2Q earnings guesstimate. Part 3
In the third and final part of this series, I'll consider bad debt
expense, foreign exchange adjustment and net earnings before
and after taxes.
FOREIGN EXCHANGE ADJUSTMENT - Some good news
here. We entered the second quarter with the CAN$ at about
US66.5c. From there, it gradually climbed in value to a peak of
about US69c, then traded in the US68-69c range for about the
last month of the quarter, as US interest rates continued to climb.
For this reason, I think there will be another small positive
contribution from the foreign exchange adjustment, similar
to the first quarter, but to be conservative, I will estimate a
zero for this.
BAD DEBT EXPENSE - This seems to average roughly $35k
per quarter. Last quarter, it was $38k, so my estimate is a
repeat of this number.
NET EARNINGS BEFORE TAXES - simple arithmetic gives:
3.55M - 2.5M - 150k - 38k = 862k
So my estimate for net earnings before taxes is $862k.
FINAL 2Q EPS GUESSTIMATE - This should be a fairly
simple calculation - just subtract the percentage for taxes. Right ?
The trouble is, the amount that GRIN sets aside for taxes
varies considerably from one quarter to the next. In Q1,
the taxes were about 59% of net income before taxes, so
I will use this again for Q2. My final net earnings guesstimate
is therefore $353k. This corresponds to an eps of 22 cents.
FINAL COMMENTS - There is a lot of room for error in this
estimate but the basic net sales and gross profits number should
be in the ballpark, given the hints from the company news
releases. For me, these numbers show that the basic business is
humming along on all cylinders. One thing to remember is that
GRIN is attempting to grow through their non-toy distribution
and US manufacturing acquisition, ARK. These new businesses
may require some expenditure at times - just a guess.
FWIW,
Frank
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