We have been publishing some X posts that might make a good story about ToughBuilt

Let's see if we can capture the essence of it:

How we met:
We took a long position in another stock, were introduced to Shrimpey, and he asked me today about this stock and why I think the business could turn around.

My Key Take-Away (KTA):
Focused business improvements on both the cost and revenue side put ToughBuilt on the path to near-term positive cash flow and longer-term profitability. However, there is no guarantee of success and there is significant risk on that path. Positive cash flows and positive EBIT will boost their equity valuations. We await Q4 earnings for increased visibility.

Jeff: We are long $TBLT common stock
Shrimpey: How do you possibly see a turnaround there?
Jeff: In super broad strokes, the whole tools sector is soft. $SWK $TTNDY $SNA $CHRHF etc. They are cutting SG&A and COGS, I see evidence from 2023. Brand new Q4/Q1 new products are amazing. I see growing global distribution. A steep climb to profitability.
Jeff (2): I equated it to buying oil E&P firms with good acreage when the price of oil was down. I am betting on a secular (housing and construction) recovery AND this company does better.


Shrimpey: Okay, but what is going to stop that insane cash burn?
Jeff: They are improving their cash cycle & inventory turns. They had a negative four million dollar cash flow from operations (9 months through Sept 30 2023). In theory, increased revenue in Q4 and Q1 could cover that. They only have ~$1M in debt. New revenue comes from new products and increased global distribution.
Shrimpey: That's good, but only temporary.


Shrimpey: Okay, but what is going to stop that insane cash burn?
Jeff: I also model out what a break-even EBIT looks like for Q4.
Shrimpey: Seems like alot to make up for, with -$9m in EBITDA and only $5m in gross profit. That is alot to catch up to. When do you think that they will break even?
Jeff: I don't know. I am waiting for Q4 results as there are too many moving parts right now.

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Shrimpey (2): I saw you noted something about a restructuring, but are there any real numbers around that?
Jeff: There are real estate savings, 20 job cuts & a shift from China to Vietnam and India for a portion of imports.