The manufactured housing industry results are seasonal for the majority of the TJT’s market area. Generally, sales for the months from November to March are much lower than for the rest of the year due to poor weather and ground conditions. The Company has historically recorded its highest sales volume in the quarters ending in June and September. The Company recently reported results for its first fiscal quarter ending in December 2014. We don’t give much importance to these results since, as noted above, the fiscal first quarter is part of the Company’s seasonally slow season. Net sales decreased 11% during the quarter, as compared to last year. Net income was essentially break-even. Terry Sheldon commented, “While our results were affected to some extent by seasonal factors, we look forward to improved results as the year progresses.”
Management
Terrence Sheldon and Paul Smith, the Company’s CEO and CFO respectively, own a combined 58% of the Company’s outstanding shares. Their salaries in fiscal 2014 were $34,000 and $43,000, respectively. They, thus, have directly participated in the Company’s aggressive expense reduction by keeping their compensation at minimal levels, demonstrating their commitment to shareholders and the success of TJT.
Balance Sheet
Despite many years of poor results and difficult market conditions, the balance sheet remains pristine. At the end of the first quarter the Company had $2.25 million of current assets, including $141,000 in cash. Total liabilities were $476,000, including $194,000 of short term debt to finance the build in inventory needed to support the Company’s imminent busy season. The Company has no long term liabilities. The current ratio was a robust 4.73 and tangible book value was $2.8 million or $.62 per share.
Valuation
We find the company’s valuation to be attractive. The Company earned $.05 per share in 2014 and we would expect growth to about $.08 per share in 2015. On a P/E basis the shares are selling for about 10 times last year’s earnings and six times this year’s expected earnings. We believe we are purchasing the shares at the beginning of the Company’s growth cycle.