I thought I heard $8M on the last conference call. However, I rechecked and it was not on the call. In fact, the target was to replace the dairy revenue from day one. They fell $1M short. Not great, but not terrible either, considering the dairy was 3/4 of their business. They guided that despite jettisoning the dairy business, revenues will grow ~50% YoY, and that the growth would be in the SECOND half.
The "extra" $14M they receive for the dairy is by far more important news, imo, and more than offsets any perceived negative for $.015 income. Obviously, this is $14M less they will have to come up with for the new land and capital development.
The cost of the land is an issue. I agree. I think the prices paid need to be explained. But I trust management, and it is clear that projected cash flow and income generated from the business uses for the land justify the purchases.
As for asparagus -- while the price may be lower, for all I know, the gestation period to maturity may be six months vs. 3 years for HU, and the cost to plant may be less. I have no idea. Don't see why they'd elect to plant asparagus rather than HU flowers, if the payback is dramatically longer/lower.
As Strindberg pointed out, there's at least 100% upside to the HU flower projections, if weather permits near capacity harvest. This increase would be delayed on the income statement (but not on the balance sheet)to the extent they chose to defer 2011 harvest to 2012 sales.
I do think that when they develop distribution networks for "one-stop shop" in 2012, it's a good idea to have diverse products.
Curious if anyone sees this meaning retail?
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