Investor Relation
Google Finance
Filing
Filing
Sept. 12, 2014
2014 Q2 Data
Check list:
1.Major Business.
Producer of greenhouse tomato, pepper, cucumbers. It has 110 acres of greenhouse in BC Canada + 130 acres of greenhouse in US. Main product is tomato-on-the-vine(TOV). Its revenue is quite seasonal. Around 2:4:4:3 for four quarters.
2.Balance sheet.
Recent price is $1.15. Shares 39m. Market Cap $45m. Tangible book value $1.5. Debt $57m.
3.Credit facility.
Bank line of credit: $10m. currently $4m outstanding.
Term loan mature at Apr. 01, 2018: Current interest is below 4%. $53m outstanding. Annual repayment is around $4.2m.
4.Financial data by years.
5.Insider holding, options, Insider trading info, share buy back.
Michael A. DeGiglio : Founder CEO, 10m, 26%
ALBERT VANZEYST: Co-Founder, 9.4m, 24%,
6.Management compensation.
Top 5 around $1.5m/year
7.Employee numbers. Revenue/Employee. Compensation/Employee.
8.Industry comparison.
Mucci Farms: Ontario private company, 400 acres of green house. July 2014, the CEO was charged with mislabeling Mexico tomato as Canadian tomato.
9.Auditor
PricewaterhouseCoopers LLP
10.Major events.
(1) At March 2001, the company actually filed for bankruptcy due to $110m debt load.
(2) Oct. 2006, it merged with Hot House Growers Income Fund which is an income fund traded on TSX.
(3) at 2009, it converted to an corporation and stopped paying dividend.
(4) Dec. 2010, Albert Vanzeyst left the company with unstated reason. Apr 2014. he filed that he intent to sell 4.3m of shares.
(5) 2011-2012, it build another 30 acres of green house in Monahans, Texas. Cost is around $44m($37m 2011+$7m in 2012). There are 90 acres in the same location is able to build in future.
(6) May 31, 2012, its 82 acres greenhouse in Marfa Texas was damaged by hail storm. It received $47m($31m in 2012 and $16m in 2013) from insurance company. It repaired 40 acres in 2012 with probably just $3-$5m. Repaired another 20 acres from 2013 to Q2 2014 for a cost of $8m. The rest 20 acres is severely damaged and the cost to repair estimate around $12m. The rest 2 acres is for research and won't be restored.
11.Comments.
(1) From 2006 to 2013, its equity increased by $40m in 7 years after 9.4m dividend payment. However this includes the insurance payment $47m in 2012 and 2013. Assuming $10m is extra gain from the insurance. That would translated to $40m net increase in equity in 7 years. Around $6m/year.
(2) From 2011 to 2012 $44m spent on new green house. From 2012 to 2014, over $10m spent in repair work. It states its maintenance CapX is around $2m/year. However, the really number seems always higher. Probably around $3m/year.
(3) Tax expense is way higher than tax paid. The reason is mainly the deferred tax from insurance payment. Estimate normal tax rate 15% of EBITDA.
(4) Cash increased about $30m after $9.4m dividend. This excludes $44m spending on new greenhouse at 2011-2012. Over $10m in repair work. Totally is over $90m. That's from $42m in income, $47m in insurance proceeds. $8m in deferred tax increase, $20 in difference in depreciation and maintenance CapX.
(5) At 2013, the US government renewed the expansion agreement with Mexico which protect US tomato grower from Mexican dumping. In 2013, the US TOV price did increased which benefited the company. However, starting Q2 2014 TOV price dropped 15%, mainly caused by 22% increase export from Canada to U.S. while mainly are mislabeled Mexican tomatoes based on VFF's CEO. I guess Mucci farm played quite a role in this, if this is true, the recent charge might stop the mislabeling. The company also tries to lower TOV as a percentage of sales. It has decreased from 99% to 50% in latest quarter.
(8) Use $12m as normal EBITDA, $3m in maintenance CapX. $3m in interest. 15% tax. It might be able to generate ($12-$3-$3)*0.85=$5.1m/year in real income. Current price is quite cheap.
(9) Overall, the business is quite unstable mainly caused by the versatile of TOV price. Price in 2009, 2012, 2014 affect the company quite a lot. Should not heavily invested unless its supper cheap.
