CEO and President: James Cohen
CFO: Ernest Reinfort
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About: Gendis Inc. leases commercial real estate properties and invests in marketable securities and private placements primarily in the energy and agribusiness sectors. Its shares trade on the TSX under the symbol GDS. There are currently 13.5-million shares outstanding.
WSA: Good day from Wall Street. This is Juan Costello with the Wall Street Analyst. Joining us today are James Cohen, the CEO of Gendis Incorporated as well as the company’s Chief Financial Officer Ernest Reinfort. The company trades on the Toronto Stock Exchange and their ticker symbol is GDS. Thanks for joining us today gentlemen.
James Cohen: Thank you Juan.
Ernest Reinfort: Good morning.
WSA: Great. Now, starting off please give us a brief history and overview of the company for some of our listeners that are new to the story.
James Cohen: Sure Juan. I’ll give a brief overview. The company started in the early 1930s at that time as an imports and distribution company. It grew over the ensuing decades, in the 1950s the company had the distribution range for Paper Mate pen products in Canada as well as Sony products. It was the first company in the world to sign an export agreement with what became the Sony Corporation. That joint venture ended in 1995 when Gendis sold its 51% equity in Sony of Canada. The company also had several retail chains, in fact we just passed the nine-year anniversary yesterday December 16th that we sold our retail business, and since that time we’ve concentrated on basically being an investment holding company. We have a small real estate portfolio and investments in the energy and agro business sectors. So that’s where we are at today, we’re a much smaller company but we are in very good shape financially and we’re focusing on investments in basically those two sectors – energy and agro business, and also looking at real estate opportunities.
WSA: Great. And so what are some of the drivers there behind the companies Q3 results?
James Cohen: Well, I’ll pass onto Ernie just go over briefly our investment in Verizon which is an energy company based in Calgary, Alberta, did very well over the past quarter and they have some really exciting projects that we can talk about after but I can pass over to Ernie to comment on some of the earnings results.
Ernest Reinfort: Well fundamentally our earnings quarter basically from 2006 has shown increasing operating earnings primarily from real estate and from dividends from Verizon. We do our subject to some volatility and fair value changes over investments but there is a significant upside potential in the fair value of Verizon, and that’s our invest in a gas pipeline company that is poised to execute on a construction of a natural gas export facility on the west coast of Oregon. So the prospects going forward look very good.
WSA: Great. And you also paid a recent dividend?
Ernest Reinfort: Yes. We’ve been paying our quarterly dividend about $240,000 per quarter, about two and a half cents which based on current yield is about three percent yield on the dividend.
WSA: Great. And so what are some of the trends that you guys are seeing right now in your sector and how are you continuing to position of the company to capitalize on them?
James Cohen: Well, in the energy sector for instance one I have been saying this for a while, it’s a very strange time. I mean you have oil, I haven’t checked it today but I know in the last few days it was up to I believe $97 a barrel. Prices are high but the markets especially in Canada in the energy sector there is a fair amount of uncertainty related to what the United States is talking about becoming energy self sufficient in the next few years. There is concerns about some of the environmental impacts of the oil sense in Alberta, results have been issues with pipelines getting approved. So, there is just a lot of uncertainty right now in the energy sector as far as companies looking to raise money and finding it difficult, and one of the things we are doing is investing in new companies sort of at the seed capital stage. We’ve done few of those over the past few years but right now it’s pretty quiet and we see companies are having a hard time raising fund. So, we are looking for opportunities but they are not easily found right now.
WSA: Certainly and what are some of the things that you feel make a company unique from some of the players in the sector and able to capitalize on some of the trends you know we didn’t cover and everything that you every sector you guys are in?
James Cohen: Yeah. I think we are fairly unique in terms of being a public company that is focusing on three distinct areas right now. For the most part conglomerates has been shall we say out of favor, I think perhaps that’s changing. I mean we would be considered conglomerates on a microcap scale but you know we’re focusing on three areas, real estate mainly in western Canada where we’re located, and as mentioned, energy and agro business. We feel those are three good pillars from which the company can invest from and you know there are three areas that are pretty stable in the long term and have been in the past. So we feel confident that focusing on real estate, energy, and agro business will be good areas for the company to focus on.
WSA: Certainly and perhaps you guys can walk us through your background and experience and talk about the management team behind the scenes?
James Cohen: Well, Ernie you can speak for yourself?
Ernest Reinfort: Well, I am the Chief Financial Officer, I’m a chartered accountant. I have been with this company for 29 years. I’ve had 39 years of business experience and have a sound knowledge base in real estate and investment activities.
James Cohen: And I started full time with Gendis back in 1991 actually started one of our retail stores from the ground up and basically over the past almost 23 years worked my way up the company and have been in this position in the last few years and look forward to future opportunities.
WSA: Certainly. And what are some of the goals and milestones that you guys are hoping to accomplish here over the course of the next year?
James Cohen: Well, I would like to see us make some investments over the coming year. We are pretty quiet over the past year, cautious just sort of watching the market. We get lots of opportunities across our desk. I am very interested in the agro business sector in particular, that’s been an area of interest to me personally for quite a while and I’m excited that we are starting to make small investments through Gendis as we talk about global population is now 7.2 billion people and growing by over 200,000 a day. The plan needs to find ways to feed the growing population, I think that’s a very exciting sector to be part of and I would like to see the company continue to make investments in that sphere. And with energy I’m actually going to be going through a conference next year and looking at opportunities out there I think again with energy similar to agro business we need it, the demands are only going to increase going forward and I would like to see us make some new investments in that area as well.
WSA: Great. And so I think you covered this a little bit but in terms of investors and the financial community, do you believe that the company story, your message, and upside are completely understood and appreciated by them, if not what d you wish investors better understood about the company?
James Cohen: Well, I think the fact that we have a large control position in the company, obviously there is a discount in the stock price and I am not going to sit here trying to promote the stock but we are trading at roughly $3.25 cents a share, and it’s pretty easy to look at the assets and see that it’s considerably undervalued. Having said that you know I think in time if we can continue to make good investments and show increases in earnings the share price should go up on its own. We are also doing a buyback program, we’ve been fairly aggressive in that in the last couple of years reducing a number of shares outstanding. So, theoretically remaining shareholders should see their value go up in their shares.
WSA: Well great, and what do you believe are some of the key reasons that investor should consider the company as a good investment opportunity today?
James Cohen: Well, I think if one looks at our assets we’ve got very solid assets and our track record over the past few years has been a very cautious one. As I mentioned earlier, we got a lot of opportunities put in front of us but we are very selective and you know we kept our debt level very low. We are not going anywhere near capacity and partly that’s been by design, you know, I think like a lot of company that are sitting on a lot of cash, we sort of went through 2013 wanting to see what’s happening in Europe and Asia and other economies. And going in 2014 I am very optimistic and, you know, looking forward to, looking at new potential investments over the next 12 months and if some of those investments turn out I think our shareholders should be happy.
WSA: Well great. And once again joining us today are James Cohen, CEO of Gendis Incorporated as well as Ernest Reinfort the company’s chief financial officer. As mentioned the company trades on the Toronto Stock Exchange, ticker symbol GDS, trading at $3.23 a share, market cap north of 44 million. And we like to thank you for taking the time to join us today gentlemen and update our investor audience on GDS; always good to have you on.
James Cohen: Thanks very much Juan.
Ernest Reinfort: Bye now.