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Sales declined ever since Musclepharm signed Tiger Woods and Johnny Manziel.....and this deal got little impact on the US sales where Musclepharm invested all it's money on sales organization, that yet hasn't paid off (as the company has negative EBITDA).
Now it has to start all over abroad building up a sales organization, to fully capitalize on the sponsorship, which might not pay off initially as well. Yup, dilution is coming.
Soccer has it's following in America, but it ain't a big one though....most of what is followed seems to be the teams from Mexico and Spain in America, as it is primarily those from Latin America that follow it...In Canada, soccer is more popular though.
I wonder what a sales organization in the UK and Australia gonna cost? still with Musclepharm considering buying Capstone Nutrition as well.
I believe Musclepharm should have found some financing before it started announcing anymore big sponsorships....and it should have done so when it's stock price traded high last year. It didn't do anything, apart from buying back stock. This year, it got itself into a bank loan when it really hasn't demonstrated that it can be profitable yet.
Musclepharm has no obvious financing available to pay for any of this per their latest earnings report, meaning dilution is very likely coming.
For Musclepharm to function it needs probably $30 million in inventory at any time, which might actually not be enough to have enough money for unanticipated drops in demand like what happened in Q4....so, we might be talking about at least $10 million cash at any time as well.
Where are we now? Will so many different big sponsorships and endorsements pay off, as it becomes hard to capitalize on one deal over another, when you come from close to no sales relative to the size of the sponsorships.
Nike, Adidas, Puma and Pepsico got lots of cash and virtually no debt, selling in the billions of dollar each year.
My mistake, yeah I know, I watched Premier League football every weekend as a kid...Manchester City is definitely not Manchester United.
Still, notwithstanding any of these sponsorships, Musclepharm needs money to finance it's working capital requirements. Whenever Customers have to wait for something, they look for something else....Cellucor is not too bad a brand right? I mean, Cellucor and On Nutrition both put more of the expensive whey isolates in their products, so Musclepharm might have lost customers in the specialty stores from being out of stock with their favorite flavors.
It surely doesn't look like they are doing great with the latest earnings report....The inventory was down to $13 million, making it hard for Musclepharm to fill all orders, and making it hard to imagine the financial situation is stellar.
My impression is that Musclepharm is seeking some investors within the World of sports, for a pipe deal...like $20 million, or perhaps even higher....
Even if Musclepharm only buys the right to use the names Cavaliers and Manchester United.....we are looking at millions of dollars down the road, on top of other sponsorship and endorsement expenses.
Searches for the name "Musclepharm" has been declining on Google from last year, so, it's not like we come from great to greater.
looks like huge dilution is coming, might be a pipe deal is in the works that will finance all this and the hole in the inventory, my guess is $20 million.
A commercial bank is probably not gonna touch Musclepharm...but capital at risk may.
Hopefully nothing serious happened that made the 3 board members resign at the same time.
Could be they had little "muscle" to play with, with the chairman being the ceo, and perhaps not willing to listen to the directors' guidance.
The chairman of the board is the power figure, that sets the agenda, so the board members should have stayed till next year.....unless they found that they could not support the actions of the executives under any circumstances.
This stock will fluctuate a lot because of it's characteristics: trading over the counter as a highly illiquid stock, and being in a transition as it works on establishing more financing and more effective manufacturing, possibly causing the board members to resign yesterday as they may not agree to the management style or might be unfit for the job in the current situation.
Not much is fed to investors inbetween quarterly earnings. So, any Musclepharm SEC filing, press release, or any other indicator might be reacted to, and even be brought out of proportions both positively as well as negatively by investors....
Among other things, taking a closer look at Cable Car Capital, and the announcement of resignations of some board members yesterday definitely changed my stance.
Regardless of board members resigning, and regardless of my personal stance, Musclepharm could possibly make it if it delivers the sales growth that it preached. That is the speculative element of the stock, as you sense it is working in a very tight space financially.
I would take into consideration all the things that could go wrong if that doesn't happen, just as a precaution.
drive929 told us that.
Sure he did. He got 60 days to report his purchase with the SEC
Ryan Drexler bought his shares on the open market right after the Q4 conference call. The volume was around 1.8 million shares as far as I recall.
He made a hell of a trade, that might make him $10 million or more, if we get past last year's highs.
Ryan Drexler tried to buy Nutraceutical International, and he made Vitacost.com sell itself to Kroger.
Mr Ryan Drexler has clearly been following Musclepharm for quite a while as he bought right after Q4 conference call.
He is not dancing around Frostie in any tutu anytime soon....He may very well make his first move when Brad retires his chairman of the board seat next year, just wait and see.
Ryan Drexler and Nelson Obus, they are the kind of shareholders we need to ensure that the board and the management do their job well.
Yeah, Ryan Drexler is good when he deals with the supplement industry, but less good when he deals with the clothing industry.....so, he is our man.
I don't know what you mean by "moral capacity"?? This is all about making money, nothing else....he doesn't owe me anything personally, but I do believe that his presence will make non insider shareholders more money.
If you got $60 million demand but you can only meet $50 million demand from retailers, it ain't all that bad. It all depends on whether you get your credit and manufacturing situation optimized before some retailers sell out all of tub sizes and flavors of a certain product.
Retailers get an opportunity to clear the older inventory and alternative Internet players get an opportunity to win a transaction where they are lucky to carry something that is sold out elsewhere.
Musclepharm will have to focus on those accounts that provide highest margins, greatest potential, most loyal customers and where it got least slack in terms of not filling in orders.....like Walgreens, GNC and Costco....and downplay those retailers that aren't as important or where it got more slack in terms of not filling in orders.
It seems like Jim Stoppani is gonna bash every other company that enters his territory at Bodybuilding.com...what a punk!
yeah, things start looking a whole lot brighter for those long in this stock, and a whole lot less encouraging for those short, in my opinion.
Yeah, Musclepharm will have to get used to another activist investor, that's for sure.
And, Ryan Drexler will probably get particularly involved with Musclepharm as he is an expert in the economics of the supplement industry.
You have to look at the quality of the sales, more than the absolute number.
Musclepharm's sales are growing the right places. GNC and Costco got some of the most loyal customers, and that brings a whole lot more safety to our investment.
It's a positive that the demand for Musclepharm is growing broadly as well, but let's not delude ourselves into believing that all sales are equally important to Musclepharm.
because the the strong US dollar hurt International sales in Q1, and the fact that Musclepharm had to dig itself out of a hole from Q4.
It is worth noticing however, that sales have grown fast at mass retailers (ex Walmart). Sales at Costco, GNC and Walgreens have exceeded all expectations.
That coupled with the fact, that specialty retailers have renewed their interest in the brand, by ordering $17 million worth of products following Arnold Classics...shouldn't that be enough proof of Musclepharm turning around?
Musclepharm sales grew 75% y-o-y at GNC, that's amazing considering GNC was one of it's largest accounts.
Brad gave me the impression that GNC is close to becoming the second largest account at Musclepharm.
I think we all got the impression that Musclepharm is doing great at Costco, and that the Cocoprotein drink might be carried there later this year.
Musclepharm current manufacturing issues might explain why Musclepharm sales is not growing fast at Bodybuilding.com right now....as the good relationship with Ryan Deluca may allow it not filling in all flavors for a while, until it is ready to produce for plus $50 million revenues each quarter. GNC and Costco might not have much patience with companies that cannot deliver....so, the strong ties to bodybuilding.com are probably priceless.
I don't see that the financing of the company should be such a big issue.
First of all, we have been told that Musclepharm is working on converting it's local bank loan to a commercial bank loan. A bank loan that is of moderate size considering the size of it's operations.
Furtheremore, the board and the management could always substitute the employee stock purchase plan with a capital raise of equal size instead...
The employee stock purchase plan is nothing else than a capital raising mechanism, spread over many years versus being a one time event. The dilution would be unchanged if there is a substitution of one type of capital raise with another.
Musclepharm kind of needs a higher stock price, and the employee stock purchase plan is already factored into the stock price, so it is really a non-brainer.
Good luck with that!
What astonishes me is that he doesn't stop, but continues as the stock creeps up, taking on more exposure, when the stock very well could take off being a very speculative play, with company's management giving bullish guidance.
I wonder if the TRUE GRIT brand indeed is Bodybuilding.com's own brand as claimed by hardbodynews.com?
All that bodybuilding.com stated in the press release was that it launched and released a new brand, but not that is was it's own brand.
It seems odd to me, that Jim Stoppani would bash the selling point of that new protein brand, the micellar whey, if the brand was Bodybuilding.com's own brand.
Telling the World that micellar whey is idiotic is gonna stick to that brand for sure, and it will make it much harder for it to succeed as many consider PhD Jim Stoppani to be a guru.
Gurus are always dangerous, as people tend to follow whatever they say, without validating if there is any truth to it. I'm sure that Micellar Whey is not anymore idiotic than his blend of different proteins.
Jim Stoppani is never gonna make it into GNC. He simply cannot stop running his mouth
I don't question that they work hard...it's obvious that they do.
Smart move Jim Stoppni! now you are telling everybody how awful bodybuilding.com's TRUE GRIT brand is...
The branding and the sales organization is taking off.
That is one possible explanation to the backlog of orders, at the end of Q1.
The company has invested millions into the right packaging, brand identity and social media communication, as well as high profile endorsements and sponsorships.
For it's sales organization, Musclepharm draws from a pool of talent from GNC, Bodybuilding.com, Sportika Export, EAS and Arbonne International.
It has not been cheap building up such a branding and sales organization, but it has probably been working.
The company did however seem to be honest this time.
I don't agree with Paulo Santos' view that the company didn't disclose that it had issues with manufacturing. It told us that it was working on optimizing manufacturing, so what was hidden there?
It doesn't need to go down to too much detail as that would be telling competitors too much.
I found that the company was pretty straightforward regarding it's credit and manufacturing, by informing us about the bank's sentiment regarding it's loans and by discussing the transition to Capstone Nutrition....The guidance that the company gave us was based on these material facts, and it was upbeat....meaning that Musclepharm had issues meeting demands that exceeded certain levels in the beginning of Q2, but had no problem growing.
I respect your views.
I do agree that the most important right a shareholder got is the right to sell the shares he owns, if he is not happy with the investment.
However, I don't believe that a company's management can live of past years' growth to justify their current performance based compensation. Neither do I believe that a company's management can justify their compensation by promising anything that ain't kept.
A public company cannot hide any material facts and a public company cannot systematically be unspecific and overshooting every time it gives guidance. A public company got plenty of time to report the market of any material adverse changes to it's business, that might make it hard to meet projected sales targets within an acceptable margin.
I do however believe that a proxy fight initiated by a hedge-fund manager like Wynnefield Capital got much better chances of fixing issues with the management of the company than the court room. So, the more hedge-funds that invest in Musclepharm, the better.
a stock price higher than $8.5, the closing price on December 31, 2014 is most likely something the company is working towards.
It would maintain a good standing with creditors and Wynnefield Capital and it would guarantee that the stock grants become tax deductible.
With strong demand for products, reduced cost of goods sold and a strong momentum for stock, it is probably not unlikely that the stock price returns to levels above the $8.5.
The outlook from the company was bullish.
Anticipating earnings per share of ($0.75) for the year is very bullish with Q1 earnings per share of (0.56)....that means that the company expects that it will soon be profitable.
i hope this move this morning will reactivate and motivate the insiders to work hard, day and night, and turn this company around.
it's great to have a lot of good ideas, but we need to see execution.
Paulo Santos seem to be somewhat bullish, but share some of the same concerns regarding the management's straightforwardness that many shareholders have.
Hopefully these shareholder concerns are brought to shame after the company's Q2 earnings report....and hopefully all shareholders of Musclepharm will stop being ambivalent about the company forever after.
well, the executives that you trust so blindly can push themselves up in a corner pretty soon, so I do find the stock worth investing in.
If the numbers aren't getting any better this Summer or by year end, then I'm betting that a class action lawsuit or a lawsuit by Wynnefield Capital is highly likely.
The executives cannot keep on promising spectacular growth to obtain shareholder support and then come with all sorts of excuses when the numbers don't add up...It can only be done so many times, as the shareholder's redemption of the executives' lack of performance won't last forever.
In 2009, the Bank of America stock ran up from $3 to $18....so whenever speculators think that things have changed, they look at no fundamentals whatsoever.
The outlook provided by Musclepharm's management is very bullish, and the eventual Capstone Nutrition acquisition is something that might be considered bullish by some as well, considering that Post Holdings paid $380 million for Dymatize with $140 million revenue...meaning Musclepharm should become a plus $200 million company net of debt if it acquires Capstone Nutrition.
Concerns about large stock grants might vanish entirely if the management delivers unreal results....I would like to see some good results and some solid stock price appreciation before I feel obligated to credit the management for anything though. I'm not particularly pleased with anything the management has delivered thus far.
the rally doesn't look like it is over yet.....it's possible the stock price will continue to run up in $10-11 range entirely driven by speculators reacting positively to any bit of positive news.
MSLP got the characteristics of a speculative stock, so anything is possible.
You are probably the only investor feeling that the management has no credibility problems....the trust between board/management and shareholders is broken imo. Neither side trusts each other, and not surprisingly, neither side profits as fully with the lack of it.
Had the board proposed 1.5 million new shares this year, and explained shareholders what to expect from next year and beyond....then, we could probably have been close to reaching $10 during this rally rather than $6.
It wouldn't have made any executive poorer had it considered to align with the interests of shareholders a little further.
The package of 2 million shares shows to me that the board doesn't trust that investors will trade this stock up to the levels of $10-13.5 where insiders bought last year. It's a complete surrender imo....unless the shares are gonna be allocated a little more broadly than last year.
The message thus far is however, we don't believe in the stock and in the shareholders....so,the board and the management don't trust us as well.
the stock would probably be up another 100% with any change in governance and compensation practices at this company.
Lets face it, the stock is still undervalued.....the problem is that the threat to shareholder value of keeping most of executives' pay in stocks is worrisome. By 2016, the company has run a few years with plus 10% dilution for stock grants.....so, the impressive stock grants of the past should be more than enough to motivate any reasonable human being to perform, in particular if stocks are vested over 4 years.
Probelm here can only be that the unvested stock grants of executives are vested when the executive leaves....Something that seems to be very shareholder unfriendly, and forcing the company to focus more on revenue growth than profitability to keep on printing more stocks to retain employees.
It's a peculiar governance and compensation to say the least. It might work, and Musclepharm may become a billion dollar company in a short time....or it might all fall apart next year, as promised revenue growth doesn't materialize whatsoever in Q3 and Q4, and the executives would have gotten lots of stocks for not performing well at all, by not meeting any of it's own targets.
The company's stock is probably undervalued, but until we see more changes on the governance front it is hard for me to feel really confident that Musclepharm will ever be run like any other food and beverage company, with a focus on profitability.
The "die rich or die tryin'" mentality ain't gonna be appreciated for much time longer by any investor, I'm quite certain of that.
there is a 33.3% increase in the stocks issued to management, so cheer up! LOL
I have a feeling they have fcked too much with Wynnefield Capital to let him be silent....Him not asking any questions at CC pretty much shows me that he doesn't consider anybody there to be his friends.
Wynnefield Capital bought at $8-9 levels and he cannot be happy with any gambling with the money he invested into MSLP and observing executives not speaking at conference call, orchestrating a drop in stock price to then later raise the number of stocks for performance based stock grants.
IRS cannot be happy either, if Musclepharm losses money for another year because of stock grants. Is there any other company that does that when it needs financing to become profitable?
Delaying profitability and performance for stock grants, that is not what they are intended for with the label "performance based" or "incentive" compensation.