I'm definitely staying up too late tonight. I was really curious to understand LACI better.
I was reading the 10Q's , 10K, and press releases for Laci. The company seems to have potential. The big question is, "how well will the new Colombian and Nicaragian sites do". Also, the Hondurian sites should open late this year. The company has plenty of slot machines available for expansion. Now they just have to find homes for them since the Peruvian market has been severely stiffled due to a 200% excise taxed levied on October 1, 1996. This has caused many of the machine lessees to give the machines back to LACI, and, hence, the drop in revenues/profits which has been experienced.
LACI and other companies are hoping to get the tax retroactively repealed or partially repealed. I'm not sure what the chances of that are. Has anyone asked the company?
Revs/earnings look like this:
2Q 96
Revs $703,00
Profit $ 375,00
EPS .11
Cash $ 4.5 mil
3Q 96
Revs $ 787,00
Profit $ 387,00
EPS .11
Cash $ 4.5 mil
4Q 96
Revs $ 392,469 (tax was levied this Q and machines returned)
Profit ($122,168)
EPS ( -.03)
Cash $ 4.4 mil
1Q 97
Revs $ 426,000 (Colombian and Nicaraguaian sales)
Profit $ 66,000
EPS .02
Cash $ 4.3 mil
2Q 97
Revs $ 480,000
Profit $ 71,215
EPS .02
Cash $4.0 mil
Note that earnings seem to have stabilized and that the cash has been decreasing some each quarter as expenditures are being made to start up operations in new countries since Peru started the 200% excise tax. The cash position is great, but I thought it would help to monitor the cash position, too.
With an earlier release the company stated that it expected the 3Q and 4Q to be better then the 1st and 2nd. With the last earnings report, all they said is that they expect to be profitable. I'm not sure if that is a down-grade from the earlier report or if they just neglected to word the earnings release as they had before (maybe to be more conservative).
The CEO owns 1.7 mil shares of the 3.3 mil shares available. I like that. He is on our side.
There are 1,725,000 warrants out which expire on December 12, 1999. The strike price is $ 7.25 and they can be called when the price reaches $ 13 for 10 consecutive days. Today the warrants sell for about twenty-two cents each (ASK).
The stock sells for about $ 1.875 on the ask.
The company has $ 1.22 in cash and 7,000 slot machines of which 6,500 are refurbished. The total cost for the company for each slot machine was $ 400 (non-refurbished) plus $ 75 for refurbishing. That gives a value for the 6,500 refurbished machines of about $ 1 per share.
Value of stock: $ 1.21 cash and $ 1 in slot machines for a value of $2.21.
I'm not sure what I think of LACIW at this point, but it does look promising. I plan to call the company so that I can find out what they expect for the remainder of the year. If they say that earnings will improve for the rest of the year, then things will look really good. If they say they aren't sure, then I might want to wait since that would seem to be a reversal of previous statements made by the company.
I might also note that I've been to Honduras before. It is a very poor country whose main cities are Tegucigalpa and San Pedro Sulo. There is also a big tourist area by the sea, but I can't think of the name. I guess they will try to get tourist money, too. |
