Paul,
For one with humor in almost every posting, you sure go sour on ELAMF.
Low margins - high depreciation/earnings ratio, leasing of facilities versus owning, past interest expense, etc. The depreciation ratio will be declining and interest is now a minor factor.
I compare ELAMF to Methode. Meth had similar margins when they started due the same things. As revs increased, depreciation declined, debt reduced and cash situation improved, margins increased. New companies usually have to price lower to get the business, then can raise prices when they show dependability.
Methode also has many facilities. Most companies are finding it better to have facilities in many areas rather than one core facility. Disruptions at a plant aren't a major company factor, you don't outgrow your labor, utility, and other needs, many other advantages. Also, the plant manager has a better handle on operation if it's kept small with more of a 'hands on' management team.
It's very difficult to sign contracts with wage escalation clauses. The customer wants a guaranteed price. Keep the customer and do better with the next contract.
I've reviewed as much as I could and they seem to have done very well over the last 2-3 years. Steady growth, eliminated debt, some acquisitions that improve operation, and diversifying products so that a depressed market in any one area won't have a major impact on the operation. To me, this makes ELAMF more desirable than others.
For what it's worth,
Ron
BTW - METH is now priced better than most of the sector |
