my observations and inferences from yesterday's HOM SH mtg (in my personal order of importance, i.e., first = most important, last = least important)
1. Frank smartly underscored the fact that the company was working diligently to achieve the 3-yr goal of $500mm in revs through further accretive acquistions and internally generated growth (more than a 7-fold increase over 2005 revs of $68mm)
2. Frank reiterated guidance that mgmt believed that it would conclude a SIGNIFICANT (emphasis Frank's, not mine) acquisition this year, and that "we are working dutifully towards that"
3. re the significant opportunities before HOM in the geographic areas ravaged by the hurricanes (and to be ravaged by future hurricanes), mgmt stressed that "the customer wants ONE solution for disaster-related services" - i.e., insurance companies, fed agencies, etc. do NOT want to have to engage separate contractors for the various phases of recovery/restoration/rebuild if they don't have to -- this is a big advantage for HOM in the mkts where they have a presence
4. HOM is expanding its relationships with new homebuilders - primarily in the SW FL mkt (Ft. Myers-Naples area). Gulfstream is one new builder
gulfstreamhomes.com
Rick said that HOM likes to link up with the higher end contractors bcz the margins r better (4 the cabinets and granite countertops HOM sells and installs). The opportunity to expand the Centex relationship is definitely there, but mgmt wants to make certain that it will be able to execute in a high quality manner b4 entering into new mkts with Centex and other builders (e.g., Orlando-Tampa-Jaksonville mkts). very, very smart....
5. HOM expects approx. $30-$40K in revs from each modular home they r involved in with ARH. important point - the relationship with ARH is exclusive to ARH (IOW, ARH is obligated to utilize HOM for the demo/foundation/erection work), but HOM is free to perform those services for whomever wishes to retain them in NO (and elsewhere)
6. HOM's mgmt is geared up and intends to work very hard to grow the institutional SH base; "THAT'S [institutions] who we r looking to attract as investors"..... in a polite, but rather unambiguous way, mgmt is letting folks know that they r in for the long haul, and really don't get too concerned re: whether s/t retail traders may or may not be happy on any given day.... personally, I was glad to hear this! "institutional investors r looking for 3-yr strategies" (presumably this is the genesis of the $500mm 3-yr tgt)
7. re: Corbin & Co. - large regional accounting/auditing firm; they have a long history with the co. and know the financials; they have substantial public co. auditing experience; important point - with this year's Sarbanes Oxley compliance requirements, Frank advised that there would be 2 other auditing firms involved in perusing and testing the financials of the co.; he seemed enthused when making this remark - my take on it was that by having 3 auditing firms scrutinize the co.'s finances, this would eliminate any future contrived attacks on the integrity of HOM's financials, a day that he greatly looked forward to (as do I)...
8. "our internal growth is 30%, and we intend to reinvest our profits into the co." - "we r gonna buy other businesses" (note the plural)
9. "at end of Q1, we had $7.2mm in cash and cash equivalents" "this number will increase at end of Q2" "there is also a $10mm LOC that remains unused and at our disposal" "our ARs of $20.9mm are being collected, on average, w/i 70 days"
overall, it was well worth the time and money to make the trip to Dallas to be present for the mtg and meet each member of the mgmt team personally. u get so much information from body language and inflection that u cannot get from the written word (in an SEC filing or a PR), and it was very important to me to shake hands and make direct eye contact with Frank, Rick, Jeff and Armando.
I have acquired a substantial amount of shares in the co., and will add more on Monday
I am happy to respond to any questions any of u may have
long and very strong |
