- Gogo (NASDAQ:GOGO) has turned 11.5% lower after the company's conference call discussing its new business plan, Gogo 2020.
- “The difference in view of potential strategic partners of our value and Wall Street’s sense of our value is as striking as I have ever seen,” CEO Oakleigh Thorne said.
- The company's targeting break-even free cash flow for 2020 with a plan aimed at cost structure improvement along with balance sheet strengthening and revenue growth.
- Part of the call centered on debt refinancing, particularly the convertible notes due March 2020, and refinancing of those will be considered in the context of potential strategic deals and dilution impact, says CFO Barry Rowan. "No one is more concerned about equity dilution than Oak [Thorne]," he says, and refinancing doesn't have to happen all at once. (h/t Bloomberg)
- Meanwhile, Northland Securities isn't buying the new plan. "We’ve seen this movie before with enticing the street with impressive out year EBITA growth targets," says analyst Paul Penney, who sees "minimal equity value left in GOGO's shares."
- Most of the company's wins with airlines have come from "funded deals," he says, and he questions how debt service costs won't go up, risking the break-even FCF projection. He's projecting $848.4M revenues vs. the company's sunnier outlook of $865M-$935M.
Original article