re:acquisition, page-5

Nice work TOX. A front end upgrade of the TDU and/or an upgrade of the kiln announced sometime over the next 6 months would really get things cooking.

Some basic EBITDA multiples of this acquisition, by my poor maths skills, are as follows (please correct my if i am wrong):
Scenario 1 (STCS continues to earn $500K p.a. over 2 years): Total payment = [4.4 + (4*.5 - .9)]/.5 = 11 times EBITDA
Scenario 2 (STCS earns $750K p.a. over 2 years): Total payment = [4.4 + (4*.75 - .9)]/.75 = 8.67 times EBITDA
Scenario 3 (STCS earns $1M p.a. over 2 years): Total payment = [4.4 + (4*1 - .9)]/1 = 7.5 times EBITDA

So, worst case scenario based on the announcement, TOX have paid perhaps 10 times EBITDA, which would be much dearer than previous acquisitions.

But, judging by the announcement, it seems like STCS will earn much more than $500k p.a. over the next 2 years. TOX have structured the deal quite nicely so that both parties have a distinct incentive to maximise profits. If STCS can get their EBITDA over the next 2 years to average close to $1M, then the multiple for the acquisition becomes single figures (somewhere between 9 and 7.5), which would make the acqusition strongly EPS accretive and would turn out another great acquisition.

I really like the direction the company is taking, and if, like they said in the announcement, they focus on organic growth from here on in and can get some plant upgrades happening, the future looks very rosy indeed.

Good luck to all holders.
Cheers.