Yahoo Finance
Filing
July. 10, 2019
2019 Q1 Data
Price: $4 Shares:6.3m, Cap: $25m
1.Business Information
(1) History
The company was founded by Patrick Cashion and Irvin Thomas in 11995 to catch the opportunity that the Alberta province needs to process recycling glasses. It creates the manufacturing factory to crash recycled glasses and sell to fiberglass insulation manufacturers. By the year 1998, it had reached revenue of over $5m and a small profit. In 2001, the company acquired a cabinet manufacturing business which brings around $5m revenue from 2002 to 2005 but never been profitable.
In 2006, the company got rid of the cabinet business and at the same time the glasses business also getting better which generates $7.6m in revenue and $1.4m in profit. Since then its revenue stays around $7m and profit was around $1.3m to $1.5m to the year 2013.
From 2014 to 2018, its revenue had increased to $8m and profit is above $2m.
(2) Major business.
The business is quite simple with around 50% gross margin since 2014. I guess the raw material cost should be really low while transportation might cost more than it.
It has 3 major customers which the first 2 made most of its revenue.
Johns Manville: Sub-company of Berkshire Hathaway. Its revenue might be around $1B on insulation product in 2016.
Owens-Corning: US public company. Its revenue of insulation product might be $1.3B in 2016.
Both companies have multiple plants over US and Canda. VCI only supply raw material to the plants that close its manufacturing facility. Also, it seems VCI supply the majority of raw material for these tow plants. It seems that in the last several years, VCI can't keep up the demand it customers need.
It looks like the company's business is tied to real estate development activity. However, from 2009 to 2013, it doesn't suffer any revenue and profit losses.
The company paid out almost all of its profit in dividend which yields over 10% for most of the time.
(3) Debt and Credit Facility.
The company is in net cash for a very long time.
(4) Employee numbers
(5) Industry comparison.
(6) Major events
2. Management
(1) Key person
Patrick Cashion is the main person who is running the business. There is not much public information can be found from the internet about him
(2) Insider ownership & Compensation
At 1996, it had around 44m shares outstanding. In 1998, it did a 10 for 1 merge which reduced shares to around 4.6m. At that time, Patrick only owns 260k shares while Irvin owns 730k.
In 2009, the company bought the build and the land which is leased from Irvin Thomas's company for $1m. At that time he has 1.1m shares in the company. Since 2010, he started to reduce his holding. At around 2013, Irvin reduced his holding to less than 10% and left the company at 2014 while Patrick increased his share to 2.8m by 2014 which is around 44% of the company.
At 2018, Patrick and his wife own 2.4m shares which are 38% of total shares.
Patrick's compensation was over 600k since 2006 and was 900k in 2018. It is quite generous compared to the net profit the company generates each year.
3. Financial data.
4. Valuation
(1) The business is very stable almost since the beginning. It was able to grow revenue and profit over the years. However, it only happened in 2006 and 2014. Most of the years it just stay flat in both revenue and profit.
(2) Currently, the company is traded around 12 P/E which is not expensive. However, it was traded like this for a long time and sometimes even cheaper.
(3) The dividend payout is very high.
5. Risk
(1) The company is relying on limited customers and limited supply. Any change on each side will heavily affect its business.
(2) It is unknown how it is tied to the real estate market.
(3) The CEO was paid very generously and it seems he has no intention to grow the business since all profit is been paid out as dividends.
6. Conclusion
The company is very stable and the current price is acceptable. However, there is not much growth outlook. Also, it should be monitored closely since it is very concentrated both on the revenue side and the supply side.
7.Links
