1000 words finance essay 8 hrs
Vincent666
FIN4337-Report.docx
Atrion Corporation (ATRI) Equity Value Report
Michael Tulmen, Charles Chard, Xuan Sun, Kevin Hu, Lucas Estevez
The University of Texas at Dallas
Table of Contents
Assignment Overview 3 Atrion Corporation Equity Value Report 4 [Heading 1] 4 [Heading 2] 4 [Heading 3] 4 References 5 Footnotes 6 Tables 7 Figures 8
Group 7: Charles Chard, Lucas Estevez, Kevin Hu, Xuan Sun, Michael Tulmen
The aim of this report and our calculations is to evaluate the viability of Atrion as an acquisition of 100% of common stock in the form of a long term investment. In order to come to a conclusion we analyzed datum in the form of historical balance sheets, income statements, capital expenditures and a host of other data presented in the exhibits using SEC 10-K as our base for research (along with other SEC objects as supporting data/evidence). We combined these points of data and statistics with outside sources in order to get a firmer grasp on the external factors affecting Atrion such as other firms, the COVID-19 pandemic, supply shortages, and laws and regulations surrounding the medical supplies industry. We were able to use other firms as models to calculate levered and unlevered equity betas and deduce cost of capital, as well as estimate dividends on the investment based on a historical basis using linear regression models. CAPEX was also formed on a historical basis using linear regression, and pro-forma balance sheets and income statements were created in order to justify an investment in Atrion. One major remark to be made about our discoveries in further research of the firm was a remarkable lack of debt and how that allowed the firm much more freedom in their space in comparison to competitors also influencing pro-forma evaluations. Common stock value was held constant throughout the pro-forma balance sheet where long-term and short-term investments were deduced using historical values, industry trends, and professional judgement.
Atrion Corporation (ATRI) Equity Value Report
IF NEED BE WE CAN ALWAYS SHIFT THESE DOWN TO THE BOTTOM IN THE TABLES SECTION SO THAT WE CAN WRITE HERE
|
HISTORICAL INCOME STATEMENT: |
Dec 31, 2016 |
Dec 31, 2017 |
Dec 31,2018 |
Dec 31, 2019 |
Dec31, 2020 |
|
Revenues |
143,487 |
146,595 |
152,448 |
155,066 |
147,591 |
|
Cost of Goods Sold |
(75,857) |
(75,841) |
(80,670) |
(84,378) |
(81,428) |
|
Gross Profit |
67,630 |
70,754 |
71,778 |
70,688 |
66,163 |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
Selling |
(6,611) |
(7,251) |
(8,341) |
(8,813) |
(7,520) |
|
General and administrative |
(15,319) |
(16,430) |
(16,217) |
(16,308) |
(17,330) |
|
Research and development |
(6,574) |
(5,799) |
(5,513) |
(5,038) |
(5,645) |
|
Total operating expense |
(28,504) |
(29,480) |
(30,071) |
(30,159) |
(30,495) |
|
|
|
|
|
|
|
|
Operating Income |
39,126 |
41,274 |
41,707 |
40,529 |
35,668 |
|
|
|
|
|
|
|
|
Interest and Dividend Income |
448 |
1,061 |
1,667 |
2,487 |
1,444 |
|
Other Investment Income (Loss) |
(311) |
4 |
(1,380) |
152 |
1,355 |
|
Other Income |
3 |
1 |
42 |
— |
— |
|
Income before Provision for Income Taxes |
39,266 |
42,340 |
42,036 |
43,168 |
38,467 |
|
|
|
|
|
|
|
|
Provision for Income Taxes |
(11,685) |
(5,747) |
(7,781) |
(6,407) |
(6,352) |
|
|
|
|
|
|
|
|
Net Income |
27,581 |
36,593 |
34,255 |
36,761 |
32,115 |
|
|
|
|
|
|
|
|
Net Income Per Basic Share |
$15.12 |
$19.82 |
$18.49 |
$19.82 |
$17.49 |
|
|
|
|
|
|
|
|
Weighted Average Basic Shares Outstanding |
1,824 |
1,846 |
1,853.00 |
1,855.00 |
1,836.00 |
|
|
|
|
|
|
|
|
Net Income Per Diluted Share |
$14.85 |
$19.71 |
$18.44 |
$19.73 |
$17.44 |
|
|
|
|
|
|
|
|
Weighted Average Diluted Shares Outstanding |
1,857 |
1,857 |
1,858.00 |
1,863.00 |
1,841.00 |
|
|
|
|
|
|
|
|
Dividends Per Common Share |
$3.90 |
$4.50 |
$5.10 |
$5.80 |
$6.60 |
|
HISTORICAL BALANCE SHEET |
|
|
|
|
|
|
Assets: (In thousands) $59,999 means $59,999,999 |
|
Dec 31, 2017 |
Dec 31,2018 |
Dec 31, 2019 |
Dec31, 2020 |
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$30,136 |
$58,753 |
45,048 |
22,450 |
|
Short-term investments |
|
35,468 |
9,684 |
23,766 |
19,258 |
|
Accounts receivable, net of allowance for doubtful accounts of $21 and $28 in 2018 and 2017, respectively |
|
17,076 |
17,014 |
18,886 |
16,445 |
|
Inventories |
|
29,354 |
33,572 |
42,093 |
50,298 |
|
Prepaid expenses and other current assets |
|
3,199 |
3,242 |
2,545 |
3,868 |
|
Total Current Assets |
|
115,233 |
122,265 |
132,338 |
112,319 |
|
Long-term investments |
|
9,136 |
21,048 |
31,772 |
46,207 |
|
Property, Plant and Equipment |
|
167,080 |
181,582 |
200,990 |
218,912 |
|
Less: accumulated depreciation |
|
100,711 |
106,689 |
116,384 |
123,977 |
|
Total Equipment |
|
66,369 |
74,893 |
84,606 |
94,935 |
|
|
|
|
|
|
|
|
Other Assets and Deferred Charges: |
|
|
|
|
|
|
Patents and licenses, net of accumulated amortization of $12,181 and $12,062 in 2018 and 2017, respectively |
|
1,778 |
1,659 |
1,539 |
1,421 |
|
Goodwill |
|
9,730 |
9,730 |
9,730 |
9,730 |
|
Other |
|
1,534 |
1,621 |
2,046 |
2,278 |
|
Total Non- Current Assets |
|
13,042 |
13,010 |
13,315 |
13,429 |
|
|
|
|
|
|
|
|
Total Assets |
|
$203,780 |
$231,216 |
262,031 |
266,890 |
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$3,929 |
$5,082 |
5,707 |
6,635 |
|
Accrued liabilities |
|
4,947 |
4,519 |
5,148 |
6,565 |
|
Accrued income and other taxes |
|
746 |
619 |
419 |
436 |
|
Total Current Liabilities |
|
9,622 |
10,220 |
11,274 |
13,636 |
|
Other Liabilities and Deferred Credits: |
|
|
|
|
|
|
Deferred income taxes |
|
7,312 |
6,687 |
8,496 |
10,768 |
|
Other |
|
2,458 |
3,542 |
4,391 |
2,044 |
|
Other Liabilities |
|
9,770 |
10,229 |
12,887 |
12,812 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
19,392 |
20,449 |
24,161 |
26,448 |
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
Common stock, par value $.10 per share |
|
342 |
342 |
342 |
342 |
|
Additional paid-in capital |
|
48,730 |
50,391 |
52,043 |
53,527 |
|
Accumulated other comprehensive loss |
|
(1,215) |
0 |
0 |
0 |
|
Retained earnings |
|
268,194 |
291,761 |
317,745 |
337,700 |
|
Treasury shares, 1,567 shares in 2018 and 1,568 shares in 2017, at cost |
|
(131,663) |
(131,727) |
(132,260) |
(151,127) |
|
Total Stockholders’ Equity |
|
184,388 |
210,767 |
237,870 |
240,442 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$203,780 |
$231,216 |
262,031 |
266,890 |
