KCLarkin Posted October 28, 2015 Author Share Posted October 28, 2015 Q1 earnings out. It's going to take me a thousand years to untangle the new financial presentation: http://ir.cimpress.com/phoenix.zhtml?c=188894&p=quarterlyearnings Testing new relationship with Amazon in the US market Not sure I like the sounds of that. Link to comment Share on other sites More sharing options...
Guest notorious546 Posted October 28, 2015 Share Posted October 28, 2015 "During the quarter, we repurchased 2.0 million Cimpress shares for $140.2 million, an average price per share of $70.95." I think this one is really interesting. Pretty solid growth for the quarter, steady returns on invested capital and high insider ownership. Retention rates for customers is stable from what i see. I don't remember greenberg's exact question regarding the historical buybacks but i imagine this could result in a few more question on tomorrow's call. Link to comment Share on other sites More sharing options...
Sionnach Posted October 28, 2015 Share Posted October 28, 2015 Q1 earnings out. It's going to take me a thousand years to untangle the new financial presentation: http://ir.cimpress.com/phoenix.zhtml?c=188894&p=quarterlyearnings Testing new relationship with Amazon in the US market Not sure I like the sounds of that. I don't know, I might disagree - I really like the sound of it. I think its signaling a partnership, not competition. In my view, there's no reason for AMZN to try to compete with CMPR. It doesn't make economic sense for AMZN to build the whole back end "mass customization" platform that CMPR has built and invested in over a number of years. For AMZN, its more economic for them to invest in AWS, etc. which have much larger addressable markets. CMPR is in a very nice niche. I think using AMZN as a front-end seller for CMPR's back-end platform would be hugely accretive. And Keane sounded excited about it. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 28, 2015 Author Share Posted October 28, 2015 When did Keane talk about Amazon? First thought, AMZN isn't known for playing nice with "partners" Second thought, I sure hope Jeff doesn't try to buy us. I would just feel safer if Amazon didn't know we exist. Link to comment Share on other sites More sharing options...
Sionnach Posted October 28, 2015 Share Posted October 28, 2015 When did Keane talk about Amazon? First thought, AMZN isn't known for playing nice with "partners" Second thought, I sure hope Jeff doesn't try to buy us. I would just feel safer if Amazon didn't know we exist. Sorry yeah I just mean from reading the presentation it seemed like a positive - I guess I was just hearing keane saying it in my head. You have some really great points though. It will be very difficult to sustain margins with amazon as a customer. Damn jeff just leave CMPR alone Link to comment Share on other sites More sharing options...
Sionnach Posted October 29, 2015 Share Posted October 29, 2015 Here's what it looks like on amazon if you're interested: http://www.amazon.com/Design-Business-Cards-Vistaprint-Front/dp/B00X5F9RGK/ref=sr_1_1?s=office-products&ie=UTF8&qid=1446123546&sr=1-1&keywords=custom+business+cards They're only selling business cards. It looks like more of an AMZN marketplace type selling rather than selling to Amazon as inventory. So, I don't think they'll face any pricing pressure from AMZN. The partnership appears to be to put the vistaprint design interface on AMZN, but I could be wrong. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 17, 2015 Author Share Posted November 17, 2015 Just to follow-up on a question asked long ago. Both Mecham and Greenberg added significantly after the big drop in July: Mecham +87% (23% of portfolio as of Sept 30) Greenberg +79 (10% of portfolio) Link to comment Share on other sites More sharing options...
KCLarkin Posted November 26, 2015 Author Share Posted November 26, 2015 Given the substantial short interest in this stock, I am always looking for a solid short thesis. This is far from solid, but at least it is current: http://seekingalpha.com/article/3712906-cimpress-printing-value-to-get-very-difficult?app=1&auth_param=9ed2t:1b5e108:5909e2e0b3df136087a9c0a68f072483&uprof=45 I guess it makes sense on a superficial level but completely ignores the bull thesis. Link to comment Share on other sites More sharing options...
kab60 Posted November 26, 2015 Share Posted November 26, 2015 I read it as well. It's pretty superficial but I have to admit I'm debating whether or not this is the best value I can find after it has run up 40 pct with currency effects since I bought in August. It's the thesis I struggle with the most and now it's 20 percent of the portfolio. I think I need to recheck the thesis that's for sure. Do you have an indication of how much the Staples partnership is gonna hurt? Link to comment Share on other sites More sharing options...
LongTermView Posted November 26, 2015 Share Posted November 26, 2015 Given the substantial short interest in this stock, I am always looking for a solid short thesis. This is far from solid, but at least it is current: http://seekingalpha.com/article/3712906-cimpress-printing-value-to-get-very-difficult?app=1&auth_param=9ed2t:1b5e108:5909e2e0b3df136087a9c0a68f072483&uprof=45 I guess it makes sense on a superficial level but completely ignores the bull thesis. Yeah, I wouldn't want to bet against Arlington and Brave Warrior... Link to comment Share on other sites More sharing options...
KCLarkin Posted November 26, 2015 Author Share Posted November 26, 2015 Staples is in All Other segment, so less than 10% of revenue. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 27, 2015 Author Share Posted November 27, 2015 I think I need to recheck the thesis that's for sure. The lowest cost provider disrupting a large and fragmented industry. Wide moat getting wider as the company invests heavily in technology and economies of scale. Recent strategy shift allows Cimpress to target a much larger and more lucrative market. Large runway for above average organic growth and acquisitions at high ROIC. 40% Return on Equity. Negative cash conversion cycle and high utilization of fixed assets allows Cimpress to grow organically with little incremental capital. Result is buybacks and acquisitions. 22% revenue growth. 13% organic revenue growth. Investments in customer experience resulting in higher Net Promoter Score, better retention, and higher LTV. $210M steady state free cash flow masked by heavy growth investments. 7% free cash flow yield (at steady state). Add a founder led company with the capacity to suffer and prudent capital allocation skills. --- Bottom Line: You can quibble about the valuation and the risks and shady business practices. But this does not seem like a smart short. Especially, when the short interest is so high (28 days to cover). --- Note 1: I think this is a pretty good summary of the uber-bull thesis. I have presented this through management's rose-colored glasses, so do your own work. Truth is somewhere in between this and the short thesis. Note 2: To get a 10-bagger, you need to resist the urge to take small profits. Note 3: If you aren't comfortable with the position, you won't be able to hold when volatility strikes (and it will with this stock given the very high short interest). Note 4: This is about 14% of my portfolio. In a world without capital gains taxes, I would trim this to 10%. Note 5: One very obvious flaw with the short thesis on SA: he is putting emphasis on the "YTD" results, conveniently ignoring that this is only 1 quarter in a very seasonal business (Q1 is usually a weak quarter -- Q2 is very strong). Link to comment Share on other sites More sharing options...
kab60 Posted November 27, 2015 Share Posted November 27, 2015 I think that is a pretty good summary of the bull case but it's also pretty much the way management wants to tell the story. I'm not saying it's wrong (it's 18-20 percent of my portfolio, I bought because I think it's pretty much right), I just think it's difficult to confirm by looking at the numbers. Obviously, revenues are growing, but steady state cashflow/growth investments suppressing GAAP earnings are harder to confirm. It sounds plausible but it requires trust. Have you seen a decent short thesis anywhere? And thanks, your thoughts are much appreciated. Link to comment Share on other sites More sharing options...
frommi Posted November 27, 2015 Share Posted November 27, 2015 The trailing TTM FCF numbers don`t look good (even if you add back ad expenses), and the aquisitions just added revenue with low margins. I am sure i am not getting everything but i existed my position at recent prices for safety reasons. Strong dollar remains a big headwind for the future quarters and i am not sure if the business in its current state will be recession restitant. Reading the transcript of the last conference call i was under the impression that the CEO defended the bad numbers with the fire, but i really doubt that that was the reason. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 27, 2015 Author Share Posted November 27, 2015 The trailing TTM FCF numbers don`t look good The YoY FCF decline is easily explained by increased CapEx and Capitalized software spending. The decline in Q1 OCF needs further investigation. I still haven't adapted to the new reporting/guidance regime so I don't really understand the big drop in Q1. and the aquisitions just added revenue with low margins. Gross margins are lower for the Upload and Print business, but 14% operating margins aren't that low. Can they get to 20%+ as they scale up and integrate into the CIM platform? Link to comment Share on other sites More sharing options...
KCLarkin Posted November 27, 2015 Author Share Posted November 27, 2015 Obviously, revenues are growing, but steady state cashflow/growth investments suppressing GAAP earnings are harder to confirm. It sounds plausible but it requires trust. True. But longs are more trusting since the 2011 investment cycle played out as management outlined (though it was longer and more painful and less rewarding than originally planned). I'm expecting the current investment cycle will be similar. You hope management has learned lessons from the last investment cycle but business is always hard and uncertain. In other words, I trust that free cash flow is being suppressed due a heavy investment cycle. I'm more concerned about the future return on those investments. This is obviously a much more difficult thesis at $91 than it was at $65. I understand your concerns. But it also makes me appreciate the Fisher/Buffett/Munger approach. Making the buy decision is easy. The sell decision is hard. Still, I will likely trim if I can come to terms with the capital gains. Link to comment Share on other sites More sharing options...
KCLarkin Posted November 27, 2015 Author Share Posted November 27, 2015 This old article is a good primer on Cimpress's moat: http://www.piworld.com/article/vistaprint-enjoys-high-level-auto-mation-through-cutting-process-here-polar-cutter-dices-up-business-cards-40524/all/ Link to comment Share on other sites More sharing options...
Sionnach Posted November 27, 2015 Share Posted November 27, 2015 Larkin - that was phenomenal, thanks for posting. Where'd you find that article? Link to comment Share on other sites More sharing options...
Sionnach Posted November 27, 2015 Share Posted November 27, 2015 Or are you just a long-time reader of printing impressions magazine? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted November 27, 2015 Share Posted November 27, 2015 Why will the business card industry continue to grow? Link to comment Share on other sites More sharing options...
KCLarkin Posted November 27, 2015 Author Share Posted November 27, 2015 Why will the business card industry continue to grow? Wrong question. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted November 27, 2015 Share Posted November 27, 2015 Why will the business card industry continue to grow? Wrong question. Why and how do you expect the niche to grow? My initial thought is that future growth is somewhat linked to the amount of small (maybe 1-man) businesses. What do you think the drivers of revenue and growth are (ex-acq)? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted November 27, 2015 Share Posted November 27, 2015 Why will the business card industry continue to grow? Wrong question. What is a better question to understand why the niche will grow? Link to comment Share on other sites More sharing options...
Jurgis Posted November 27, 2015 Share Posted November 27, 2015 I'm interested in what KCLarkin will answer. My guess is that CMPR could keep taking business away from small mom-&-pop businesscard/website/etc. design companies. Especially internationally (through EU). However, I haven't done deep DD through CMPR business segments, so perhaps there's something else that bulls expect. Link to comment Share on other sites More sharing options...
Sionnach Posted November 27, 2015 Share Posted November 27, 2015 That's exactly right. The growth of the industry overall isn't all that important to a "disruptor" who is growing by gaining share. The assumption is that business cards, etc. won't go completely extinct, and I don't think they will. Keane the CEO I think related it to Starbucks, which grew amazingly despite per capita coffee consumption declining. Might be a pretty generous metaphor but an appropriate one nonetheless Link to comment Share on other sites More sharing options...
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