There was some heavy rain but probably nothing like you get in twin cities. Power here was out all afternoon and into the evening, over a pretty large area. Good lightning show though.
I was adding to bb's post that NI originally received $100K from the national science foundation in 2007 to develop a process to extract phenolics from DFB. I think they rolled that forward into more grants and got to where they are now. I'm not sure if NI's product is scalable yet, Z might be way ahead of them there. It can take a while to scale a lab process for production.
Z did 2.48 revenue per share in Q1, now they will need to do 19.5M in revenue in Q2 to have the same revenue per share. Just a bit of perspective, to cut through the fluff on this.
I agree sales and margins will grow, but they have to grow faster than dilution for any of that to be worth it to an investor. There were pumper tweets or posts a while back about how Z would do $2.00 per share EBITDA. That has been diluted to $.50/share in just 2 months. The cash flow per share is getting hammered, even in the face of so called sales growth, so that's why I'm still cautious.
We're back at the 50 dma, and the stock is not oversold, so pps appears to be reacting sensibly to the news.
This is quite the blistering pace of new shares from our CEO and head diluter, from 3M shares to 8M shares in just Q2. And no matter what they say the money is for in terms of infrastructure, they always add the disclaimer "and working capital" to the PR's so all these fund raises can get used to pay operating expenses as well.
%R was showing overbought all last week, but pps kept rising anyway. Now it's back in neutral territory, with 4.96 at end of oversold range.
Not a lot of volume either way though. Maybe tomorrow it will trend down a bit more.
Z used 200K of NOL for a tax issue with H&N and they used 300K of NOL for something they negotiated in Brazil. Z only used half a million total NOL.
NOLS also have to be part of the projected EBITDA/cash flow, but I did not see any info on that.
Z bought H&N subject to some tax issues, but they were factored into the purchase price, so probably there was no effect either way.
A company buying NOLS has to amortize them over 20 years, but I think the original owner can use them whenever against a taxable gain, up until they expire.
Whatever Z's problems, doesn't look like paying taxes is one of them for a few years. Although GH thought Z could accidently trigger a change of control from all the debt deals, and then lose their NOLS.
Z used $200K NOLS against a gain on the H&N acquisition. does that count? Z had $110.7M NOLS left, as of last year. If Z isn't profitable, they will gradually expire unused.
Not just superman, RBT spun a few PR's about expansion and acquisitions, plus that all too rosy sounding CC, (should've been suspect), and all the while they kept the PN, trough and O/S issues out of sight and out of mind.
Market cap spiked up nicely today, we're trading at near one times sales; that's in the ballpark for diversified food sector. (posted about it previously)
NYCB's cost of funds is above average for the industry. They can lower that cost by buying a bank with a good depositor base. A good depositor base helps earnings by lowering costs. That might be part of what NYCB is looking for.
JS needs more shareholders who know nothing about the company or what the products are or what the financials are. Ones that will but 100K shares because we trade on NASDAQ with the word "tech" in our name, or because they see the buzzwords non-GMO or gluten free, Or ones that will buy 100K shares at the bid because someone blogged about how he thinks in his opinion the stock "oughta be" $20 per share.
Legacy shareholders were customers, plus they know the nutritional science, the products and the financials. They are too tough an audience for JS.
So did they get the new shares? Will we even know the O/S before the next 10-Q comes out? I'm not sure what all the A/S is for, except maybe an Alothon roll up, or some other acquisition.
There's a company called Gardein making meatless meat. It is plant based with soy, and can be grilled and served like meat. Gardein was reporting 50% YoY growth, a pretty good indicator of demand.
New 8-K today, so I think that was our discussion Hunk, GH saying we know this and that about how many shares JS "owes", and me wondering about how many more notes etc., we will still see beyond that.
And then as you have mentioned too, all the warrant overhang. Despite that it brings capital to the company, it also takes extra sales growth to offset those shares.
Z will grow, just hope it's faster than the shares.
JS did not guide at all on the O/S, it is an unknown. Did he think we weren't going to bust him on that?
You can value the company, you can say it is worth 8X EBITDA, which is $48M, or you can say it is worth one times sales, which is $59M, but what you cannot do is extrapolate backwards from the value to the share price. You can't do the calculation, because any O/S you plug in is just a wild guess.
I appreciate your guidance on the 6.2M shares, (couldn't find that on the Z website). But since they want 25M A/S, the 6.2M expected O/S seems an unreliable divisor beyond the short term.
$2/EBIT/share sounds like it is based on current O/S, not expected O/S. Might be .50/share by 4Q, for all we know.
Interesting that with CG, and now the two new employees, that's 3 people Z has recruited from Kerry Group. Those are the guys that bought the cereal business and phoenix plant equipment from Z during BK.
If the shares have not been issued yet, why would you use them to calculate the market cap as of today?
More on my valuation comments: the diversified food sector trades at an average of 1.3 times sales, as of Jan 2014. Z is in that sector, so my comment on Z having room to grow its market cap in P/S terms, was based on the sector average, not on Z specifically.
As far as new shares raising the market cap when they are issued, I did not mean to say more shares will increase the market cap. I meant the inverse, which is that the market cap is the constant, and that it is the pps that has to change to absorb new shares.
Investors give companies with high debt to equity extra multiples for EBITDA, and it seems EBITDA was JS only card to play at the CC. Hopefully sales growth will be the lead story next Q.
The ROI is the hard part to judge, I mentioned that revenues per share going forward might be some sort of barometer that would self correct for dilution. And assuming Z can one day trade at one times sales, (twice where it is now), well that's another value metric to watch.
And a higher pps certainly helps them on the capex, whether the value is deserved or not. Also, it was nice at the CC to see JS come out and not see his shadow.
Good luck static, maybe BTFD will finally work for us after all.
That's a lot of dilution and debt just to double sales. We'll probably need $2,000 a share to equal the old $5 pps. But we are trading at a more normal metric, back above one-half sales.
We have to wait and see how many of the 25M new shares they they will want to use. They have no history of showing any restraint in issuing new shares when they have them.
I think GH had mentioned them needing 10 million shares, so that would be more than triple the current O/S. It's hard to track the dilution effect, except maybe look at revenues per share QoQ.
6th, interesting chart, the BRL has failed 7 times now to move back above its 40 week moving average, (since the cross).