1.Major Business.
Whole sale of home appliance, mainly electronics. Founded at 1978. 16 retail stores. 3 warehouses. Mainly at western Canada and for new house construction. IPO at June 2005 with 6.5m shares and $10 per share.
Seasonality: first quarter and fourth quarter a little slower. around 23%.
Revenue lag behind house permit around 6 - 18 months.
Sectors:
Retail: 50%(estimate)
Builder: 50%(estimate)
2.Balance sheet.
Recent Price: $4.50, Tangible book value: $0, Shares: 10.03m, Market Cap: $45m.
Current asset: $36.5m, Current liability:$24.3m, Debt: $18m, Inventory:$23.4m. $700k in showrooms
4.Financial data by years.
*2005 data is only for June 23 to Dec.31.
Current year dividend is $0.035 per month. $0.42 per year.
Dividend pay out policy is around 50%.
Revenue/Price is around 4:1.
Flexible cost structure or fixed cost structure? Cost controls.
6.Insider holding, options, Insider trading info, share buy back.
Harlow B. Burrows: Interim CEO. Founder. 100k + up to 35% by CWAL investment Ltd.
Gordon ChristoÅ and Randy Ryzak: founder of CWAL, seems retired after 2005. Don't know how much they own ???
7.Management compensation.
2010 Top5: $1.6m. 2009 Top 4: $1.3m
8.Employee numbers. Revenue/Employee. Compensation/Employee.
266 people as of March 31, 2011. Most are sales person
9.Industry comparison.
Sears, Home depot etc.
10.Auditor
Deloitte & Touche LLP
11.Major events.
1. At Jan. 2009, bought Morley’s Appliance Centre for $5.25m, thus opened first store in GTA.
2. Blain Lawson served as CEO from 2007 and to end of 2010.
Whole sale of home appliance, mainly electronics. Founded at 1978. 16 retail stores. 3 warehouses. Mainly at western Canada and for new house construction. IPO at June 2005 with 6.5m shares and $10 per share.
Seasonality: first quarter and fourth quarter a little slower. around 23%.
Revenue lag behind house permit around 6 - 18 months.
Sectors:
Retail: 50%(estimate)
Builder: 50%(estimate)
2.Balance sheet.
Recent Price: $4.50, Tangible book value: $0, Shares: 10.03m, Market Cap: $45m.
Current asset: $36.5m, Current liability:$24.3m, Debt: $18m, Inventory:$23.4m. $700k in showrooms
3.Credit facility.
1. $13m term loan should be repaid in 10 years from 2011-2020 with $1.3m per year. Interest rate is around 4.5% currently.
2. $20m revolving loan. $5m outstanding. Interest rate is the same as term loan.
2. $20m revolving loan. $5m outstanding. Interest rate is the same as term loan.
4.Financial data by years.
| 2010 | 2009 | 2008 | 2007 | 2006 | 2005* | Ave | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 135 | 144 | 147 | 143 | 126 | 67 | ||||
| OP Income | 5.6 | 6.9 | 9.0 | 10.8 | 10.3 | 6.3 | 9.2 | |||
| Income/s | 0.56 | 0.69 | 0.90 | 1.08 | 1.03 | 0.63 | 0.92 | |||
| FCF | 9.1 | 16.4 | 12.1 | 9.8 | 9.6 | 2.4 | 10.3 | |||
| FCF-WC | 7.1 | 8.3 | 10.5 | 11.5 | 11.5 | 6.8 | 9.3 | |||
| Dividend | 5.8 | 5.8 | 12.7 | 12.1 | 12 | 4.5 | 9.6 | |||
| Debt | 18 | 22 | 23.5 | 23.5 | 20 | 20 | ||||
| Cash | 1.8 | 2.4 | 0 | 0 | 0 | 0 |
Current year dividend is $0.035 per month. $0.42 per year.
Dividend pay out policy is around 50%.
Revenue/Price is around 4:1.
5.Cost structure
Leasing obligations: $3.5m to $4m a year.Flexible cost structure or fixed cost structure? Cost controls.
6.Insider holding, options, Insider trading info, share buy back.
Harlow B. Burrows: Interim CEO. Founder. 100k + up to 35% by CWAL investment Ltd.
Gordon ChristoÅ and Randy Ryzak: founder of CWAL, seems retired after 2005. Don't know how much they own ???
7.Management compensation.
2010 Top5: $1.6m. 2009 Top 4: $1.3m
8.Employee numbers. Revenue/Employee. Compensation/Employee.
266 people as of March 31, 2011. Most are sales person
9.Industry comparison.
Sears, Home depot etc.
10.Auditor
Deloitte & Touche LLP
11.Major events.
1. At Jan. 2009, bought Morley’s Appliance Centre for $5.25m, thus opened first store in GTA.
2. Blain Lawson served as CEO from 2007 and to end of 2010.
3. Aug. 2011, Maurice E. Paquette now is the new CEO. It says he is one of the founder and the original CEO.
12.Comments.
1. From 2005 to 2010, cash improved by $3.8m. after paid $52.6m in dividend and spent $5.3m in acquisition.
2. Current ratio is just about 1.5. No tangible book value.
3. Revenue tied to real estate development. However, decreased less than 10% in 2010 compare to house starts in west Canada decreased 40% in 2009. This might caused by new store opened in GTA.
http://www40.statcan.ca/l01/cst01/manuf05-eng.htm
4. It converted from an income fund which never paid any tax during the past six years. Since 2011, it will pay up to 25% in tax at 2011.
5. 5-years rental contract expired. Now rental have increased.
6. Currently still looking for a new CEO.
7. Higher Canadian dollar should benefit the business a lit bit.
Sept. 20, 2011
Sold all positions. Two main reasons
1. It is kind of a test for me at the beginning which I want to try something new: ignore book value. However, it turns out that I didn't feel comfortable when the price drop a lot. Just likes the SCHS. It seems this kind of test is unnecessary. I guess just need to stick with the old tricks.
2. Its revenue is declining on whole sale side while Canada real estate is still hot. Not that good.
