Date post: | 11-Jul-2015 |
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The statements made in this presentation that are not historical facts are forward-looking statements that represent presenters’ beliefs and assumptions based on currently available information. These statements may relate to matters such as expected financial performance, business prospects and like matters. These statements involve risks and uncertainties, including but not limited to the risk factors described hereunder. Actual results could differ materially from those projected as a result.
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Group 10BC02-2Michael YangKaren TranChristian Hansen
Sharon Fisher
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Due to the inhospitable climate, Canadians spend 90% of their time indoors.
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Innovation Service Competitive Advantage
6Source: CanaData, Reed Construction, via Vancouver Island Construction Association, 2011
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•
Green roofs are growing
Government incentives
No Canadian competitors
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GWL 2010
GWL2011
Industry1
2011
Current ratio 3.29 2.57 1.4
Debt to Equity 0.41 0.48 1.6
Accounts Receivable days 61 73 74
Revenue Growth 4.53% 6.65% 11.10%
Return on Equity (ROE) 9.72% 7.46% na
1 RMA Annual Statement Studies 2011
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Mature industry
Fierce Competition
Economic uncertainty
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Low revenue, ROE
Low PE Multiples
Share price
Trading volumes
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Shareholder value
EnviroofExpand West
Capital Structure Control of the Company
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Discount Rate 11%
Time Horizon 20 Years
Building CCA rate 4%
Equipment CCA rate 30%
Equipment replacement in 10 Years
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West
Base $11.5M
Optimistic $13.6M
Pessimistic $9.6M
Enviroof
$20.3M
$23.8M
$17.2M
Double
Overwhelmingly Better!
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West
Revenue in 5 Years $15M
Year 6 – 20 growth rate 7%
Enviroof
$20M
10%
Gross Margin % 41%
Operating Margin % 24%
39%
23%
GWL
38%
8%
-25%
-3%
2%
1%
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West
Financing Needed $7.6M
$14.7M
Enviroof
$7.1M+
Financial Available $8.1M(to be revisited) $(6.6M) short
-
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Market opportunities
Consistent with value proposition
First-mover advantage in Canada
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Economic uncertainty
Lack of unified support from senior leaders
No sales experience and technical knowledge in green roofing
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New and improved plant
Consistent with existing business model
New building permits
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Job security concerns
Increases risk of product deficiency
Fierce competition in local roofing
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EnviroofWestern
Expansion
Low Competition 2 1
Key Success Factors 2 1
Value Proposition 2 1
Long Term Revenues 2 1
Profit Margin 1 1
Net Present Value 2 1
Total 11 6
1 = supports2 = strongly supports 24
Proceeding with ENVIROOF project creates value in a market space
with little competition
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Convertible Debenture (8% interest, Principal repayable in five years, or convertible to Class – B shares)
$5 M
Class B equity financing(Maximum for Class -A to retain control)
1.4 M shares
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Cost of Debenture 5.2%
Cost of Equity 16.5%
Brokerage Fee @ 5% $(0.25M)
Maximize Debenture Financing $5M
Net proceeds $4.75M
Financing Required $7.1M
Additional Financing Needed $(2.35M)
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Recent Share Price $2.50Thinly Traded
Offer 1M Shares (1.4M Max) $2.35M
Possible reasons:1. Low Volume2. Lack of analyst coverage3. Lack of Capital Market Communication
(Do they know Enviroof?)
Significantlyunder-valued !
Valuation & Fair Price $4.80
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Share Marketing Program
1.60
1.40
1.20
1.00
0.80
0.60
$
1.60
1.40
1.20
1.00
0.80
0.60
$Close
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$300K over 2 months including:
News Releases
Road Shows
Independent Valuation
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Offer 581K shares @ $4.80 (subject to actual performance)
$2.79M
Less: Brokerage Fee @ 5% $(0.14M)
Net proceeds $2.65M
Share marketing program $(0.30M)
Enviroof $(2.35M)
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Technical Dimension
Human Dimension
Plan and Support of the Process
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Need for Change
Building the Guiding Team
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GWL is the pioneer of premium roofing technologies for industrial, commercial and institutional (ICI) customers in harsh northern climates, including advanced composite and green roofing systems. GWL creates shareholder value by being the “no-worries” provider of superior roofs and roof management solutions serving central and eastern Canada and north-eastern USA.
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Financing
Enviroof Product Launch
CEO Succession Plan
Roof Maintenance Program
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Pre-Construction
Construction
Marketing and Product Launch
Q1 Q2 Q3 Q4 39
Executive Search Committee
CEO Selection Matrix
Hire and Train New CEO
Q1 Q2 Q3 Q4 40
Separation of Sales and Maintenance
Customer Service Training
Mend Existing Relationships
Q1 Q2 Q3 Q4 41
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2011 Finalized
Revenue $38M
ROE 7.5%
EPS $0.15
Share price $2.50
2016 Pro forma
$76M
14%
$0.48
$7.20
15 Times
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P/E Ratio 17 Times
0
2.41.1 1.3 3.7
7.8
2011 2012 2013 2014 2015 2016
Pay Down Debt
Pursue Other Ventures
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Current – Class B Outstanding 8.5M
Controlling Status Class A - 50.30%
Current – Class A Outstanding 1.0M (10 M votes)
= Completely Diluted Class B 9.9M (9.9 M votes)
+ Stock option 0.1M
+ Enviroof Financing 0.6M
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Increased Shareholder Value
Revenue Growth
Earnings Growth
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2012 2013
Who ResourcesQ1 Q2 Q3 Q4 Q1 Q2
Secure 2-stage debenture financing ($0.5M available February 15 and $4.5M contingent on share offering) x
Gagnon,C Laroche 5% of proceeds
Share marketing program (February 16 to April 15) x x All chief Executives $ 300,000
Annual financial results filing with Sedar (March 31) x Finance team Normal course
Announce brokered private placement for gross proceeds of $2.79M and obtain TSX Venture acceptance (April 16) x
Gagnon $750+0.5% of proceeds
Close of private placements (April 30) x Gagnon,C Laroche 5% of proceeds
Obtain second stage of debenture financing (April 30) x C Laroche 5% of proceeds
Internal Green-roof change-management communications plan launch; product training and site tours; focus groups.
x x x CEO; HR Normal course
Plant site selection, design, tender x x
Cross-functional project team (CEO; COO; R&D
manager)
Normal courseTraining - plant, sales, service; modify sales tools (IT) x x x Normal course
Construction x x $ 6.6M
Production launch x Normal course
Marketing x x $ 500,000
Executive Search Committee formed x D. Laroche Normal course
Advertise CEO position xExec. Search Committee
$ 5,000
Shortlist, interview CEO candidates; hire; job shadow Pierre x x x $ 15,000
Implement base-salary plus commission for sales reps x x Human Resources Normal course
Customer service training for RMP contractors x x x Human Resources Normal course
Review general liability insurance, legal counsel; contact unhappy RMP customers x L. Laroche Normal course
Develop forward exchange contract policy/procedures x Gagnon net savings
Reschedule production (existing plant) for higher production runs in low/ shoulder season; add inventory storage (PP&E) on site
x x x x COO; HR; Plant managerPPE $11M 2012-2016; +20% working capital