Summery
This is a Canadian wood product company. It has been bit down by slower Canadian housing market and US subprime crisis. Recent price around $9 - $10.
Facts:
1. Share outstanding 8.6m
2. Book value 99.6/8.6=$11.6. Book value with current asset only is 69.7/8.6 = $8.1. Very close to the net net working capital situation.
3. Average earning for the past 6 years(2007--2002) is (1.17+1.53+1.32+1.33+1.74+0.75
Facts:
1. Share outstanding 8.6m
2. Book value 99.6/8.6=$11.6. Book value with current asset only is 69.7/8.6 = $8.1. Very close to the net net working capital situation.
3. Average earning for the past 6 years(2007--2002) is (1.17+1.53+1.32+1.33+1.74+0.75
+0.88)/6 = $1.23
4. Current dividend pay our rate is 50% of earnings.
5. Strong balance sheet with no long term debt.
Analysis:
1. Strong Canadian dollar affect its income but offset by import materials from US. The company says it is neutral to the exchange rate. I think it will be affected but very lightly.
2. Slower housing market in US will affect their income. US account 14% of their sales. Compare to 17% in 2006. It was down by 300bps. Assume it will be down for another 700bps in 2008. Then the income will be affected by 1.17x7%=$0.08.
3. Slower housing market in Canada affect their income, but it was offset by stronger sale on renovation and Alberta market. The sales in Canada actually increase by 300bps in 2007 compare to 2006. But the income in 2007 falls because of lower margin rate. It may down further but should not be too much.
Conclusion:
Take average earning $1.32. It worthy buying at 1.32x15x60%= $11.88. If takes 2007 as the earning. It worth (1.17-0.08)x15x60% = $9.81. But probably I will buy if it fails blow $8.1 considering current market situation.
4. Current dividend pay our rate is 50% of earnings.
5. Strong balance sheet with no long term debt.
Analysis:
1. Strong Canadian dollar affect its income but offset by import materials from US. The company says it is neutral to the exchange rate. I think it will be affected but very lightly.
2. Slower housing market in US will affect their income. US account 14% of their sales. Compare to 17% in 2006. It was down by 300bps. Assume it will be down for another 700bps in 2008. Then the income will be affected by 1.17x7%=$0.08.
3. Slower housing market in Canada affect their income, but it was offset by stronger sale on renovation and Alberta market. The sales in Canada actually increase by 300bps in 2007 compare to 2006. But the income in 2007 falls because of lower margin rate. It may down further but should not be too much.
Conclusion:
Take average earning $1.32. It worthy buying at 1.32x15x60%= $11.88. If takes 2007 as the earning. It worth (1.17-0.08)x15x60% = $9.81. But probably I will buy if it fails blow $8.1 considering current market situation.
Updated
July 16, 2008
Current price $8.35. Book value with current asset 73/8.6 = $8.49. Now it is a net net working capital. Don't know why it felled 7% today.
Updated
Nov. 7, 2008
Q4 2008
Bought at $6.25. Current price $6.50.
1. Whole year 0.83 pre share earning. Not too bad.
2. Debt reduced by 24m to 22m.
3. $0.25c dividend for this quarter.
Mar.02, 2009
Q1 2009 data
1. Earning 0.12 per share compare to 0.22 per share last year.
2. Usually earning is better in Q3 and Q4.
3. Debt 29m
Mar. 25, 2009
Q2 2009 data
Recent price around $6.00.
1. Sales down around 8%. Lost $0.09 per share excluding $0.37 per share gain on sale property to government.
2. Debt 24m.
3. Cut head count 130 as part of its cost-cutting program. Bad debts ran at double the year-earlier rate, but financial costs were lower.
4. Checked their 2008 proxy. The top 5 officer account around $1.3million in compensation. No options.
5. Insider holding around 5.0m shares. around 58%.
G. DOUGLAS GOODFELLOW Vice-Chairman of the Board and Secretary 1,994,913
DAVID A. GOODFELLOW Corporate director 2,076,513(2)
STEPHEN A. JARISLOWSKY Chairman of the Board 1 057 998
Nov. 16, 2010
Check list:
(Year end Aug.31)
(removed)
May 01, 2012
2012 Q2 Data
Check list:
1.Major Business.
Family business since 1898 by George Goodfellow.
Lumber and hardwood flooring. Used on both new house building and renovation. Flooring 1/3, Lumber 1/3, Panel and building Material 1/3. It seems its business will be affect more by building activity than renovation activity.
Canada sales > 90% while US and export sales < 10%. Down from 20% in previous good years.
Q3 and Q4 usually better. Q2 is the worst, Q4 is the best.
2.Balance sheet.
Recent price $8.0. Book value $12.13. Shares: 8.57m. Market Caps: $68.5M
Current asset: $139m, Current liability:$57m Debt: $33m, Inventory: $73m, Cash:0.Current asset-total liability=$139-$62=$77m. It is net-nets.
3.Credit facility.
4.Financial data by years.
Paying dividend over 10 years. Current dividend policy is paying off half of income
5.Cost structure
Leasing obligations. Flexible cost structure or fixed cost structure? Cost controls.
6.Insider holding, options, Insider trading info, share buy back.
Chairman Stephen holds 1m shares.
Goodfellow family hold 4m shares. It seems that at 2009, David and Douglas passed 0.6m to CEO Richard
7.Management compensation.
Richard held CEO position since 1975.
Douglas and David seems just directors.
Top five: 2010 - 2007 $1.7m $1.2m $1.3m $1.6m
8.Employee numbers. Revenue/Employee. Compensation/Employee.
2010: 880 employees. Around half are workers. Not unionized. Revenue per employee is around 0.5 million.
9.Industry comparison.
Primary Industry (NAICS):
416320 - Lumber, Plywood and Millwork Wholesaler-Distributors
Alternate Industries (NAICS):
321211 - Hardwood Veneer and Plywood Mills
321911 - Wood Window and Door Manufacturing
Dakeryn Industries Ltd: Private BC company. 50m+
10.Auditor
Better be among the big four.
11.Major events.
Business acquisition, law suit etc.
12.Comments.
Concerns and thoughts.
2. Usually earning is better in Q3 and Q4.
3. Debt 29m
Mar. 25, 2009
Q2 2009 data
Recent price around $6.00.
1. Sales down around 8%. Lost $0.09 per share excluding $0.37 per share gain on sale property to government.
2. Debt 24m.
3. Cut head count 130 as part of its cost-cutting program. Bad debts ran at double the year-earlier rate, but financial costs were lower.
4. Checked their 2008 proxy. The top 5 officer account around $1.3million in compensation. No options.
5. Insider holding around 5.0m shares. around 58%.
G. DOUGLAS GOODFELLOW Vice-Chairman of the Board and Secretary 1,994,913
DAVID A. GOODFELLOW Corporate director 2,076,513(2)
STEPHEN A. JARISLOWSKY Chairman of the Board 1 057 998
Nov. 16, 2010
Check list:
(Year end Aug.31)
(removed)
May 01, 2012
2012 Q2 Data
Check list:
1.Major Business.
Family business since 1898 by George Goodfellow.
Lumber and hardwood flooring. Used on both new house building and renovation. Flooring 1/3, Lumber 1/3, Panel and building Material 1/3. It seems its business will be affect more by building activity than renovation activity.
Canada sales > 90% while US and export sales < 10%. Down from 20% in previous good years.
Q3 and Q4 usually better. Q2 is the worst, Q4 is the best.
2.Balance sheet.
Recent price $8.0. Book value $12.13. Shares: 8.57m. Market Caps: $68.5M
Current asset: $139m, Current liability:$57m Debt: $33m, Inventory: $73m, Cash:0.Current asset-total liability=$139-$62=$77m. It is net-nets.
3.Credit facility.
4.Financial data by years.
| 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 467m | 504m | 438 | 481 | 518 | 520 | 520 | 540 | 520 | 510 | 450 |
| OP Income | |||||||||||
| Income/s | 0.35 | 1.48 | 0.87 | 0.83 | 1.53 | 1.53 | 1.33 | 1.74 | 0.75 | 0.88 | 0.56 |
| FCF-WC | 0.16 | 1.28 | 0.78 | 0.78 | 1.28 | 1.50 | 1.27 | 1.53 | 0.70 | 0.82 | 0.43 |
| Dividend | 0.40 | 0.90 | 0.40 | 0.50 | 0.70 | 0.80 | 0.53 | 0.34 | 0.09 | 0.10 | 0.07 |
| Debt | 28.6 | 27.1 |
5.Cost structure
Leasing obligations. Flexible cost structure or fixed cost structure? Cost controls.
6.Insider holding, options, Insider trading info, share buy back.
Chairman Stephen holds 1m shares.
Goodfellow family hold 4m shares. It seems that at 2009, David and Douglas passed 0.6m to CEO Richard
7.Management compensation.
Richard held CEO position since 1975.
Douglas and David seems just directors.
Top five: 2010 - 2007 $1.7m $1.2m $1.3m $1.6m
8.Employee numbers. Revenue/Employee. Compensation/Employee.
2010: 880 employees. Around half are workers. Not unionized. Revenue per employee is around 0.5 million.
9.Industry comparison.
Primary Industry (NAICS):
416320 - Lumber, Plywood and Millwork Wholesaler-Distributors
Alternate Industries (NAICS):
321211 - Hardwood Veneer and Plywood Mills
321911 - Wood Window and Door Manufacturing
Dakeryn Industries Ltd: Private BC company. 50m+
10.Auditor
Better be among the big four.
11.Major events.
Business acquisition, law suit etc.
12.Comments.
Concerns and thoughts.
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