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48 North Q4 F19 September 30, 2019 “Quarter In Pictures”

Originally posted on December 4th, 2019 by GoBlue


An 11 page MDA! A new record.  No QoQ comparisons. They can do better.  MUCH better.


First off, the MDA for 48 North is very weak with little segmentation of information, no QoQ narrative and no Adj EBITDA calculation. They could do a much better job at conveying information to shareholders. Might be… with low sales there isn’t much to convey.

Income Statement Drivers and Implied Breakeven – Trend

Sales still have yet to rebound to the level recorded in first Q of rec and came in at $1.5 million for the Q up from $0.5 million last Q.

Distribution channels and success therein are a requisite to improved performance. They aren’t showing much.

Income Statement Drivers and Implied Breakeven – Peers

North is lowest in this peer base and may be replaced if they don’t start to show a pulse.

Gross Margin: Trend and Peers

GM continues to fall but remains north of 50%.  Absolute GM is $0.7 million, far shy of most of their expense categories.

Gross Margin: Peers – larger group

While GM% is good the GM in $ is the worst of the peer group.

SGA and SBC- Trend

SGA is $5.1 million up from $3.2million last Q.  Selling is up $1.2 million alone to $1.9 million.  G&A is now $3.2 million up from $2.5 million last Q.

“Related Party Transactions

Key management personnel are those persons having authority and responsibility for planning, directing and controlling activities of the Company, directly or indirectly. The key management team personnel of the Company are the members of the Company’s executive management team and the Board of Directors. The aggregate value of transactions relating to key management personnel and the Board of Directors were as follows:

Management is drawing a $1 million out of a total of $5.9 million in quarterly SGA + SBC or 17%. 

SGA and SBC- Peer

Certainly, the highest of peer group.

Implied Breakeven Net Operating Profit divided by Current Q Sales

North would need incremental quarterly sales of 685% at current GM% and OPEX$’s to achieve +NOP.

Implied Breakeven Adj EBITDA divided by Current Q Sales

North would need incremental quarterly sales of 508% at current GM% and OPEX$’s to achieve +EBITDA.

EBITDA Trend and Peer:

EBITDA continues its trend of growing more negative. 

Cash Position vs Debt Service:

The strongest metric North has is its cash position at $40 million down $13 million QoQ. They will need it if they cannot ramp sales and get to +EBITDA.  They are also debt free.

North would be an attractive takeover target for their cash position, if you could look past all the sliding metrics.

“Gas in the Tank”

They just started reporting FG and WIP last Q. 

Their bio assets are up as a function of outdoor grow.  The grow was projected to yield 40,000 KGs and it came well below that at 12,000 KGs.

They have ample inventory to spur sales but their FG is weak.

48 North has issues that only sales volume can start to solve.  At least they have a good cash position, which might make them attractive for a merger/takeover.  The problem becomes, are the assets any good?


The preceding is the opinion of the author and is in no way intended to be a recommendation to buy or sell any security or derivative. The author does not have a position in NRTH and will not start one in the next five days.