"How is the company going to service $736M in long term debt with a TTM operating cash flow of $263M?"
Based on those numbers, the company can EASILY service the debt...Interest expense on the debt is only running about $45MM/year. It would require throttling back on the company's aggressive investing activities.
I think that the bigger question is "how long can the company sustain such high operating cash flows?" The company's hedges will buy time but once the hedges are used up, those operating cash flows will drop precipitously. But, as long as the company generates at least $50MM in operating cash flows, they should be able to survive (albeit unable to invest)...but with a well's average life being only 3 years or so, the company would wither away if it could not continue to invest.
I'll consider buying at $3/share.
Merc, I am usually in agreement with you when you opine on ADES matters, but in this case I have to agree with Halevay, trp, et al...2014 has been a lost year. If you recall, they had originally planned to have ALL RC facilities operational by the end of 2012...then the end of 2013...then all operational and sold (save the ones kept for tax credits) by the end of 2014. So, to talk about how great RC has been is a fallacy...they are far short of the expectations that THEY created, and repeatedly adjusted. And the LAES deal looks good on paper...but do you really have any faith that the company can execute on it? Seems to me that the company has extended itself far beyond its charter of emissions control. That was $2.4M of OUR money invested in LAES! Perhaps we could have individually invested that money more efficiently.
The only glimmer of hope that I see has been the addition of the new directors. I sincerely hope that Durham is forced into a non-executive chairmanship position and that the board brings in a heavy-hitter CEO who is already chummy with all of the power plant executives (perhaps even a former high-level exec from one of the big power generators).
Coal-fueled power plants operated by Dynegy Inc. and Southwestern Electric Power Company, a unit of American Electric Power (AEP), were honored for leadership in deploying advanced technologies that deliver ultra-low emissions as part of Peabody Energy's inaugural Advanced Energy for Life "Clean Coal Awards." Presented at the Power-Gen International Awards Banquet in Orlando, Fla., the honors recognize the best environmental performance achieved among U.S. coal power plants in 2013 based on key emission rates.
The award recipients include:
Dynegy Inc. and its Coffeen Plant in Montgomery County, Ill., a 40-year-old
915 megawatt power plant, has the lowest sulfur dioxide emissions rate among U.S. coal plants, which is 99 percent lower than the U.S. coal plant average. Dynegy also uses low-sulfur Powder River Basin coal.
Southwestern Electric Power Company, a unit of AEP, which operates the John W. Turk Jr. plant in Fulton, Ark., a 600 megawatt ultra-supercritical power plant built in 2012. John W. Turk Jr. is the most efficient coal plant in the U.S. The plant's heat rate was 16 percent better than the United States coal fleet average this past year.
How many times was that bus headed out of the station for good? How many times did we see skibare get too bullish too early?
this is embarrassing...are we really trusting these guys to make good decisions with OUR money? Yes, I say our money, because a much better choice would've been to dividend to shareholders and let shareholders decide how to allocate the capital...get our own house in order first is a spot-on sensibility.
At the very least, wait to announce it until AFTER the housecleaning is done.
the point I was trying to make is that as pre-payments are not additive...they are simply accelerated cash flows credited against what CCS would earn from the tonnage processed...get the $$ now or get the $$ later.
The "Obama" recovery? You make it sound like economies can't recover on their own! The funny thing is, they always do. It's called the business cycle, knucklehead. Ups and downs.
But, hey, if you want to call it the "Obama recovery", be my guest. If you look back historically, this is the SLOWEST recovery in American history by most metrics...even with unprecendented stimuli!
And, please, explain to me what Obama did specifically to enhance the recovery? He doesn't control the Fed, and most of the economic stimuli (QE1, QE2, QE3) were unilateral moves by the Fed -- no government action at all.
So...Obama occupied the White House during the recovery, and somehow his magic unicorns improved the economy? Show us exactly what he did that measurably (in a cause and effect way) improved the situation, and prove to me that it wouldn't have happened anyway?
Your poor understanding of macroeconomics has led you to put blind faith in the Chosen One, HIs Holiness Obama.
And this is not to let the Republicans off the hook...Dems and Pubs are equally complicit in their combined decades of failures in all levels of government.
jim, I agree that it was a good move going forward...I like that they did it now, in Q4, so they can write off all of the one-time expenses associated with the refinancing, and start 2015 with a fresh, clean slate.
I estimated about the same savings; however, that is a pre-tax savings number. The actual amount will be closer to 60% of that, or $18 million, which is about 7-8 cents/share/year.
I am still trying to figure out if/when the company can use the truckload of losses it suffered over the 2008-2011 time frame to offset taxable income -- that will be a big boost to earnings.
I think that they ran the numbers and determined that the redemption premium for the $505 was low enough to be offset by the interest expense savings of refinancing...plus, the cash on the balance sheet from the bank dividends probably could not be deployed at rate of return higher than the interest rate on the $505s, so why not use it to retire debt?
The $800 is not callable until Nov 2015.
Neither the $505 nor the $800 had subsidiary guarantor provisions. Only the $435 did, and it was only for $300 of the $435.
Boom! "The notes will NOT be guaranteed by E*TRADE's subsidiaries."
In essence, ETFC can now spin off the bank without creditors claiming a default on the notes.
My guess is that suitors like Ameritrade were insisting on this...they do not want to be saddled with a bank that adds many more regulators!
Now this barrier is out of the way, and I think we could now see some of those M&A rumors turn into something more than fantasies.
For those actually interesting in a discussion about ETFC, and not all of the political BS, I have a question: at what point (if any) can the company use the NOLs from the bad years to offset taxes going forward? If I recall, the IRS provides for a limited window to use them, but I am trying to figure out when the company can START using them.
I don't think it is happenstance that this announcement came just after the elections...I think the underlying message is two-fold: first, that Moelis believes that with both houses of Congress firmly in the grip of the Republicans, they are confident that they can get a vote on the Senate Floor to extend the tax credits due to the delays so far; AND, as a reassurance to prospective RC finance partners that all is well and good, no risk of having the rug pulled out from under them, so sign the contracts and generate tax credits!!!
All speculation on my part.
actually, md, his strategy is NOT risky...it is a hedging strategy that reduces risk...I want the risk exposure.
but halevay brings up a good point -- there is the trust factor. the only thing that maintains my trust is the board of directors -- the moves they have made indicate to me that they will not be relegated to a rubber-stamp board for the CEO...and therefore, everything will get fixed.
under normal circumstances, I would agree...5% return in 2 weeks is pretty darn good.
however, this quarter's board of directors meeting is Nov. 18 & 19. this company has a habit of releasing news immediately after its board meetings. I don't know if that news would be good or bad, but I wouldn't want to take the risk of giving shares up so easily when there is a lot more room left to run, once they get this accounting fiasco resolved.
just my 2 cents worth.