The cost problem goes beyond the products division.
Digging a little further in AIRM'S P & L for the last 4 quarters,
G & A expense for the first 6 months of 1998 vs. last 6 months of 1997 is up 20 %, flight center expenses are up 8.8 % and aircraft operations is up 5 % while sales are up only up 3.4 %. The sales numbers in the first half include the gain on the insurance settlement, which if excluded, sales increase would have been flat. These expense increases are out of line and explain why the financial results have fallen short.
Quarter Revenue.... G&A EXP.... % to sales
3rd-97... 10,989...... 1,224...... 11.4 %
4th-97... 12,395...... 1,408..... 11.9 %
1st-98... 12,213........ 1,543..... 12.6 %, 13.7 %... excluding ins settlement
2nd 98... 11,969..... 1,613.... 13.5 %
If this trend continues, we will be lucky to see 30 cents in earnings.
If we are going to see $ 10 a share, eps must grow to .50 to .60 per share.
At $ 4.00 we have a good value relative to book value and future potential. However, I'm lowering my expectations to 5.50 per share in 1998.
Bill |
