SOS driving sales and profit into 2022

“The fourth quarter of 2021 also provided a substantial increase year-over-year as Stationery and Office Supplies was able to post a $13.3 million profit compared to a loss in the previous year 4th Quarter of $8.2 million from sales of $103 million up 45 percent from $71 million in 2020, to record the best December quarter in SOS’ history” the director advised shareholders in their commentary on the full year results.
The company “had a very strong year in 2021 as revenues and gross profit grew by double digits, gross profit percentage increased to 51.2 percentage while expenses were held to a modest 3 percent increase. SOS was, therefore, able to record its second highest pre-tax profit figure in its history of $105M.”
“For the fourth quarter, we put an emphasis on Christmas sales which is normally our slowest time of the year so that greatly helped” Allan McDaniel, the company’s recently appointed CEO, informed Revenues for the company’s 2022 first quarter are said to be the company’s best first quarter ever up to early March, with expansion in the BPO sector seeming to be playing a major role.
The company seems set to deliver its best full year results in 2022 barring any major negative developments. If revenues excluding book production grow by 18 percent profit should reach $210 million for EPS of 85 cents versus 43 cents for 2021, but projects sales revenue growth of 28 percent and profit to reach $275 million and EPS of $1.10.
Segment results from the audited financial statements paint an interesting picture with Furniture revenues dropping 37 percent to $462 million from $734 million in 2020 but Stationery and Others surged 207 percent to $614 million. The small books segment saw revenues climbing 26 percent to $48 million. consulted with the company about the substantial changes in the revenues for the two large segments and was informed that there are to be adjusted and will likely show that that the Furniture segment remained flat while Office supplies grew by 45 percent over 2020. With the expansion in the BPO industry, there are good prospects that the furniture segment could see a major move in sales in 2022.
Cost of sales climbed 9 percent to $574 million from $527 million in 2020, but gross profit surged 24 percent to $551 million from $445 million in 2020.
Administrative and general expenses rose 9 percent to $320 million from $287 million, while selling and promotional expenses rose 7 percent to $80 million from $75 million in 2020,

Stationery & Office Supplies hit new high after posting good Q2 results.

Depreciation and amortization cost slipped from $28 million to $26 million and Finance expenses fell from $15 million to $11 million.
The performance generated gross cash inflows of $142 million, but increased inventories, and receivables consumed $124 million, with the company ending up with negative funds flow after paying $40 in dividends and loan repayment of $42 million that resulted in cash of $34.5 million down from $97 million at the end of 2020.
Notwithstanding, the dislocations caused by the Coronavirus, the company’s financial position continues to improve, with shareholders’ equity climbing to $677 million from $610 million in 2020, borrowed funds amount to $137 million, down from $172 million at the end of 2020. Current assets rose to $524 million from $460 million with Inventories climbing to $296 million from $233 million and trade and other receivables moving from $99 million to $124 million. Current liabilities fell by $40 million to $105 million.
The company has an excellent management team, with the stock being BUY RATED, with a price of $7.20 and a PE of 6.6 times 2022 earnings and 16.7 times last year’s earnings.

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