Google Finance
Filing
Dec. 20, 2016
2016 Q3 Data
Current Price: $20.2
1.Basic Information
(1) History
(2) Business-related:
Around 25% sales are from Canada and rest is in the US. The first quarter seems the best quarter. Rest almost the same. In recent years the seafood consumption actually is declining mainly because of the high cost. There is a trend that more people prefer simply seasoned seafood than heavily breaded ones.
(3) Management.
KEITH A. DECKER, current CEO, previously CEO of Fishery Products International, which was acquired by HLF at 2008. Since then, he led several acquisitions for the company and named CEO of the company at 2015.
(4) Debt and Credit Facility.
Current debt around $266m. Down from high over $350m at 2014 year end.
(5) Insider holding, options, Insider trading info, share buyback.
Thornridge Holdings Limited: 11.5m shares. 37%.
Keith Decker, 32k shares + 360k options.
Henry Demone, Chairman, and the old CEO, 530k shares
(6) Employee numbers
Keith Decker, 32k shares + 360k options.
Henry Demone, Chairman, and the old CEO, 530k shares
(6) Employee numbers
(7) Auditor
(8) Industry comparison.
Clearwater Seafoods Inc(TSE:CLR): Canadian based seafood company as well. Its main product is shellfish. Unlike HLF, it also harvests its raw fish by itself. It seems has 9 active vessels. Unlike HLF, all of its products are processed in Canada. Its sales to Canada just around 11%, rest is from the US. Europe, Asia etc. It reports in CAD$. Revenue is just about half of HLF. Current market cap is over $700m. Higher growth rate. Very good FCF-WC.
(9) Major events
2. Financial data.
FPI joint HLF at end of 2007, and since 2008, it acquired 4 companies. Most of the revenue growth is coming from those acquisitions.
3. Valuation
The company's report number is in USD$ while the share price is in CAD$. Currently, EBIT is around $53m, Interest expense $16m. Pretax income is around $36m. Net income $30m. Market cap CAD$644m. Current P/E ratio 16.
When compares with Clearwater, CLR has higher margin 22%-25%, and SG&A is lower at 12%. CLR has close to $480m in debt which is much higher than HLF. Maybe because it has vessels. The weak CAD$ definitely helps the company's performance.
4. Risk
(1) When removing the effect of the acquisition, there seems little organic growth or even negative growth. Currently, the management is focusing on efficiency. If it can bring SG&A level down from current 15% to around 12%, that would be significant.
(2) The debt level is still little too high to me although the management is working to get the debt down.
5. Conclusion
6.Links
http://canadianvalueinvesting.com/?p=189
BNN interview
Bloomberg interview
SFP interview
Top 25 US seafood producer
August 16, 2017
Current Price: $14.5. Market Cap. $483.
(1) The company recorded 2.5m before tax loss in income for Q2 2017 because of product recalls.
(2) Henry Demone came back as CEO and Keith Becker left the company.
(3) At May the company made another acquisition for $75m. Currently, the debt is $336m.
May 14, 2019
Price: $7.4. Shares: 33.4m. Cap: $247m.
2019 Q1 data
(1) It has been a bad year for HLF for 2018, the 2017 acquisition was pretty bad. Net income was just around $17m for 2018. Net debt went up to $380m in early 2018. But down to $350m at Q1 2019. It had recovered around $17m from the 2017 product recall from the ingredient supplier.
(2) For Q1 2019, its sales volume was down but operating income is flat. It generates around $26m in real EBITDA compare to Q1 2018's $24m which is a little better. It also cut the dividend to CA$0.20/year which will save $10m in cash annually.
(3) Going forward, it might be able to generate $60 in EBITDA, interest cost: $22m, CapX: $10m, Dividend $7m. Should only have $20m left for debt reduction. It has to do better than that. Overall it is doing better but it is way too early to say it has turned around. Need to watch closely.
http://canadianvalueinvesting.com/?p=189
BNN interview
Bloomberg interview
SFP interview
Top 25 US seafood producer
August 16, 2017
Current Price: $14.5. Market Cap. $483.
(1) The company recorded 2.5m before tax loss in income for Q2 2017 because of product recalls.
(2) Henry Demone came back as CEO and Keith Becker left the company.
(3) At May the company made another acquisition for $75m. Currently, the debt is $336m.
May 14, 2019
Price: $7.4. Shares: 33.4m. Cap: $247m.
2019 Q1 data
(1) It has been a bad year for HLF for 2018, the 2017 acquisition was pretty bad. Net income was just around $17m for 2018. Net debt went up to $380m in early 2018. But down to $350m at Q1 2019. It had recovered around $17m from the 2017 product recall from the ingredient supplier.
(2) For Q1 2019, its sales volume was down but operating income is flat. It generates around $26m in real EBITDA compare to Q1 2018's $24m which is a little better. It also cut the dividend to CA$0.20/year which will save $10m in cash annually.
(3) Going forward, it might be able to generate $60 in EBITDA, interest cost: $22m, CapX: $10m, Dividend $7m. Should only have $20m left for debt reduction. It has to do better than that. Overall it is doing better but it is way too early to say it has turned around. Need to watch closely.
