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TechPrecision Corporation Message Board

exhibitthirteen 2 posts  |  Last Activity: Jul 28, 2014 7:17 AM Member since: Apr 8, 2010
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  • Reply to

    Taken out of context. But are these statments

    by fredgier2002 Jul 24, 2014 9:04 AM
    exhibitthirteen exhibitthirteen Jul 28, 2014 7:17 AM Flag

    Well, I think they've said explicitly that roll out will happen in earnest during 4q of 14. I think the Zyri Labs (GNC Corporate) brand is being tested in select pilot locations now.

    So that will be great if it goes well but if you want into this stock you can't 'wait and see' if it goes well. You have to build your position between now and the end of the year with the assumption that corporate GNC will go well. Once it turns on it will be too late.

    Why? FTLF results are currently based on sales to individual franchises which means a big franchisee account might mean a dozen stores or so. I've read on other boards that we should think of GNC corporate as a giant franchise with a little over 3000 stores. Right now, FTLF are selling to about 800 individual franchise locations. Imagine what will happen when they are selling into 3000 corporate stores. FTLF could be in a situation where they roll out Zyri at time zero and at time zero plus three quarters they've tripled their revenue base.

    That course of events is not totally beyond the pale. GNC corporate is monolithic so FTLF wouldn't have to scale up the sales force to sell into each store. And FTLF have a contract manufacturing base so manufacturing the product should be very scalable.

    By then it will well and truly be too late to build a position in the stock.

  • This is a buying opportunity created by investors who do not understand how this business works.

    What IG, in reality, is re-investing current earnings immediately into value-creating activities. That is, R&D. Shareholders should be ecstatic about this. First of all, it's tremendously tax efficient. You PAY the government for profit...you GET PAID BY the government for research and development. Second, you get the benefit of immediate compounding. Last year, we could only re-invest about 800k in research and development. With perfect hindsight we can all say with 100% confidence that was money well spent. This past quarter we were able to invest 152% more than that in R&D.

    This time next year we will look back at that investment and discover that it was, once again, money well spent.

    Investors need to frame the income statement in proper terms. Drop that R&D expense to the bottom line. That's 4.3 cents per share. Imagine IG had paid that out as a dividend and you account was set to automatically re-invest those dividends. That would probably please more investors but in reality is is a much, much worse allocation of capital since the company is taxed for the profit and the investor is taxed for the income.

    Trust me, when industry players are looking at IG, they are seeing the value of those R&D dollars. Especially given the low-risk nature of IGI's pharma business.

TPCS
0.35-0.03(-7.41%)Jul 29 3:40 PMEDT

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