Some Thoughts On ALJ Regional Holdings, Inc.

ALJ Regional Holdings, Inc.

You’ve got here a well managed, cheap co that is moving forward….advantaged by net loss tax credits, paying off debt, looking for additional acquisitions…

Well managed- rapidly paying off debt, which is amortizing at extremely attractive interest rates

Q4 earnings per share were….$0.20..that’s $0.60 annualized no its NOT it’s $.80 However, Faneuil was awarded a new contract at the end of 2014…so that should add a boost. Still, you’re looking at a P/E of 6.5 based on annualized Q4 earnings….

Buying up businesses and keeping the management teams in place…clever….moreover, the management teams of these businesses are being given a share in the companies…so share in the profits and outlooks…even more impressive.

“As of September 30, 2014, ALJ had two employees, its Executive Chairman and its Chief Financial Officer, performing services dedicated primarily to general corporate and administrative matters. As of September 30, 2014, Faneuil had approximately 3,000 employees and Carpets had approximately 200 employees” — ALJ has essentially become a PE company, they’re not really exposed to any risk.

For the twelve months ended September 30, 2014, the Company used $28.9 million in investing activities, primarily attributable to the $19.4 million acquisition of Faneuil, $5.3 million acquisition of Carpets and $4.3 million acquisition of fixed assets

but at the same time, cash generated from operations was $14.4m for the year….strip out the acquisitions and you get a FCF of $10m p.a….carpets is not profitable and Faneuil has a huge contract coming online this year…$10m FCF on a co with 31.3m shares in issue…that’s $0.32 per share a FCF yield of 8.2% but even at this level there’s plenty of room to grow..

Around $15mm net income, on around $48m of net assets, that’s an ROE of 33%—-no tax losses you’re looking at ROE of 20%…

Earnings yield 20%….

[LONG ALJ Regional Holdings, Inc.]

Leave a Reply