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PFEW SmartPetz Stockholder's presentation — Transcript

by Christopher Betz · 1,996 words · 355 segments · language en · Watch on YouTube

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0:00i am the ceo of company a2 smart pets
0:04and now i am happy to pass this
0:06presentation along to my chief financial
0:08officer jake
0:12hello fellow shareholders my name is
0:14jade i'm the cfo of smart pets and i'd
0:17like to welcome you all to our annual
0:19stockholders meeting
0:21first of all
0:22i would like to tell you our strategy
0:24which was a luxury marketing strategy we
0:27picked the strategy
0:28because we wanted to avoid the high
0:31uh plant capacity addition prices
0:34and to avoid extra overhead
0:37now that you know our general strategy i
0:39would like to pass this meeting on to
0:41another member of our financial team jay
0:48good morning shareholders i'll be going
0:50over the income statement
0:52so throughout the operation of our
0:53company
0:54we determined that we were not only able
0:56to operate without borrowing more money
0:59but we're able to pay off some of our
1:01loan as well however during the fourth
1:04quarter of our second year we took out a
1:06sixty thousand dollar loan through the
1:08low interest rates to keep cash flow
1:10high now throughout our first operating
1:13year we focused on investing in both
1:15advertising and product development
1:18through these investments we managed to
1:20maintain high product perception
1:22and this led to a breakthrough in our
1:24product technology
1:26during our second year we also started
1:28to favor quality management which also
1:30increased the perception of our product
1:33as a result of our constant high quality
1:35products we cornered the luxury market
1:38resulting in increases of return on
1:40equity and stock price
1:43in order to improve our retained profits
1:46we would continue to increase plant
1:48capacity while demand is high which
1:50would cut down on the lost sales that we
1:52have been struggling with to stop
1:54occasionally we increased our price
1:56because demand was so high and we found
1:58it more profitable to raise our product
2:01an extra dollar rather to increase
2:03playing capacity by several thousand
2:05units
2:08we hold the belief that our second year
2:10was more successful than our first as we
2:12were able to get a better sense of the
2:13market and our investments from our
2:16first year start to pay off
2:18however without our investments and
2:20decisions from the first year we would
2:22not have been able to have such a
2:24successful second year
2:26now a couple challenges that we faced
2:28included proper communication with each
2:30other often producing various opinions
2:32which led to discussion and debate
2:35if it weren't for the shorter amount of
2:36time a lot the further we got along to
2:38make our quarterly decisions we could
2:40have been debating all night
2:41ultimately though we were able to come
2:43to an agreement
2:45and we ended each quarterly decision as
2:47a team
2:48another minor challenge we encountered
2:50was being able to use market research
2:52most efficiently
2:54a couple times we thought cutting off
2:56the research was a good idea but it
2:57conflicted with you the stockholders
3:00following the messages of this
3:01appointment we made it our mission to
3:03make sure we deliver what our
3:04stockholders wished
3:06to go over the balance sheet devin
3:16as you can see according to our balance
3:18sheet our assets liabilities and equity
3:21increased across the board in year two
3:23we utilized a loan which increased our
3:26liabilities while simultaneously
3:28increasing profits
3:29as a result of this and our increased
3:31spending in all categories our assets
3:34and equity increased
3:36in order to grow our retained earnings
3:38we first invested in the quality
3:39sophistication and perception of our
3:42product to justify our higher price
3:44point to the consumer as we entered our
3:46second year our product was higher
3:49quality and perceived as such by the
3:50consumer so we focused more on expanding
3:53and maintaining our customer base
3:56we could have increased our equity by
3:58continuing to increase the amount of
4:00units
4:01produced and capacity to produce
4:05since we were very capable of selling
4:07large amounts
4:08additionally we would have paid out
4:09larger dividends
4:11i'd now like to introduce zach to
4:13discuss some of our management decisions
4:17hello hello my name is zach peters and
4:19i'm the fp a manager here at smartcuts
4:22and i'm going to discuss with you the
4:24decisive management decisions that we
4:26made as a team that ultimately led to
4:28our success
4:30so as you previously heard we went with
4:32the luxury marketer strategy and
4:34gradually increased our price from 38
4:36dollars to 40
4:39now in a very important aspect
4:42of this
4:44very important aspect
4:46of
4:47this strategy is making sure to maintain
4:49a very high quality product
4:52therefore we invested a large amount of
4:54money into both product development and
4:57of course quality management
5:00this allowed us to reach the pinnacle of
5:02quality we received a quality award in
5:05year two quarter three and at a product
5:07breakthrough around the same time which
5:09increased our sales
5:11finally our product perception was the
5:13highest in the entire industry reporters
5:17one through four in year one and year
5:19two
5:20alongside this our market share was high
5:24relative to our price point um put it in
5:27perspective our market share didn't drop
5:29below 28.5
5:31it was often around 30
5:33despite the fact that our price was over
5:36three dollars higher than our nearest
5:38competitor and five to ten dollars
5:40higher than our second competitor in our
5:42industry
5:47ultimately the idea of analyzing our
5:51competitors decisions
5:52and creating opportunities for ourselves
5:54based on what we learned
5:57proved to be an invaluable resource in
5:59staying and staying ahead of the
6:01competition
6:03another indicator of our success is the
6:05fact that we retained we retained
6:07profits even during a time of recession
6:10that occurred in year one quarter four
6:12and kind of lingering effects throughout
6:14the beginning of the year
6:16even though it was a little less and
6:17that explains our roe decreased by about
6:21four percent we still maintain an roe
6:23above 20 in year two
6:26and
6:26um
6:28and yeah so
6:30next another important decision that we
6:32made as a group
6:34was to utilize our loans when the
6:36federal reserve dropped their interest
6:38rates to almost zero percent
6:40we determined that we could utilize and
6:43leverage our debt
6:45and in turn make more profit on every
6:47dollar than what the interest rate would
6:50cost us
6:52therefore we invested into
6:55plant capacity additions
6:57this was needed to minimize our loss
6:59sales and also to maximize our return on
7:03equity for both the shareholders
7:05and
7:06for our company
7:09now some other important things to take
7:11note of are the fact that we made sure
7:13to keep our cash flow about four hundred
7:15thousand dollars at all time just in
7:17case we were to encounter an unexpected
7:20loss
7:21also we kept our debt to asset ratio
7:24well below one even though we were
7:26taking out loans um for capital
7:29investments such as the
7:30plant capacity edition
7:33overall our company has had tremendous
7:35success
7:36however we have taken some serious risks
7:39as previously mentioned we did struggle
7:42sometimes with deciding how much market
7:45research to pay for
7:47and we invested a lot into product
7:49development even during a period of
7:51economic recession
7:53however by the end of year two we have
7:55learned as a group collectively to make
7:58small risks that still have a great
8:00economic reward and make sure that we're
8:02limiting the potential adverse effects
8:07throughout this
8:08throughout these two years of production
8:10we've had to deal with many external
8:11factors
8:12such as
8:14changes in our competitors decisions
8:18of varying in interest are sorry
8:22on varying inflation rates due to the
8:24recession
8:25and finally a fluctuating economy as um
8:29previously mentioned we had a recession
8:31towards the end of year one
8:32however we managed to stay on top
8:35through the successful implementation of
8:37our
8:38strategy our use of capital effectively
8:42and finally the adaptations are made as
8:45a team to grow together and make
8:47improvements
8:48thank you next we have shrav and
8:51angelina with our common stock analysis
8:54hello shareholders
8:55we are financial advisors and are here
8:57to present you our stock analysis over
8:59the past two years to begin with our
9:01financial team worked to maximize the
9:03return on equity by increasing our net
9:05profits
9:06our roe in year one finished at 25.17
9:10as shown on the graph as for year two
9:12the ro was 22.2
9:15furthermore our company smartpets
9:17experienced a decline in roe at the end
9:19of year one going into year two because
9:21of the minor recession due to our
9:23overall high re we also had increasing
9:26stock prices
9:27our stock prices in year one finished at
9:2927
9:30and a year in year two
9:32and year two finished at forty seven
9:34dollars the economic recession primarily
9:37caused a lower stock price at the end of
9:39year one
9:40to discuss dividends and eps
9:42angelina will now take over
9:46thank you
9:47another aspect of our financial
9:49decisions that positively impacted our
9:51stock price was our dividend policy in
9:53which we would increase dividends as our
9:55profits increased
9:57furthermore when our profits remained
9:59stable we stayed consistent with our
10:01dividends
10:02we truly value our investors and we're
10:05able to show this through paying
10:06dividends that were five to ten percent
10:08of our profits retained
10:11the only exception was quarter two of
10:13year one where we withheld from paying
10:15any dividends because we predicted that
10:17the profits would be insufficient to do
10:19so while maintaining a financially
10:21stable company
10:23next we are moving on to earnings per
10:25share
10:26eps represents how much money a company
10:28earns per share
10:30throughout the two years we increased
10:32our eps by maximizing our profits and
10:35ensuring that we didn't go past the
10:37point of diminishing returns by
10:39experimenting with investing various
10:41amounts and factors such as quality
10:43management and product development but
10:46we altered our investment approaches if
10:48we noticed no significant changes
10:51the success from this strategy is
10:53clearly shown as our eps increased from
10:55a dollar and 33 cents at the end of year
10:58one to dollars and eighty cents at the
11:00end of year two
11:02to conclude i would like to bring this
11:04back to our cfo jake to present you all
11:06with our future financial plans
11:12in addressing future plans
11:15for our company we would like to
11:17increase our plant capacity
11:20to
11:21as sales continue to rise increase the
11:24price to meet rising demand and
11:25inflation
11:27and continue paying off our bank loan we
11:29will make these moves by our by using
11:32our retained profits to pay for these
11:34editions
11:35after learning about our company's
11:37finances and the future of our company
11:39we would love to hear if you have any
11:41questions for us if not our team thanks
11:43you for your time and interest in our
11:45company
11:53what other things do you think you could
11:55do to increase far away
12:01well i think right now
12:03um our sales are increasing we still
12:05have some a little bit of all sales in
12:08the
12:08end of year two just because
12:11we didn't have enough cash flow to
12:13really maximize our
12:15production capacity increase and we want
12:17to make sure that our efficiency remains
12:19between 85 and 95 in our back
12:22in our facilities
12:23so i think the next plan is really to
12:25just expand um our cash flow is
12:28increasing i think we're projected to
12:30have um six hundred thousand dollars to
12:32use and we're probably gonna
12:34um
12:35um at least three 000 to our capacity
12:39and this will increase our profits
12:41every extra thousand increase our profit
12:44by 20 000
12:45so that's something that we have in mind
12:47and then raising the price as well since
12:49the demand is so high
12:51we pay for market research it says that
12:53the economy is
12:55trending in an upwards of trending off
12:57so we're going to make sure that we keep
13:00meeting demand and expanding our
13:02business that way and that should
13:04maximize profit and therefore increase
13:05our return on that
13:07thank you
13:09enjoy the rest of your day
13:11you're done
13:12thank you thanks everybody

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