Web Site
Google Finance
SEC Filing
Jan 10, 2013
Q2 2013 Data
Year end May, 31
1.Major Business.
It is IT agent. Mainly hire IT contractor for big financial companies. At 2012 it has 260 contractor(including maybe 100 from India).
2.Balance sheet.
Recent Price: 3.17, Tangible book value: $4.68m, Share outstanding: 1.98m, Market Cap: $6.3m.
Current asset: 13.7m, Total liability: 4.5m, Debt:0, Cash: $4.5m(*).
*Cash is after 3m special dividend payout.
3.Credit facility.
not important
4.Financial data by years.
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 45.2 | 39.3 | 37.0 | 42.8 | 51.7 | 49.7 | 48.1 | 51.4 | 51.7 | 52.4 |
| Margin% | 16.5 | 18.3 | 17.7 | 18.0 | 18.2 | 18.4 | 19.4 | 21.7 | 22.2 | 21.8 |
| OP Income | 2k | 480k | 317k | 1 | 1.97 | 1.92 | 1.71 | 3.6 | 3.7 | 4.0 |
| Income/s | (0.03) | 0.10 | 0.08 | 0.30 | 0.56 | 0.60 | 0.54 | 0.94 | 0.94 | 1.06 |
| CF-WC | 0 | 260k | 210k | 690k | 1.27 | 1.39 | 1.21 | 2.14 | 2.12 | 2.36 |
| Cash | 8.3 | 7.7 | 8.7 | 8.6 | 8.0 | 8.3 | 8.0 | 10.5 | 8.7 | 18.0 |
| Dividend | 0 | 0 | 0 | 0.20 | 0.64 | 0.64 | 0.64 | 1.20 | 5.2 | 0 |
5.Cost structure
n/a
6.Insider holding, options, Insider trading info, share buy back.
Joseph F. Hughes(CEO): 900k, 46%.
Dimensional Fund: 100k, 5%.
7.Management compensation.
Top 3: Over $1m per year.
8.Employee numbers. Revenue/Employee. Compensation/Employee.
Whether employees are unionised, etc.
9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?
10.Auditor
Better be among the big four.
11.Major events.
(1) at 2006, it has been discovered there is a a scam of TSRI related to a employee of New York City Department of Education ("DOE"). TSRI provide contractors to DOE which is administrated by the employ. TSRI then subcontract the contract to a private company which is also opened by the same employee. As a result DOE terminate contract with TSRI and also TSRI paid $900k to DOE as settlement.
12.Comments.
(1) Gross margin decrease significantly since 2006 while cost not changed. It seems bottomed at current 16.5%.
(2) It currently has 20 recruiter to recruit developers, which is historically high compare to only 14 at 2006 and 10 at 2004.
(3) The management took home $1m/year for many years despite whether it is profitable or not.
(4) Its cost mainly on employee's compensation which is quite flexible. Now it is quite high since it seems want to hire more sales and recruiter to raise revenue. However, if revenue doesn't catch up, the company actually can control cost pretty easily by eliminate employees. I view its cost structure is pretty flexible.
(5) The CEO is founder and he is 81 years old now.
(6) On downside, I guess it is pretty hard for it to return margin to previous level since the competition is pretty tough now. On positive side, it might be able to pick up revenue since it has 26% of customer is from financial services which I think could possible be recovered in future.
(7) Overall, it is just a fair business, since its book value is much higher than currently price and the cost is controllable, I think the current price are pretty ok to hold.
