March 11, 2021

The Lumber Depot Limited (LUMBER), for the nine months ended January 31, 2021, reported revenue of $1.05 billion, an increase of 14% year over year (2020: $921.45 million). Revenue for the quarter totalled $353.10 million (2020: $311.38 million). Management noted, “We now compare Lumber Depot Limited’s performance for the nine months of this year with the performance of the business during the comparable nine‐month period of the prior year, when it was owned and operated by the Blue Power Group for the first quarter and owned and operated by this company for the second and third quarters.”

Cost of sales for the period amounted to $833.39 million. Consequently, gross profit for the period closed at $219.26 million.

Moreover, the Company reported administrative and other expenses of $119.01 million, whilst impairment gains on trade receivables amounted to $1.28 million.

As such, operating profit amounted to $101.53 million, up 183% relative to the $35.84 million reported in 2020. For the quarter, operating profit totalled $35.05 million compared to operating profit of $25.97 million in 2020.

Other income for the nine months ended January 31, 2021 amounted to $731,347 (2020: $2.32 million).

Net finance costs totalled $1.39 million for the nine months ended January 31, 2021 (2020: $6.11 million). Of this, finance income for the nine months amounted to $5.13 million. However, finance costs closed at $6.51 million (2020: $7.10 million).

Profit before taxation summed to $100.87 million, up 215% year over year from the $32.05 million booked in 2020. There was no taxation for the period (2020: $9.88 million), resulting in net profit of $100.87 million (2020: $22.18 million) for the nine months ended January 31, 2021. For the third quarter, net profit was $34.28 million relative to a net profit of $22.06 million booked the corresponding quarter last year.

Management noted that, “Our strategy is to consistently offer competitive prices on our products and to maintain our service standards while prioritizing the safety of our customers and staff.  During the period under review,  a  major area of focus for us was to maintain consistent inventory levels in all of the key hardware supplies – including lumber, steel and cement products – regardless of the factors affecting production and transportation of these items.”

Earnings per share (EPS) for the nine months amounted to $0.14 (2020: $0.03). For the quarter, EPS amounted to $0.05 (2020: $0.03). The trailing twelve months earnings per share amounted to $0.21. The number of shares used in our calculations is 706,237,500 units. Notably, LUMBER’s stock price closed the trading period on March 10, 2021 at a price of $2.56 with a corresponding P/E ratio of 11.92 times.

Balance Sheet at a glance:

As at January 31, 2021, the Company reported total assets of $500.58 million (2020: $374.01 million). The main contributors were ‘Cash and Cash Equivalents’ and ‘Inventories’ which closed at $140.56 million (2020: $29.08 million)  and $133.57 million (2020: $104.69 million), respectively.

Shareholders’ Equity as at January 31, 2021 was $278.99 million (2020: $192.24 million). This resulted in a book value per share of $0.40 relative to the $0.27 reported in the corresponding period last year.

Disclaimer:

Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.