Hello subscribers!   We hope you are getting settled in and have poked around the website. 

The website is a work in progress as we want to design something that our subscribers covet.  So free feel to tell us what you would like to see.  Also, plans are underway for a message board and some other features to get the conversations and dialogue rolling.  But you certainly can ask Q’s and we will do our best to reply in a timely manner.

If you haven’t followed us on our subreddit you may wonder who is who in the zoo.  So, before I drop some new original content on you, I figure I should introduce the cast of characters.

• Craig Wiggins aka GoBlue –  It is a University of Michigan reference to the school colors Maize and Blue. I am football season ticket holder and my renewal subscription was on my desk when I was coming up with my handle several years back.
• Andrew Udell aka Mollytime – Named after play time for one of his rescue cats “Molly”
• Graham Jones aka CytochromeP – I had to Google it my first time.  It is plant related.

You will get to know us more as this journey continues.  Like why we are so often quoting Blazing Saddles – best comedy ever that will NEVER be remade!

Now to the meat….  We have been repeatedly asked to commence Rundowns and Capital Structure on US based companies. We have a Lounge on our sub Reddit called “Rock Ridge Saloon” – a Blazing Saddles reference – that is open after trading hours and weekends to discuss US names.

The problem with doing Rundowns has been there are only a handful of US companies with more than one quarter of published earnings.  For a guy like me to do a Rundown I need some trends and some peer comparisons to write anything that has some legs to it.  So, I will be doing Rundowns on some US names in the future.  But I’ll need a few Q’s to say anything meaningful.

Perhaps we can coax Molly to do a Capital Structure review of a few of the names to see if there are any optionality trip wires that may impact these US names and their stock price in the interim.

What we have below is a Peer Comparison of some US names (which I will add and subtract once we get some more like sized companies to compare) with various metrics in C$ 000’s:

• Revenue and/or Sales
• Gross Margin: adjusted for IFRS voodoo on Gain on Biologicals and Fair Value Increment
• Operating Expenses: OPEX
• Net Operating Profit: Gross Margin less Operating Expenses. This is what the operation of the companies PRIMARY business earns.
• Adjusted EBITDA – Earnings Before Interest, Taxes, Depreciation, Amortization and other non cash expenses (eg. Share Based Compensation) that are outside of the physical operations or investment income/expenses and changes thereto.
• Breakeven Sales on a quarterly basis necessary to show a positive Net Operating Profit using CURRENT OPEX and Gross Margin
• Gap to Breakeven Sales: Breakeven Sales less current quarterly Sales
• Gap to Breakeven Adj EBITDA – How much more quarterly Sales are needed to get to $0 Adj EBITDA

Gross Margin % is VERY important in Breakeven Sales levels. If the percentage is low it magnifies the breakeven points. OH is a good example of this. They had $508k in Gross Margin last Q or 8% of sales. When 8% is your denominator it magnifies the breakeven gap as you are dividing either OPEX or EBITDA by that percentage. Trulieve,has negative gaps on a breakeven basis, as they are positive Net Opearting profit and EBITDA

[NOTE: OH has undergone a shift in business model. In one of their earlier Q’s they didn’t back out a gain on investment in doing their Adj EBITDA. If they are an investment company maybe you don’t back it out. But as they moved to an operating company I thought it was prudent to back it out.]

The idea of this chart is to see how industry peers are doing across the above metrics based on most recent quarterly financial data.  The individual company trend analysis, which I will post over the next few days, will help you identify “inflection points” that might show either something good or bad is developing.

As I do Rundowns on the various US names you will see both Peer Comparisons and Trend Analysis to help explain what the individual companies numbers are saying versus their peers.

If you have any questions, hit me up.

GoBlue