RE:AGMThank you for the update.
BB123456 wrote: Attended the AGM today :
They talked about the financial results, the big investment and related borrowing for the new plant, how they used to sleep easy at night, but are now more concerned because of this. Said that owning Hammond now is a bet that the company can make this investment (largest in their history) work.
Now have increased depreciation costs, interest costs, but have driven no increase in revenue to offset this, which is why profits are down. They said they could scale up to over $150 million in the current 2 plants. The US$, now at $1.37 is an advantage and are trying to use this to grow revenue and margins in US, but need to be careful as could come back down as well.
Are still going through some growing pains (eg. lights out operations would often run less than an hour overnight at first, but now getting mostly through the night). Plan is to spend about $165,000 fixing up area where paint line in the old plant was before moving other lines into this area. Hope to acheive efficiencies by being able to optimize work flow in the old plan and drive down costs.
Talked about competition being tough in the computer rack business and many competitors just sell cheap Chineses stuff, so Hammond has both lines - quality Guelph stuff and cheap Chineses stuff at 40% discount.
Think that's about all - my investment thinking is Hammond has made over $0.20 per share 4 of the last 6 years and over $0.30 two of those years. Doing this big change is causing some near-term issues, but they should be able to work through these and be in a position to generate higher profits in 3 years, assuming the dollar stays in the current range. Say they can get optimisitically to $0.40, put a 10 p/e on it as investors will pay up as they see the growth and you could have a $4.00 stock. On the downside, they have a $3.80 book value, which is supported by some valueable Guelph real estate.