Yahoo Finance
Filing
Nov. 08, 2018
Q3 2018 Data
Price: $0.80, Shares: 50m, Cap: $40m
1.Basic Information
(1) History
The company was found by Joseph Abbandonato, Tony Abbandonato, and Gerald R. Phelps at 1993. It produces plastic films for the food industry. Previously, Joseph found another company in the same industry and sold it. The company went IPO at 1999 through a reverse merger. Both 3 of them are still in the company and Joseph is still the current CEO.
Since the beginning, its main product is its plastic film used in packaging and bags. Later it produces metalized films for agriculture usage. It has been doing very well for the first 10 years with revenue growing from almost none to $50m in 2005. EBITDA also reached over $7m. However, from 2006 to 2012, it suffered major industry overcapacity and other issues. Revenue stays below $50m and just stay profitable. From 2013 to 2017, revenue grew close to $90m. However, profit stays low until 2017 which generates $7.8m EBITDA again.
Since 2014, the company started to develop two new films which are still not generating big revenue yet. But both seem to have some potential.
(2) Business-related.
(1) Regular film and bags: this is its core business. Garbage bags, films for others etc.
(2) Metalized film for plant protection:
(3) Shine N’ Ripe: A special film to fight citrus greening. It has generated $6.4m revenue in 2017.
(4) ADVASEAL: A special slow release film to protect plants. Still under development.
(3) Management.
Joseph is the CEO from the beginning. Before his first company, he worked for 10 years at 2 different plastic company. After selling his first company, he lost some money in another new startup. Later he still started the current company. The company was managed fairly well and been profitable for many years. Also, he had led the company through some difficult years from 2007 to 2012. The company has been profitable since IPO. Also, management compensation is very low in my opinion. Also, although the company's share base has been grown from 19m to 50m, he has maintained his 30% share.
(4) Debt and Credit Facility.
Around $10m in debt and around 5% to 6% interest rate.
(5) Insider holding, options, Insider trading info, share buyback.
(6) Employee numbers
241 employees which 160 in Canada and rest are in the U.S.
(7) Industry comparison.
(8) Major events
2. Financial data.
3. Valuation
(1) Currently, the company is making close to $4m profit out of $80m in sales. It is traded around just 10 P/E. However, the company only generated minimal profit for 10 years before 2017.
(2) The two new agriculture films do have some potential if turns out good.
4. Risk
(1) Before 2017, its profitability was lower for several years. It might not be able to sustain its current sales and profit level.
(2) Generally, the plastic film industry is very competitive with low margin. It is not a very attractive industry to invest in.
5. Conclusion
Overall the company was well managed with some growth potential. If the company can maintain the current revenue and profit level, the price is cheap.
6.Links
https://www.youtube.com/watch?v=JyTWIkfUHWI
