Historical Results Forecast Period

FINANCIAL STATEMENTS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Assumptions

LIVE SCENARIO
Revenue Growth (% Change) 0.0% 15.8% 11.2% 8.4% 5.9% 10.0% 10.0% 10.0% 10.0% 10.0%
Cost of Goods Sold (% of Revenue) 38.3% 40.7% 37.4% 37.0% 37.6% 42.0% 47.0% 50.0% 36.0% 35.0%
Salaries and Benefits (% of Revenue) 25.9% 19.2% 18.2% 16.2% 16.7% 17.0% 17.0% 17.0% 17.0% 17.0%
Rent and Overhead ($000's) 10,963 10,125 10,087 11,020 11,412 15,000 15,000 15,000 15,000 15,000
Depreciation & Amortization (% of PP&E) 42.9% 42.9% 42.9% 42.9% 42.9% 35.0% 35.0% 35.0% 35.0% 35.0%
Interest (% of Debt) 5.0% 5.0% 5.0% 5.0% 5.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Tax Rate (% of Earnings Before Tax) 31.2% 29.2% 28.7% 29.0% 29.1% 28.0% 28.0% 28.0% 28.0% 28.0%
Accounts Receivable (Days) 18 18 18 18 18 18 18 18 18 18
Inventory (Days) 73 73 73 73 73 80 90 100 100 100
Accounts Payable (Days) 37 37 37 37 37 37 37 37 37 37
Capital Expenditures ($000's) 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Debt Issuance (Repayment) ($000's) - - (20,000) - - - - (20,000) - -
Equity Issued (Repaid) ($000's) 70,000 - - - - - - - - -

Income Statement

Reveneue 102,007 118,086 131,345 142,341 150,772 165,849 182,434 200,678 220,745 242,820
Cost of Goods Sold (COGS) 39,023 48,004 49,123 52,654 56,710 69,657 85,744 100,339 79,468 84,987
Gross Profit 62,984 70,082 82,222 89,687 94,062 96,193 96,690 100,339 141,277 157,833
Expenses
Salaries and Benefits 26,427 22,658 23,872 23,002 25,245 28,194 31,014 34,115 37,527 41,279
Rent and Overhead 10,963 10,125 10,087 11,020 11,412 15,000 15,000 15,000 15,000 15,000
Depreciation & Amortization 19,500 18,150 17,205 16,544 16,080 13,132 13,786 14,211 14,487 14,667
Interest 2,500 2,500 1,500 1,500 1,500 3,000 3,000 1,000 1,000 1,000
Total Expenses 59,390 53,433 52,664 52,066 54,237 59,327 62,800 64,326 68,014 71,946
Earnings Before Tax 3,594 16,649 29,558 37,622 39,825 36,866 33,890 36,013 73,263 85,887

Taxes 1,120 4,858 8,483 10,908 11,598 10,322 9,489 10,084 20,514 24,048
Net Earnings 2,474 11,791 21,075 26,713 28,227 26,543 24,401 25,929 52,749 61,839
Balance Sheet

Assets
Cash 67,971 81,210 83,715 111,069 139,550 161,050 179,175 178,547 233,396 292,860
Accounts Receivable 5,100 5,904 6,567 7,117 7,539 8,179 8,997 9,896 10,886 11,975
Inventory 7,805 9,601 9,825 10,531 11,342 15,267 21,142 27,490 21,772 23,284
Property & Equipment 45,500 42,350 40,145 38,602 37,521 39,389 40,603 41,392 41,905 42,238
Total Assets 126,376 139,065 140,252 167,319 195,951 223,885 249,916 257,325 307,959 370,357

Liabilities
Accounts Payable 3,902 4,800 4,912 5,265 5,671 7,061 8,692 10,171 8,056 8,615
Debt 50,000 50,000 30,000 30,000 30,000 30,000 30,000 10,000 10,000 10,000
Total Liabilities 53,902 54,800 34,912 35,265 35,671 37,061 38,692 20,171 18,056 18,615
Shareholder's Equity
Equity Capital 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
Retained Earnings 2,474 14,265 35,340 62,053 90,280 116,824 141,225 167,154 219,903 281,742
Shareholder's Equity 72,474 84,265 105,340 132,053 160,280 186,824 211,225 237,154 289,903 351,742
Total Liabilities & Shareholder's Equity 126,376 139,065 140,252 167,319 195,951 223,885 249,916 257,325 307,959 370,357

Check 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Cash Flow Statement

Operating Cash Flow

Net Earnings 2,474 11,791 21,075 26,713 28,227 26,543 24,401 25,929 52,749 61,839
Plus: Depreciation & Amortization 19,500 18,150 17,205 16,544 16,080 13,132 13,786 14,211 14,487 14,667
Less: Changes in Working Capital 9,003 1,702 775 903 827 3,175 5,062 5,768 (2,613) 2,041
Cash from Operations 12,971 28,239 37,505 42,354 43,480 36,500 33,125 34,372 69,849 74,464

Investing Cash Flow

Investments in Property & Equipment 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Cash from Investing 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

Financing Cash Flow

Issuance (repayment) of debt - - (20,000) - - - - (20,000) - -
Issuance (repayment) of equity 70,000 - - - - - - - - -
Cash from Financing 70,000 - (20,000) - - - - (20,000) - -
Net Increase (decrease) in Cash 67,971 13,239 2,505 27,354 28,480 21,500 18,125 (628) 54,849 59,464
Opening Cash Balance - 67,971 81,210 83,715 111,069 139,550 161,050 179,175 178,547 233,396
Closing Cash Balance 67,971 81,210 83,715 111,069 139,550 161,050 179,175 178,547 233,396 292,860

Supporting Schedules

Working Capital Schedule

Accounts Receivable 5,100 5,904 6,567 7,117 7,539 8,179 8,997 9,896 10,886 11,975
Inventory 7,805 9,601 9,825 10,531 11,342 15,267 21,142 27,490 21,772 23,284
Accounts Payable 3,902 4,800 4,912 5,265 5,671 7,061 8,692 10,171 8,056 8,615
Net Working Capital (NWC) 9,003 10,705 11,480 12,382 13,210 16,385 21,447 27,215 24,603 26,644
Change in NWC 9,003 1,702 775 903 827 3,175 5,062 5,768 (2,613) 2,041

Depreciation Schedule
PPE Opening 50,000 45,500 42,350 40,145 38,602 37,521 39,389 40,603 41,392 41,905
Plus Capex 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
Less Depreciation 19,500 18,150 17,205 16,544 16,080 13,132 13,786.04 14,210.93 14,487.10 14,666.62
PPE Closing 45,500 42,350 40,145 38,602 37,521 39,389 40,603 41,392 41,905 42,238

Debt & Interest Schedule

Debt Opening 50,000 50,000 50,000 30,000 30,000 30,000 30,000 30,000 10,000 10,000
Issuance (repayment) - - (20,000) - - - - (20,000) - -
Debt Closing 50,000 50,000 30,000 30,000 30,000 30,000 30,000 10,000 10,000 10,000
Interest Expense 2,500 2,500 1,500 1,500 1,500 3,000 3,000 1,000 1,000 1,000

DCF Model

Assumptions
Tax Rate 25%
Discount Rate 12%
Perpetual Growth Rate 4%
EV/EBITDA Mulltiple 8.0x
Transaction Date 3/31/2018
Fiscal Year End 12/31/2018
Current Price 16.00
Shares Outstanding 20,000

Discounted cash flow Entry 2018 2019 2020 2021 2022 Exit Terminal value
Date 3/31/2018 31.12.18 31.12.19 31.12.20 31.12.21 31.12.22 31.12.22 EV/EBITDA 812,428
Time period - 1 2 3 4 Perpetual 816,278
YearFrac 1 1 1 1 1 1 Average 814,353

EBIT 39,866 36,890 37,013 74,263 86,887

Less: Tax 9,966 9,223 9,253 18,566 21,722
NOPAT 29,899 27,668 27,759 55,697 65,165
Add: Depreciation 13,132 13,786 14,211 14,487 14,667
EBITDA 52,998 50,676 51,224 88,750 101,554
Less: Inc in NWC 3,175 5,062 5,768 (2,613) 2,041
Less: CapEx 15,000 15,000 15,000 15,000 15,000
Unlevered free cash flow to equity 24,856 21,391 21,203 57,797 62,791 814,353

Transactional FCFF - 18,642 21,391 21,203 57,797 62,791 814,353

IRR FCFF (210,450) 18,642 21,391 21,203 57,797 62,791 814,353

Intrinsic value Market value Rate of Return

Enterprise value 599,588 Market cap 320,000 Current share price 16.00
Plus: Cash 139,550 Plus: Debt 30,000 Target share price 35.46
Less: Debt 30,000 Less: Cash 139,550 TGT upside 122%
Equity value 709,138 Enterprise value 210,450 IRR 43%

Equity Value per share 35.46

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