yeah I didnt expect a 100% return this fast. Q1 was obviously great but a sale will still take time. I redid my model and now expect about 60mm ebitda this year and 75mm next year. a 7.5x multiple of 2013 gets you to $31 this year. so if it gets close to there soon I take some profits. Otherwise I let it ride. I still havent sold any for myself of or clients.

Russell rebalance action today? Huge volume.

Seems like it; I had other Russell 2k stocks undergo large volume trading today.

wtg op!

i still dont get using ebitda instead of just net income :/ What am i missing here? Seems like you need to at least take in taxes and interest payments right? Not trying to shoot you down here, just trying to understand as i feel im really missing something here lol.

well anyway, i missed the boat

looking again, and i really dont get how you get these 50-60 million income figures. They will generate 20 million in cash after everything at best by the end of the year. The fact that Q1 looked good seemed mostly because those are the wintermonths. Stockholders equity in 2012 was 118 mill, so how do you get a 400 mill valuation? It is also going to take a while still to pay off their long term debt. There also seems to be some variance in how much more cheaply they can do it. I think in 09, it cost them even more then in '11. They have very little room for failure.

It seems the rise in stock probably comes from teh fact that investors expect a large rise in revenue because of more affordable medicare now. But that seems hard to predict right?

Im learning here, so if im missing something incredibly obvious, my apologies .

im talking ebitda, which is slightly different than free cash. im using ebitda because thats what PE firms use in coming up with values in buyouts, which is my thesis.

im not sure where you get the 20mm number from. im at home now so I dont have my model in front of me but if they do 60mm in ebitda, they will have about 8mm in interest payments, and 14mm in taxes this year, so about 38mm in cashflow with about 8mm in capex or 30mm in free cash. interest payments go way down next year (they have very little net debt), and their insanely high tax rate may go down in the future (currently 42%).

so as of this writing, with the stock at 30 a share, its trading about 13x free cash this year, which is about right. looking at a low/no growth stock id pay 10x.

looking at next year, 75mm ebitda, 4mm interest 23mm taxes, 8mm capex means free cash of 40mm. if you put a normal tax rate on it (35%) you get an extra 4mm in free cash. Im not banking on that, but its potential upside. 40mm in free cash at 10x gets you to $31, which would be fair if there was no growth. its also where id said id start trimming.

stockholders equity is useless, not sure why you are looking at that.

debt will not take a while to reduce. if you actually read through their annual report, you can see that they will make a huge debt repayment next winter, when the option is available.

Q1 looked good because it was much better than Q1 2012. Im not just annualizing one quarter, that would be ******ed. I have a model and am looking at year over year margin improvement.

edit: just trimmed 20% of my stake at 30.78

reporting after the bell today.

im looking for revenue of 290mm vs 280 last year and ebitda of 15.2mm vs 11.4mm last year.

stocks had a big run so im not sure if it hits those numbers how it trades. this is the last really easy comp from old management, although they did exit their last bad contract on July 31st so we should continue to see improvements for the next year at least.

right now im calling for 61mm ebitda for this year and 77mm next year. will revise after numbers come out.

Looks like you are going to get it. Good call. EBITDA of 32 mil for 6 months, so really looking good.

What happened in Q3 here? Adjusted EBITDA was barely up YOY after seeing enormous YOY improvement in the first two quarters.

Ow. Looks like everyone was also expecting the numbers that ahnuld was expecting.

Bump. Saw PRSC is back on the Magic Formula screener with $40m in FCF in TTM selling for $375m EV. You have to think all this crazy cold weather will be good for their near term results as well.

crazy cold weather and snow always helps, margins should continue to improve this year, obamacare is kicking in and expanding their revenues without prsc having to do anything. there's a lot to like.

just to explain, states had the choice to opt in for expanded medicaid or not, with the states opting in getting 90% of the funds from the federal government. while many red states did not opt in, and prsc is mostly in red states, both NJ and NY decided to opt in. they are the largest contracts for PRSC

Thanks. If it wasn't already my largest position I'd probably be adding more here at $24-25. I think the buyout target is probably higher now as well.

ahnuld,
Following your logic on PRSC, I checked into what Coliseum Capital has been buying recently. They've been pouring money into ACW for months now. ACW makes parts for commercial trucks. Looking at it briefly, the company looks like a complete turd. Market cap $185M, enterprise value $495M, net income -$187M, negative operating cash flow, price/book 6.28. Coliseum owns more than 10% of them now.

Only thing I can think of is there's hidden assets somewhere on the balance sheet, like machines or real estate that isn't being held at its full value.

The analysis about ACW is in the value investing thread. Basically it's a turnaround story with a rather interesting possibility of getting sold within the next few years based on the players involved.

I looked at it (albeit not in much detail) and to be honest I really dont see it. I assumed they did current revenues and managed to achieve the margins of their larger competitor and it still looked expensive. If I wanted to play the auto parts manufacturers id go for martinrea

nice bump today for PRSC over $35 a share now.

Well missed the boat on that 50% gain. Oops.

PRSC going beast mode. Thanks arnold and others that gave us that pick.

sick acquisition multiple of 4x allin or 1.5x ebitda before earnouts. will only be able to give real estimates after they have a conference call with the new division heads after they close the deal, but some quick math tells me they can make about $5.33 per share in free cash in 2015. means stock should trade in the 50s by early next year if they acomplish what they said they could.

up 170% since recommendation, could end up being a 4 bagger.

Now I feel kinda stupid for cashing out half my shares at around $30. Oh well.

They are paying $124m over the next 5 years based on performance targets. If you assume its spread evenly over 5 years and NPV it to today, it ends up being closer to 3x multiple. Almost seems too good to be true.

Assuming they can hit their 6.5% ebitda target on 1.1b rev + 56m ebitda from acquisition:
New Buyout target: $125m ebitda * 8x - 185m net debt / 13.5m shares = $60/share. This might even be conservative.

did you sell today?

Its really interesting how it took the entire day for the market to adjust today. Anyone could have read the investor presentation right away in the morning and seen how good of a deal the stock was at $28-$30 after seeing the pro forma results with the acquisition. The stock was trading at 6.75x ttm ebitda before the acquisition, applying the same multiple to the pro forma results and subtracting the debt would say the stock should be somewhere around $39.