EveryWare (EVRY) Going Anywhere But Higher

July 3, 2014 • Analysis • Tags:

EveryWare is on the verge of bankruptcy as it has failed to generate enough return to satisfy debt covenants. A designer and seller of tabletop and food preparation products (think dinnerware and kitchen accessories), EveryWare is up 100% this week on news that it has until July 15th to negotiate a long term financing solution.

With flat sales, tight margins and heavy reliance on debt, there isn’t much to be excited about in EveryWare. Q1 2014 sales were down 5% from the year prior and the bottom line has seen red in six of the past seven quarter. The company ended the latest quarter with gross margins of 15% and a debt-stuffed balance sheet.

EVRY simplified balance sheet

 

Even if lenders decide to give EveryWare more leeway, the company is in a financial catastrophe. To fulfill orders, the company partially reopened its Monaca plant last month. However, moving forward EveryWare must reduce costs and minimize cash burn to satisfy debt agreements. Both these financial restructures are expected to negatively affect demand and top line figures.

Investors should realize the inevitable fate of EveryWare and move away from the company. The latest stock surge is a last attempt to keep the company afloat, which I think will be disregarded by month’s end. The question now becomes: How long will EveryWare be able to tread water before the company goes under?

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