Andrew Peller Ltd T.ADW.A

Interest rates are a big deal for Peller. Q2

[TheCount11]

Shareholders are the residual claim on operating profits.  This quarter saw ALL operating profits go to debt holders. 
Decent revenue increase over last year. 
I think Peller is a Debt vs Dividend story for next few years.  If Bank of Canada raises in Dec and holds next year it won't be great for Peller equity holders all else being equal.

I can see Gross and Operating profit margins increasing with price increases.  What are your thoughts?

	Sep 30 '22		Sep 30 '21
Sales	101,816		99,224		199515	191621
COGS	62,336	61.2%	56,816	57.3%	121972	111952
Dep_prod	2,472	2.4%	2,411	2.4%	4791	4516
Gross_profit	37,008	36.3%	39,997	40.3%	72752	75153
SGA	27,822	27.3%	26,587	26.8%	53914	51935
Dep	3,209	3.2%	2,862	2.9%	6431	5871
Op_profit	5,977	5.9%	10,548	10.6%
Interest	6,016	5.9%	2,478	2.5%	8629	4751

[johnathamilton]

Peller's SG&A continues to be out of line. 

[TheCount11]

Whats your thoughts on Debt funded Dividends next year?  ie increase amount of long term debt to pay dividends

[johnathamilton]

I think there will be a dividend cut next year. This company has demonstrated an unwillingness to bring its bloated SG&A into line and will instead pass on the cost to the shareholders. Note that there was extensive insider selling in October prior to the release of the poor earnings report. I cannot for the life of me understand why this is allowed in Canada. There should be no insider

[Stonksonlyup90]

"Insider selling" was related to the winding up of a Peller Family Members Estate. However, I do agree with your comments on SG&A.. there has to be more levers to pull!

[johnathamilton]

Thanks for the feedback. I don't have a problem with insider selling. They do have a right to cash out and especially with regards to the passing of their brother and winding up his estate - I get it. But again - the timing looks very bad. 

[TheCount11]

great points.