Investor Relation
Google Finance
SEC Filing
Year End: Sept. 30
Aug 1, 2014
2014 Q3 Data
Check list:
1.Major Business.
Manufacturer of heavy machinery used in highway construction. Products include asphalt plants, combustion systems and fluid heat transfer systems.
2.Balance sheet.
Recent Price: $10.78, Tangible book value:$11.90, Share outstanding: 9.5m, Market Cap: $103m.
Current asset:$111m, Current liability: $5.3m, Debt: $0m, Cash: $91m.
3.Credit facility.
Not important
4.Financial data by years.
5.Insider holding, options, Insider trading info, share buy back.
E.J Elliott: Founder and CEO, 1.1m common shares + 1.3m class B shares. 26%. He controls major voting shares.
6.Management compensation.
Top 4 average around 1.5m for the past 3 years.
7.Employee numbers. Revenue/Employee. Compensation/Employee.
8.Industry comparison.
9.Auditor
Moore Stephens Lovelace, P.A
10.Major events.
(1) 2001 the company forced to file for bankruptcy and later the debt was actually paid in full.
(1) From 2005-2008 the company received $94m from investment in green fuel production. Mainly from government credit. After tax it would be around $50m.
(2) For past 10 years the company's cash has increased by around $100m. However, it includes the $50m from fuel investment. Another $20m from equity investment.
(3) From 2004 to 2013, the US government from all level spend around $70B to $110B on highway funding. The fund is increased annually compare to GENC's sharp drop on revenue since 2009. I think the reason is either its customers became cautious on capital spending or it became not competitive and lost business.
(4) For the past several years, the US highway trust fund is short of funding. Currently there is legislation work pending. Once legislation finish and new funding rules set. It would be a good for its business.
(5) In 2013 the company does get better on cost saving despite its revenue is down. Its SG&A cut quite a lot compare to other years.
(6) The most attractive part of the company is its cash balance over $90m. However, its revenue was dropped to $60m since 2009 and setting there since.
(6) I estimate $3m EBITDA going forward. $3m in investment income. $1m CapX. use 30% tax rate. It comes around (3+3-1)*0.7=$3.5m annual real income. If using 15 times P/E. Plus the cash it has. It should be a worth around $140m. Currently price is still no cheap enough.
Updated. Feb. 2015
Bought around $10 and sold around $9.50. I realize this is a wrong calculation. When deal with a company with high cash balance, I need to split the cash, investment income with the core business. In this case. it generates around $3m in before tax investment income which is about 3% of the cash. No too bad. But if this is is a mutual fund, then it is not a buy. if use a 10% discount rate for 2 years, the percent value of the cash balance is less than $80m. About the business, it generates only $2m before tax income which converted to a fair value around $20m. Together the fair value should just about $100m. Now it is trading at $90m. There is not enough margin there.
I think now people are buying it because it is quite a safe investment and also there will be good upward possibility if the government pass any long term high-way funding bill. But historically, its EBIDTA is not that great even in good years. In 2004-2008, the real income is probably just $3.5m/year ( $5m EBITDA, 30% tax). Which is about $52m in fair value. Adding $80 in cash, it would have a fair value around $130. At $90m there is still not enough margin, this is already a good case.
