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The Company is a diversified company providing products, technologies and services in two industries: construction materials, including coal combustion products, and alternative energy.
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noexperience (< 20) Submitted: 7/20/07 8:35 PM : Start Price: $16.43 HW Score: 13.53
Relies on section 45K tax credit for 78% of operating income for 6 months ended 3/31/07. Tax credit expires 12/31/07. Construction materials declining due to residential slow down.Other clean technology products unproven and not generating profits.65% of assets (133% of shareholders equity) is goodwill and intangibles. Without hiring valuation firm, no way of knowing if goodwill and intangibles have value, so I am assuming they have no value. Consequently I see no margin of safety on the balance sheet either.PE and PB are low for a reason - it is a value trap.
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MGDG (97.37) Submitted: 11/17/07 10:46 PM
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While this was a good short term bearish play( I had shorted at $20 ) It won't continue for the long term. As you have shown section 45K accounted for 78% of operating income, they have been replacing it with clean coal revenue ( so I'll have to take exception with your statement that it's not generating profits ). Their forcast is for section 45K to comprise only 25-30% of 2008 profit and using median earnings guidance it has a forward p/e of 12.They saw the writing on the wall years ago and began preparing for it. If they hadn't they would be digging themselves a huge hole right now. They have 3 plants up and running now ( earning profits ) and expect 5 by year end. By year end 2008 they expect to double that to 10 plants. The CTL technology is still in the R & D stage, but they have completed successful tests at 2 refineries and expect to test at 3rd refinery in December. This will be licensed technology and will generate high margin profit from sales to existing refineries. You make a good point about their assets as the goodwill writedown of $98 million that they just took can attest to. This does not affect cash flow as the $52.5 million in early repayment of senior debt from cash flow they also just reported can attest to. They have a history of positive earnings surprises because the analyst's didn't expect them to make this transformation from reliance on section 45K revenue so quickly and they felt the housing slowdown would affect their earnings from their building materials sector more then they did. They could stumble during this period, but they have the plan laid out and it has been working. I have gone long on this stock from my previous short position and plan on holding it for many years, or until I see that their plan is either not working or will not generate the profits they have forecast for it.---Fool on---Educate---Make money
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divagator (41.33) Submitted: 4/30/08 1:10 PM
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Based on earnings today, this was an excellent summary. Great job nailing this one.
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