85
Revenue and Adjusted EBITDA - Fiscal year 2018 has been a strong growth year for the core tobacco business. AOI recently reaffirmed fiscal year 2018 revenues of $1.9-2.0 billion, which would be approximately 14% growth at the midpoint guidance over the $1.7 billion it recorded for revenues in fiscal year 2017. Additionally, adjusted EBITDA was reaffirmed to be $165-185 million for fiscal year 2018, which would be approximately 29% growth at the midpoint guidance over the $136 million the company recorded in adjusted EBITDA in fiscal year 2017.
Balance Sheet / Liquidity - Like many large, global companies, AOI has historically carried a lot of debt, but it has been able to service this debt. As of December 31, 2017, available credit lines and cash were $543.8 million, comprised of $209.5 million in cash and $334.3 million in credit lines. In the future, AOI stated it may elect to redeem, repay, make open market purchases, retire or cancel indebtedness prior to stated maturity under its various global bank facilities and outstanding public notes as they may permit. The company has been looking to buy back anywhere from $25 million to $50 million of debt a year, and will be continuing to do that as it goes forward. It has been actively retiring debt. Lastly, in the latest form 10-Q, as customary, AOI reported it believed that sources of liquidity versus requirements will be sufficient to fund anticipated needs for the next twelve months.
A link to this publication appears closer to the end of this case study. Please note that all the accuracy of all third party references is solely the responsibility of that third party.
If you are doing the math here … the legacy/core business alone translates into an adjusted EBITDA of nearly $19 per share. If you then use share price/market cap multiples of LPs then if all goes to AOI’s plan then AOI’s share price could be north of $100 before long.
LEGACY BUSINESS
This letter to shareholders emphasizes AOI’s commitment to its core (legacy) business as it embraces its expansion and diversification strategy.
A Seeking Alpha writer following AOI recently published his analysis on how the core business of AOI is impacting financials: