Unfortunately the data doesn't present that way to me (my data below). Sure there are one off expenses associated with the west coast expansion to the east cost, but any expansion of WC will have a corresponding increase in the cost of goods and wages. At the end of the day I expect that WC is a low margin business (10-15%) and it will continue to keep it's head above water and show incremental improvement over successive quarters but it won't be enough to sustain the greater organisation. I expect that the detention centre contract isn't worth much any more now.
Even if the 900K net loss (for the latest quarter) can be retained over successive quarters then with $3MM in the bank it still doesn't account for 12 months of operation. With regard to mgt's comments well I'm afraid that I'm not a passive investor and don't sit back and take everything being said as gospel. Carter is spruiking his book like we pay him to do.
The real costs from the combined entity are associated with the drug delivery side of the business not the least of which are associated with IP. That's expensive and another 1 or 2 $600K IP hits this year as has happened previously will dent the bottom line.
To all - the post wasn't intended as a doom and gloom one - just a reality check. I aren't selling (and am certainly not buying into the SP slide today) and still very much like the story and the progress that has been made over the last few years. All good here.
SUD Price at posting:
4.0¢ Sentiment: Hold Disclosure: Held
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