been long dillards for a few months. My buddy's thesis is the same as Mercato's, but he had it 6 months earlier.

Sold out of RGA, 20% gain over 8 months. They did not have as big of an upside as I had thought.

The earnings call today was wow.
Looks like this may turn around a lot faster than I had originally thought.
Next quarter will be immensely interesting.

Earnings expectation was (.14) and they pulled off (.07)... was surprised it only ended up 4%...

I really dont get this investment. If they hit 75mm ebitda, above high end of range, its trading 7.5x.

This is a cyclical, capital intense business. Those get low multiples. Its expensive.

Their guidance is based on very conservative numbers. The interesting takeaway was this:

They mentioned that they learned from '11 and '12 when they were unexpectedly hit with demand for a 300k truck build rate and now have the infrastructure to comfortably handle that kind of intake. However, this year through next year may actually demand more, and other suppliers may collapse from the demand if they did not prepare like ACW did. So the year end EBITDA might actually end up being much higher than their guidance.

so whats much higher? What are standard capital needs like? My guess is it is still trading at a normal, not cheap, free cash multiple of peak earnings.

Here is what I have gathered from earnings:

Their core businesses are right now providing an adjusted EBITDA of roughly $25m. Lets assume this holds flat, even though two of the businesses have single digit EBITDA margins and management has stated that they will improve to double digits. So that is $100m annually.

For expenditures, interest is presently at 35 million which they can refinance, and CapEx right now is 23m going forward according to management due to their heavy investments in new equippment last year which negated the need for anything higher this year. There are no taxes due their previous losses being carried forward. Thats roughly 40m in FCF for a 250m market cap. This is also without the cycle coming back, flat revenues, and no improvement on EBITDA for the other two businesses.

Now, if the cycle hits at the numbers that management mentioned in the earnings call, then, assuming it is close to the revenues that they made in previous cycles, that is almost 1 bil in revenue. Given that the above was made assuming revenues of 650-680 mil, that makes the story a LOT more interesting.

isnt ebitda 18mm in Q1? I guess you are taking out corporate costs, but they seem like cash costs to me so im not sure why we should ignore them.

Also annualizing Q1 is a mistake. Its a seasonal business and Q1 and Q2 are always stronger than the back half of the year.

finally capex runs much higher than 23mm. sure maybe they only spend 23mm this year, but thats not the long term steady state spending level. depreciation is 35mm a year and its real depreciation. so id use that number.

seems like free cash is enough to service interest payments and buy more equipment and thats in. In the last 3 years cash flow from ops - capex was negative in every year. Mind you I get that this is a turnaround story but I would need to expect ebitda of 120mm this year to get excited.

Did LOY report today? I don't see anything.

Was also looking around for a report. Guess tomorrow morning?

http://www.sedar.com/DisplayCompanyD...uerNo=00009147

Costs as a percentage of revenue increased yoy and spiked in Q4. Seems worrisome. Claimed to be one-time result of large acquisitions at end of Q3. Duplicative costs to be eliminated going forward.


"Subsequent to the year end, the Company announced that it would be pursuing a franchise initiative which provides franchisees the license to the core curriculum of select Loyalist’s ESL programs. The Company has six licenses in place as at the date of this MD&A, with initial fees ranging upwards of $100,000 and recurring revenue based franchise royalty fees of 5% up to 20%."

Signed one more franchise agreement since January 8th press release.

"The Company started 2014 with a pilot program of 104 student living spaces spread across Halifax, Toronto, Vancouver and Victoria. The Company plans to strategically add an additional 50 living spaces per quarter."

Starting in which quarter?

So the financials looked pretty encouraging but Q4 gross margin was pretty bad. Stock down more today. Pretty disappointing but I guess we only have to wait a month until we see Q1.

I'm always curious just how much insider selling goes on with a small stock like this. Strange that it holds so long in a range only to fall off before what appears to be a negative earnings.

Bought SKUL at $7.69. Earnings will be out today. Let's go Hoby. Show the street some of that sweet Kool-Aid.

Nicely done. I hadn't noticed Skull dipped below my price target recently

FWIW, I sold the 40% of my position that sat in roth iras over the last couple days. I think they've taken care of the easy part -- cutting costs and becoming more efficient. Now the next step is regaining lost business -- this, of course, is much harder.

But anyways I intend to hold the rest. I think you're missing a few things.

1) Yes it's a turnaround. So I would say Ebitda is still depressed from the lost business they've yet to regain.

2) I don't think this is the peak of the cycle. my expectation is that normalized ebitda should be around $100M. Brillion is still very challenged. They've cut cost but in peak cycles this part of the business generates a lot of cash. I value ACW at appx 7-8x normalized Ebitda -- $700M to 800M - $330M Debt = $370-$470M -- leaving quite a bit of upside still.

The challenge for Accuride is that their business has lots of peaks and valleys and it is difficult to forecast the ups and downs in demand. What they failed at in the past was being prepared for these ups and downs -- causing them to operate poorly in the downcycles AND losing customers in the up cycle. Hopefully the new management team will help them to regain some of the lost business.

Hitting a homerun with distressed investing. Awesome story.

http://seekingalpha.com/article/2121...ethanex-energy

Thanks. Learning from last time, I placed a limit order to exit so let's hope there's a massive jump tomorrow.

It's not very long, but a good read. Alice Shroeder (author of The Snowball) did an AMA on Reddit today.

http://www.reddit.com/r/investing/co...ort=confidence

Be curious what your thoughts are now. Even the analysts recommending LOY at $0.70 have now turned sour on it. Presently it's never been more oversold and hitting another resistance zone, hopefully this ends the free fall. Q1 at the end of the month but I don't see good news on the horizon until Q3 at the earliest. (other then possible acquisitions)

Great read. Thanks.

Can't believe no one else commented on this. Really cool story

That should be pretty obvious. Do u still believe it`s a good stock to own long term? It`s now down 40% since I bought it in january. Not sure how the Venture index has done in the same period but for sure not down 40%.

Of course it`s 100% my own responsibility that I bought the stock. You know a hell of a lot more than me about the stock market, I just asked for an opinion whether u still like the company or not.

I think he was implying that Yes, he still likes the stock.

what should be pretty obvious is if I recommend something and it drops on no news, then yes I still like it.

at this point news has come out, but I havent had time to do a write up yet. Might just wait until Q1 comes out in a couple weeks. I havent sold any shares.