Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0

Matt DiLallo says stay away, too much negative and the dividend may likely get cut.

The ten year history is that the dividend was at $3 per stub, rising to about $3.25, until Nov. 2016, then down to current level of $2.00. May well be a 20% yield later today.

Their most recent stumbles occurred with a Q4 write down of the unhedged portion of fuel inventory, mostly butane (9.5 mill), and the continuing lagging of activity in the offshore drilling world (1 mill).

The discussed plans to delever the balance sheet and search for improved commodity hedging sound fine. With 39 million shares outstanding, the annual distribution of $2 does not seem to badly scrape the $159 million in EBITDA projected.

"In summary, our 2019 adjusted EBITDA forecast is $175.4 million before unallocated SG&A of $15.9 million or $159.5 million in total. Total capital expenditures will be between $33 million and $37 million with maintenance CapEx being approximately $20 million to $23 million and expansion CapEx estimated between $13 million and $14 million." - CFO Sharon Taylor.

Of course, actually hitting the numbers counts as a major important assumption.

Admittedly, the various businesses of the company make a firm grasp on the operations and the importance and scale of changes and events difficult to readily appreciate. Likely par for the course with a small cap, commodity driven (to some extent) 20% yielder.

It seems like the market hates this operation enough to point me to a contrarian buy of modest size. A 50% dividend reduction would cover almost 80% of their 2018 interest expense, which is likely to fall in 2019.

As for Matt's comments and view, I will readily agree that I've been warned.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.