Investor Relation
Google Finance
Filing
Aug 21, 2014
2014 Q2 Data
Check list:
1.Major Business.
Canadian company located at Guelph, Ontario. Manufactures metallic and non-metallic enclosures, rack, surge suppressors and transformers. The company is close 100 years old and was founded by the Oliver Hammond. At the beginning, it just produce radios. At 2001, it split into 2 public companies. One is Hammond Power Solutions which produce transformers. Other one is Hammond Manufacturing which is this company. Both companies have similar A, B share structure and both are tightly controlled by the Hammond family.
2.Balance sheet.
Current price is $1.60. Shares 8,556K A shares + 2,778K B shares. Market Cap $18.1m. Tangible book value $3.1. Debt $10.4m.
3.Credit facility.
Bank indebtedness: Prime+0.5% interest. 9.4m outstanding
Term Loan: $1.4m outstanding.
4.Financial data by years.
5.Insider holding, options, Insider trading info, share buy back.
ROBERT HAMMOND: CEO, 1.4m A shares and 2.8m B shares. 36% of total shares.
6.Management compensation.
less than $1m for top 3. Quite low.
7.Employee numbers. Revenue/Employee. Compensation/Employee.
574 at end of 2013. 425(76%) of them are hourly workers. Those are unionized
8.Industry comparison.
9.Auditor
KPMG LLP
10.Major events.
(1) In 2008, it sold 45% interest in Moloney Electric Inc for $7.7m with a gain of $2.2m.
(2) In 2011, it purchased 6.5 acres of land for $1.3m.
11.Comments.
(1) For past ten years. The average real earning is $4.9(EBITDA)-$2.3(CapX)-$0.7(Interest)-$0.6(Tax) = $1.3m which is very close to the average reported income $1.4m. It translated to around $14m increase in book value. Which is translated into inventory increased by $12m while debt decreased by $2m.
(2) The average tax expense is very close to real tax paid. The average CapX is very close to depreciation.
(3) The company's inventory keep increasing, especially in recent years. That's probably one of the reason the stock is cheap. However, its sales has also increased by 50% in the past ten years. Inventory as a percentage of sales, doesn't changed that much. although 29% of sales is a little high. I wish it could down to 25%.
(4) Currently it pays 3c dividend/year. Quite low, this is another reason probably the stock is cheap. If it continue to pay down debt, I believe eventually it will pay more dividend given the high insider ownership.
(5) The company currently has a environment litigation pending. It might to pay $2m if they lost the case.
(6) Estimate future earning, using $5.5m EBITDA. $2.5 CapX. $0.4m interest, $0.6m tax. It would generate $2m real income/year.
(7) Overall the company is well managed and the price is very cheap.
12.Other writings
