spartansaver Posted June 21, 2019 Share Posted June 21, 2019 Furniture manufacturer. Good balance sheet ($30mn in cash) trading at ~0.6x TBV (market cap of $130mn). Okay returns on capital over time. SAP implementation is causing material disruption. New CEO in Dec 2018 announced restructuring which will cost $40mn. Restructuring should save $30mn a year, achieved by 2021. The company plans to sell $45mn of land related to footprint optimization. +$30mn cash -$40mn restructuring +$45mn land sales -$130mn market cap =$95mn EV ~$40mn in EBIT by 2021 Close to 2.5x EV to EBIT if restructuring works. Biggest risk seems to be that the company sources ~40% of end-sales from China (purchases finished goods, which are installed in furniture). Anyone else take a look? Link to comment Share on other sites More sharing options...
valuedontlie Posted June 21, 2019 Share Posted June 21, 2019 That's an awful long time for all of that to happen... the properties won't go up for sale until after the restructuring is complete (in 2021)... Using today's cash balance as a starting point assumes no cash burn during this whole process (an unlikely outcome)... probably best to throw it on the watchlist and keep an eye on progress? Link to comment Share on other sites More sharing options...
spartansaver Posted June 21, 2019 Author Share Posted June 21, 2019 That's fair, I'd added a share to my account to keep an eye on it. I do assume cash burn in terms of the restructuring ($40mn). The company was still profitable as of the most recent quarter. Maybe cash flow is somewhere around breakeven till 2021 (ignoring $40mn in restructuring costs). Link to comment Share on other sites More sharing options...
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