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You two can work each up into lather can't you. Jeez. Anyway, I'm more aligned with greasemonkey (grass root revolt) than I am any conspiracy theory to take this company private.
As far as turning into hotheadluke not yet, sorry. I need to give it more time. Wrong or right they bought IGourmet to to play in the gourmet field along with the B&B. The core has been down but is a steady 7-8 cent annual EPS earner. If IGourmet can start making profit then we have something. As for me the jury is still out. It looks like they will cut the loss at IGourmet in half from standalone IGourmet which is improvement. Next year they need to be profitable at IGourmet. If they continue to need 40% SG&A as a % of IGourmet revenues then that is a big problem. I'm waiting to see what over 50% of IGourmet's revenues in the 4Q will bring as well as any new governance actions. 2019 will be a big year to see what they do on both fronts.
If they don't improve and the core gets worse than I think activist shareholders will make a move. I own 4% and have had other large shareholders contact me with similar ownership as well as firms that don't own any right now but are activist investors and have been eyeing IVFH for improving operation and governance.
No, right now I'm comfortable with what I have.
My thoughts after analyzing the 10Q and press release:
(1) I had forecast 1.7 cents and they ended up at 1.4 cents after excluding the one-time costs for Mouth. That would be 2.3 cents for the core business and about a penny loss for IGourmet.
(2) They had revenues of $10.3M at the core and $1.7M at IGourmet.
(3) 3Q2018 to 3Q2017 comparisons on revenue - the main difference with my 1.7 cents forecast was I hoped for at least flat core revenue growth whereas core revenues were down 1.6%. USFoods was flat and non-USFoods was down almost 6%. (2Q2018 to 2Q2017 comparisons had the core down 3%, USFoods slightly higher and non-USFoods down 12%). So better year over year comparisons than 2Q but still losing from the core.
(3) My assumptions are they made 30% gross margin for the core and 25% for IGourmet. SGA as a % of revenue around 23% at the core and 42% at IGourmet. These are my assumptions by business but they seem close with history. The only one I'm unsure about is the 42% at IGourmet. How much is investment in infrastructure for it and how much does it change with sales? The % should go down when 4Q IGourmet sales peak but go down how much?
(4) Last year IGourmet had 53% of total sales in the 4Q. If IVFH can improve on that by 27% (it was 30% in the 3Q but 23% in the 2Q), then they would have revenues of $5.8M from IGourmet in the 4Q. If core is down another 2% from 4Q2017 then overall revenues would be over $16M.
(5) Assuming the same gross margins and SGA % of revenue at the core business has it earning over 2 cents (in fact the core seems to earn about 2 cents every quarter now vs. the 4 cents of 2017). Assuming a SGA % of revenue of 20% for IGourmet (probably my biggest assumption) then IGourmet would show a profit of 1 cents and the overall quarter would be over 3 cents. I'd like to see 4 cents too but that would probably be unlikely.
(6) If all this happens at IGourmet as I assume that means loss of around $500K for the year inside of IVFH vs. loss of almost $1.2M at IGourmet standalone in 2017. Obviously they need to make this profitable in 2019 or at least break-even.
(6) Which puts us around 7-8 cents for the year and probably a 50-60 cents price for a while with maybe adding a another director or the reverse split changing the price a bit.
Less then a penny EPS
That's 2Q2018.
New 8K with voting results of the shareholder meeting out there.
Couple weeks ago before the annual meeting. We talked about the advisory votes on BOD directions, the core business and IGourmet. I don't think he told me anything that wasn't already in a press release but I do believe their is an honest intent to get on Nasdaq. Don't know about the timing. I think Sam's salary is decent (300K) but he will only get rich if the share price goes up and he knows that. In fact, I own almost as much as Sam.
They haven't had losses so I don't know what you are talking about. And I don't know from the conversation whether IGourmet will work or not or whether the core business will come back but again my thoughts are I see more upside with IVFH long term than downside based on what I bought it at. I do think we will see more IR action if they can have a story with the core and IGourmet to tell but I would think you need results to back up that story. Hence, let's see what 3Q brings.
I've talked to Sam several times.
My EPS estimate is 1.7 cents but I could see your 1.5 cents as well. That's the problem is we don't know and it could be 1 cent or 2 cents+.
My assumptions for the 1.7 cents:
(1) Core growth revenues flat with 3Q2017. Flat would actually be an improvement over 2Q2018 to 2Q2017 comparison which was actually down 3%.
(2) IGourmet gets about 25% of total 2018 revenue in 3Q and a 20% increase over their standalone 3Q2017.
(3) SG&A stays high similar to 2Q as IGourmet investment continues.
(4) 30% gross margin for core and 25% gross margin for IGourmet
(5) IGourmet still not profitable but getting very close.
Well I don't think 8-10 cent is overly optimistic but I will admit I have more faith in 8 cents rather than 10 cents. Excluding acquisition/legal costs they are at 3 cents for the first half. I forecast 5 cents for the last half.
Now I think I'm being conservative on core sales by keeping them flat at lower margins than last year.
On IGourmet, I forecast over 60% of their sales in the last half of the year and a 25% gross margin but still have them investing higher SG&A at that business. I have them going 20% higher revenues than stand alone IGourmet in 2017. I don't think we will see a profit at IGourmet until 4Q.
Course I could be wrong on all that and they could stay negative quarter to previous quarter (like in 2Q) on core sales rather than flat. IGourmet could have lower margins and sales than I modeled and if those all happen it is definitely closer to a 1 cent EPS 3Q. Again, I'm estimating 1.7 cents but have been disappointed before.
Having said all that, I have been buying at 62 cents this week and have added even more shares which is already quite large balance so yes I'm always more optimistic then others but I'm looking longer term at hopefully better growth, governance and if they screw up too badly a buyout.
Just my thoughts.
I agree with the big drop off with last year. I think with with just matching last year's core sales they will be around 1.7 cents in 3Q.
I hope the growth to the core business comes back and it was more the integration of IGourmet taking their eyes off the ball being the problem. But if the core just stays flat and IGourmet continues it's progress (albeit with the extra $ going to IGourmet subsiding sometime soon), I get more of an 8-10 cent company.
Nothing like the .15 cents of last year but I think higher than 4-5 cents. Even at the 8-10 cents they are at at 6-7 PE.
Looks like we are in a 65 to 68 cent holding pattern (with occasional day dips below) until the BOD meeting on the 31rst. Results of pro-shareholder motions may help a bit and a reverse stock split eventually will too but probably no major movements until 3Q EPS on Nov 14th. I'm not expecting big 3Q EPS. I'm thinking 1.7 cents with flat organic growth (flat quarter over quarter would be better than 2Q). IGourmet should have about 25% of the year's total revenues in 3Q but continued investment in it would probably bring it closer to breakeven but still likely a loss for the quarter.
My guess having outlasted other mistakes in the past even he might have actually felt the pressure from going from $1.32 price to the 50 cent range.
I hope your guess #1 is it but I have a feeling it is guess #2 at least for the next quarter. Maybe if a NASDAQ listing becomes a closer reality in the future then the CC comes back as well as maybe getting earnings guidance. We shall see. My guess (I'm not the odds master you are) is the 1:5 on the reverse split to get in the $3-$4 range.
Well, these are all good steps towards better governance and shareholder interaction. Hopefully, an IR strategy of telling the story to Wall Street is part of this as well. Looks like just the better governance and the intent to try to get listed on NASDAQ is worth a multiple increase from around 5 to now 7. Now better results will be needed to go higher.
As for the 3 cent quarter I think that is more likely in the 4Q. I think the 3Q will be in the 1.5-2 cent range unless organic sales come back in anyway. If the core sales are just flat with last year, then we are likely in that range. Whereas 4Q should have 40% of USGourmet sales and may be able to get to the 3 cent range.
Most of that is me. I'm a buyer at this price. So if I can get that filled maybe it heads up.
While I appreciate the hypothetical theories of someone that doesn't own the stock, I have a different belief.
Well I wouldn't have bought all the shares I did if I believed what you believe. You would have to believe he is purposely tanking the company and I don't.
Oh there is a lot that concerns me but I guess my faith is that I believe at this low multiple there is more upside than downside. Having said that, who knows?
Eldan
Welcome aboard. I agree with you assessment. I have bought a lot of stock and own about 3% of the company now so I have a huge vested interest.
I have a feeling that on the governance side that a new Board member will be named and an annual meeting held in the next 6 months. I believe that they will hit IR a little harder soon but I think they need to get their story defined better especially how the different platforms are working (IGourmet, core business, USFood). It is actually the non-USFood business that has fallen off (or converted to IGourmet or both). I think they would be great for value investors.
I think they will continue the higher than usual operating expenses for IGourmet for probably the next few quarters. I think the 9 cents for the next 4 quarters is fair and if they can solve core growth or the IGourmet investments can add revenue than maybe a bit higher.
At the end of the day, they are a player in a growing specialty market (gourmet), profitable, good balance sheet and an acquisition target (probably only USFoods for now but could be others if that revenue concentration gets reduced).
Good price to get it at. I bought some last week at 53 and 55 cents.
Actually I wasn't talking about your projection of Igourmet sales I was talking about the actual comparison to last year which can be determined (after some work) from the 10Q and press release.
On another note, I wonder since the non-USFoods revenues were down 12% from last year's quarter if some of those are being sold through IGourmet. If smaller customers, it may make sense that's what happened. If that is the case then the sales are going to a lower margin business but I guess better to cannibalize your own business then have it taken away. On the flip side, it could have just been taken away too.
I'm not disputing most of your analysis or your questions below. Very valid. I'm just confused about the revenues. Press release says IGourmet grew 23% from 2Q2017 to 2Q2018. So I have it a little differently on revenues.
I have core at $10.5M to $10.2M (down 3%) with case growth offset by lower revenue products and US Food growth flat. Matter of fact non-US Foods was down 12%. I then have IGourmet going from $1.45M in 2Q2017 to almost $1.8M in 2Q2018.
This doesn't change any of the rest of your analysis or your very valid questions, I'm just trying to make sure I understand what is going on with revenues. Core business is definitely the question here.
Although disappointed in the results, I'm buying more at 53 cents. Lowering the overall weighted average.
The non-GAAP adjustments are actually less than 2Q2017. I think the big problem is organic growth. Sounds like customers are buying more cases, but a different mix with lower margins. If organic growth is 0% they aren't beating any quarter of last year even with a big 4Q of IGourmet. Which my guess may just only be profitable in that quarter. He's upbeat but I can't understand why.So it looks like the core business is half of what 2017 was and they have add IGourmet losses (at least for the time being).
2Q report is out. Looks terrible to me. Less then $12M revenues and 1 cent of EPS compared to 4C in 2017. Looks like negative or flat organic growth (certainly flat for US Foods). Gross margin is 30% down from 32% in 1Q. SG&A is 25% revenue which looks like the new norm vs. low 20% last year. Don't see any positives. Let me know if you see differently.
Light trading this week. No one wanting to make a big commitment one way or another before the earnings on Tuesday, I suspect.
That could be exactly right although they bought IGournmet in Jan and 2Q goes through June. They also reported the 30% increase for March. So hopefully we see something in 2Q but surely by 3Q. Who knows? The bigger concern in IVFH's organic sales bouncing back.
Well if its 1c, I believe we are all selling as they did 4c on their own last year. I'm thinking (hoping) around 4c but could be in the 3.5c-4c range. Obviously with these guys it could be anything.
No one will disagree with you about terrible IR particularly for small shareholders. I think if I'm right about 2Q it just moves back into the 80 cent range. Some multiple expansion will come with good quarterly earnings but I think we might be capped at a PE of 7 or so even after several good earnings quarters until they add a Board member (who sticks around), get listed on NASDAQ, starts communicating beyond earnings releases and courts Wall Street. However, if none of that happens I can still make a lot of money at a 7 PE multiple on good earnings.I don't see a dividend with this company in the near future regardless (and personally didn't buy for a dividend).
Since we are a couple weeks from 2Q reporting here is my 2Q thinking:
Revenues of $13.4M
Net income -- just short of $1.4M
EPS around 4.1 cents but could be slightly lower depending on shares outstanding and IGourmet contributes slight profit
Key Assumptions:
2Q2018 over 2Q2017 --- core growth - 8%
2Q2018 over 2Q2017 --- IGourmet growth - 15% (assuming 2Q2017 share of 2017 total sales was 20%)
Obviously, the biggest assumption is core growth. So 4Q2107 over 4Q2016 was 10% with USFoods at 13% and non-USFoods at 2%. Then the sky fell in 1Q2018 with growth probably around 2% for both. Let's say weather cost 3% (a guess). Are they still growing organically or was that too much focus on the acquisition and getting it integrated or more troubling problems? If 8% core growth is too high maybe IGourmet at 15% is too low based on the 30% March over March results in the press release. Law of compensating errors?
I think the analysis of 2Q organic sales will tell us all a lot about IVFH.
Anyway, these are my thoughts. Appreciate any comments.
No one's stopping you. Fire away at him.
I understand what passive means from an investment standpoint. I think I made myself clear on waiting on 2Q and maybe 3Q results before I jump to any conclusions. However, if 2Q is poor (in my judgement) then I will probably be asking lots of questions.
Lot going on here but my only comment is on the 2%+ claimed ownership shareholder is passive.
First, I assume you are talking about me.
Second, not claimed -- actual.
Third, not passive if mismanaged (from when I owned the stock) company.
Since I just got in about a year ago, I'm still waiting to see especially 2Q and 3Q earnings. If many of what you say is true now or happens, I will certainly become more active to any extent that matters to Sam.
That would probably be the one for me too although if management just can't handle this, I may wait for a buyer to come in and see what they can do. Like I said I can be patient. I have some investments 10-15 years that have paid of tremendously.
Who the hell knows the probability. That would be just a guess on my or your part. I made my big bet with these guys right or wrong so either they make me a lot of money or hopefully worst case I get out not losing money. I'm patient though. I can wait. No thanks on ASBN as I'm good on my investments for now. As for my concentration, I'll survive quite well even if this is a loser.
I don't disagree with that at all. In fact in #18222 I laid out my assumptions getting essentially what you just said. 2Q in another month will be very telling.
Just for clarification are you talking $14M and 5 cents in 2Q? Or in one of the quarters this year? If 2Q, I don't see that happening but would agree with you 3Q or 4Q would need to pull that off.
No, I used 1Q as is and then have my assumptions for the three Qs coming up . I'm sure it will need to be adjusted after 2Q results. But right now I'm not sure what I would change it to as I don't know if 1Q core sales slow growth is permanent or if March year over year IGourmet 30% increase is sustainable.
I wasn't saying my assumptions are correct at all. They are just assumptions based on history. I absolutely could be way off. I guess I'm hoping then I'm also way off on IGourmet the opposite way then (albeit a lower margin business it appears).
I was just asking since you raised the correlation with USFoods (which I think very well might be a valid point) if it held for the other years as well? I thought it was an insightful point and if the correlation is strong, it even brings more validity to your point.
As for 800K shares I look at a lot of things to make an investment decision. I hope I'm more right about this having more upside than downside but hey, it's the stock market. Most of all this is out of my control other than how much I buy/sell and when. If I'm wrong then well I'm going to lose some money. I've had some big winners and I've had some mild losers. I do enjoy trying to find something like IVFH and hope it works out and I wish we had more numbers and better investor relations but I knew that going in that was unlikley.