I haven't forgotten about the question of cash flow and earnings.
I find the situation somewhat confusing both because I am not an expert in finance or accounting and because the data available was all prepared to meet the rather complicated SEC rules for SPAC accounting. So somewhat more meaningful data will become available as ESA completes the transition into a normal SEC compliant,publicly held and reporting company. In addition, I really don't feel qualified to make a cash flow analysis or estimate. As ESA grows and attracts some attention from the brokerage houses, I imagine we will start to see some at least quasi-meaningful cash flow and earnings estimates.
sec.gov
sec.gov
In addition ST Pipeline had one hugely profitable contract in 2007 and I do not know how much of that is included in the available earnings data running from October 1, 2007 through March 30, 2008 and how much is include in the fiscal 2007 yearly data. (ESA did emphasize that this one contract was not factored into the purchase price). On the other side of the equation, this includes data from ESA's second fiscal quarter (Jan. thru March) which is their worst quarter because it is hard to lay pipeline in the mountains during the winter. Also from what I understand, revenues and profits on the CJ.J. Hughes side have apparently just been exploding.
So anyway for the year ended Sept.30, 2007, I see earnings listed fully diluted and assuming maximum redemption (which was nearly the case) earnings of $1.25 per share. That would give a retrospective p/e of 4.6 for the fiscal year 2007-using yesterday's closing price of $5.75
For the first 6 months of fiscal year 2008 (9/07 thru 3/08) I see the same fully diluted, maximum redemption figure of $.69. Multiply by 2 that leaves $1.38. Using the $5.75 price that gives a potential p/e of 4.16.
Using another method: The company was allowed by the SEC to list estimated earnings for fiscal year 2008 of 10.8 million. Using a figure of 12.5 million outstanding shares that works out to earnings of .864 per share. There we get a p/e estimate for 2008 of 6.65. Possibly these figures are overly conservative, because they had to pass some very strict SEC muster.
I also found this rather curious statement: "Based on an escrow value of $5.97/share, the net earnings multiple being paid is 9.5X."
I have no idea where that comes form or even what it means, but it does not correspond to any earning figures or estimates that I can find. Perhaps it comes from the due diligence opinion of Legacy Capital on pages 77-86 of the final SEC proxy document. Or perhaps it is assuming the warrants have been exercised as it seems to imply on page 21 here.
sec.gov
I am pretty confident that the true p/e for ESA in 2008 will lie somewhere between a low of 4.16 and a high of 9.7. I expect 2009 to be better yet.
Incidentally I found this statement concerning ST Pipeline
<ST Pipeline has a relatively low backlog at December 31, 2007. At December 31, 2007, ST Pipeline had a backlog of $5.4 million compared to a backlog of $57.0 million at December 31, 2006. While the Board recognized that there can be no assurances that ST Pipeline will be successful in bidding and getting additional contracts for 2008, the board believes that with the abilities of ST Pipeline, they will be successful in getting a significant amount of additional contracts in 2008.>
If ST pipeline does have a year in 2008 or 2009, anywhere like the year they had in 2007, then all bets are off.
Once ESA has organized itself into a normal operating company, we should have a lot more information. |
