|
Summary ratios for the week of July 24 |
||||||
|
(P/E ratios based on annualizing the March quarter, unless otherwise noted) |
||||||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Alien Technology (RFID) |
$510 |
25.5 |
-9 |
3.4 |
3.4 |
19% |
|
radio frequency identification products |
Sept 30 fiscal |
Post-IPO shrs:46mm |
||||
|
Chart Industries (GTLS) |
$512 |
1.1 |
19 |
2.8 |
-2.5 |
49% |
|
machinery for oil/gas production |
Post-IPO shrs: 25.6mm |
|||||
|
CHG Healthcare (CHGH) |
$282 |
0.7 |
25 |
6.2 |
-8.2 |
28% |
|
temporary physician staffing |
Post-IPO shrs:17.6mm |
|||||
|
Crystal River Cap (CRZ) |
$704 |
14.3 |
11 |
1.2 |
1.2 |
36% |
|
REIT |
Post-IPO shrs: 25.6mm |
|||||
|
GeoMet (GMET) |
$532 |
10.8 |
18 |
2.5 |
2.5 |
16% |
|
energy production & development |
Post-IPO shrs:38mm |
|||||
|
WNS (Holdings) (WNS) |
$756 |
5.0 |
41 |
4.9 |
6.9 |
26% |
|
travel/fin business outsourcing offshore |
Post-IPO shrs: 40mm |
|||||
|
========================================================================= |
||||||
|
SEARCH BY COMPANY |
Use 'Edit, find on this page' to search for companies |
|||||
|
for analysis |
scheduled below |
|||||
|
========================================================================= |
||||||
|
Analysis -- week of July 24 |
||||||
|
Alien Technology |
RFID, C, 6 |
|||||
|
radio frequency identification products |
Sept 30 fiscal |
Post-IPO shrs:46mm |
||||
|
Morgan Hill, CA |
2004 |
2005 |
Mar31/6mos |
IPO Mkt |
||
|
Revenue ($mm) |
$6.8 |
$9.9 |
$19.8 |
$10.0 |
Cap (mm) |
|
|
Gross Profit |
20.6% |
-70.7% |
-12.1% |
-60.0% |
$510 |
|
|
Net income (loss) $mm* |
($19.0) |
($27.0) |
($53.0) |
($28.0) |
@$11 |
|
|
Net income % |
-279.4% |
-272.7% |
-267.7% |
-280.0% |
||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Alien Technology (RFID) |
$510 |
25.5 |
-9 |
3.4 |
3.4 |
19% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
1 |
2 |
1 |
2 |
6 |
|
|
Business |
||||||
|
. Manufactures radio frequency identification, or RFID, products, and provide professional and |
||||||
|
educational services to support these products. |
||||||
|
. Organizations in retail, consumer goods, manufacturing, defense, transportation and logistics, |
||||||
|
pharmaceuticals and other industries use RFID’sproducts and services to improve the |
||||||
|
effectiveness, efficiency and security of their supply chains and asset tracking operations. |
||||||
|
. RFID believes its passive, ultra high frequency, or UHF, RFID products deliver the combination |
||||||
|
f long read range, fast read speed and low cost required for many supply chain and asset tracking |
||||||
|
applications. |
||||||
|
Proprietary design |
||||||
|
Since 2000, has focused efforts on the design and development of RFID products and the |
||||||
|
production of low-cost RFID tags utilizing RFID’s proprietary Fluidic Self-Assembly, or FSA, |
||||||
|
technology. |
||||||
|
. RFID believes its proprietary tag manufacturing process, which is based on FSA and related |
||||||
|
processes, gives it a strong cost and performance advantage in manufacturing tags over current |
||||||
|
alternative RFID tag manufacturing processes, and will enable RFID to increase our production |
||||||
|
capacity to keep pace with the anticipated growth in customer tag demand in the years ahead. |
||||||
|
Competition |
||||||
|
. Principal competitors in producing passive UHF RFID inlays include Avery Dennison, UPM |
||||||
|
Raflatac, Symbol Technologies and Texas Instruments. Other companies, including Impinj, |
||||||
|
Philips and ST Microelectronics, are primarily focused on selling ICs, and therefore are |
||||||
|
ggressively promoting the use of RFID inlays utilizing their ICs, including the inlays of our |
||||||
|
competitors. |
||||||
|
. In the RFID hardware business, principal competitors include Impinj, Intermec, SAMSys, |
||||||
|
Symbol Technologies, ThingMagic and Tyco. |
||||||
|
. In the airport baggage security and handling business, Quatrotec competes with a number of |
||||||
|
companies depending on the contract, including ADT Security, Cage, FKI Logistics, Honeywell, |
||||||
|
Johnson Controls and Turner Construction. |
||||||
|
. Avery Dennison, Philips, Symbol Technologies and certain label converters and tag |
||||||
|
manufacturing equipment manufacturers have indicated that they are actively working on |
||||||
|
programs to reduce the cost of producing RFID inlays and labels. |
||||||
|
Use of $88mm in IPO proceeds |
||||||
|
. $19 million to fund equipment purchases and tenant improvements for the Fargo, North Dakota |
||||||
|
manufacturing facility |
||||||
|
. Remainder for general corporate purposes, including expansion of sales and marketing and |
||||||
|
research and development efforts, working capital, capital expenditures and potential acquisitions |
||||||
|
============================================= |
||||||
|
Chart Industries |
GTLS, C, 7 |
|||||
|
machinery for oil/gas production |
Post-IPO shrs: 25.6mm |
|||||
|
Garfield Heights, Ohio |
2005 |
Mar 31 qtr |
IPO Mkt |
|||
|
Revenue ($mm) |
successor co ===> |
$403 |
$121 |
Cap (mm) |
||
|
Gross Profit % |
27.3% |
30.6% |
$512 |
|||
|
Operating income % |
4.4% |
13.1% |
@$20 |
|||
|
Interest expense ($mm) |
$24 |
$6 |
||||
|
Net income (loss) $mm |
($6.4) |
$6.6 |
||||
|
Net income % |
-1.6% |
5.5% |
||||
|
Highly leveraged" |
||||||
|
. Notice for the three months ended March 31, 2006 interest expense almost equaled after-tax income |
||||||
|
. Also notice the low (not good) negative price-to-tangible book value valuation ratio |
||||||
|
. Graded C because GTLS is very highly leveraged with debt |
||||||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Chart Industries (GTLS) |
$512 |
1.1 |
19 |
2.8 |
-2.5 |
49% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
2 |
1 |
7 |
|
|
Business |
||||||
|
. Leading independent global manufacturer of highly engineered equipment used in the |
||||||
|
production, storage and end-use of hydrocarbon and industrial gases |
||||||
|
. Supplies engineered equipment used throughout the liquid gas supply chain globally. |
||||||
|
. GTLS believes it is the number one or two equipment supplier in all of its primary end-user |
||||||
|
markets. |
||||||
|
Recent Developments |
||||||
|
. On May 26, 2006, purchased the common stock of Cooler Service Company, Inc., or Cooler |
||||||
|
Service, a Tulsa, Oklahoma-based company that designs and manufactures custom air cooled heat |
||||||
|
exchangers utilizing advanced technology in thermal and mechanical design. Cooler Service |
||||||
|
provides air cooled heat exchangers into multiple markets, including hydrocarbon, petrochemical |
||||||
|
and industrial gas processing. |
||||||
|
. The aggregate purchase price for the acquisition was $16.5 million, which GTLS paid in cash. |
||||||
|
Business segments |
||||||
|
. Operates in three segments: (i) Energy and Chemicals, or E&C, (ii) Distribution and Storage, or |
||||||
|
D&S, and (iii) BioMedical. |
||||||
|
. While each segment manufactures and markets different cryogenic equipment and systems to |
||||||
|
distinct end-users, they all share a reliance on GTLS's heat transfer and low temperature storage |
||||||
|
know-how and expertise. |
||||||
|
. The E&C and D&S segments manufacture products used in energy-related and other |
||||||
|
applications, such as the separation, liquefaction, distribution and storage of hydrocarbon and |
||||||
|
industrial gases. |
||||||
|
. Through hte BioMedical segment, supplies cryogenic equipment used in the storage and |
||||||
|
distribution of biological materials and oxygen used primarily in the medical, biological research |
||||||
|
and animal breeding industries. |
||||||
|
Product applications & other products |
||||||
|
. The largest portion of end-use product applications is for energy-related, accounting for 51% of |
||||||
|
sales and 58% of orders in 2005, and 77% of backlog at December 31, 2005. |
||||||
|
. Also a leading manufacturer of standard and engineered equipment primarily used for low |
||||||
|
temperature and cryogenic, or very low temperature, applications. |
||||||
|
. Developed an expertise in cryogenic systems and equipment, which operate at low temperatures |
||||||
|
sometimes approaching absolute zero (0 kelvin; -273° Centigrade; -459° Fahrenheit). |
||||||
|
. The majority of products, including vacuum-insulated containment vessels, heat exchangers, cold |
||||||
|
boxes and other cryogenic components, are used throughout the liquid gas supply chain for the |
||||||
|
purification, liquefaction, distribution, storage and use of hydrocarbon and industrial gases. |
||||||
|
The Leveraged Buy-Out Acquisition |
||||||
|
. On August 2, 2005, Chart Industries entered into an agreement and plan of merger with certain of |
||||||
|
its stockholders, First Reserve Fund X, L.P., |
||||||
|
. The Acquisition closed on October 17, 2005. In connection with the Acquisition, entities |
||||||
|
affiliated with First Reserve contributed $111.3 million in cash to fund a portion of the purchase |
||||||
|
price of the equity interests in Chart Industries, and management contributed $6.4 million in the |
||||||
|
form of rollover options. |
||||||
|
. The remainder of the cash needed to finance the Acquisition, including related fees and expenses, |
||||||
|
was provided by funds raised by the offering of $170.0 million senior subordinated notes due 2015 |
||||||
|
and borrowings under GTLS $240.0 million senior secured credit facility. |
||||||
|
. The senior secured credit facility originally consisted of a $180.0 million term loan facility and a |
||||||
|
$60.0 million revolving credit facility and will be amended effective upon the closing of this |
||||||
|
offering to increase the size of the revolving credit facility to $115.0 million. |
||||||
|
Competition |
||||||
|
. Companies that operate in GTLS's industry are Air Products, Kobe, Linde, Nordon, Puritan |
||||||
|
Bennett, a division of Tyco International, Ltd., Sumitomo and Taylor-Wharton, a Harsco |
||||||
|
Company. |
||||||
|
. Additionally, GTLS competes with several suppliers owned by global industrial gas producers |
||||||
|
and many smaller fabrication-only facilities around the world. |
||||||
|
Use of proceeds& loans |
||||||
|
. Cash dividends: $243.9mm |
||||||
|
. Of that amount $197.4 million will be received by FR X Chart Holdings LLC, an affiliate of First |
||||||
|
Reserve. |
||||||
|
======================================================== |
||||||
|
CHG Healthcare Srvs |
CHGH, C+, 7 |
|||||
|
temporary physician staffing |
Post-IPO shrs:17.6mm |
|||||
|
Salt Lake, UT |
2003 |
2004 |
2005 |
Mar 31 qtr |
IPO Mkt |
|
|
Revenue ($mm) |
$286 |
$381 |
$405 |
$108 |
Cap (mm) |
|
|
Gross Profit % |
31.3% |
29.4% |
28.1% |
27.8% |
$282 |
|
|
Operating income % |
7.5% |
7.0% |
5.1% |
6.9% |
@$16 |
|
|
Interest expense ($mm) |
$1.3 |
$4.0 |
$6.4 |
$2.1 |
||
|
Net income (loss) $mm |
$11.6 |
$12.2 |
$7.3 |
$2.8 |
||
|
Net income % |
4.1% |
3.2% |
1.8% |
2.6% |
||
|
CHGH is yet another highly leveraged company, |
||||||
|
. Notice for the three months ended March 31, 2006 interest is almost 75% of after-tax income |
||||||
|
. Notice the negative price-to-tangible book value (not as severe as Chart Industries, however) |
||||||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
CHG Healthcare (CHGH) |
$282 |
0.7 |
25 |
6.2 |
-8.2 |
28% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
2 |
1 |
7 |
|
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
2 |
1 |
7 |
|
|
Business |
||||||
|
"Locom tenens" |
||||||
|
. One of the oldest and largest nationwide providers of temporary physician staffing services, |
||||||
|
commonly referred to in the industry as "locum tenens," in the United States. |
||||||
|
Other services |
||||||
|
. Also a leading nationwide provider of temporary allied health and travel nurse staffing services |
||||||
|
and permanent placement of physicians and other healthcare professionals. |
||||||
|
. CHGH’s temporary staffing services focus exclusively on travel staffing. Founded over 25 years |
||||||
|
ago, CHCG has many long-standing relationships with healthcare professionals and customers, |
||||||
|
and CHGH believes we have a reputation as one of the most trusted and experienced providers of |
||||||
|
healthcare staffing services. |
||||||
|
Market |
||||||
|
.Staffing Industry Analysts, Inc., or SIA, an independent provider of market data and analysis to |
||||||
|
the staffing industry, estimates that locum tenens experienced annual growth rates of at least 11% |
||||||
|
for each year from 2003 through 2005 and projects that locum tenens will grow 12% in each of |
||||||
|
2006 and 2007. |
||||||
|
Placements |
||||||
|
. In 2005, CHGH placed more than 6,500 healthcare professionals on over 18,500 temporary |
||||||
|
assignments in more than 35 physician and over 50 other healthcare specialties and subspecialties |
||||||
|
with over 4,100 customers. |
||||||
|
. Primary customers are hospitals and physician practices. |
||||||
|
. Locum tenens accounted for 51.2% of our 2005 revenue, other healthcare staffing, which consists |
||||||
|
of allied health and travel nurse staffing, generated 42.6% and permanent placement of physicians |
||||||
|
and other healthcare professionals generated 6.2%. |
||||||
|
. Contracts directly with customers and do not rely on third-party payors, such as Medicaid, |
||||||
|
Medicare or insurance companies, for reimbursement. |
||||||
|
Operations |
||||||
|
. Physicians are the primary generators of revenue and demand for other services in most |
||||||
|
healthcare settings and are an important factor in achieving high quality outcomes and patient |
||||||
|
satisfaction. |
||||||
|
. In addition, CHGH believes the cost to the customer of a locum tenens physician is |
||||||
|
approximately the same as the cost of a full-time local physician. Hospitals, physician practices |
||||||
|
and other customers use locum tenens physicians to fill in for permanent physicians during |
||||||
|
vacations, maternity leave, sabbaticals and continuing education, to address peak or seasonal |
||||||
|
demands and to fill open positions while conducting a search for a permanent physician. |
||||||
|
. Because physician absences often are planned months in advance, demand for locum tenens |
||||||
|
generally is more predictable and less dependent on hospital admission trends or general economic |
||||||
|
conditions than other types of healthcare staffing. |
||||||
|
Locum Tenens |
||||||
|
. Locum tenens involves placing physicians, which include general practitioners and specialists, on |
||||||
|
temporary assignments in a variety of healthcare settings. Locum tenens assignments vary |
||||||
|
significantly in length, lasting from several days to a year or more in duration. |
||||||
|
. Based on CHGH’s experience, assignments most commonly last from 10 to 20 days. |
||||||
|
. According to estimates for 2003 through 2005 and projections for 2006 and 2007 published by |
||||||
|
SIA, locum tenens is currently the fastest growing component of the temporary healthcare staffing |
||||||
|
industry. |
||||||
|
. SIA estimates that locum tenens grew 16.5% in 2003, 11% in 2004 and 12% in 2005, generating |
||||||
|
revenue of $1.2 billion in 2005, and projects that locum tenens will grow 12% in each of 2006 and |
||||||
|
2007. Revenue for CHGH’s locum tenens segment grew 16.0% in 2003, 13.2% in 2004, 10.2% in |
||||||
|
2005 and 15.3% in the first quarter of 2006 as compared to the first quarter of 2005. |
||||||
|
Competition |
||||||
|
Locum tenens (locum tenens physicians are considered be independent contractors) |
||||||
|
. CHGH believes it is one of the two largest providers of locum tenens. Based on SIA’s estimate |
||||||
|
of total 2005 locum tenens revenue, CHGH share of the locum tenens market in 2005 was |
||||||
|
approximately 17%. |
||||||
|
. CHGH largest competitor in locum tenens is AMN Healthcare Services, Inc./The MHA Group, |
||||||
|
Inc. CHGH also competes with numerous smaller niche providers of locum tenens. |
||||||
|
Other segments |
||||||
|
. In the travel nurse business line, our competition includes two larger competitors, AMN |
||||||
|
Healthcare Services, Inc. and Cross Country Healthcare, Inc., as well as numerous similarly sized |
||||||
|
and smaller competitors such as InteliStaf Healthcare, Inc., Medical Staffing Network Holdings, |
||||||
|
Inc. and On Assignment, Inc. Based on SIA’s estimate of total 2005 travel nurse revenue, our |
||||||
|
share of the travel nurse market in 2005 was approximately 4%. |
||||||
|
. In our allied health business line, CHGH competes with larger healthcare staffing companies that |
||||||
|
focus on healthcare professionals in a number of specialties as well as small providers focused on |
||||||
|
a particular specialty. The largest competitors include AMN Healthcare Services, Inc., Cross |
||||||
|
Country Healthcare, Inc. and Medical Staffing Network Holdings, Inc. Competition in this |
||||||
|
business line is highly fragmented. Based on SIA’s estimate of total 2005 allied health revenue, |
||||||
|
CHGH’s share of the allied health market in 2005 was approximately 3%. |
||||||
|
Permanent placement market |
||||||
|
. Primary competitors on a national level are AMN Healthcare Services, Inc./The MHA Group, |
||||||
|
Inc. and Cross Country Healthcare, Inc./Cejka Consulting. |
||||||
|
. Based on CHGH’s internal estimates of total 2004 physician permanent placement revenue, |
||||||
|
CHGH believes its share of the physician permanent placement market in 2004 was 6%. |
||||||
|
Use of $35.2mm in IPO proceeds from sale of 2.5mm shares |
||||||
|
(shareholders intend to offer 2.3mm shares) |
||||||
|
Repay debt |
||||||
|
========================================================== |
||||||
|
Crystal River Capital |
CRZ, C, 6 |
|||||
|
REIT |
Post-IPO shrs: 25.6mm |
|||||
|
New York, NY |
Mar 31 qtr |
IPO Mkt |
||||
|
Net interest income ($mm) |
recently formed ==> |
$12 |
Cap (mm) |
|||
|
Income before other income |
$10 |
$704 |
||||
|
Other income (mostly derivative income) |
$6 |
@$27.5 |
||||
|
Net income (loss) $mm |
$15.5 |
|||||
|
Note: derivative income shouldn't be included in analysis of operations |
||||||
|
REITs are a special category, they are not operating companies in the traditional sense |
||||||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Crystal River Cap (CRZ) |
$704 |
14.3 |
11 |
1.2 |
1.2 |
36% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
1 |
1 |
6 |
|
|
Business |
||||||
|
. Specialty finance company formed on January 25, 2005 by Hyperion Brookfield to invest in real |
||||||
|
estate-related securities, real estate loans and instruments and various other asset classes. |
||||||
|
. Completed a private offering of common stock in March 2005, in which CRZ raised net proceeds |
||||||
|
of $405.6 million. |
||||||
|
Use of $203mm in IPO proceeds from sale of 8mm shares |
||||||
|
(selling shareholders will offer 1mm shares) |
||||||
|
Plans to invest "in accordance with our investment objectives and strategies described in this |
||||||
|
prospectus" |
||||||
|
======================================================== |
||||||
|
GeoMet |
GMET, C, 7 |
|||||
|
energy production & development |
Post-IPO shrs:38mm |
|||||
|
Houston, TX |
2003 |
2004 |
2005 |
Mar 31 qtr |
IPO Mkt |
|
|
Revenue ($mm) |
$12.0 |
$20.9 |
$42.0 |
$12.3 |
Cap (mm) |
|
|
Operating income %* |
40.0% |
34.9% |
44.5% |
32.5% |
$532 |
|
|
*before derivative income(loss) |
@$14 |
|||||
|
Operating income % |
7.5% |
7.0% |
5.1% |
6.9% |
||
|
Net income (loss) $mm* |
$2.5 |
$3.8 |
($1.6) |
$7.2 |
||
|
*including derivative results after tax |
||||||
|
Net income % |
20.8% |
18.2% |
-3.8% |
58.5% |
||
|
Note: operating income is a better indicator of operations than with derivative results; |
||||||
|
which begs the question why don't they concentrate on their basic business? |
||||||
|
Graded C because they lost money trading derivatives in 2005 |
||||||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
GeoMet (GMET) |
$532 |
10.8 |
18 |
2.5 |
2.5 |
16% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
2 |
1 |
7 |
|
|
Business |
||||||
|
. Exploration, development, and production of natural gas from coal seams (coalbed methane or |
||||||
|
CBM). |
||||||
|
. Principal operations and producing properties are located in the Cahaba Basin in Alabama and |
||||||
|
the Appalachian Basin in West Virginia and Virginia. |
||||||
|
Operations |
||||||
|
. At December 31, 2005 controlled a total of approximately 255,000 net acres of coalbed methane |
||||||
|
development rights, primarily in Alabama, West Virginia, Virginia, Louisiana, Colorado, and |
||||||
|
British Columbia. |
||||||
|
. Are developing a total of approximately 77,000 net acres of coalbed methane development rights |
||||||
|
in the Gurnee field in the Cahaba Basin and in the Pond Creek field in the Appalachian Basin. |
||||||
|
. Also controls the balance of approximately 178,000 net acres of coalbed methane exploration and |
||||||
|
development rights primarily in north central Louisiana, British Columbia, West Virginia, and |
||||||
|
Colorado. |
||||||
|
. Has conducted substantial gas desorption testing and drilling of core holes throughout the |
||||||
|
property base. |
||||||
|
. GMET believes its extensive undeveloped acreage position in the Gurnee field in the Cahaba |
||||||
|
Basin and in the Pond Creek field in the Appalachian Basin contains a total of 586 additional |
||||||
|
drilling locations. |
||||||
|
Reserves, sales, capital expenditures |
||||||
|
. At December 31, 2005 had 262.5 Bcf of estimated proved reserves with a PV-10 of |
||||||
|
approximately $880 million using gas prices in effect at such date. |
||||||
|
. Estimated proved reserves at December 31, 2005 were 100% coalbed methane and 74% proved |
||||||
|
developed. |
||||||
|
. For the month of May 2006, net gas sales averaged 16,500 Mcf per day. |
||||||
|
. For 2005, GMET’s total capital expenditures were $60 million, and development expenditures |
||||||
|
for the development of the Gurnee and Pond Creek fields were $46.4 million. |
||||||
|
Development plans |
||||||
|
. Intends to increase development expenditures by 57% in 2006 to $72 million to accelerate the |
||||||
|
drilling of the Gurnee and Pond Creek fields, of which GMET had spent $10.3 million on |
||||||
|
development expenditures as of March 31, 2006. |
||||||
|
. For 2006, GMET estimates that total capital expenditures will be $90 million, of which GMET |
||||||
|
had spent $13.4 million as of March 31, 2006. |
||||||
|
History |
||||||
|
. Originally founded as a consulting company to the coalbed methane industry in 1985 and have |
||||||
|
been active as an operator and developer of coalbed methane properties since 1993. |
||||||
|
Competition |
||||||
|
. Primarily competes regionally in the northeastern and southeastern United States. |
||||||
|
. Competition throughout the United States is regionalized. |
||||||
|
. GMET believes that the gas market is highly fragmented and not dominated by any single |
||||||
|
producer. |
||||||
|
Use of $71mm in IPO proceeds |
||||||
|
Repay debt |
||||||
|
========================================================== |
||||||
|
WNS (Holdings) (WNS) |
WNS, C+, 7 |
|||||
|
travel/fin business outsourcing offshore |
March fiscal |
Post-IPO shrs: 40mm |
||||
|
Jersey, Channel Islands |
2004 |
2005 |
2006 |
IPO Mkt |
||
|
Revenue |
$104 |
$162 |
$203 |
Cap (mm) |
||
|
Gross Profit |
13.8% |
13.5% |
28.1% |
$756 |
||
|
Operation income |
-6.7% |
-2.7% |
9.8% |
@$19 |
||
|
Revenue less repair payments* |
||||||
|
Revenue |
$50 |
$99 |
$150 |
|||
|
Gross Profit |
28.9% |
22.1% |
38.6% |
|||
|
Operation income |
-14.1% |
-4.4% |
13.4% |
|||
|
Net income |
($7) |
($6) |
$18 |
|||
|
Net income % of revenue less repair paymts |
-13.4% |
-5.9% |
12.2% |
|||
|
VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
WNS (Holdings) (WNS) |
$756 |
5.0 |
41 |
4.9 |
6.9 |
26% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
||
|
20 is perfect |
2 |
2 |
2 |
1 |
7 |
|
|
American Depositary Shares, or ADSs: The ADSs are evidenced by American Depositary Receipts, or ADRs. |
||||||
|
One ADR is equivalent to one share of common stock |
||||||
|
Business |
||||||
|
. Offshore business process outsourcing, or BPO, services -- comprehensive data, voice and |
||||||
|
analytical services that are underpinned by an expertise in target industry sectors. |
||||||
|
. Transfers the execution of the business processes of clients, which are typically companies |
||||||
|
located in Europe and North America, to delivery centers located primarily in India. |
||||||
|
. In fiscal 2006, the top five clients represented 41.0% of revenue, the top 20 clients represented |
||||||
|
73.0% of revenue and one client represented more than 10% of our revenue for this period. |
||||||
|
. Largest clients in terms of revenue contribution include leading global corporations such as Air |
||||||
|
Canada, AVIVA, British Airways, First Magnus Financial Corporation, GfK, IndyMac Bank, |
||||||
|
Marsh, SITA, Tesco, Travelocity and Virgin Atlantic Airways. |
||||||
|
One of top two |
||||||
|
According to the National Association of Software and Service Companies (NASSCOM), WNS |
||||||
|
were among the top two India-based offshore business process outsourcing companies in terms of |
||||||
|
revenue in 2004, 2005 and 2006. |
||||||
|
History |
||||||
|
. Began operations as an in-house unit of British Airways in 1996, and started focusing on |
||||||
|
providing business process outsourcing services to third parties in fiscal 2003. |
||||||
|
. According to the National Association of Software and Service Companies, or NASSCOM, an |
||||||
|
industry association in India, WNS was among the top two India-based offshore business process |
||||||
|
outsourcing companies in terms of revenue in 2004, 2005 and 2006. |
||||||
|
Market Opportunity |
||||||
|
. Businesses globally are outsourcing a growing proportion of their business processes to |
||||||
|
streamline their organizations, focus on their core operations, benefit from best-in-class process |
||||||
|
execution and increase shareholder returns. |
||||||
|
. More significantly, many of these businesses are outsourcing to offshore locations such as India |
||||||
|
to access a high quality and cost effective workforce. As a pioneer in the offshore business process |
||||||
|
outsourcing industry, WNS believes it is well positioned to benefit from the combination of the |
||||||
|
outsourcing and offshoring trends. |
||||||
|
Market research market growth estimates – 37% annual compound growth |
||||||
|
. The NASSCOM-McKinsey report estimates that the offshore business process outsourcing |
||||||
|
industry will grow at a 37.0% compound annual growth rate, from $11.4 billion in fiscal 2005 to |
||||||
|
$55.0 billion in fiscal 2010. |
||||||
|
. The NASSCOM-McKinsey report estimates that India-based players accounted for 46% of |
||||||
|
offshore business process outsourcing revenue in fiscal 2005 and India will retain its dominant |
||||||
|
position as the most favored offshore business process outsourcing destination for the foreseeable |
||||||
|
future. |
||||||
|
. It forecasts that the Indian offshore business process outsourcing market will grow from $5.2 |
||||||
|
billion in revenue in fiscal 2005 to $25.0 billion in fiscal 2010, representing a compound annual |
||||||
|
growth rate of 36.9%. |
||||||
|
. Additionally, it identifies retail banking, insurance, travel and hospitality and automobile |
||||||
|
manufacturing as the industries with the greatest potential for offshore outsourcing. WNS provides |
||||||
|
industry-focused business process outsourcing services to the majority of these industries. |
||||||
|
Risks |
||||||
|
Industry concentration |
||||||
|
Travel industry |
||||||
|
In fiscal 2006 and fiscal 2005, 30.9% and 28.9% of revenue and 42.3% and 47.3% of revenue less |
||||||
|
repair payments. |
||||||
|
Banking, financial services & insurance (BFSI) |
||||||
|
During the same periods, clients in the BFSI industry contributed 55.6% and 61.4% of revenue |
||||||
|
and 39.1% and 36.8% of revenue less repair payments |
||||||
|
Customer concentration |
||||||
|
. For fiscal 2006 and fiscal 2005, the five largest clients accounted for 41.0% and 40.1% of |
||||||
|
revenue and 52.8% and 56.4% of revenue less repair payments. |
||||||
|
. WNS’s contract British Airways, expires in March 2007. In May 2006, WNS entered into a non |
||||||
|
binding letter of intent with British Airways to extend the term of this contract to May 2012, |
||||||
|
subject to negotiating and entering into a definitive contract. |
||||||
|
. For fiscal 2006 and fiscal 2005, British Airways accounted for 7.2% and 10.1% of revenue and |
||||||
|
9.9% and 16.5% of our revenue less repair payments. |
||||||
|
AVIVA |
||||||
|
. Contracts with another major client, AVIVA, provide the client options, exercisable at will after |
||||||
|
November 18, 2006 and April 28, 2007, to require WNS to transfer the relevant projects and |
||||||
|
operations to this client. In May 2006, WNS entered into non-binding letters of intent with respect |
||||||
|
to the AVIVA contracts to postpone the start of the option exercise periods to after June 2007 and |
||||||
|
after December 2007. |
||||||
|
. For fiscal 2006 and fiscal 2005, AVIVA accounted for 9.8% and 6.2% of revenue and 13.4% and |
||||||
|
10.1% of our revenue less repair payments. |
||||||
|
Contracts |
||||||
|
. Clients may terminate contracts before completion or choose not to renew contracts |
||||||
|
. The terms of client contracts typically range from three to five years. |
||||||
|
. Many of client contracts can be terminated by clients with or without cause, with three to six |
||||||
|
months’ notice and in most cases without penalty. |
||||||
|
. Contracts representing 15.0% of revenue and 20.5% of revenue less repair payments from clients |
||||||
|
in fiscal 2006 will expire on or before March 31, 2007 |
||||||
|
Competition |
||||||
|
• Focused business process outsourcing service companies based in offshore locations like India, |
||||||
|
such as Genpact and ExlService Holdings Inc.; |
||||||
|
• Business process outsourcing divisions of numerous information technology service companies |
||||||
|
located in India such as Progeon, owned by Infosys Technologies Limited, Tata Consultancy |
||||||
|
Services Limited and Wipro BPO, owned by Wipro Technologies Limited; and |
||||||
|
• Global companies such as Accenture Ltd, Affiliated Computer Services Inc., Electronic Data |
||||||
|
Systems or, EDS, and International Business Machines Corporation, or IBM, which provide an |
||||||
|
array of products and services including broad-based information technology, software, consulting |
||||||
|
and business process outsourcing services. |
||||||
|
. Global companies such as Accenture and IBM have significant client relationships and |
||||||
|
information technology capabilities, but WNS believes these companies are at a disadvantage in |
||||||
|
the offshore business process outsourcing business because of their relatively limited offshore |
||||||
|
focus. |
||||||
|
• While companies such as Infosys (through its business process outsourcing subsidiary, Progeon) |
||||||
|
and Tata Consulting can offer clients integrated information technology and business outsourcing |
||||||
|
services, WNS believes these companies focus on information technology as their core business |
||||||
|
. WNS also competes against other offshore business process outsourcing-focused entities like |
||||||
|
Genpact and ExlServices Holdings Inc. by seeking to provide industry-focused services with an |
||||||
|
offshore focus and building on WNS’s track record of operational excellence. |
||||||
|
Shareholders—post IPO |
||||||
|
Warburg Pincus, 57% |
||||||
|
British Airways plc, 2% (plans to sell 4.4mm shares) |
||||||
|
Employees |
||||||
|
As of March 31, 2006, WNS had 10,433 employees, of whom 9,700 were employees who execute |
||||||
|
client operations, or associates. Approximately 9,200 associates are based in India, with around |
||||||
|
250 in each of Sri Lanka and the UK. Most of associates hold university degrees. As of March 31, |
||||||
|
2005 and 2004, WNS had 7,176 and 4,472 employees. |
||||||
|
Use of $74mm in IPO proceeds from sale of 4.5mm shares |
||||||
|
(shareholders intend to offer 6mm shares) |
||||||
|
General corporate purposes, including capital expenditures and working capital, and for possible |
||||||
|
acquisitions of businesses and delivery platforms. |
||||||
|
===================================================== |
||||||