I disagree. The company does not spin. Whether it is because they are more honest than most managements, are afraid of being sued, or whatever, "cautiously optimistic" is the most you ever get from them. Explaining high inventory on the last day of Q4 as being the result of an expected increase in sales over the next three months, which would end two days after they filed that statement, would never have been said if Q1 would be reported in a few weeks as having been anything but very good. You can take it to the bank that the high inventory was not due to sales weakness. Amnf is in an expansion mode with new products, new equipment and new customers. I expect to see more evidence of this when Q1 is reported and the higher inventory will be understood as having been necessary in light of increased sales which actually occurred in Q1.
"Inventory levels on December 31, 2014, 2013, and 2012, were $2,792,436, $2,106,600,
and $2,090,693, respectively. Inventories increased annually due to timing and also to
support the Company’s expected increase in sales activities in the subsequent quarter
after the respective year end.
They would not have said this if the excess inventory represented stuff that they couldn't sell. I agree with Freshbread; this is a positive.
As for the balance sheet, the most relevant comparison of cash, CDs, etc. is year over year. Otherwise, seasonal changes affect the comparison. Y.O.Y. 4.082K compared to 3,047K is an increase of 34%. That is terrific. They are planning capital expenditures of about 400K more than last year for new equipment and expansion which could delay a dividend increase but bode well for future growth. But it will happen this year IMHO and things are going extremely well.
Here is the key portion of a Forbes article:
"According to the terms of the deal, the current shareholders of Heinz will hold a 51% stake in the newly formed company. These shareholders include 3G Capital and Berkshire Hathaway. The remainder will go to the current shareholders of Kraft. To sweeten the deal for Kraft’s shareholders, they have been provided a one-time cash dividend of $16.50 per share"
Logically, unless Buffett and 3G took Kraft private, which they did not, the Kraft shareholders have to hold a stake in the public company. Heinz is being merged into Kraft with the Kraft shareholders having 49% after the deal and the 3G/Buffett shareholders 51%.
Unless I missed something, Kraft Heinz will be a public company immediately after the deal is completed and the special dividend paid to the Kraft shareholders. Heinz, in effect, is going public using the vehicle of the Kraft stock which will remain a public company under the name Kraft Heinz.
I also own BGS and share your sentiment. It would also be fine if BGS were bought out at a decent premium, as Pf almost was by Hillshire before Tsn bought Hillshire.,
You either didn't read or didn't understand wrb335's post to which I responded. He has a fundamentally different view on how an acquisition price is set than I have. That issue is worth discussing. Your response conflates that important issue with a straw man: painting the tape. Nobody here has expressed the view that such conduct affects a takeover price. The reason people presumably paint the tape is because their results for the day will look a little better if they have a large amnf holding as a % of their portfolio and amnf closes .01 or ,02 higher. Some may also believe that the closing price has some effect on the close next day.
The price of a deal is typically a function of the stock's price for 10-20 trading days ahead of a deal being announced (or the point that serious rumors are out there). The vast majority of friendly deals are done at a premium of around 20% in my experience, though the premium certainly varies and could end up much higher if there is a second interested party. Occasionally, there are special circumstances where a deal is done below the share price (a "take-under") , but that only happens when the seller is desperate such as where it needs capital and can't otherwise get it. That is not an issue here. Once in a blue moon, a bid is made substantially higher than the current price, but that is rare, again in my experience. I don't have stats on any of this, just 3 decades of watching.
So the bottom line IMHO is that it does matter whether the stock is at 2, 2.25 or 2.50 when a deal is being considered. The downside of a too high stock price is that a suitor who would otherwise be interested, loses interest because the valuation, including a premium, is too high compared to how it evaluates the fundamentals. For me, Amnf is not overvalued for a potential suitor because of the 20% EPS growth rate with a reasonable PE, potential savings in distribution and brokerage charges after a deal and the potential for a geographic expansion by a buyer willing to invest more in the business.
" But wouldn't anyone the BOD hires have to pretty much agree with their current philosophy?"
I don't assume that the current philosophy, to the extent it exists, is inflexible. If a new CEO came in he or she would presumably have some plans for change which I have no reason to believe the BOD would not give full consideration to. For example, if the new CEO had a plan to slowly increase the geographic reach of the bulk of the distribution and provided a prudent plan for effectuating it without undue risk, my guess, without knowing the board members, is that the proposal would be carefully considered and very likely implemented.. That's how BODs and new CEOs typically operate. Presumably, before any new CEO were hired, he would have a good idea as to whether the Board is definitely looking to sell the company, is definitely opposed to doing so (except at a very unlikely to be obtainable price), or is open to the idea at attractive terms. On such a key issue there would have to be a meeting of the minds before the CEO signed on.. On other matters, just as the company has evolved since Bill Armanino's death to add products, move into international markets, etc., I would expect further evolution under a new CEO who would presumably review all of the company's operations and have some new or different ideas. for the Board to consider.
While the payout ratio is certainly an important metric, to the extent that the cash on the balance sheet grows, which it has been doing significantly, that is another potential source for an increased dividend or special dividend. It will be interesting to see the balance sheet which should come out shortly as part of the financial filing.
Until recently, I thought that there was no significant chance for either an increase or special this quarter. However, if Q1 is really as strong as the earning Press Release would indicate -- and has continued to be strong since the earnings release -- I can see either an increase in the regular dividend to .02 or a special of .015-.02 on the theory that they were thinking about doing it last quarter and conservatively waited to confirm that the business remained strong which has now occurred.
The multiple of ebidta is obviously not the same for every company having x dollars in revenue. Amnf has been growing earnings at about 15%. Many food companies are lucky to grow at 5%. Obviously, the Amnf multiple would be significantly higher to a buyer who thinks the growth can continue. In that regard,, Amnf's business is more scalable than most because it operates primarily in a relatively small geographical area. Alsom, as somebody pointed out, the broker expense could easily be eliminated with only marginal increased distribution costs for a company that has products already being sold to the same customers, plus there is potential for cross-selling of both companies' products.
It only takes one buyer and I agree that many potential buyers would probably be private companies that nobody here heard of. At this point, given Amnf's record of strong earnings growth and a very solid balance sheet, I am reasonably confident that an attractive price could be obtained. I am less confident that the company wants to sell just yet.
These two sentences from the report are the most bullish they have ever been in an earnings report since I have been in the stock beginning in 2005:
"Preliminary indications for the first quarter of 2015 are that our sales are off to a strong start in the new year. Our sales pipeline appears strong".
Given that they always have overdelivered and never overpromised, the above indicates that things are going extremely well.
As I read the report, they seem to have borrowed a bit from Q4 in Q3 (the timing reference) which explains the extraordinary result in Q3. Looking at the whole year, EPS was up 15.3% which is very strong and we may very well do even better this year.
Q3's earnings in 2014 were actually announced on October 17th, a Friday. I am surprised that anyone would be against the company announcing a week or two before earnings what the date will be. Almost all companies do that and it benefits shareholders who may want to trade the news and don't watch the market all day. The desirability of a conference call, on the other hand, is more debatable. I would welcome the opportunity to hopefully get a better idea about current and future initiatives and trends in the business. If the Press Release were more comprehensive, the call would be less necessary.
An earnings conference call would be wonderful. Also, a much more modest change, announcing in advance when earnings will be released would be helpful, rather than investors having to try to guess the date and time of the announcement. The more the company acts like a larger company (in matters such as the above, not in being more bureaucratic), the more respect it will get and the more fund managers will consider investing.in the company. Particularly because it is on the pink sheets, Amnf should take steps to signal that it seeks to be transparent, not a characteristic of many pink sheet companies.
I agree that it is strange that the press release regarding special dividends was not distributed. Note, though, that for the last couple of months the press releases announcing ordinary dividends were also not disseminated..
A few highlights:
1. Cash is up over $1 Million since last year, coupled with a substantial pay down of debt (about 500K). This increases the odds of a special dividend significantly, though I put them at no more than 50-60%. only because the company is conservative and we got a dividend increase just last month. Hope it happens.
2. A shift in mix to higher profit items.
3. Increased promotional expenses to continue in Q4 " “with a goal of obtaining additional market share in several domestic markets” (p. 29).
4. Nice 25% increase in international sales y.o.y. They now represent 13% of sales, compared to 11% last year.
5. Much increased R&D expenses (presumably for new products) and despite that the earnings were very strong. Investing in the business but not at the expense of excellent EPS is what you want to see.
I see nothing whatsoever in the report and a lot to be pleased with..
It may not be a yawn. Between now and then we have:
1. dividend announcement around 12/12 which could include a special or a buyback. A div increase is highly unlikely 2 quarters in a row, but the others are very much in play and would further confirm the likelihood of a very good quarter.
2. The full financial statement which will be filed in a few weeks contains tidbits from the balance sheet re inventories, accounts receivables, cash on hand etc. and often narratives beyond the press release detailing international sales and other metrics.
3. The real possibility of new institutional money coming into the stock before year's end.
In the meantime, there seems to be good buying interest at 2.00. I wish it were at a higher price which would be fully justified IMHO, but that should come.
Somebody sold a 10K share block at 2.02. There was only a small bid shown which remains there. That means that a market maker picked up the block confident that the stock is heading higher.
If I didn't have such a large position, I would be adding here. The results have been extraordinary all year and my guess (supported by the increased sales late in the quarter which you noted) is that next quarter will be very good as well.