JBI Inc. suffers summertime blues

2010-08-26 11:39 ET - Street Wire

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Summertime blues...and then fall blahs?

Sales for the Javeco/Pak-It entities are up a bit for the second three-month period ($3.8 million, compared to $3.57 in the first quarter), but the cost of sales is still at 71 per cent of revenue (it was 102 per cent in the first quarter).

While the "other operating expenses" aren't broken out, they're absolutely horrendous ($2.7 million in the second quarter, and $3.63 million in the first). Some of those costs must be attributable to Javeco/Pak-It, so it looks like the operating divisions are real woofers.

Accounts receivable, at $3.7 million, represent almost the whole second-quarter revenue, which indicates that there is either a major collection problem, a quality-control problem...or have right-of-return sales been booked as revenue? No matter which, the financials indicate that the costs associated with the operating divisions are untenable and the two might need to be flogged off.

What's the value of money-losing entities, especially if they're accompanied by uncollectible receivables and unuseable inventory? And, removing the inventory and receivables (no matter the ageing) wreaks havok with the balance sheet.