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Non-Tech : The Children's Beverage Group (TCBG) -- Ignore unavailable to you. Want to Upgrade?

To: Peter Prickett who wrote (1198)	7/30/1998 1:36:00 AM
From: mark cox	Respond to of 2452

Pete, this is how I interpret the sentence from the press release: "plus $2.5 million in additional annual profits on an ongoing basis." TCBG will be paying,(leasing), the 7 machines for $2.5 million per year for the two years. Total cost $5 million. We know that each Volpak costs $550,000 each for a total of $3.85 million. So TCBG will be paying in a sense $1.15 million in (interest) for these machines. Looking at it that way it appears to be expensive, but actually it is a pretty good deal. I will show their financial leverage gain from this deal with the facts that I know at present. Of course these are rough estimates. Based on the net profit margins given to me by IR. Juice drinks at 22% to 24%, the spring waters at 30% and he did not know how much they will receive from royalties but he agreed that they would be very high. So if I were to use a figure of 10% net profit margin for all the sales it should be conservative. Each Volpak can produce $6 million per year in revenues. So the 7 machines could produce $42 million in revenues per year. At a 10% margin it would yield $4.2 million in earnings. TCBG will be paying $2.5 million per year for the machines for a leveraged gain of $1.7 million in clear profits from using those machines. Basically speaking, TCBG would be earning 68 cents net profit on every dollar borrowed from Volpak. This is the highest leverage gain I have ever computed on any company. So lets hope that they do this some more in the future until their cash flows can fund their growth. It is important to note that the margin I used might be only 1/2 of what it could be and if it is then they will earn $ 5.9 million with those machines and actually make $2.36 on every dollar borrowed from Volpak. That would be phenomenal. We will have to get more accurate information over time so we can make more accurate estimates for this company's future. Thanks for your very informative post Pete. Please feel free comment or disagree with what I said above. Let's get some good discussion going with what little we know. I am looking forward to the day we can analyze their financial reports. Then we won't have to do too much speculating. Mark