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Non-Tech : Imperial Sugar (IPSU) -- Ignore unavailable to you. Want to Upgrade?

To: Patentlawmeister who wrote (54)	1/1/2003 3:57:04 PM
From: Crossy	Respond to of 121

Cuda, quite right... That's my thought, too. And the company provided some clues.. They bought back their A/R facility (securitization) with GE Capital Corp. This will add the forgone discount on A/R to gross margin, say 2-3% (is this realistic ??) plus they closed their least efficient cane plant (Suger Land, Texas) Now they sold higher margin foodservice operations, BUT they retained the "sugar" portion of it. And some new marketing appointements and new process engineering skill additions may point to some intersting new offerings in variety, which should have a positive impact on their bottom line and gross margins midterm. And if you examine the current quarter's report, you will see that IPSU is already EBITDA profitable, their EBITDA profit was $10m this quarter... Operating income of $6m and Depreciation of $4m.. Let's calculate "sensitivity" for each BPGM (Basepoint Gross Margin). New Sales figure excluding DCB-Hormel is around $280m. Last quarter's Gross Margin % was 8.86% (even better than ADM - Archer Daniels Midland ! and they sell for Price/Sales of 0.30) A Basepoint (0.01% percentage points) in gross margin Percentage will add around $30k to the contribution margin. So, 100 BP (1% Percentage Point increase in Gross MArgin percentage) will add some $2.8m to earnings pretax, around $0.28 in pre-tax EPS. IF they just maintain the current Gross MArgin (8.86%) then they should be able to generate some $0.35-$0.40 per QUARTER, according to my tabulation.. I see their new breakeven point around 7.5% of future gross margins, current sales levels of the segment they retained (sugar) being unchanged. all the best CROSSY