Movado Group, Inc (MOV)

SEC Filing


Oct. 20th, 2008 

(Year end Jan.31)

Summary

Famous switch producer. Current price around $15.

1.Currently asset - Total liability = 309m. Close to current market cap 345m.

2. No deficit in last 10 years. Average earning for past 5 years around $1.4.

3. Total debt 60m. Total liability 158m. Cash(85m)+Receivable(95m)=180m. Total current asset 467m.

4. Current dividend 0.32 pre year

5. Solid growth in last 5 years.

Conclusion:

Target buying price $14.

Updated

Oct. 27, 2008

Today's price around $12. Down 8.5% today, don't know the reason.

1. Current market cap less than 300m. It is net net working capital now.

Conclusion:

Need read more of their financial report.

Dec. 15, 2008
Very good analysis articles:

http://www.idexonline.com/portal_FullNews.asp?id=31627

Feb. 25, 2009
Q3 2009 data
 1. Recent price around $6.0.
 2. Dividend cut to $0.05 per quarter.
 3. Estimate earning around $1.0 for whole year 2009.

Apr. 09, 2009
Q4 2009 data
1. Suspended dividend payment.
1. Estimate saving around $50m to $60m per year from cost saving program.
2. Estimate capital spending for 2010 is less than $10m
3. Estimate $1.0 earning lost for first half and zero earning for whole year 2010

Sept. 17, 2009

Recent price over $13. very good analysis articles:

http://www.idexonline.com/portal_FullNews.asp?id=32967

Vonage(VG)

May 8. 2008

New quarter data analysis:

Facts:

1. Gross subscriber line 281,329. Net subscriber line additions 30,133.

2. Total subscriber 2.61m. Previous period end is 2.58m.

3. Monthly customer churn: Jan 2008: 3.6%. Feb: 3.2%. Mar: 3.1%.

3. Marking expense 60.9m. Marketing costs per gross subscriber line addition $216.47

4. Share outstanding 156m

5. Net lose 8.96m. $0.06 pre share.

Analysis:

1. It lost (281,329-30,133) = 251,196 user during this quarter. 9.7% of 2.58m user.

2. Real earning should added the cost to acquire new customer 30133x216.47 = 6.5m. Even adding this number to their income. They still lost money.

3. Originally their marking expense is a big issue. Now the churn rate is the biggest. It doesn't make sense to acquire a number of new customers while lost 89% of the number of existing customers at the same period.

August 26, 2009

Luckily I have sold shares of VG after holding it close to 2 years for a little profit. When I bought it I have convinced myself for several reasons:

1. Their user line worth a lot of money. Based on 2.5m user line. If each line worth $500(with net profit close $100 per line), then they worth $1.5B. Even if they go bankruptcy, they still be able sold each line for at least $200. That is still $500m.

My mistake on this point is that I totally ignored the churn rate. With a churn rate around 3% a month, they could lost 36% of their users in one year. It cost a lot of money to replace them.

2. They are actually making money if they don't spend that much on marketing.

Again this is about the 3% churn rate. It is unacceptable. VOIP is generally good, but Vonage is not. With $25 a month it is still too expensive for most people who want to switch to VOIP. The only valuable service they provided probably is the unlimited international calling they given out recently. This might attract some immigrants.

3. Two year ago, they got big problem on lawsuit. But I think their legal issue is temporary.

Actually I am correct on this issue. However, I totally bypassed their $183m debt issue which is due at end of 2008.

It doesn't fit to any value standard which I follow latterly. So hopefully I will never get involved in the same type of stock again. But most valuable lesson I learned is: if I don't like the business, don't buy it. That is I should be more "business like".

Logistec Corp.(TSE:LGT)

Google Finance

Apr.13, 2009
Year 2008 data

Logistic Company with long history.

Checklist
1. Major business.
(1) Marine Services: $188m revenue at 2008

(2) Environmental Services: $40m revenue at 2008 


2.Price/Book ratio.

Shares: 6.67m. Current price around $10. Book value $13.7.

3.Current ratio. Debt/Current Asset ratio. Inventory level.

Current asset $68.4m. Current Liability $32.1m. Total Debt $29.2m. From Dec.2006 to Dec.2008, added debt by around $20m. No Inventory.

4.P/E ratio.Deficit check.Revenue/price ratio.

Average earning per share for last 5 years around $1.5 per share. No deficit since go public(1969). 2008 Revenue $228m. Revenue/Price around 3.4.

5.Dividend.

Paid dividend since go public(1969). For last 5 years paid dividend from 0.23 to 0.32 per share. Paid special $1.50 dividend at 2007. Paid total $1.30 at 1984 and total $0.66 at 1996.

6.Cash flow

              2008    2007   2006    2005
FCF        6.4m   -6.0m   9m      11m

Dividend  2.2m   12.5m  1.8m   1.6m

FCF looks OK. However, looks like all the dividend paid in 2007 and 2008 are main cause of debt increase.

7.Grows related.

Fore past five years, revenue grew from 180m to 230m. Earning grew from $1.17 to $2.01.

8.Management compensation.

Top five officer:
         S+B      LTIP     Pension   Total

2008  $1.8m   $1.0m   $1.7m      $4.5m

2007  $1.7m   0          0             $1.7m

2006  $1.2m   $1.0m   0             $2.2m

Don't know why the pension is so big in 2008.

9.Industry comparison.

Based on 2006 data, it mentioned 0.2m TEU handling which is 15% of Montreal port.
                  2006      2007      2008

Vancouver  2.20m     2.49m    2.49m

Montreal    1.29m     1.36m    1.46m
Halifax       0.53m
Montreal Port terminals: Cast, Racine, Termont(Owned by Logistec), and Bikerdike.
Montreal Gateway Terminals(MGT): Owned by Morgan Stanley(80%) since 2007. It owns terminal Cast and Racine. Handling around 80%-90% of TEUs of Montreal port.
From Jan. 1, 2009 MGT reduce both port open hour for Truck service from 6:00-24:00 to 6:00-16:00.
From May. 4, 2009 MGT reduce Cast port open hour for Truck service from 6:00-16:00 to 8:00-16:00.

Port Metro Vancouver:


10.Buy back, insider holding and trading info.

               Total  Voting Right  Dividend    Other
Class A  3.80m    30                100%      Can be converted to class B at any time.

Class B  2.85m    1                  110%

Sumanic Investments Inc. 2,88m 75.9% of Class A. It is controlled by Suzanne Paquin(President)(1/3), Madeleine Paquin(CEO)(1/3), Nicole Paquin(VP)(1/3)

159585 Canada Inc. 1,27m 44.4% of Class B. It is controlled by Pierre Somers. He is not a director of the company.

John Springer(Director) 0.22m of Class A.

In 2007, the company buy back some shares at around $20 per share.

From 2008 to now, continue to buy back. in 2008 bought back 20,000 share. Average volume of the stock is pretty low.

11.Major events.
Nov. 2008, bought Sydney Coal Railway(SCR) from Quebec Railway Corporation(QRC) which it owns 16% share. Paid $11m in cash and also issued $9m 5% notes to QRC due at Oct. 2009. Get back $5.9m of notes at end of 2008. Balance is $3.1m.

Since the rest $3.1 will be paid this year. So roughly this investment is to convert the $9m invest of QRC + $11m cash to SCR( $1m cash + $3m good will + $16m Assets).

McCoy Corporation(TSE:MCB)

Google Finance

May 21, 2009

2008 and Q1 2009

1.Major Business.

(1)Drilling equipment: 60%. Percentage increased during the past five years.

(2)Truck & Trailer: 40%. Income down and are negative now.

Geographic: Canada 60%, U.S.A: 25%, International: 15%.

2.Price/Book ratio.

Shares: 26.5m. Recent price $1.00. Book value $1.70.

3.Current ratio. Debt/Current Asset ratio. Inventory level. Debt maturity and interest.

Current Asset: $49m. Current liability: $17.3m. Total debt: $7.9m. Inventory: $25m.

Debt: must pay $2m to $3m each year for next 3 years. Interest cost $0.8m per year.

4.P/E ratio.Deficit check.Revenue/price ratio.

Earning per share(2008-2004): (0.38+0.36+0.45+0.35+0.16)/5=$0.34.

2003: 0.05

2002: -0.17

2001: 0.02

Revenue around $170m. revenue/price = 6.4.

5.Dividend history.

1c in 2004, 3c in 2005, 4c in 2006, 8c in 2007, 12c in 2008. Now back to 1c per quarter.

6.Cash flow

FCF 2008-2004: $7.0m , $-16m, $-15m, $4m. -$8m

In 2007, it got $40m by offered new shares around $5 per share.

7.Grows related.

It acquired almost one business per year since 2004 and target to become $500m revenue in 2013. Seems not possible now.

8.Management. Employee numbers. Revenue/Employee.

SG&A increased a lot for the past several years. This includes new business acquired each year.

Employee around 676. Revenue/Employee around $250,000.

9.Management compensation. Options.

Top 5 officers: $1.7m and no options for 2008 compare $1.4m and some options in 2007.

10.Industry comparison.

1. Eckel Manufacturing: US company. Seems a major player focus on Hydraulic power tongs.

11.Buy back, insider holding and trading info.

By year end Dec. 2008. Bought back 1.4m share at price $1.65. Around 5% of total shares. No more buy back until Sept. 2009.

Insider control around $11m share which is 43%.

12.Major events.

Servotronics Inc.(SVT)

July. 31 2009
2008 Data & 2009 Q1

Check list:

1.Major Business.

Products:
1. ATG: Servo-control Aeroplane parts for Boeing and Airbus, 50%-60%.
2. CPG: Cutlery, bayonets, machetes and military knives, 40%-50%.
Around 45% of its revenue is from contract with U.S goverment.

2.Price/Book ratio.

Current price around $6.05. Book value $8.12. Shares: 2.24m.

3.Current ratio. Debt/Current Asset ratio. Inventory level. Cash level.

Current Assets: $21m. Current liabilities: $4.7m. Total liabilities: $8.8m. Inventory $11.5m. Cash 4m.
Current Assets-Total liabilities=12.2m. 12.2/2.24 = $5.45 is net net working capital price.

Debt:4.2m. Including $3.5m in bond. 2009-2013 need to pay $170k per year. 2014 need to pay $2.62m. Floating interest, current at 0.74%.

4.P/E ratio.Deficit check.Revenue/price ratio.

2008 Revenue $34m. Revenue/Price around 2.5.
Average earning for passed five years(2008-2004): (1.45+0.96+0.51+0.64+0.35)/5=0.78.
-0.12/share at 2002 and -0.38/share at 1999.

5.Dividend.

No devidend before 2008. 2008 and 2009 paid $0.15/share.

6.Cash flow

Average FCF for past five years (1.7m+2.0m+0.8m+2.9m+0.5m)/5=1.58m. Around 0.70/share.

7.Grows related.

From 2004 to 2008 revenue grow from 22m to 34m. From 1999 to 2003 revenue around 15m-17m not much change.

8.Management

SG&A $4.55m at 2008, grow from $3.78m from 2004. Pretty low increase compare to revenue grow.
Employees around 300. Revenue per employee $0.11m.

9.Management compensation, options.

Top 3 officer: 2008 around $1.7m(including 430k from surrender of unexercised options). 2007 around 1.2m. 2006 <1.0m.>
Around 250k options price around $3.5 are outstanding.

10.Industry comparison.

11.Buy back, insider holding and trading info.
ESOT(Employee Stock Ownership Trust): 34.3% (including around 70k for Nicholas family).
Nicholas(CEO): 22.8%.
Nicholas J(COO): 5.5%.
Harvey Houtkin: 15.7%.
Seems bought back around 240k stock from 2006 to 2008.


12.Major events.

13.Others.

(1) Blog Link: http://www.barelkarsan.com/2008/11/from-mailbag-servotronics.html

(2) News: http://www.buffalonews.com/145/story/722489.html

L.S. STARRETT(SCX)

(Year End: June 30th)

May 22 2009
(Q3 2009 Data)

1.Major Business.
Tools manufacturer since 1880. Products includes over 5000 kinds of Tools.

2.Price/Book ratio.
Recent Price: $8.40. Book value around $23. Book value with current asset-total liability is: $8.99. Net Net working capital.

3.Current ratio. Debt/Current Asset ratio. Debt maturity and interest. Inventory level.
2008 revenue around $240m. Current Asset: $119m. Current liability $30m. Total liability: $60m. Total Debt: $20.5m. Inventory 63m.
Inventory Adjustment if using FIFO instead of LIFO.
Year
1998 24.0m
1999 23.5m -0.5m
2000 22.7m -0.8m
2001 22.7m 0.0m
2002 23.8m 1.2m
2003 23.2m -0.6m
2004 20.1m -3.1m
2005 21.8m 1.7m
2006 24.0m 2.2m
2007 28.4m 4.4m
2008 27.5m -0.9m
2009Q1 29.3m 1.8m
2009Q2 32.3m 3.0m
2009Q3 33.8m 1.5m

4.P/E ratio. Deficit check. Price/Sales ratio.
Average earning for last 5 years is ($1.64+$1.00+$-0.46+$0.28+0.02)/5=$0.50. 10 year average earning is around $0.75.
Year 2006, 2003, 2002 are deficit.
Sales/Price: around 4:1.

5.Dividend history.
2002: $0.80, 2003:0.70, 2004-2007: $0.40, 2008: $0.52, Current: 0.12/quarter.

6.Cash flow
FCF for Past 5 years 5.5+12.0-9.0+4.0+3.0 = 15.5m.
Devidend for 5 years 3.4+2.7+2.7+2.7+2.7+2.7= 14.2m

7.Grows related.
Revenue grew from $180m in 2004 to $240m in 2008. This includes some acquisitions.

8.SG&A, Employee Compensations.
SG&A grew from $52m in 2004 to $63m in 2008. from 29% of revenue to 26% of revenue.

9.Management compensation. Options.
Top 4 officer: 2008: $1.1m compare to $1.0m in 2007. Both year has no options.

10.Employee numbers. Revenue/Employee. Compensation/Employee.
June 2007, employees around 2100. June 2008, employees are 2221, Now around 2000(or 1800). Around 53% domestic. Based on 2008 data, Revenue/Employee =$0.11m. Revenue/Empoyee(U.S only) = $0.20m. It is quite low compare to other companies.

11.Industry comparison.
Mitutoyo: Japan company 6000+ product. Revenue in 2006 around $1B. Employee around 2450+2150 at 2006. Seems the number one brand for micrometer. Mainly digital model.
Brown & Sharpe: Part of Hexagon Metrology whose revenue in 2008 is around $1.7B. Employee around 8100.
Fred V. Fowler: US company. Smaller and cheaper
Swiss Precision Instruments(SPI): Swiss company, Cheaper.

12.Buy back, insider holding and trading info.
Class A 5.7m. Class B 0.9m(10 votes/share).
Douglas A. Starrett(CEO) : Class B (44,299+1,545) around 5%.
Trustee(Harold J. Bacon + Douglas A. Starrett + Randall J. Hylek): Class A: 10%, Class B: 23%.
At end of 2008 some buying from insider for price around $10.
Bought back 11,400 share during Jan.-Mar. of 2009.

13.Major events.
Q1-Q3 2009: Revenue around 4m together. Cash flow -5m together.

PFB Corporation(TSE:PFB)

Web Site
Google Finance

SEDAR Filing


May. 5, 2009
2008 Data

Check list:

1.Major Business.

One single segment. Selling energy saving building board, frames etc. Located at Calgary. Canada sales>80%. U.S sales<20%
Business are seasonal. Q2+Q3 around 50% higher than Q1+Q4. Q1 is the lowest. Q3 is the highest.

Product line:
(1) EPS(Expanded polystyrene foam): made by resin. Major business.

(2) SIPS (Structural Insulating Panel Systems): Made by EPS + OSB(oriented strand board). Located in Canada

(3) ICF(Insulating Concrete Forms): Like bricks

(4) TIMBER FRAMING: Wood framing. Located in U.S.

2.Price/Book ratio.

Current price $3.50. Book value $5.55. Shares: 6.57m.

3.Current ratio. Debt/Current Asset ratio. Inventory level.

Current Assets: $22m. Current liabilities: $10m. Total Debt: $10m. Inventory $7m.

Debt:

$7m: 5.5% to 6% 5 years.

$1.6m : 5.5% to 6% 5 years.
US$0.8m : Prime+0.25% 5 years.
Around $0.7m payment for next 4 years. Will have $0.4m extra in interest expense since 2009.

4.P/E ratio.Deficit check.Revenue/price ratio.

Revenue for last four years are around $80m. Revenue/Price around 3.5.

Average earning for passed five years(2008-2004): (0.11+0.61+0.79+0.92+0.32)/5=0.55.

5.Dividend.

Paying dividend since 1997. Last four years dividend are $0.24 per share.

6.Cash flow

FCF for past five years are negative around -1m. Dividend paid in last five years are $8.5m. Debt at end of 2003 is zero. Cash decreased from $6.2m at 2003 to $2.8m at 2008.
In 2008, capital expenditure are 10.8m include $9.5m for a new manufacturing building. $7m increase in debt is related to this.

7.Grows related.

Before 2004, revenue is around $40m. After 2004, revenue increase to $80m. This seems related to the Riverbend acquisition.

8.Management

SG&A $15.5m at 2008, flat compare to 2007.
Employees: 400. Several more than 2007. Sales per employee $0.2m.

9.Management compensation.

Top 5 officer: from 2006 to 2008 around $1m. 2007 is little bit higher. CEO only earn $0.2m/year, before 2007, he earns $0.1m/year. It is a pretty low level.
Around 0.2m options price at $8.45 outstanding.

10.Industry comparison.

Based on 2006 data. The company counts around 10% of Polystyrene Foam Product Manufacturing(NAICS 32614) industry.

Icynene Inc. : $50m+. Ontario company. Product looks like spray foam, seems different than PFB's.

Groupe Isolofoam: revenue $5m-$10m?. Quebec company. Product looks the same. Website is bad.

AMC Insulation Corp.: revenue $5m-$10m?. Winnipeg company. Produce ICF.


11.Buy back, insider holding and trading info.
C. Alan Smith(CEO): 2.9m 44%.

Frank B. Baker(Director, former owner of Riverbend): 0.7m 10%.
Bought back 7000 share at end of 2008

12.Major events.
(1) Acquired EnerGreen ($0.5m+0.2m shares) and Riverbend Timber Farming($0.6m+0.8m shares) in 2004.
(2) Spend $1.9m(2007)+$9.5m(2008) for a new manufacturing building. $0.5m spending remains.

May 21, 2009

Q1 2009 Data

1. Lost 1.4m before tax. 1.0m after tax. Positive 1.4m cash flow.

2. Current price 3.50. Book value now $5.25.

June 02, 2009
Bought some at $3.40

July, 26 2010
Q1 2010 Data
Recent price: $5.63.
1. Book value: $5.67. Share: 6.57m.

2. 2009 revenue: $66m. Earning 0.56 per share. FCF around $9.4m

3. 50k $5.30 options should be exercised or expired now.

4. Dividend 0.24 per year unchanged.

5. Total compensation for top 5 officer 2009 are $1.1m.



Nov. 1, 2010
Bough more at $5.41. At currently price, I still think it is under valued. Although it is not that attractive as $3.40.

Nov. 3, 2010

Q3 2010 data

Sold yesterday's purchase at $5.65. It is a mistake to buy without checking it first. 

1. 50k $5.30 options was exercised by two directors at Q2.

2. Q1, Q2  Q3earning -$0.13, $0.04, $0.27 per share.

3. Oct. 15 there is fire at RiverBand Plant US. As Q1+Q2 US sales are $3.7m. The effect should not be very big. Also the plant are fully insured. However, it is hard to tell how it will affect a small cap company.

4. The cash flow for the first two quarter is quite negative -$8m. Q3 cash flow not know yet. Nine months operation income $3.8m. June 30th cash only 3m cash. Both inventory and receivables are up while sales is down. Balance sheets seems no problem.

Updated 
Dec.31, 2012
Recent price $5.25.
(1) Earlier this year it has agreed to buy a division of NOVA Chemical. However,  at Nov. both side dropped the agreement. Don't know why.

(2) At Dec. 16, the company sold all properties in Canada to a REIT at $15m in cash and $15m in REIT unit. Based on its filing, it has 400k sqf owned properties in Canada. So the sales is $30m/400k= $75/sqf. Not a bad price. Also from now on, it will lease all properties from the REIT. Based on GTA's $5/sqf leasing rate for industrial building, it comes $2m/year in extra rental cost. However, if the $15m returns 5% in dividend each year, then it will get $750k/year back. Need to know which REIT it sold to. Also it should pay down all debt which will save another $500k/year

(3) Current book value is around $6/share. With the $30m real estate sale, it should record quite some gains because all land & building at Sept 30 is recorded as $24.5m. This includes 65k building in US which the company still own,  which could take about $3m  in recorded value.

(4) Although the deal with NOVA breaks, this year both revenue and profit is down, Given the long tracking profit record and the capable management, The current price $5.25 is pretty attractive.

Updated
May 10, 2013
Recent price: $6.20

(1)Sale of REIT is $25.3m instead of $30m previously said. Capital gain from REIT sale is 7.3m(6.2m after tax). .

(2)Declared $1.00 special dividend.

(3)The sale is recorded on Q1 2013 in stead of Q4 2012. I was a little confused when read its 2012 annual report.  Unfortunately I just skipped it and didn't read carefully. Otherwise, might get some share at $5 price range. Still, with the $1 dividend, $6 is not a bad price.

LSI Industries (LYTS)

(Year End June 30th)

Apr. 21, 2009
(based on 2008 and Q3 2009 data)

Check list:

1.Major Business.

(1) Lighting Segment: 62% in 2008, 60% in 2007, 70% in 2006.


(2) Graphics Segment: 38% in 2008, 40% in 2007, 30% in 2006.
The two segments are related and is helpful for the business. Their business is kind of contract oriented, especially the graphic segment. The revenue may vary from year to year. This make it harder to trace its grows.
Major customer: BP, Chrysler, CVS Caremark and Burger King. Petroleum store sale: 28% in 2008, 26% in 2007, 24% in 2006.
Business are seasonal, generally Q3(end Mar. 31st) is lower affected by weather condition for outdoor operation.
Solid state lighting is one very interesting new product.

2.Price/Book ratio.

Shares: 21.8m. Current Price $5.55. Book value $5.87.

3.Current ratio. Debt/Current Asset ratio. Inventory level.

Current asset: $91.4m. Current liability $19.8m. Total Debt: $3.0m. Inventory: $44m. Less than $60m(revenue of Q2 2009).

4.P/E ratio.Deficit check.Revenue/price ratio.

Real 2008 earning around $0.63 per share. For past five years average earning $0.69 per share.
No deficit for past 10 years.


2008 Revenue $305m. Revenue/Price = 2.5.
First 3 quarter 2009 Revenue down 25%. Graphic segment down more than Lighting segment.

5.Dividend.

Has paid dividend since 1987. Average $0.44 for past five years. Up to 0.63 in 2008. Current dividend rate $0.20 per year. Dividend policy is to payout 50%-70% of net income.

6.Cash flow

Average FCF for past 5 years are around $14m($0.64/share). Average dividend payment around $9.6m for past 5 years.


7.Grows related.
Revenue grow from $240m to over $300 in last 5 years. But this includes acquisition of SACO.
Earning grow from $8m to $20m in 2007 and back to around $14m in 2008.

8.Management SG&A, Marketing, R&D

First 3 quart of 2009 SG&A decreased $6m compare to 2008. 2008 SG&A increase 3m over 2007. 2007 is 7m higher than 2006 after bough SACO.
Marketing 0.5m flat for 3 years.


R&D: 2008 $4.1m, 2007 $2.6m, 2006 $1.3m


9.Management compensation.
Options: 1.5m outstanding, average price $13.2
2008 issued no bonus.
2009 no increase on salary over 2008. Don't know how much options granted, but the price should around $8.0 based on Aug. 22th 2008 price.


2008 top 5 officer compensation: $3.4m.
2007 top 5 officer compensation: $3.8m

10.Industry comparison.

Hubbell Inc (HUBa.N) (HUBb.N), ???


ImagePoint: Private company. Direct competitor on graphic. more than 450 employees. Private company. Bankrupted and closed at Jan. 09, 2009.


Marketing Displays (MDI): Seems a private company. Graphic company, don't know what relationship with ImagePoint.


Acuity Brands (AYI): lighting company. 2b revenue. Seems doing OK.


Cooper Industries (CBE): 6b revenue. include lighting division.


Keyser Industries, Inc: Seems a private company. Graphic. Don't know how big it is.

11.Buy back, insider holding and trading info.

Top ten insider hold 2.8m shares. Around 12.5% of total shares. CEO hold 1m share. around 5% of total shares.
Fred D. Jalbout (President of LSI Saco) sold around 0.6m of his 1.4m share during last year. He is still holding 0.8m of common share.


No stock buy back right now.


12.Major events.
June 2006, bought SACO technologies in Montreal with $23m cash + 1.4m share.
Charged $29m goodwill in 2008 and $16.7m goodwill in Q2 2009.
Settled a lawsuit with Marketing Displays(MDI) with $3m at Q2 2009. $2.8m is recorded at Q4 2008 and $0.2m is recorded in Q2 2009.

13.Others
By end of 2008, it has 1460 full time and 140 temp employees. Average $200K revenue per employee.
Their conference calls are very detailed( more than 90 minutes).




Feb. 5, 2010
(Q4 2009, Q1&Q2 2010)
Failed to bought at $4.0 level. It climbed to over $8 and now price comes back around $5.7.


Check list:

1.Major Business.

(1) Lighting Segment:  69% in 2009, 62% in 2008, 60% in 2007, 70% in 2006.

(2) Graphics Segment: 26% in 2009, 38% in 2008, 40% in 2007, 30% in 2006.

Added two small segment in accounting: 

Technology Segment: 2% in 2009
Electronic Segment: 

All Other :                  3% in 2009

2.Price/Book ratio.

Shares: 24.3m. Current Price $5.56. Book value $4.91. The book value change is related to the goodwill increase in acquisition of ADL Technology.

3.Current ratio. Debt/Current Asset ratio. Inventory level.

Current asset: $93.5m. Current liability $17.1m. Total Debt: $1.1m. Inventory: $41.8m. Less than $69.4m(revenue of Q2 2010).

4.P/E ratio.Deficit check.Revenue/price ratio.

Real 2009 earning close to zero. Real 2008 earning around $0.63 per share. For past 6 years average earning $0.58 per share.

No deficit for past 10 years.

2009 Revenue $234m. Revenue/Price = 1.73.

First 2 quarter 2009 Revenue flat compare to first 2 quarter of 2008.

5.Dividend.

Has paid dividend since 1987. Average $0.44 for past five years. Up to 0.63 in 2008. Current dividend rate $0.20 per year. Dividend policy is to payout 50%-70% of net income.

6.Free Cash flow

2009: 13.5m
2008: 9m
2007: 34.8m
2006: -0.4m (Bought SACO $22m cash).
2005:
Average FCF for past 5 years are around $14m($0.64/share). Average dividend payment around $9.6m for past 5 years.

7.Grows related.

Revenue grow from $240m to over $300m from 2003-2008, 2009 go back to $240m level. 

Earning grow from $8m to $20m in 2007 and back to around $14m in 2008. Down to $0 at 2009.

8.Management SG&A, Marketing, R&D

SG&A:
2009:
First 3 quarter of 2009 SG&A decreased $6m compare to 2008. 2008 SG&A increase 3m over 2007. 2007 is 7m higher than 2006 after bough SACO.

Marketing 0.5m flat for 3 years.

R&D: 2009 $4.05m, 2008 $4.1m, 2007 $2.6m, 2006 $1.3m

9.Management compensation.

Options:
640k granted Q1+Q2 2010 from $5.93 to $8.40.


2.0m outstanding at Dec. 2009($10.54) 

2.1m outstanding at June 2009($13.07), 

1.5m outstanding at June 2008($13.20),

2008 issued no bonus.

2009 no increase on salary over 2008. Total 360k $8.98 options granted at Aug. 2008. Among of which 130k are to officers.
Aug. 2009:  245K options at $8.40 to officers.

2009 top 5 officers compensation: $2.8m. CEO $800K compare his 1m share ($6m-$7m in value)

2008 top 5 officers compensation: $3.4m.

2007 top 5 officers compensation: $3.8m

10.Industry comparison.

Hubbell Inc (HUBa.N) (HUBb.N), ???

ImagePoint: Private company. Direct competitor on graphic. more than 450 employees. Private company. Bankrupted and closed at Jan. 09, 2009.

Marketing Displays (MDI): Seems a private company. Graphic company, don't know what relationship with ImagePoint.

Acuity Brands (AYI): lighting company. 2b revenue. Seems doing OK.

Cooper Industries (CBE): 6b revenue. include lighting division.

Keyser Industries, Inc: Seems a private company. Graphic. Don't know how big it is.

11.Buy back, insider holding and trading info.

Top ten insider hold 2.8m shares. Around 12.5% of total shares. CEO hold 1m share. around 5% of total shares.

Fred D. Jalbout (President of LSI Saco) sold around 0.6m of his 1.4m share during last year. He is still holding 0.8m of common share.

No stock buy back right now.

12.Major events.

July 2009, bought ADL Technologies with $15.8m ($1.3m cash + 2.45m share). Record Goodwill $9m.  Actually intangible added around 14m.


June 2006, bought SACO technologies in Montreal with $23m cash + 1.4m share.

Charged $14.5m goodwill in 2009. $29m goodwill in 2008.

Settled a lawsuit with Marketing Displays(MDI) with $3m at Q2 2009. $2.8m is recorded at Q4 2008 and $0.2m is recorded in Q2 2009.

13.Others

By end of 2009, it has 1160 full time and  80  temp employees. Average $190K revenue per employee.
By end of 2008, it has 1460 full time and 140 temp employees. Average $200K revenue per employee.

June 01, 2010
Q3 2010


Recent price go down around $5.80.


1. Book value around $4.79.


2. Q3 lost $0.10 per share.


3. LED counts around 25% of revenue for first 3 quarters of 2010.




LED article:

http://seekingalpha.com/article/160929-expect-a-lot-of-acquisitions-in-lighting




Aug 19, 2010
Q4 2010
Bought at $4.84. Recent price $5.20.


1. Q4 revenue increased by 27%. Income 0.03 per share.


2. Whole 2010 revenue $254m. 9% higher compare to 2009. Income 0.12 per share.


3. State that made in U.S. instead of import from China.




Oct. 22, 2010
Q1 2011


Recent price $8.50
1. Q1 sales up 18% compare to last year. Profit more than doubled compare to same quarter last year.


2. Awarded 104k options at August 19, 2010. The price should be $5.21. (This is from the 8-k at Aug 24th 2010).


3. Previous owner of ADL David T. Feeney (371,913 shares); Kevin A. Kelly (998,882 shares); and Craig A. Miller (1,047,481 shares) are very likely to sell their shares.


Others:
The biggest concern is that the CEO owns quite a few shares 5% and he likes to dilute it.


Nov. 1 2011


Sold all shares of LYTS at $9.42.

On the upside, the stock have very good growing potential especially for the LED technologies. I won't be surprised if it goes up to $15 or $20. 

On the downside, 

1. Now it is fairly priced based on 15 times P/E of past 5 years average earning. 

2. The most important, I don't feel comfortable with the CEO. Historically he very generous of issuing new shares of the company to fuel acquisitions and he never increase his stake in the company. That's as the creator of the company, he now only owns 5% of shares of the company. I think he care more for how much he can make from the company than share holders' value.