Andrew Peller Ltd T.ADW.A

LEADERSHIP LEAVING PELLER

[johnathamilton]

Looks like leadership is fleeing the company. Two executives leaving in the same month is not a good look.

[TheCount11]

Agreed.  When does the dividend get cut?

[johnathamilton]

Agreed. The dividend has become unustainable. Fortunately, I am sitting on "free" shares but capital is capital, and the ownership of this company has destroyed a lot of it. Hopefully, these executives leaving will provide an opportunity to right size the SG&A. If the ownership were truly serious about righting the ship, John Peller who owns 12.3% of the company would work for $1/yr

[TheCount11]

Wonder how quickly SG&A can be brought down given YTD ending Dec 31st  Raw Materials and Consumables were up 8.3% Compensation was up 8.3% Repairs and Maintenance was up 6.7% I think it would have been prudent to cut the dividend last year.  I think of  Peller like a big ship.  Its difficult to be nimble so the balance sheet should be conservative. 

[johnathamilton]

Don't forget interest rates are not taking a bigger bite of the cash flow too. 

[johnathamilton]

"now" taking a bigger bite.....sigh.... should have done better proof reading. 

[TheCount11]

Agreed.  Stock just hit another 52w low.  Seems like investors are waking up to risk vs reward.  Given debt is almost $200M an extra 4% interest is $8M to debt holders. EBIT of 2% is needed with revenues of $400M before Dividends.    

[Stonksonlyup90]

They need to get their working capital in order, reduce inventory on hand and you have an instant "win" against your debt levels and interest savings.

[TheCount11]

Given its a winery how quickly are they going to reduce inventory when they need to raise wine prices?  Unfortunately no easy wins.  Reducing inventory will be an accomplishment.  Not saying it can't be done just can't think of any wineries that have quickly done that with inflation pressures. I have the impression management thought the low rate environment would

[Stonksonlyup90]

There is a lot of 'embedded value' in their hard assets.. if they ever truly ran into trouble they could sell assets (although I think ownership has too much pride to admit when they are wrong).

[TheCount11]

I agree that there is a lot of 'embedded value' in their hard assets.  I also think they have done a great job of creating the Niagara experience using their hard assets. Unfortunately financial leverage cuts both ways.  Debt holders have limited upside so they have covenants. Assets are funded through Debt and Equity.  The Return On Assets is Net Income divided by Total

[johnathamilton]

I believe that their cost of debt is closer to 10% - don't recall where I read that.  Just feels to me that they are a lot of dollars in this company that could be better spent. It's also disturbing the number of executives that come and go. Is the Chairman that difficult to work for? 

[TheCount11]

Haha I have absolutely no clue what the interest rate is for this year...  Interest was $5,273 for last quarter.  This includes lease "interest".   Note 11 Long-term debt in last years AR is vague and complicated The Company has entered into interest rate swap agreements to fix the interest rate on a portion of the balance outstanding on the investment facility