is much more complex. The entire IRC needs to be thrown in the trash. It had its origin in the 1954 IRC. Since then the wealthy have gotten to where they control everything. The wealthy have lobbists. The return on investment for a lobbist is 10,000x, 100,000x, 1,000,000x, so the entire system is bought and paid for. Simply put, the only way to fix it is to get money out of politics. This isn't going to happen. So the debt cycle goes on and on until the U.S. becomes Cyprus. The credit cycle, demographic cycle (baby boom and other things), and resource shortage situation is going to combine to slow world growth and then later to blow the world economy to smithereens. We'll ee some wars fought at maximum capacity too. Maybe we will survive.
Simply put, all the world central banks are monetizing their respective currencies. This means more and more money is pumped into the banking system. Who owns the banks? The very wealthy of course. The very wealthy don't spend all of their income, but they do invest in things. Hence, at some point much of the money will go somewhere. The most likely place will be things like the current L-T bond bubble, current equity bubble, and perhaps in things like coal, oil , natural gas, fertilizer, water, etc. All bubbles in the history of the world have blow up. So the central banks can blow and blow, perhaps for several years. Then the bubble(s) will blow. The longer the central banks blow, the bigger the bubble, and the bigger the pop.
Timing, well that's difficult. My guess would be that the central banks and governments might get lucky and hold it together for a few more years. But I can pretty much tell you this will blow up sometime, probably long before the mid 2020's. Equity values, across the board, will be lower in inflation adjusted terms then. Neither the Democrats, nor the Republicans, will save us. The plutocracy owns them both, so it is just which party stinks the most. -
Does SMI own any patents pertaining to PerClot?
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Your post was confusing. Also, it used 2007 data. Please explain.
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But that vote was for an amendment to a Senate budget that won't become law until it can be reconciled with a much different budget blueprint from the Republican-controlled House of Representatives, so there's no guarantee that the repeal will survive.
The Wall Street Journal reported that many of the Democrats who voted for the repeal did so with the caveat that they'll insist the $30 billion it raises be replaced. Finding a way to raise that much money somewhere else won't be easy. -
buckeye, I accept that Ed Celeski was a great accountant and a great instructor. I assume then too that he would have shared this "contribution formula" with you and other students. Would you then be so kind as to apply the "contribution formula" your talking about specifically to the two tissue cost centers? Please use either CY2011, or CY2012, data. In addition, please explain what is important about the subject "contribution formula", as well as sharing with us the details of any related math calculations? Thank you.
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CRY could pretend to set up a virtual car painting center. This cost center would have no employees, no income and no expenses. Therefore, by definition, it would generate no “net income”.
The two tissue cost centers (cardiac and vascular) generated approximately $53 million in revenue during CY2012. It appears to me that this combined tissue cost center generated no “net income” in CY2012. If I’m wrong about this, then extract relevant tissue numbers from CRY’s CY2012 financial statements and PROVE your case. At best, I suspect the "net income" number will be quite small. I don't think you can prove your case though. I don't think CRY wants it talked about either, because it shows how ineffective management is and has been. It would likely show that about 40% of the company, measured by revenue, doesn't generate any "net income". Worse, this tissue cost center could, in the future, have a repeat liability tail similar to Lykins in 2001.
So which is better, from a CRY shareholder's perspective? Having no employees generating no “net income”, or having say 200 employees generating no “net income”. Granted it gives some people a job, but that doesn’t help shareholders.
From a CRY shareholder perspective, doesn’t “no net income” from tissue equates to “no net income” from imaginary car painting.
I repeat, if the tissue cost center generates positive “net income” for CY2012, then extract relevant numbers from the financial statements and PROVE your case.
Buckeye, you have an accounting background. Call DAL. Ask him to hit the magic “net income” button on CRY’s SAP accounting system. For CY2012, have DAL give you both the “net income” number for cardiac tissue and the “net income” number for vascular tissue. Then let us know what he told you.
Amigo, please do your own due diligence. -
Warmcapm, thank you for responding.
How about ABX, GG, NEM, and SLW?