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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (60733)	4/21/2018 2:57:55 PM
From: E_K_S	1 Recommendation Recommended By Lance Bredvold Read Replies (2) \| Respond to of 78759

Clearwater Paper Corporation (CLW) a paper company released earnings yesterday. The business is seeing thinner margins. CLW was -34% on their earnings and from what I could tell was not a company specific issue either. Therefore, holding off on adding to more TIS. They hired a new CFO w/ a good history in the business. Thought I would wait to add more shares until she had one quarter to clean house. Still think they have a lot of good assets (remember that new facility was acquired in a bank sale w/ City/County incentives) and the new equipment that makes up the majority of the debt is almost working to specifications. BGS will report earnings in next two weeks and still have room to add to get to a full position. I did a GN valuation calculation and only 8% undervalued (maybe more w/ Fridays sell off). FWIW, DF is selling almost 30% below it's GN but it's all about no pricing power in milk. Other paper companies (especially those that manufacture tissues) all sold off including KMB. Also looking at ADM to add to my Ag basket but I think that can go a bit lower (and get into better value territory). EKS

To: Paul Senior who wrote (60733)	5/3/2018 6:27:24 PM
From: E_K_S	Read Replies (2) \| Respond to of 78759

BGS & THS are similar food company stories; both with low PE's BGS @ 10.9 PE vs THS @ 13.6 (Note: THS had a good 'recovery' report today and was +9%; TreeHouse Foods rallies after marked improvement - I have THS on my Buy list to add to my Ag/Food basket) B&G Foods beats by $0.02, revenue in-line B&G Foods (NYSE: BGS): Q1 EPS of $0.55 beats by $0.02. Revenue of $431.73M (+4.7% Y/Y) in-line. ------------------------------------------------- Stock +5% AH. I tried to Buy more shares this AM but missed my entry price. We have been evaluating stocks for several decades and I think we have seen enough income & balance sheets when there is value and more importantly when management is on the same page on reducing debt. Here the new CEO at BGS now 2 years into his job has done exactly what he has said, restructure the product portfolio, REDUCE DEBT from FCF and pay their dividend. Here are some high point from their earnings release. B&G Foods Reports Financial Results for First Quarter 2018 — Generates Net Cash Provided by Operating Activities of $73.7 Million for the Quarter — — Reaffirms Full Year 2018 Guidance — Executive Summary (vs. year-ago quarter where applicable): Net sales increased 4.7% to $431.7 millionDiluted earnings per share decreased 36.7% to $0.31Adjusted diluted earnings per share1 decreased 5.2% to $0.55Adjusted EBITDA1 decreased 2.9% to $89.4 millionNet cash provided by operating activities increased to $73.7 million from $2.5 million in the first quarter of 2017Guidance for full year fiscal 2018 reaffirmed:Net sales reaffirmed at a range of $1.720 billion to $1.755 billionAdjusted EBITDA reaffirmed at a range of $347.5 million to $365.0 millionAdjusted diluted earnings per share reaffirmed at a range of $2.05 to $2.25 ------------------------------------------------ You never saw 'Chainsaw Al' aka Albert Dunlap do this in any of his attempts to turn around a company. This new CEO out of the gate made a new acquisition to strengthen their product portfolio. This is a key component to the turn around. They are getting more efficient w/ SG&A -12% even w/ high transportation costs and continue implementing their invesntory management system (took a one time charge of $16mln). Mr. Cantwell continued, “We generated $89.4 million of adjusted EBITDA, which as a percentage of net sales is 20.7%, $36.4 million in adjusted net income1 and $0.55 in adjusted diluted earnings per share, all supportive of our full year fiscal 2018 guidance. Importantly, we generated net cash provided by operating activities of $73.7 million compared to $2.5 million in the first quarter of last year. We also reduced debt by $125.0 million during the first quarter and an additional $25.0 million in April. We also reduced our inventory by $46.5 million during the quarter and we now expect to achieve the high end of our $75.0 million to $100.0 million inventory reduction program by the end of the year.” Growth was driven by Green Giant frozen innovation products. Other brands that performed well during the quarter include Cream of Wheat, whose net sales increased 11.2%, Ortega, whose net sales increased 4.1%, and Victoria, whose net sales increased 11.0%. This performance was offset, in part, by Pirate Brands, whose net sales decreased 17.9%, largely due to the timing of promotional activities, Maple Grove Farms of Vermont, whose net sales decreased 9.1%, Mama Mary’s, whose net sales decreased 9.8% and Green Giant shelf stable, whose net sales decreased by 6.9%. As you can see, there is still more product portfolio balancing. ----------------------------------------------------------------------------- I am very pleased w/ the BGS performance. I think the market is missing the value opportunity in BGS & the turn around in THS. Maybe the market does not think it is sustainable and/or they have little to no pricing power if there is high inflation. Both companies are increasing sales and BGS is booking good earnings. THS seems to be on track to now post positive earnings. The key for both companies is to continue to pay down debt.