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This Month's Tiny Gems - May 2012
Avita Medical Ltd. (AVMXY)
Modine manufacturing (MOD)
Salem Communications Corp. (SALM)
Triangle Capital Corporation (TCAP)
Avita Medical Ltd. (AVMXY)
Avita Medical Ltd. (AVMXY), based in the UK, develops and distributes regenerative products, utilizing the patient's own skin, to treat wounds, burns scars, and skin defects. The company's lead regenerative product is ReCell®, already on the market and generating revenues in Europe, Australia, and Asia. In the U.S., FDA trials are currently underway, with FDA submission expected next year.
The goal of Avita's products is to regrow, replace, and restore the function of tissues, organs, and limbs that have been damaged, lost, or are not working due to trauma, disease, or senescence. It's important to note that all tissues and organs, not just skin, are now believed to have the capability to regenerate under the right conditions and applying the right technologies. This represents a fundamental change to the practice of medicine.
ReCell® is Avita's novel Spray-On Skin® point-of-care stem-cell treatment, applicable to a wide range of wounds and dermal defects. It can be used for burns, chronic wounds, plastic, and reconstructive surgery, as well as with aesthetic/cosmetic surgery. From a market standpoint, ReCell® has a number of advantages:
Avita posted revenues of $4.54 million for the year ending June 30, 2011, with a gross profit of $3.5 million. As of December, 2011, cash on balance stood at $10.9 million, with zero debt.
Modine Manufacturing (MOD)
Modine Manufacturing (MOD) is a leading global developer, manufacturer, and marketer of heat exchangers. Its product lines include radiators and radiator cores, vehicular air conditioning, oil coolers, charge air coolers, heat-transfer packages and modules, building heating, ventilating and air conditioning equipment, and exhaust gas recirculation coolers. Modine owns more than 2,400 patents, making it a leading innovator in the field.
The company employs approximately 6,800 people at 27 facilities worldwide in 14 countries, including 600 engineers and 35 PhDs. Modine is committed to enhancing its presence around the world and serving its customers where they are located. It creates value by focusing on customer partnerships and providing innovative solutions for its customers' thermal problems.
Fiscal 2012 year-to-date net sales of $1,188.4 million were $136.9 million higher than the $1,051.5 million reported in the same period last year. Diluted earnings per share from continuing operations improved from a $0.07 diluted loss per share in the prior year to $0.46 diluted earnings per share in the current fiscal year to date, an impressive turnaround.
As Modine's customers strive to comply with increasingly stringent global emissions, fuel economy and energy efficiency requirements, the company will work side-by-side with them to help them succeed, drawing on the knowledge base of its state-of the art wind tunnels and virtual engineering tools that are among the best in the business.
Salem Communications Corp. (SALM)
Salem Communications Corp. (SALM) is the largest commercial U.S. radio broadcasting company providing programming targeted at audiences interested in Christian and conservative values. In addition to its radio properties, the company owns Salem Radio Network®, which syndicates programming to approximately 2,000 affiliates; Salem Radio Representatives™, a national radio advertising sales force; Salem Web Network™, a leading Internet provider of Christian content and online streaming; and Salem Publishing™, a leading publisher of Christian-themed magazines.
Salem currently owns and/or operates a national portfolio of 96 radio stations in 37 markets, 60 of which are in 22 of the nation's top 25 radio markets. Notably, through a recently forged partnership with TunIn, the company has extended the reach of their programming to more than 30 million monthly active listeners in over 230 countries around the world. All of Salem's stations are now available through a variety of different platforms, including smartphone apps, connected vehicle dashboards, Internet home entertainment systems, and more.
On March 8, 2012, Salem declared a quarterly dividend of $0.035 per share of its Class A and Class B common stock. The first dividend (approx. 5% yield on announcement) was paid on March 30, 2012, to all common stockholders of record as of March 23, 2012.
The recurring dividend is a strong demonstration of the company's confidence in its resilient business model and management's ability to maintain significant free cash flow. Dividends are expected to be issued in March, June, September, and December of each year.
Triangle Capital Corporation (TCAP)
Triangle Capital Corporation (TCAP) is a specialty finance company that provides customized financing to lower middle market companies located throughout the United States. Triangle seeks to partner with business owners, management teams, and financial sponsors to provide flexible financing solutions to fund growth, changes of control, or other corporate initiatives.
For the first quarter of 2012, Triangle's total investment income was $19.1 million. Net investment income was $12.2 million, or $.49 on a per share basis. Triangle paid out $0.47 in dividends per share. Its net increase in net assets from operations was $12.6 million.
Triangle's portfolio companies are diverse in scope, ranging from dental centers to restaurant chains to polymer manufacturers. Triangle's investments range from $5 million to $25 million in 66 portfolio companies. None of its portfolio investments represents greater than 10% of the total fair value of the firm's investment portfolio.
Going forward, Triangle anticipates investing an additional $48.5 million in companies that match its target profile. Investors looking for growth potential and diversification should take a look at Triangle.