Research: Apollo Health and Beauty
- 73.8mm shares outstanding at $2.78 for market cap of $205mm
- there are another 20.9mm warrants outstanding but they are way out of the money at $11
- they used to be called Acasta Enterprises – beginning July 2018 had operating sub called Apollo Health and Beauty
- amalgamated with Apollo Apr 2020 – changed name to Apollo…
- Apollo has been around since 1991
- employs 500 people
- one of largest private label personal care product manufacturers in NA
- develop and manufacture branded and private label products for retailers
- products sold across 10,000s of stores in NA
- was a breakeven business in 2019
- I guess its their sanitizers and cleaners that are selling:
- they kind of allude to what is going on in Q220 MD&A: The Company attracted new customers and augmented existing customer demand for its cleanser and sanitizer products
- it is actually kinda surprising how little info or promotion of these results there are in the filings or PRs
- debt at end of June was $35.7mm – they paid off about $29.4mm of debt in June
- EBITDA in June quarter was $30mm
- SG&A was quite a bit higher too though – up from $2.5mm to $7.9mm yoy in Q220
- also a pretty big increase in professional fees and general office expenses
- EPS in the Q220 was 35c
- it’s a pretty crazy increase in results:Stan Bharti is chairman of the board (?!?) but he actually doesn’t own any shares according to circular, which seems odd
- run by Charles and Richard Wachsberg
- these Wachsbergs own a lot of shares:
- another 2.5mm shares owned by Carlo LiVolsi, a director
- this does not seem like a scam or promo to me, just looks like they are in the right place at right time
- probably limited to COVID but really, should have pretty good results for a number of quarters, maybe 3-4 I’d guess, which would nearly would match the market cap
- revenue has been pretty consistent up until this quarter
- these are the last 10Qs of financials. They actually appear to have been turning the corner in Q1:
- it looks like they changed CEO and cleaned out the board a over a year and a half ago:
Acasta Enterprises Inc. (TSX:AEF) (“Acasta”) announces it has agreed with Charles Wachsberg and Richard Wachsberg, who together own approximately 36% of Acasta and are the co-founders of Apollo Health and Beauty Care (“Apollo”), to replace the Board of Directors (the “Board”).
The current Board and the Wachsbergs were not able to agree on strategy going forward and, accordingly, Geoff Beattie, Robert Schwartz and Jay Swartz have stepped down as Acasta directors and Ian Kidson has stepped down as Interim CEO and director.
Stan Bharti, Carlo LiVolsi, Jeffrey Spiegelman, Richard Wachsberg and Charles Wachsberg have joined the Board. The new Board has appointed the Wachsbergs as co-CEO’s of Acasta.
Interesting one. If they can leverage the Covid sales to strengthen their balance sheet and the ongoing business is positive, should do very well. Seems like it should be the type of business that would attract a good valuation. Also, with the improved balance sheet, could get rid of the going concern clause on their financials, which would,also help attract more investors.
I put on my watch list as they just had their big move (which you don’t mind buying, but I personally struggle with). Also, I want to go back through their financials more. They used to own an aviation business and a detergent and have taken big hits to retained earnings, so want to look more into their management decisions. Also, have set themselves up for a big payout on a change of control (about 15% of current market cap), so that could be a red flag or a motivator for management to sell. Also, you are right about their lack of promotion, couldn’t even find an IR page on their web site – not sure what to read into that.
But certainly seems like a good opportunity and could easily get a good move up over next couple of quarters if covid sanitizer sales continue at the same level.
History of AHC
Thanks Kevin. Its a crazy story. Thats quite the writeup for a reddit thread. The bear case is pretty obvious but by the time we are back to any kind of normal AHC should have already pocketed maybe $80 or $100 of cash, which gives them lots of options to grow. Thoughts?
Another story telling from Keish Schaefer
Thanks, stock is range bounds still.