D-DAY, June 6thHappy Saturday to all!
As always, please challenge my ANALYSIS with ANALYSIS, that way we all can learn/glean more from what it out there.
I raised the 'revenue-mirage' in a previous post outlining how Gilles Gagnon's price increase, along with the FOREX gain, overstated Ceapro's growth in 2022; Sales volume growth that is. While REVENUES grew by 10%, sales volume did not grow by 10%; peak sales have been achieved.
Now I will introduce the concept of 'revenue-gap' that Ceapro now faces, why we should be concerned and, who is repsonsible for the issue; Gilles Gagnon.
SALES AND MARKETING
Source: Q1-2023 Financial Report, page 6
"The Company’s primary marketing strategy is to sell mostly though a distribution network instead of selling directly to end-users and as a result sales and marketing expenses are negligible."
94% of Ceapro's revenue comes from Symrise!!!
Source: 2022 Year End Consolidated Financial Statements, page 23.
"During the year ended December 31, 2022, the Company had export sales to one major distributor of the Company’s products in the aggregate amount of $17,638,541 representing 94% of total
revenue (2021 - $15,885,193 representing 92% of total revenue). This major distributor sells to dozens of customers on a worldwide basis."
Selling 94% of your product through one distributor is NOT as strategy.
Selling 94% of your product through one distributor does not constitute "sell mostly" but rather, "SELL ALL".
Therefore the sentence logically expands to include:
"Therefore, as long as Sales and Marketing remain, materially zero dollars ($0), there should be no expecation of revenue coming from any other sources as revenues will continue to solely come from our distribution network."
Sales and Marketing spend under Gilles Gagnon
Source: Annual Reports, Conslidated Financial Statements
2011 $111,000 (The year Gilles Gagnon becomes CEO)
2012 $199,000
2013 $85,000
2014 $14,000
2015 $8,000
2016 $5,000
2017 $32,000
2018 $225,000
2019 $425,000
2020 $111,000
2021 $47,000
2022 $30,000
Sooo... do you see Gilles Gagnon's strategy? Ride the growth of the underlying brands, collect a ridiculous paycheck and do nothing, other than say, "The pipeline, this is coming, that is coming..."
Sounds familiar doesn't it?
This is why the stock price is where it is and, more importantly, why no analysts follow Ceapro. They smell the stink.
Gilles Gagnon is running a one-man c1own show and the street knows it.
SO WHAT DOES THIS ALL MEAN?
With Ceapro's product in decline - and its decline now ACCELERATED by Gilles Gagnon's price increase, no strategy for selling - as evidenced by the Sales and Marketing 'spend' - Ceapro faces a looming and lengthy 'revenue-gap' that has begun, will increase and I predict will last at least 18 to 36 months. (See above for rationale) I am being generous by calling it a 'gap'... it will likley expand into being a 'hole' before it hits rock-bottom.
Is it any wonder that this has happened? Not at all, a company that does not invest in Sales and Marketing, ESPECIALLY when, materially, ALL OF THEIR REVENUE COMES FROM ONE SOURCE, has given itself, and ultimately its 'leader', Gilles Gagnon, a Best Before Date.
We are well past Gagnon's Best Before Date, it looks like it was prior to 2011.