|Shares Out. (in M):||39||P/E||11.1x||0.0x|
|Market Cap (in $M):||419||P/FCF||6.6x||0.0x|
|Net Debt (in $M):||274||EBIT||79||0|
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What is TMS?
Steel? Isn’t that a bad business?
Why is TMS a good business?
“In 2011, we renewed and extended 11 contracts globally for various terms at multiple locations—a 100% renewal rate for the year. Our aggregate contract renewal rate since 2005 is now over 97% based on Revenue After Raw Materials Costs.” (Source: 2011 Annual Report)
It’s Not “Build it and they will come”
“Because of our model, where we say, 90— over 91%, 92% of our transactions are back-to-back, basically, where we lock in a sale and a buy at the same time. So that, basically, protects us against large write downs that we see with other competitors in this business, where they hold a lot of inventory. So the inventory that we hold is minimized by our model.” (Ray Kalouche, President & COO - Mill Services Group; 8/2/2012 Earnings Call)
“Year-to-date, revenue after raw materials costs from international operations, which we define as non-US and Canada, is now approximately 26% versus 6% in 2007. Even though we continue to win new contracts in North America, we expect this percentage to further increase in the long-term, as we selectively grow internationally.”
“We continue to have success penetrating international markets, both through our mill services group and our raw material and optimization group. We expect this trend to continue, as our mill services contract pipeline remains very healthy…”
The Proof of the Pudding…
…is in the eating.
|Share Price||$10.67||Adj. EBITDA||145.0|
|Shares Out (Class A)||14.5||Less D&A||65.8|
|Shares Out (Class B)||24.8||Less Interest||23.6|
|Shares Out (Total)||39.3||Operating Profit||55.6|
|Market Cap||419.0||Less Taxes at 32%||17.8|
|Less Cash||26.5||Net Income||37.8|
|Plus Debt||300.9||Plus D&A||65.8|
|TEV||693.4||Less Maintenance Capex||40.0|
|Free Cash Flow||63.6|
|Free Cash Flow per Share||$1.62|