MSB - Most exciting 6 months, page-484

@wombat777@MSB4ever

I am sure you both know but thought i might be helpful just in case to explain the divident scenario..

Dividends are below earnings per share and do not affect a P/E valuation as it is a form of distribution of earned cash. They are also excluded from NPV calculations as it is a form of financing cashflow and it basically looks at operational less investment cash flow to get to FCF, which is then discounted at WACC. The financing cashflow gets into NPV via the WACC.

I think what you are referring to is the increase in royalty expense to Osiris (well the current owners of Osiris), which is above EBIT. I wouldn't worry modelling that increase as the variable profit at a 80% GM (if they reach that) far exceeds the fixed cost noted and the sensitivity of revenue assumptions dwarf that scenario. It would infer they are taking a very large market share or have another revenue stream (e.g. COVID).

Hope that is helpful.