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BRY - Bri-Chem


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Worth creating a thread IMO.

 

Last year, 11.4 million shares were voted or 48%. Of these, 2.12 million were withheld on Don Caron (Chairman and CEO) while the rest of directors (3) had only around 200,000 shares withheld.

 

I did not vote my shares last year and I hold a decent stake. I also know other shareholders who are unhappy, did not vote last year and are planning to vote against the slate of directors this year.

 

Let me put it this way: If the same number vote against Don Caron this year plus the new ones from this year, we are looking at tripling the number of shares withheld or potentially enough to force him to resign from being a director per their corporate by-law: more than 50% of shares voted withheld.

 

I suspect that those who voted against him last year are long term shareholders quite unhappy with long term results and who do not support him being Chairman and CEO with just over 1 million shares or 4.5%. This is reinforced by the fact that a significant number of shares or similar to 2017 have been withheld for a number of years now.

 

It is time for us to send a strong message: This is not a private company. One individual with only 4.5% of shares held cannot dictate for the remaining 95.5%. Results have been poor and undervaluation has lasted for way too long. Time to look at strategic alternatives.

 

The Management Circular was finally published on Sedar on Friday and you should receive your proxy in the mail shortly.

 

PLEASE VOTE! Every vote counts! DO NOT underestimate your vote even if you believe it is a small stake as it could be the difference maker.

 

Cardboard

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Interesting idea.  Seems like the company can generate earnings and on that basis looks cheap.  However, they keep getting squeezed on working capital if that continues, without any cash on hand, this can get ugly.  ABL has been increased, but I would have thought they would have cut costs more to give themselves more room.

 

Can they sell any assets?  What would they get for US operations? 

 

What would the PP&E be worth in a liquidation?

 

Management does not have high termination costs either, which is interesting to note.

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Well, I only ever bought 15k shares ... just saw the electronic proxy from IB and withheld votes for all management! Now, I think Cardboard should sharpen is pen and send a strongly worded letter to the board after the vote :) along the lines of 'fire that muppet'.

 

 

Worth creating a thread IMO.

 

Last year, 11.4 million shares were voted or 48%. Of these, 2.12 million were withheld on Don Caron (Chairman and CEO) while the rest of directors (3) had only around 200,000 shares withheld.

 

I did not vote my shares last year and I hold a decent stake. I also know other shareholders who are unhappy, did not vote last year and are planning to vote against the slate of directors this year.

 

Let me put it this way: If the same number vote against Don Caron this year plus the new ones from this year, we are looking at tripling the number of shares withheld or potentially enough to force him to resign from being a director per their corporate by-law: more than 50% of shares voted withheld.

 

I suspect that those who voted against him last year are long term shareholders quite unhappy with long term results and who do not support him being Chairman and CEO with just over 1 million shares or 4.5%. This is reinforced by the fact that a significant number of shares or similar to 2017 have been withheld for a number of years now.

 

It is time for us to send a strong message: This is not a private company. One individual with only 4.5% of shares held cannot dictate for the remaining 95.5%. Results have been poor and undervaluation has lasted for way too long. Time to look at strategic alternatives.

 

The Management Circular was finally published on Sedar on Friday and you should receive your proxy in the mail shortly.

 

PLEASE VOTE! Every vote counts! DO NOT underestimate your vote even if you believe it is a small stake as it could be the difference maker.

 

Cardboard

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  • 1 month later...

Perhaps this practice had something to do with the unexpected votes

 

https://www.reuters.com/article/agrium-jana-proxy/update-1-jana-questions-agrium-broker-payments-in-proxy-fight-idUSL2N0CO0QH20130401

 

https://business.financialpost.com/news/fp-street/liquor-stores-to-pay-brokers-to-solicit-votes-in-proxy-battle

 

Turns out in Canada you can pay brokers to vote the way you want.

 

No idea if this applicable in this case, but thought I would point out that it can happen.

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  • 1 month later...

The garbage quarter (Q2) was expected since Q1 or when they announced the closure of two underperforming oil-based mud warehouses in the Permian: costs too high over there and not the scale to deliver/compete.

 

While I am clearly unhappy with this foray into Texas while it should have been known at the onset that it would never have been as profitable as their other warehouses, I must give them credit for reacting quickly and getting out fast without too much damage.

 

The stock currently trades at $0.30 while book value is $1.05 and net-net working capital is $0.49. So right there, I see some margin of safety and large upside.

 

Moreover, Q3 looks solid per their outlook with all areas doing well and margins at or above historical averages. Then you have Q4 and Q1 which are their big quarters coming right after.

 

So I think it is an opportunity right now.

 

There is a vacuum of buyers with the dog days of summer and it is a tiny micro-cap. If they only do business as well as they did last year in Q3, why shouldn`t this trade at least at $0.60 upon Q3 earnings release?

 

Look at DC.A for example. This thing could not catch a bid and was at $1.10. A few days later it is at $1.50 just on the possibility that one holding could be sold. These small caps can move very fast.

 

Cardboard

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Are they really restructuring the company? SG&A went from 4.9m in 2016 to 3.75m YTD. Salaries went from around 7.2-7.5 (2016&2017) to 10m probably in 2018. + more debt - interest burden. How good a change in the management would be for shareholders..

 

According to their profile in Linkedin, they have just opened 5 new positions this week so salaries will get even higher ::) ::). Kidding.

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Doesn´t this company look to cheap at 0,30CAD?

 

P/NCAV = 0.63, P/TB = 0.3.

 

From Q2 "Looking to the third quarter and beyond, sales are currently robust across all North American divisions and we expect our consolidated margins to be at or above historical normalized levels. Northern American oil and gas drilling activity levels should remain consistent for the remainder of 2018, however, PSAC has forecasted 3,586 wells to be drilled in Western Canada for the second half of 2018 with 1,839 wells to be drilled in the third quarter, representing a 5% forecasted decrease over Q3 2017. Bri-Chem will continue to be proactive in seeking higher margin opportunities throughout all its North America business segments.  We will aim to stay focused on our strategy, maintain our market share and not sacrifice either to achieve our margin goals in the near term."

 

The "at or above historical normalized levels" would imply a EBIT-margin of 5-6 % historically; http://quote.morningstar.ca/Quicktakes/stock/keyratios.aspx?t=BRY&region=CAN&culture=en-CA&ops=clear.

 

With TTM revenue of 120 mCAD (despite significant lower oilprice in Q3 and Q4-17) that would give a EBIT of 6 mCAD (using a 5 % margin) - interest of 2,8 m = 3,2 mCAD EBT with NOLs. Gives a P/E < 2,2 on a ~7,3m market cap IF managements predictions are true and the oil price avrage higher than TTM.

 

Debt situation not to fun but a big cushion on the balance sheet.

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  • 5 months later...
  • 3 months later...

Hi Cardboard

 

... wondered whether you're still in this muddy situation? I kept a small tracking position and just saw that it's plumbing new lows, so wondered if you've updated your views re underlying business performance?

 

Thanks!

 

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