You have to hand it to Force Protection
So a miserable report all around -- but Force found a way to make it worse. No sooner had the bad numbers come out that Force announced a shake-up in management. Former Chief Operating Officer Phillip (Randy) Hutcherson was renamed "Chief of Business Development." Force spins the news as freeing Hutcherson up to focus on winning contracts for the company. But judging from investors' reaction, a lot of folks are looking at it like a demotion, and an indictment of Hutcherson's performance as COO.
I think that's a mistake.
Relieving a winning pitcher
In replacing Hutcherson as COO, Forced reached outside the company and brought in a relief pitcher from rival Lockheed Martin
And the news here actually gets better. While Force ran into problems maintaining revenue levels in the second quarter, Hutcherson is handing Ciarlo a firm with plenty of potential to get back on track. For one thing, Hutcherson helped the company put together a $728 million backlog of work to be done. (That's more revenue than the company booked in all of the past year.) For another, Force is flush with cash that Ciarlo can put to work.
Cash on hand now stands at $150 million. Free cash flow -- which ran negative in H1 2010 -- is now modestly positive at $3.5 million for the first half of the year. Valuation-wise, the $51.2 million in free cash flow Force generated over the last 12 months gives the firm an enterprise value-to-free cash flow ratio of just 1.7 times -- a pretty interesting price given the 10% long-term growth Wall Street expects to see at Force.
Seems to me, there's every chance Ciarlo can fix this company ... because it seems to me, Force isn't really broken at all.
Will Ciarlo succeed? Will Force surge? Add it to your Fool Watchlist and find out.