|Shares Out. (in M):||12||P/E||0.0x||0.0x|
|Market Cap (in M):||136||P/FCF||0.0x||0.0x|
|Net Debt (in M):||-35||EBIT||9||12|
Marine Components: This business makes parts for ski/wakeboard boats. It is currently subscale and the company is building it up. It is now roughly breakeven at $11m sales after losing money for the past 5 years.
The company had another segment, Furniture Components, that it sold in 2012 for $59m moving the company to a net cash position.
I think this is a quality business selling at a reasonable price. The Security Products segment, which provides almost all of the value, is stable, growing, and appears to be an attractive takeout target. Sales grew 3% in 2012, 11% in 2013, and 21% in 2014 Q1. EBIT in Q1 grew year-over-year from $3.2m to $4.7m. Currently, the company is trading at 9.0x EV/EBIT and at year end that should be sub-8x EV/EBIT. I think this is an attractive price to own this business and that in a takeout it could fetch in the mid-to-high teens per share. I do not know if the Simmons estate will sell. Given his death in December, it seems the odds of that have increased. Simmons sold Titanium Metals (TIE), which he controlled, in late 2012, so there is some precedent along those lines.
The company paid a $0.50/share dividend for a number of years but cut that to $0.20/share in 2013 due to the sale of the Furniture Components segment. The company has historically run with net debt and the last time the compandy had significant net cash, in late 2007, it repurchased 16% of shares outstanding from a Simmons affiliate, albeit at the top of the market.
David Bowers is the CEO, age 76, and has been in the role since 2002 and at the company since 1960. He writes a one-page letter to shareholders every year, available on the website back to 2004. He only owns 10k shares but made a 1.7k share open market purchase in March 2014 at $10.73/share.