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    Wednesday, November 10, 2010


    Q3 2010 HAWK Conference Call

    Management have continued to innovatively cut costs, sell spare parts and broadly behave in a shareholder friendly manner. There are lots of potential upside surprises and not too many ways things could get worse than Q3.

    I’m surprised at how much money they’ve spent on the Seahawk 3000 but from a liquidity point of view it makes sense.

    The Mexican tax issues continue with no clarity as to the eventual outcome, though HAWK continues to insist that they don’t expect a payout.

    The Strategic review was triggered by a deterioration in management expectations since July. There is going to be a liquidity problem in the first half of 2011 and they want to explore alternatives now. They had previously “hoped” to be cash flow neutral by the end of 2010. I never shared management’s optimism though the review creates additional potential upside surprises (albeit with the potential to lock in a smaller, definite, upside such as a sale in the mid-teens)

    Below are my notes from the call organized by topic.

    Upcoming work

    Idle Iron

    Costs & liquidity

    Permits and overall industry

    Strategic Alternatives

    Mexican Tax

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    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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