Stationery and Office Supplies reported earnings of 26 cents per share for 2016 and IC Insider.com forecast 40 cents pretax for the current year from just over $90 million in pretax profit, a near doubling in profits over the $53 million reported in 2016.
Revenues increased 11 percent in 2013, just 5 percent in next year, 14 percent in 2015 and 12 percent in 2016 and 20 percent for the first six months of 2017, hitting $702 million in 2016 and seems on target to get to around $850 million for 2017.
Pre-tax Profit in 2016, pre-tax profits jumped 279.5 percent to end at $53 million compared to only $14 million in 2015, and $8 million in 2014.
Improvement in the Company’s revenues has been attributable to organic expansion driven by the achievement of deeper penetration in the market for the Company’s products and services but inflation and devaluation of the Jamaican dollar versus the United States currency would also play roles. Improved profit and cash flow generated in the last two years helped to fund increased inventory making more choices available to customers and that is reflected in a noticeable pick-up in sales. The Company has expanded its product offerings, adding to the list of brands it distributes and venturing into manufacturing its own brands of furniture – Image and Torch.
Gross profit as a percentage of sales was a strong 48 percent in 2016, coming from 43 percent in 2015 and 44.55 percent in 2014. Lower cost of sales led to an improved gross profit position of $339 million in 2016, which 26.09 percent increase over that earned in 2015 and 10 percent more in 2015 over 2014.
As at the 31 March 2017, SOS reported first quarter revenues of $220 million, 20.7 percent more than the $182 million reported in the corresponding period for 2016. Cost of sales as a proportion of revenue remained in line with the FY 2016 representing 50.66 percent of total revenue; this percentage was however slightly higher than the 48.75 percent for all of 2016. The company reported pretax profits of $30 million compared to $29.5 million in Q1 2016. A number of factors impacted the 2016 results that resulted in higher profits than would normally be the case as such the 2017 profit are better than the figures suggest. In effect the 2016 first quarter could be around $20 million from normal ongoing operation.
Gross profit for the three month period ended 31 March 2017 was $108.64 million or 16.2 percent more than the $93 million reported in 2016. SOS also reported an increase in administrative costs of 21 percent to $53 million and selling expenses climbed 37.5 percent to $18 million.
Total assets were valued at J$498 million at the March this year comprising current assets of $243 million. Inventories stood at $117 million, receivables $93 million and cash of J$12 million. Total liabilities amounted to J$231 million, with trade and other payables of J$78 million. Shareholders equity stood at $270 million or $1.35 per share.
The company will benefit greatly from listing and sales to climb above recent levels form the increased exposure that will be gained from listing on an ongoing basis as well as the increased working capital that will provide additional choices for customers and help fuel increased sales. IC Insider.com accords the stock BUY RATED with the price to rise sharply after the stock list.
SOS solidly BUY RATED
This SOS IPO who are the connections?
The McDaniel family owned Stationery and Office Supplies (SOS) after 50 years of serving their more than 3,000 clients, are heading in a new direction. No longer content to hug up 100 percent of the company the family is now are embarking enjoining the public to ride on with them to the next level.
In furtherance of this new thrust SOS is now seeking to list on the Jamaica Stock Exchange Junior Market with an initial public offering 50,024,100 ordinary shares, to raise approximately $95,048,200 before expenses. The issue is inclusive of 22,500,000 reserved shares some of which are being sold at $1.60 for staff, with the rest being made available to the general public at $2 per share the offer opening at 9 on July 19th, with the closing set for 4:30 P.M. on July 26th.
The Company reported pretax profits of $53 million in 2016, from sales of $702 million, with earnings of 26.5 cents per share, resulting in a PE of 7.5 before tax. Earnings for 2017 is estimated at around 40 cents on a pretax basis at an attractive PE of 5.6 times 2017 earnings. Revenues for the first six months of 2017, are up almost 20 percent over the similar period in 2016. Office furnishing and fixtures account for approximately 60 percent of sales revenues and stationery and office supplies for 40 percent management advised IC Insider.com.
The Company estimates that the expenses in the invitation will not exceed $12,000,000 inclusive of General Consumption Tax and an expanded marketing and publicity spend, expected to not only drive interest in the IPO but create greater awareness about the company. and its products.
Minimum raise| The Company needs to raise at least $50,000,000 to qualify for listing on the Junior Market. If that amount is not achieved an application will not be made for the shares to be admitted to the Junior Market and all funds will be returned to the persons who made them.
History| The Company started business in July 1965 under the guidance of Richard Hing, George Hew and David McDaniel. In 1970, the Company became wholly owned by the McDaniel family when all of the issued ordinary shares were acquired by David and Marjorie McDaniel. The Company now operates out of a 35,000 square feet warehouse, office and showroom on Beechwood Avenue in Kingston and a 3,000 square feet location in Montego Bay that houses 1,200 square feet of office and showroom space and a 1,800 square foot warehousing facility supported by a staff complement of sixteen. The Head Office currently employs eighty-three team members. Eleven delivery vehicles are operated by the company including trucks, which support delivery to customers.
Products|The Company now sells and market office supplies and stationery items, modular office furniture, partitions, metal products, chairs, cabinets and shelving. The Company is the sole local distributor for the leading international brands in office furniture – Fursys and Boss. In 2011, lower priced items were introduced to meet growing demand, by introducing the first of two proprietary brands, the first being the “Image” brand and shortly thereafter in 2012, the Company introduced its second brand “Torch”. SOS also does a small amount of sales to the eastern Caribbean and will be seeking expand business into that Region. According to the company’s management, the increased warehouse space will be critical to this effort. A lesser known service the company carries out, is the servicing of office equipment. This area they indicate has room for increased revenues and profit.
During the last six years, the Company added commercial shredding to its suite of services offered to the general public. The service has become popular among entities which have large volumes of waste paper and other sensitive material that stores data, but are concerned about improper disposal methods. The Company’s states that its “shredding facility meets international best practice standards and has the capacity to shred up to 5,000 pounds of paper per day as well as the destruction of tapes, hard drives and compact discs. The Company’s shredding facility offers the customer the ability to view an on-line real-time video stream of the shredding process being undertaken on-site on their behalf, or if preferred the customer may also be present when the shredding process is being undertaken”.
The directors of the company are, David McDaniel, Marjorie McDaniel, Allan McDaniel, Stephen Todd, Kerri (McDaniel) Todd, Kelli (McDaniel) Muschett, Anthony Bell, Gary “Butch” Hendrickson and Evan Thwaites.
