Going Public
- Thread starter jelliott
- Start date
hmm..on the surface the Cat doesn't appear to be doing so good...maybe paying too high a rate to O/O's?
DaWhale
Seasoned Expediter
hmm..on the surface the Cat doesn't appear to be doing so good...maybe paying too high a rate to O/O's?
They're bleeding cash. How can you increase sales 43 percent and still have an operating margin of .2%? I'd like to see their balance sheet and P&L. They'd have to have one hell of a business plan for me to invest in them.
that is it...thought they had more...they seem awfully top heavy if that is all the fleet...
moose
Veteran Expediter
Why D'you say that ?
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fortwayne
Not a Member
IMHO for the O/O and drivers I don't believe this is a good thing for them.
I personally took a peek at their prospective on the Exchanges website and it reveals a couple of trends.
One, 92% of their business in 2006 came from the expedite side of the business while 8% came from the elite division. In 2010 to date, 66% came from expedited, 16% Elite Services
and 14% air and ocean freight with 4% from all other sources.
So - in 2006, 100% of their business came from expedite and elite while in 2010 that percentage dropped to 82%. So, one would question did they broaden their market to other areas or were they forced to move into other areas based upon approved competition better suited for today's market.
Or is their overhead simply less and their profit margin greater to participate in air/ocean and other sources of transporation over traditional trucking and if so is this the course they will take in the long run.
Either way, 18% of their business now comes from 'areas' where an O/O or driver is no longer required from a Panther contractor/owner-operator/driver and that is not good news.
Now the balance sheet itself can be a bit misleading as well, but, overall they are suffering alot of the ups and downs of many large mismanaged top heavy transportation companies.
I believe what they should have done was shaved more off the top, minimized the heavy management structure, improved/reduced their insurance claims - which more than doubled in four years; improved their shipments per day ratio along with the profit margin of each shipment - all which has dropped 3% over the last four years.
Keep in mind, why as investor would you drop money into this business with all the pending regulations coming from the FMCSA, EPA, the TSA and all the other federal agencies which can have a strong bearing on our earnings as drivers let alone the profits of a trucking company.
I think Panther/Fenway should get their inner house in order first, pull their IPO and come back again at a later date - when the economy is more sound (after Obama goes bye-bye) and we know what all these regulations are going to do to this industry.
I personally took a peek at their prospective on the Exchanges website and it reveals a couple of trends.
One, 92% of their business in 2006 came from the expedite side of the business while 8% came from the elite division. In 2010 to date, 66% came from expedited, 16% Elite Services
and 14% air and ocean freight with 4% from all other sources.
So - in 2006, 100% of their business came from expedite and elite while in 2010 that percentage dropped to 82%. So, one would question did they broaden their market to other areas or were they forced to move into other areas based upon approved competition better suited for today's market.
Or is their overhead simply less and their profit margin greater to participate in air/ocean and other sources of transporation over traditional trucking and if so is this the course they will take in the long run.
Either way, 18% of their business now comes from 'areas' where an O/O or driver is no longer required from a Panther contractor/owner-operator/driver and that is not good news.
Now the balance sheet itself can be a bit misleading as well, but, overall they are suffering alot of the ups and downs of many large mismanaged top heavy transportation companies.
I believe what they should have done was shaved more off the top, minimized the heavy management structure, improved/reduced their insurance claims - which more than doubled in four years; improved their shipments per day ratio along with the profit margin of each shipment - all which has dropped 3% over the last four years.
Keep in mind, why as investor would you drop money into this business with all the pending regulations coming from the FMCSA, EPA, the TSA and all the other federal agencies which can have a strong bearing on our earnings as drivers let alone the profits of a trucking company.
I think Panther/Fenway should get their inner house in order first, pull their IPO and come back again at a later date - when the economy is more sound (after Obama goes bye-bye) and we know what all these regulations are going to do to this industry.
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That is correct. Purchase of other companies are a component in those numbers amongst a whole host of other things.
So they lost 43 million on 93 million in revenue in 2009. This is a non asset based company.....that is fairly staggering in itself.
They are up 43% in revenue 2010 and still lost almost 5 million to date. Daily shipments up 23% and AND the amount of money they make per shipment up by 15% AND THEY STILL LOSE MONEY.
They have no assets, they rent everything. They are definitely NOT compensating owners to account for that loss. As Leo pointed out their ground shipments are down to 66% of their revenue. That means that less freight being shipped by the fleet.
So why would I want to invest and or work with Panther?
Be prepared for the divestiture.
They also filed for this when Fenway first bought them out, but then withdrew........lets sit and watch the Fenway Clarke show.
They are up 43% in revenue 2010 and still lost almost 5 million to date. Daily shipments up 23% and AND the amount of money they make per shipment up by 15% AND THEY STILL LOSE MONEY.
They have no assets, they rent everything. They are definitely NOT compensating owners to account for that loss. As Leo pointed out their ground shipments are down to 66% of their revenue. That means that less freight being shipped by the fleet.
So why would I want to invest and or work with Panther?
Be prepared for the divestiture.
They also filed for this when Fenway first bought them out, but then withdrew........lets sit and watch the Fenway Clarke show.
CharlesD
Expert Expediter
Would that be the trucks that I see going down the highway in reverse?
Panther acquired two global logistics companies in the last couple of years. That alone would increase revenue, and would result in the same exact ground revenue suddenly being a lower percentage than before they had the air and ocean revenues. If you look at it on the surface as you might a simple P&L statement, you'd see increased revenue, shipments and revenue per shipment up, yet see a loss, which on increased shipments and revenue per shipment is practically impossible. Gross profit percentage has remained roughly the same before and after the acquisition of the logistics companies. So it may appear that they lost 43 million on 93 million in revenue in 2009, but the only way that could happen with consistent gross profit percentages is for someone to be skimming just a snotload of money off the top, or they are paying way too much for copy paper. Clearly, there's something else going on.
Basically, they're getting out from under Fenway, and to do that they wrote off (and will over the next 2 or 3 years, probably) a bunch of charges known as "goodwill impairment charges". It's a relatively new acceptable accounting principle that is a specific reduction on a company's balance sheet that adjusts the value of a company's goodwill. Due to accounting rules, a company must monitor and test the value of its goodwill, to determine if it is over-valued. If it is, as in the case of Fenway going away, the company must issue an impairment charge on its balance sheet, to take into account the reduced value of the goodwill.
If done correctly, impairment charge writeoffs provide investors with more valuable information. Balance sheets are often bloated with goodwill that resulted from acquisitions during the bubble years, when companies overpaid for assets by using overpriced stock. Over-inflated financial statements distort not only the analysis of a company but also what investors should pay for that stock. The new rules force companies to revalue these bad investments, much like what the stock market has done to individual stocks.
The impairment charge also provides investors with a way to evaluate corporate management and its decision-making track record. Companies that have to write off billions of dollars due to impairment have not made good investment decisions. Managements that bite the bullet and take an honest all-encompassing charge should be viewed more favorably than those who slowly bleed a company to death by deciding to take a series of recurring impairment charges, thereby manipulating reality.
So the net gain or loss should be viewed in concert with the steady gross profit percentages, and the reason for the impairment charges. The new accounting rules for goodwill impairment charges leave management a lot of discretion on how to value the company and the goodwill. Companies that are publicly traded will often overvalue the company or delay as long as possible the impairment charges in order to increase management compensation. But that's not an issue at Panther. The only issue at Panther is the honest and accurate value of its goodwill with regard to Fenway, in preparation of no longer having to pay Fenway $1.5 million or more each year.
So while at first it may look like they are, what was it... oh yeah, "bleeding cash", Panther didn't really lose all that money at all. It's still there. But they don't have to pay taxes on it now, among other things.
All this does is show what the company looks like (go back to the gross profit margins) without having to pay Fenway, so the stock can be fairly priced for the investors. If you study the report carefully, rather than spending a few minutes looking at the quick and easy stuff, you'll see that it's actually a very healthy financial report. Panther is worth considerably more now than they were before the acquisition of the other logistics companies.
Basically, they're getting out from under Fenway, and to do that they wrote off (and will over the next 2 or 3 years, probably) a bunch of charges known as "goodwill impairment charges". It's a relatively new acceptable accounting principle that is a specific reduction on a company's balance sheet that adjusts the value of a company's goodwill. Due to accounting rules, a company must monitor and test the value of its goodwill, to determine if it is over-valued. If it is, as in the case of Fenway going away, the company must issue an impairment charge on its balance sheet, to take into account the reduced value of the goodwill.
If done correctly, impairment charge writeoffs provide investors with more valuable information. Balance sheets are often bloated with goodwill that resulted from acquisitions during the bubble years, when companies overpaid for assets by using overpriced stock. Over-inflated financial statements distort not only the analysis of a company but also what investors should pay for that stock. The new rules force companies to revalue these bad investments, much like what the stock market has done to individual stocks.
The impairment charge also provides investors with a way to evaluate corporate management and its decision-making track record. Companies that have to write off billions of dollars due to impairment have not made good investment decisions. Managements that bite the bullet and take an honest all-encompassing charge should be viewed more favorably than those who slowly bleed a company to death by deciding to take a series of recurring impairment charges, thereby manipulating reality.
So the net gain or loss should be viewed in concert with the steady gross profit percentages, and the reason for the impairment charges. The new accounting rules for goodwill impairment charges leave management a lot of discretion on how to value the company and the goodwill. Companies that are publicly traded will often overvalue the company or delay as long as possible the impairment charges in order to increase management compensation. But that's not an issue at Panther. The only issue at Panther is the honest and accurate value of its goodwill with regard to Fenway, in preparation of no longer having to pay Fenway $1.5 million or more each year.
So while at first it may look like they are, what was it... oh yeah, "bleeding cash", Panther didn't really lose all that money at all. It's still there. But they don't have to pay taxes on it now, among other things.
All this does is show what the company looks like (go back to the gross profit margins) without having to pay Fenway, so the stock can be fairly priced for the investors. If you study the report carefully, rather than spending a few minutes looking at the quick and easy stuff, you'll see that it's actually a very healthy financial report. Panther is worth considerably more now than they were before the acquisition of the other logistics companies.
Wow. Turtle is the first to ACTUALLY understand what it says.
I'll add that somewhere in there it says their total debt load is one percent of their revenue. I am not exactly worried.
I wish people would understand this stuff before going all over the place with it. I thought mentioning earlier the two acquisitions and that still didn't do it.
Good grief.
I'll add that somewhere in there it says their total debt load is one percent of their revenue. I am not exactly worried.
I wish people would understand this stuff before going all over the place with it. I thought mentioning earlier the two acquisitions and that still didn't do it.
Good grief.
Scuba
Veteran Expediter
hmm..on the surface the Cat doesn't appear to be doing so good...maybe paying too high a rate to O/O's?
Heck if you really feel that way come on over and offer to pull for $0.25 per mile to help them out lol
bobtrucker
Seasoned Expediter
Turtle, you almost sound like you know what you're talking about. Almost!
Goodwill represents cash that was wasted on purchases in which the amount paid was too great in relationship to the tangible assets (stuff you can touch and see) and the other intangibles (stuff that's invisible but has value like driver lists, customer list, assembled workforce and other things of value). Goodwill is what's left over after the purchase price has been attributed to all other assets, first in order of liquid assets then on to illiquid.
Each year, under current accounting guidelines, companies have to compare the value of the assets they acquired to the performance created with those assets. If the assets underperform, then impairment ensues to the extent of the underperrformance. For example, if Panther created say $9 million in goodwill when they bought the air that was called the Conway Now acquisition, and today none of those drivers, trucks and customers remain, and the value of this business is less than they projected, or reasonably should have projected, then the write-off is the balance.
While it's true this doesn't represent cash generated in the business today, it does represent cash someone spent. So investors lost money, they just weren't people we know. They are Fenway's investors - including some of the managers at Fenway and probably Panther.
So if they were carefree with their own money and are now taking huge writedowns and giving up on those investments (of course we know they didn't give up, their accountants probably forced them to own up to the writedowns), how good will they be as stewards of other people's money (the IPO) or their drivers money?
In the words of the often nutty Glen Beck, I'm just pointing out facts and asking questions.
Goodwill represents cash that was wasted on purchases in which the amount paid was too great in relationship to the tangible assets (stuff you can touch and see) and the other intangibles (stuff that's invisible but has value like driver lists, customer list, assembled workforce and other things of value). Goodwill is what's left over after the purchase price has been attributed to all other assets, first in order of liquid assets then on to illiquid.
Each year, under current accounting guidelines, companies have to compare the value of the assets they acquired to the performance created with those assets. If the assets underperform, then impairment ensues to the extent of the underperrformance. For example, if Panther created say $9 million in goodwill when they bought the air that was called the Conway Now acquisition, and today none of those drivers, trucks and customers remain, and the value of this business is less than they projected, or reasonably should have projected, then the write-off is the balance.
While it's true this doesn't represent cash generated in the business today, it does represent cash someone spent. So investors lost money, they just weren't people we know. They are Fenway's investors - including some of the managers at Fenway and probably Panther.
So if they were carefree with their own money and are now taking huge writedowns and giving up on those investments (of course we know they didn't give up, their accountants probably forced them to own up to the writedowns), how good will they be as stewards of other people's money (the IPO) or their drivers money?
In the words of the often nutty Glen Beck, I'm just pointing out facts and asking questions.
Actually, I do know what I'm talking about. While goodwill can represent cash that was wasted on purchases in which the amount paid was too great in relationship to the tangible asset, that's not necessarily what it represents, and it's not what it represents in this financial report of Panther.
Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology. It can also represent the power of market share. It can represent a lot of things, cash being over-paid is merely one of them. In this case, a lot of the Goodwill on the books was Goodwill from Fenway, and for Fenway's benefit. With Fenway out of the picture, that Goodwill is no longer a part of the balance sheet, so it needs to be written off in an impairment charge, in order to be able to accurately price the stock when going public. If they didn't go public, those Goodwill charges could be left alone.
Under the new accounting rules, all goodwill is to be assigned to the company's reporting units that are expected to benefit from that goodwill (Panther benefiting from Fenway's Goodwill, due to the various Fenway holdings, and in turn Fenway benefiting from having that Goodwill on Panther's balance sheet). Then the goodwill must be tested (at least annually for publicly traded companies) to determine if the recorded value of the goodwill is greater than the fair value. If the fair value is less than the carrying value, as would be the case with Fenway no longer being in the picture, the goodwill is deemed "impaired" and must be charged off. This charge reduces the value of goodwill to the fair market value and represents a "mark-to-market" charge. If Panther wasn't preparing to go public, then none of these charges would be written off. There would be no reason to.
It's really pretty simple and straightforward, when you get right down to it. And it's got nothing to do with, nor is an indicator of, Panther over-spending for stuff or them bleeding cash.
Another example is the FedEx brand name, which represents just a snotload of balance sheet goodwill, and the more successful FedEx becomes, the higher the value of that goodwill, and no wasted cash will be spent to increase it. If FedEx loses a couple of key court cases or federal government rulings, then the value of FedEx, and it's brand name goodwill will decrease, and you'll see a goodwill impairment charge being written off so as to more accurately represent the value of the company.
That's pretty much what's happening here. With Fenway no longer Panther's partner and backer, the goodwill that Fenway provided needs to be removed from the intangible value of the company. But the company's revenues, operating expenses and gross profit margins remain essentially unchanged. The only difference is that the company's net profit margin will likely go up as a result of not having to pay Fenway it's share.
This report is about Panther and does not explicitly state Fenway's ROI in the venture, but there are several clues that Fenway did very well for itself, since Fenway's basic compensation plus a percentage is spelled out. Remove that expenditure from Panther's obligations, and you'll see that not only did the investors likely not lose money ("likely", because we don't know for sure what Fenway paid for Panther), but that the company is likely to make more money for stock investors when it goes public. Because, not only did Fenway do OK for itself, but Panther an an entity did well year over year in spite of a downturn in the economy.
Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology. It can also represent the power of market share. It can represent a lot of things, cash being over-paid is merely one of them. In this case, a lot of the Goodwill on the books was Goodwill from Fenway, and for Fenway's benefit. With Fenway out of the picture, that Goodwill is no longer a part of the balance sheet, so it needs to be written off in an impairment charge, in order to be able to accurately price the stock when going public. If they didn't go public, those Goodwill charges could be left alone.
Under the new accounting rules, all goodwill is to be assigned to the company's reporting units that are expected to benefit from that goodwill (Panther benefiting from Fenway's Goodwill, due to the various Fenway holdings, and in turn Fenway benefiting from having that Goodwill on Panther's balance sheet). Then the goodwill must be tested (at least annually for publicly traded companies) to determine if the recorded value of the goodwill is greater than the fair value. If the fair value is less than the carrying value, as would be the case with Fenway no longer being in the picture, the goodwill is deemed "impaired" and must be charged off. This charge reduces the value of goodwill to the fair market value and represents a "mark-to-market" charge. If Panther wasn't preparing to go public, then none of these charges would be written off. There would be no reason to.
It's really pretty simple and straightforward, when you get right down to it. And it's got nothing to do with, nor is an indicator of, Panther over-spending for stuff or them bleeding cash.
No, not necessarily. It can represent that, but in the case of Panther, it does not. For example, Fenway buys Panther for x-dollars. In the succeeding months or years Panther expands its business and its market share with new customers, thereby making the Panther brand name itself more valuable. The Goodwill of Panther's name gets increased, thus increasing the overall value of the company, with no cash having been spent to do it.
Another example is the FedEx brand name, which represents just a snotload of balance sheet goodwill, and the more successful FedEx becomes, the higher the value of that goodwill, and no wasted cash will be spent to increase it. If FedEx loses a couple of key court cases or federal government rulings, then the value of FedEx, and it's brand name goodwill will decrease, and you'll see a goodwill impairment charge being written off so as to more accurately represent the value of the company.
That's pretty much what's happening here. With Fenway no longer Panther's partner and backer, the goodwill that Fenway provided needs to be removed from the intangible value of the company. But the company's revenues, operating expenses and gross profit margins remain essentially unchanged. The only difference is that the company's net profit margin will likely go up as a result of not having to pay Fenway it's share.
That might be true if the goodwill impairment charge represented actual money that Panther spent for over-valued stuff, but it doesn't. The mere fact that an impairment charge gets written off is hardly an indicator that investors lost money. In many cases it's just the opposite, since the ROI was realized long before the impairment charges were taken. With Fenway out of the picture, the company must be accurately valued in relation to the market (mark-to-market), rather than in relation to how valuable Fenway thinks it is, or of in how valuable the company actually is without the benefit of having Fenway and all of its holdings as a partner. And with Fenway out of the picture, it's Goodwill has to go with it. But again, look at the gross profit margins as a key indicator as to the health of Panther with and without Fenway, and you'll see that it's pretty healthy either way.
This report is about Panther and does not explicitly state Fenway's ROI in the venture, but there are several clues that Fenway did very well for itself, since Fenway's basic compensation plus a percentage is spelled out. Remove that expenditure from Panther's obligations, and you'll see that not only did the investors likely not lose money ("likely", because we don't know for sure what Fenway paid for Panther), but that the company is likely to make more money for stock investors when it goes public. Because, not only did Fenway do OK for itself, but Panther an an entity did well year over year in spite of a downturn in the economy.
Hey, if Fedex loses "good will" and they write off "value" can I do the same since my "good will" is directly tied to theirs?
Do you have goodwill listed on your balance sheet? But yeah, if part of your goodwill is attributed to them, you can, actually should, write it off if they do, so as to better reflect the actual value of you.
There's a Good Will Hunting joke in here somewhere.
There's a Good Will Hunting joke in here somewhere.