The Canadian Investor - Dollarama Keeps Rolling and Another Canadian Company Goes Private

Episode Date: April 11, 2024

In this episode of the Canadian Investor Podcast, Simon and Dan start by comparing the latest jobs report in Canada and the US and what it means for the Bank of Canada going forward when it comes to interest rates. They discuss Indigo's transition to a private entity under Trilogy Investment and what it means for existing shareholders. Dan breaks down the short report by Spruce Point Management's on WSP Global. Simon and Dan also discuss Lightspeed job cut and share buyback announcement, Dollarama's impressive year and the recent departure of Teladoc’s CEO. Join Simon and Dan for the latest news and earnings episode of the Canadian Investor Podcast   Stocks discussed in this episode: LSPD.TO, WSP.TO, TDOC, DOL.TO  Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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I'm trying to sound as good as I can. I think we were hoping to say we were both feeling 100%. I think we're probably, at least for me, I'm probably like 85, 90. So I'm getting close to the 100% so maybe I'll have to wait till next week until we're both fully healthy yeah we're pretty close because I'm going on a couple weeks now of 100% that's the first time I've been 100% like pretty much all of 2024 yeah yeah I'm definitely feeling a lot better than last week so just a little bit of stuffiness left but I I think we'll start off right away. We have a lot to go through some news, some earnings. You want to get us started on the Canada and US job reports that came out last week? Canada because it came in quite a bit below estimates. So the unemployment rate rose to

6.1% versus expectations of 5.9%. And when I'm using the expectations, I just grabbed these from Royal Bank. They aren't like an overall consensus or anything. It's just what the Royal Bank of Canada predicted. So they predicted unemployment to sit at 5.9%. It came in at 6.1 and the country actually cut 2,200 jobs, lost 2,200 jobs, whereas they expected them to add 25,000 jobs. So this is the largest rise in unemployment, which would be 0.3% since August of 2022. And the unemployment rate is nearing its 6.5% highs we witnessed during the pandemic lockdowns in January of 2022. So outside pandemic conditions, the last time the unemployment rate was this high in Canada was in November of 2017. And for the United States, it was quite a

bit of a different look for the United States. So their unemployment rate sits at 3.8%. So it's significantly lower than ours. This is just overall generally a pretty low rate of unemployment. And I found some pretty interesting data on this. I grabbed it from an article I believe was from BNN. So the United States has been sitting at a sub four percent unemployment rate for 26 straight months the last time this happened was in the 1960s so it's been quite a while since unemployment

has stayed this low for this long so the u.s added 303 000 jobs when expectations were calling for an addition of 200 000 obviously apples to apples comparison in terms of raw numbers and for jobs, the United States is nine, 10 times the size of Canada, but the numbers clearly are painting a completely different picture in terms of the Canadian economy versus the US economy. And then you have the pretty consistent criticism in Canada due to how fast the public sector is growing versus the private sector. So I took grab some data from that same article that stated there was 18,800 job creations in the public sector in February in Canada, while the private sector lost 16,600. lost 16,600. And the Montreal Economic Institute released a report back in February that stated that the rate of growth in the federal workforce is at a pace unmatched at any point in the previous 40 years. So there's a lot of, you know, kind of arguments that these jobs don't really add as much

to the economy as like a private sector job, something like that. And just the overall growth in that both economies are showing signs of slowing down, but it's pretty obvious that Canada is in a much worse situation. And I think it's going to be very interesting to see if they end up having to cut rates before the states. I would definitely expect them to lead the charge. I'm not sure if you had a look at this report last week. expect them to lead the charge. I'm not sure if you had a look at this report last week. Yeah, I saw the headlines, mostly the US as well. I know the US won something to keep an eye on for people like the headline number is good. Sure. Obviously, it's very good. But I think looking at the underlying numbers tends to paint a slightly different picture, especially the

trend that there's been with permanent jobs and I mean full-time jobs versus part-time jobs. I think it's been going on for quite some time now, probably over a year. I don't have it in front of me where there's been a kind of level off, if not a bit of a decline from the full-time jobs. And then a lot of the increases in employments are actually related to part-time jobs. And you're also seeing people holding multiple jobs for economic reasons trend up steadily. So, you know, I think it's just wanted to provide some context here because, yes, the headline numbers go well. It also provides ammunition to the Fed if they want to keep rates higher for longer because they can just point to that, you know, high employment

and the unemployment being historically low to say, look, I mean, the economy is doing fine. We can keep the rates as high as they are right now and, you know, not hopefully not impact inflation too much. So that's kind of that's probably the angle I think they'll play. Again, I think there's no way to know for sure. It's just looking at the various data and trying to understand how the Fed is thinking. But one thing's for sure is rate cut expectations in the U.S. have been trending down pretty significantly. something on x where since the start of the year for the june meeting for the fed it was almost like not i think it was a high 90s probability that rates would be lower by then now it's around like 60 chance which is a very massive change in expectations like it's still you know it's

almost getting to a coin flip type of situation yeah and. And it's pretty like, I think that kind of paints a pretty bleak picture for Canada who clearly needs some relief in a way. I mean, the one interesting thing about these, the job creations as well, I think, I can't remember the exact numbers, but I believe a lot of the overall job creations in February for Canada was self-employment as well. So the bulk of them were coming from, you know, self-employed jobs and just, you know, pretty much government related jobs. The one interesting thing about here, like the rate cuts, the housing market here in Alberta is going absolutely nuts. So I can't even imagine what it will do in the event that rates are cut. Like where I'm, I had a friend who just, they put an an offer in so this house was listed for 24 hours

it had seven offers in 24 hours and they had to offer above list to get it and we're talking yeah like you i haven't seen that like in alberta for quite some time but our real estate market is just going nuts so i can't imagine you, if they go down 150, 200 basis points, like what's even going to happen. Yeah, exactly. And I think that's what they're dealing with. And then you add in the fact if they cut, obviously rates, even if they don't cut by a whole lot, it may stimulate the housing market. Obviously, I think Calgary and maybe not Alberta as well, but definitely Calgary has had a pretty sustained real estate market. So they have to factor that in. And they can be, if they're cutting, it's because they know that the Fed will be cutting soon.

So yes, I think I agree that it may come before the Fed. But at the same time, they would need some assurance that rate cuts are coming because we've talked about it on the podcast before. it on the podcast before, if they cut and the Fed is not cutting, then you're putting downward pressure on the Canadian dollar, which is also inflationary for things that we import. So it's not an ideal situation. And I'm not even talking about potential housing prices going up. Of course, you know, the offset and higher rates will help people that are renewing their mortgage, kind of lowering the increase, but it's still going to be, you know, a significant increase unless, you know, magically they're cutting by 202 or 200 plus basis points in the next six months to a year. If that's the case, obviously there's bigger problems. We're probably in pretty severe

recession if they're going that deep. So I don't know. I think they're really, I'll say it again, I think they're in between a rock and a hard place. It's not easy for them. They're probably looking at the data. I'm sure they have really smart people at the Bank of Canada and trying to figure out what they are doing going forward. I just have a hard time thinking that they will be cutting their next

meeting, which is it this week? Can't remember. Let me see here. Or next week, potentially. It's soon. April 10th. Okay. Yeah. So it's tomorrow. Yeah. So it is soon. Yeah, we were right. So yeah, after that long pause, it'll be interesting i mean i could very well be wrong and i think that's what people need to take away here is you know you can make your own assumptions here but no one really knows we don't know uh you can just try to you know look at the information available and try to put your shoes in the in the bank of canada's shoes shoes or the Fed and try to come up with what you think they might do. But again, I think it's important to plan, at least for investments to plan, or if you buy a home and stuff like that, plan for the worst. And then if it gets better,

at least you're prepared for it. Yeah, it's pretty much guessing these policy rate changes. It's just pure speculation from a retail investor standpoint, at least, or consumer. It's tough enough for economists to predict it, almost impossible for us. Yeah, exactly. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you

can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winningwinning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY, do-it-yourself investors.

Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me,

search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Now, I think we've talked enough about jobs and the central banks here. So let's move on to Indigo. Last week, it came out that Indigo chapters are,

I mean, they are listed as Indigo, would be going private, mainly being bought by Trilogy Investments. Shareholders will receive $2.50 per share in cash. That's an increase of 69% compared to the price on February 1st, 2024. I did not misspeak. That's because the reason I'm saying February 1st is

because in early February, they did announce that they had received an offer to go private, which resulted in the shares jumping at the time from $1.48 to above $2 a share. And as part of the deal, a formal valuation and fairness opinion was requested from BMO Capital Markets which put the fair value of the you know of the company at a range of $1.90 to $2.90 so the $2.50 that was actually agreed upon is not a bad outcome I think for a shareholder just based on this assessment that was done by BMO Capital Markets because it would place it above the midpoint or the median, which would be $2.40. So they did get a bit above that.

Shareholders will vote on the proposal in May and assuming the vote passes, the transaction is expected to be completed in June. And if you bought the company in the last year, you're going to be up on this deal. So congratulations, you probably made decent returns depending on when you did buy it unfortunately it's been a rough go for longer term shareholders the stock is down 75 percent in the last five years and it really hasn't come close to fully recover from the COVID-19 pandemic so I think it's fair to say

that it's been it was definitely a company that was negatively impacted by that. Since in the past five years, the stock is down close to 75%, even with the bump here that we saw because of the take private offer. And then you also have, I pulled in revenue. So for our joint TC's listeners, you'll see the first graphic here is the total returns over the last five years. And then you see the revenues that have essentially been flat, kind of up and down over the last five years. So it's been hovering between, you know, a billion in revenue or a billion fifty in revenue and nine hundred thousand. So it's not really been growing, kind of stagnating. So it is a company that's, you know, not doing all that great, but they are producing some free

cash flow. So that is the positive. But on a net income basis, it's mostly been net losses again in the last five years. That's kind of what i was looking at they had a market cap of they have a market cap of like 67 million but free cash flows of like 15 million so i mean it kind of looks like on that surface level looks pretty cheap but i i didn't even know like i don't think i've been into a chapters in like it has to be at least 10 or 12 years i think they had one by like a movie theater in calgary that we used to go into the odd time but uh it's a business model that i wouldn't have even expected were to last this long i know you had mentioned they transitioned into like kind of offering what do they offer like toys and clothes and stuff like that like i didn't even know

they were offering that i haven't been in one for so long. They have baby stuff. So I mean, I don't blame you for not knowing that. If you do have kids, you'll probably learn about them. But yeah, they have other stuff. So baby goods is one of the things. I mean, I do go in the store from time to time. When Brayden and I had talked about that,

I actually was one that brought it up as a stock that could do well coming out of the pandemic because people were, as lockdowns were kind of stopping, right? And people were seeking experiences. My idea here was that people would actually like to go into chapters. There's usually a Starbucks in there. You grab a coffee, read some books, end up buying something you don't need or a book, obviously, because there is a lot of stuff that you don't really need there. So that was the premise behind it. I mean, I don't think it was fully wrong, but I think I thought they'd do better than they did. And then last year, they also had that hack where

the website was down for like over a month that impacted sell pretty negatively and i don't think they really recovered last year so i think they're the whole year was kind of put into a bit of a tail spin because of that it didn't end up being like that terrible of a year compared to previous ones but it was definitely i think it lasted like a month basically well i didn't know about that i saw there like they have a huge decline in price from 2018 to 2020. It looks like they almost went under really. They traded at $20 a share in 2018 and then went down to almost a dollar. Yeah.

It's been a rough go for Indigo. I mean, like you said, if you bought it though recently, last year probably. You're probably pretty happy. It's all about, I guess, the price you pay. That's at the end of the day, it's the price you pay and you sell. But I think that's it for Indigo.

Do you want to talk about the WSP Global Short Report, which is, I think it's a company that's pretty widely held by people that listen to this podcast. I know Brayden owns it. I know Stock Trades. I think it's a recommendation or you guys follow it. It was back in 2019.

We don't anymore, but we have in the past. Yeah, this is going to be a reasonably sized segment. And I didn't even get to go over a fraction of the short report. It's just absolutely huge. So Spruce Point Management came out with another short report on Canadian Company. They've made some pretty notable short reports on Canadian companies, especially tech companies. So Lightspeed, Nuve are two that, you know, you can think of over the last while here, especially during the peak of the pandemic. They pretty much shorted these two companies at their absolute highs.

And both of them are down quite a bit. Other shorts would be Dollarama and Canadian Tire. Those two didn't really work out all that well. But they've also had a few other small cap shorts eight or nine years ago. One of them was a gambling stock and the other one was a health care stock so the light speed and nuve shorts i would argue weren't you know really a result of any sort of skill in particular i mean there were so many tech stocks that were like you could pick quite a large basket of tech stocks that are trading yeah just like

just basically build a basket of unprofitable tech stocks at the time that they put out the short report and just short this list of tech stocks just because the valuations were crazy. Exactly. And you would have done well. And obviously, there's a name I'm hoping we'll get to it, Teladoc. I used to own it. I mean, Teladoc's in that same kind of situation. I think it was down like 80%, 90% since then. I mean, Teladoc's in that same kind of situation. I think it was down like 80%, 90% since then. I mean, you even think of a company like Shopify, I think even Shopify's still way off from those highs, even though over the last year, Shopify's gained like, you know, a hundred some percent, but they're, you know, those two worked out. As I mentioned, the Canadian

Tire and Dollarama shorts didn't really work out that well the dollarama one was a outright horrible call uh they stated the company had and i guess we'll go over dollarama today too which is it's pretty interesting because they stated that dollarama had unsustainable margins their growth targets were unsustainable they had huge refinancing risks all of which have just not turned out to be true at all. So they mentioned it had more than 50% downside, and that was a price target in the low 20s. I think it's like 115 bucks a share right now. But in terms of WSB Global, this is the one they just issued a short for, and they said it had 50% downside. issued a short for and they said it had 50% downside. So I should mention that it is impossible to digest these entire reports without spending, I'm talking literally days,

analyzing all this information. So I personally believe this is intentional. It's to create confusion, uncertainty among holders in an effort to get them to just kind of say, screw it and sell. To give you an idea of the size of the report, it's a total of 14,000 words and it's 68 pages long. So they mentioned that the company, so the bear case for them in terms of WSP, I'll get into the most key points that I found, but there's multiple others. But they mentioned that the company can only grow through acquisition and eventually its targets will run dry. They also mentioned that the company can only grow through acquisition and eventually its targets will run dry. They also mentioned that their margins are so much higher than their

competitors talking, you know, Stantec, S&C Lavalin, that it should be raising red flags for investors. And I'll get to that in a bit because they do mention how that happens. So they claim that they're producing false free cash flow data. So WSP stated that free cash flow comes in at around 110% of earnings. Spruce claims that it should be closer to 38%. The report also states that WSP has continually made worse and worse acquisitions over the last few years, ones that are resulting in declining margins. They even go as far to state that the CEO has been misleading investors by stating that their acquisitions have similar margin

profiles to WSP, despite margins being materially worse when you actually run the numbers. It claims that WSP's backlog has been weakening, so they simply changed the definition of their backlog to prop up their numbers. And they had a whistleblower in 2018, a former employee, which is always a bit controversial when a former employee kind of blows a whistle. They allege that the company has been evading taxes. I believe this was in India and this could potentially be leading their cashflow to be artificially high as well. There's no actual proof of any of this. The investigation I looked as of February 2024 is still underway. And finally, the report states that WSB is placing interest expenses as a financing cash

flow, which doesn't impact free cash flow because it's not represented in operating cash flows. So they believe that the company should be reporting like S&C, Lavalin, and Stantec do and reporting them as an operating expense. And if you do, their free cash flows would be apples to apples pretty much. So if they did this, Spruce says it would impact cash flows by about $200 million in 2023. And the company only had around $800 million in cash flows in 2023, or sorry, over the last trailing 12 months. So this would be a 25% hit to free cash flows.

So it's a reasonable case if all of this were true. Accounting fraud tends to scare the crap out of investors because of the horror stories that there's always been historically with stocks that have just been gone belly up essentially due to sneaky accounting. So this is generally where the bulk of these short reports narrow their focus on. I can't remember what it was in terms of Nuve and Lightspeed, but there was a lot of accusations of fudging numbers as well. Overall, I took this information from probably only around an eighth of the report. So even spending an hour or two reading through this thing, I got a headache. As mentioned, I think this is pretty intentional. Very few retail investors have the commitment and dedication to read this whole thing. It's absolutely huge. Some of the sheets are just text,

pure text for three or four pages. I guess I should mention that I have absolutely no idea if the claims are true or anything. I'm simply pulling the information from the report and talking about it. I haven't verified any of this stuff but yeah it's a lot of these reports like on the surface level look pretty damning but generally you know a lot of it is is i guess on it's not proven none of it is ever proven for the most part well yeah and a lot of short reports will be like that it's like there's just so much information it's hard to comb through it's very hard to verify a lot of the time the information and we spoke a couple weeks ago brayden and i about the indenburg uh research reports or the short report on equinix and first of all indenburg research does a much better job at making the information more digestible. Like I've seen the WSP report.

There was one on BIP that I own as well that I'd seen. Compared to that, Hindenburg Research does a really good job. They also have a much better track record. And what I tend to look in short reports in general is things that I can actually validate with the financial statements. So, and that was one of the things about the Hindenburg Research Report for Equinix that they were talking about adjusted from operation. For those not familiar, just a profitability metric for real estate investment trust. It's widely used, but it's an adjusted metric. It's not a gap metric, which is a generally accepted accounting principle or IFRS,

which is the same thing for Canada and kind of the rest of the Western world, I would say. But those adjusted metrics can be calculated differently depending on who it is. And that was one of the things they were saying is that it was not being calculated properly by Equinix comparing to their peers, but also the fact that management and the executives were actually benefiting from that because their compensation was tied to that. And I was actually able to go in the statements and validate the information, not only for the executive compensation, but also in the calculation and the huge discrepancy between them and their competitor. There were other items that were alarming. There was also accounts of talking

to former employees. But that part, I always take with a grain of salt because, you know, someone leaves an organization and oftentimes they won't necessarily be the most in love with the former organization. I'm not saying that's always true, but they, you know, they could have an ax to grind. So I always take that part with a grain of salt. But the way I approach them is trying to at least validate a big part of their thesis with the actual reports that the company puts out. Yeah. And it's all like you were speaking on just those adjusted numbers. So one of Spruce Point's main issues is with WSP versus its competitors is gap numbers requires interest expenses to be an operating cashflow, whereas IFRS, the guidance is less clear. So they're

kind of saying that WSP should be following its peers and reporting on an apples to apples basis but I don't really think they're doing anything wrong here but I mean they also they just they go into a bunch of I mean I would just call them scare tactics like I know there's a portion in here that uh the chairman they speak on the chairman how he was like the head of a fraudulent company, like a few years ago. And now like, now that the case has been settled, he's like removed it from all his bios, you know, that he was never involved with that company. And they kind of create like a, a scandal in that regard to try and, to try and scare people a bit. But I mean,

these reports are just, they're massive. They're hard to read. And I mean, are just they're massive they're hard to read and i mean yeah you really gotta spend a lot of time digesting this stuff and i do feel like a lot of people just say like they get scared yeah and they and they sell right because they don't there's just so much information overload here yeah exactly and i think it's just a good reminder you you know, for people, just make sure you understand, don't panic, you know, do the research. The one for BIP, I did not end up selling my shares just because a lot of the stuff that he was alleging was just very hard to prove. Again, they are adjusted. They're like metrics that they use over at Brookfield Infrastructure Partner is BIP,

which I'm referring to. But they were also questioning the net asset value of certain assets. And again, that can be very subjective. And there were things in the report where they were questioning like the Enercare business, which I'm pretty familiar with. Enercare, we used to be publicly traded. I mean, we literally rent a boiler from them. traded i mean we literally rent a boiler from them like i know it's a legit business like i know it's not like so they were like basically saying that it wasn't a legit business at all so that's where i kind of started scratching my head a little bit and kind of took the report with a grain of salt maybe you know maybe it was right under certain issues i don't know but um when it's when you can't really

verify at least a good chunk of what they're saying i don't know i tend to err on the side of kind of staying with the company and believing management at that point well and i think that's for the most part that's what most people are doing like wsb hasn't really changed in price all that much when the report came out they were230 a share and now they're $215. Whereas I know like in the past popular, like Lightspeed and Nuve absolutely tanked once they had those short reports. I think they fell 30 plus percent in a single day.

And I know it wasn't Spruce, but it was, what was that company? Citron did it to Shopify back in, I think it was 2018 or 2019. And Shopify absolutely tanked. I think it's a bit more volatile. Stocks like that are probably going to react a bit more. But WSP really hasn't been impacted much at all off the news. So obviously, there is a ton of unproven stuff in this report. And

I think it's better for, as you said, to just not panic. Yeah. Yeah, exactly. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real

people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time.

And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Blossom Social in the App Store and I'll see you there. Now we'll move on. So anything else you wanted to add or we'll go to one of the other

short targets that they had a while back, Dollarama. Yeah, go ahead. Yeah, it's been pretty bad short. Hopefully they covered that short position because they'll be in a lot of pain. I imagine it's closed by now. Yeah, I imagine they did. Yeah, so they had their Q4 and full year report. So I'll focus more on the Q4 result, but I will say this. I'll definitely say this for the full year.

I mean, they had a really strong year once again a couple of things that i'll mention on a full year basis because it makes more sense like free cash flow but for the rest i think q4 is more telling here especially since we try to cover it as often as we can when they come with their earnings now sales increase 11.3 to 1.64 billion comparable store sales grew 8.7%. Again, these two are very impressive considering that you're seeing inflation. I think last year was probably at a clip of what, like 4% for the year roughly as a whole? 4, 4, 5%.

That's probably about right. Just going ballparking here. EBITDA was increased 19.5% to $559 million. EPS was up 26% to $1.15. Net income was up also pretty close to 26% to $1.05 billion. Free cash flow was up 74% to just shy of $1.3 billion for the full year. Gross margins have been pretty stable over the last few years, but operating margins have been steadily going up. That's actually quite impressive that their margins or operating margins have been going up that well. join TCI, you'll have the top one is the gross margin, which has been hovering between 46, around 46% for, you know, the last three years or so since May 2021. And then you have the operating margins that are literally gone up 600 basis point from that in that timeframe. So I

think that's really the impressive part to have your operating margins go up 600 basis point, especially when a lot of retailers and grocers are struggling with higher costs as well, right? Your operating margin, there's a lot of cause that goes in there, inflation and so on. So the fact that they were able to improve their margin is pretty significant. They announced a 29.9% increase to their quarterly dividends. So dividend stock lovers or people that like, you know, dividend growth stocks, this is definitely, you know, for you here. And in terms of guidance for 2025, I think that's where it's kind of funny. I think the market clearly liked, you know, the quarter and obviously the performance

in the last year. But the fiscal 2025 guidance, which is starting now, it's not as good as I would expect. It's not bad per se, but they're planning to open 60 to 70 new store. Same as last year. Last year, they ended up opening 65. same as last year last year they ended up offending 65 comparable store sales are going to be their guidance is between 3.5 percent and 4.5 percent that's down from 11 to 12 percent last year so this is the part that i think it's starting to it's still good don't get me wrong but it's definitely starting to go down and then the gross margins are in the similar

range as last year. SG&E, again, similar range, I would say, as last year. And capital expenditure, pretty similar range as last year as well. So I think it's just the comparable sells. I don't know what you think, Dan, but that took me by surprise. I thought it would have been better in terms of guidance. I wonder if they're thinking that a lot of people over the last year or two kind of migrated to them and now they're going to see a slowdown in that. A lot of people maybe who shopped at Walmart before kind of gravitated towards Dollarama because they're cheaper. And now they expect a slower new customer base i'm not sure

because that is that's quite the decline and i think they've had double digit comparable store sales for for quite a bit so like three three and a half to four and a half is that's pretty low yeah exactly so i mean i don't know it just that really stood out because for the most part, like the markets tend to brush off really good results. I mean, at least in the past year or two, if there's like the guidance disappoints. The guidance is weak, yeah. Yeah, exactly. If there's weaker guidance and that would kind of fit the bill for that. But I mean, the stock really popped on the earnings and now it's been trending down ever

slow slightly. And I'm not saying like, obviously, this is a great company, but it's just I haven't had the chance to listen to the conference call. But it'd be interesting to see if they had question or the address, the guidance for comparable sales, because, again, it's just a sharp drop off. I don't know. Maybe it's also the fact that governments are federal governments saying that immigration will be slowing down in the coming years.

Maybe they're starting to factor that in into their models, because obviously, the more people you have, the more people that will be attracted to the value proposition being offered by Dollarama. So I really don't know. But that was a big one that stood out to me. Yeah, it's definitely a huge decline if like i said if i were to guess it would just be that you know the huge influx of people over the last few years as people start pinching pennies it's eventually going to slow down yeah and maybe they're expecting that next year yeah you're

probably right but uh so you want to go on and talk about the uh other four more short target yeah there's a lot of uh point companies today yeah exactly light speed layoffs unfortunately obviously it's not great for anyone impacted uh with that but you want to go over that yeah so light speed has been said by their ceo who just took over a few months ago from the CEO who took over from him. They said they're entering a new phase focused on profitable growth. So as a result, they're trimming around 280 jobs. So according to Y charts, the company has around 3000 employees, and they said it will represent about 10% of its salary related expenses. So I mean, to me, this kind of shows that it's just, you know, the average average salary type layoffs and not like any, you know,

large scale, upper level, or else you'd probably see this represent a larger portion of salary related expenses. And they also mentioned that it is going to take some restructuring costs to kick off fiscal 2025. So this would be their next next quarter they're one of those companies who's kind of a year a fiscal year ahead in terms relative to the calendar year so this is in an effort to essentially you know reduce costs improve the efficiency of the company but the real interesting thing here is lightspeed has stated it is going to start buying back shares so it wants to buy back 10%. Well, it can buy back up to 10% of its total outstanding float. The company's had like,

it's been pretty close to a billion dollars in cash on the balance sheet for quite some time. I think actually at one point, it had nearly one and a half billion in cash. It hasn't really done anything with that money for quite some time. So the buyback is definitely interesting. It's definitely interesting that a company like Lightspeed is buying back shares.

The buybacks from Lightspeed and the dividend from Nuve, they're really confusing. Both elements are kind of confusing. I mean, this is a cash burning company. They're not profitable. And I mean, they've effectively doubled their share count over the last five years. So it's pretty surprising to see them turn around things and start to buy back shares. The one thing about the share issuances from Lightspeed, they did the bulk of their issuances during that just pure market euphoria in late 2020 and late 2021. So they did issue shares at least at insanely high valuations. Since the stock has taken a, well, not a bit of a drawdown, a huge drawdown,

it's only issued around 3% of its total shares outstanding over the last few years. So it definitely tapped into pretty sky high valuations. Dax De Silva, who is the company's CEO now said that, this was just a few weeks ago too, that a major shareholder approached him at a meeting and said, I want Lightspeed to be a real business. It can't be growth at all costs with large losses, just to capture market share forever. When is this company going to have a balance of growth and profitability? And he said that this was, you know, kind of one of the main reasons they've shifted to this. I mean, right now, the market just doesn't really

have the time for cash burning unprofitable companies. Growth at all costs is certainly something that has gotten punished severely. And the company trimming a bit of the fat and focusing on profitability is certainly a good thing. In terms of like valuation on how cheap profitability is certainly a good thing. In terms of valuation on how cheap Lightspeed is, which could be maybe a bit of a reason for the share buyback, Nuve sold for 4.7x enterprise value to sales. So this was a profitable fintech company with a reasonable amount of free cashflow. As of today, Lightspeed trades at 1.6x EV to revenue. So this is a, you know, Nuve sold for pretty much triple the price that Lightspeed is trading at right now.

So I mean, it'll be interesting to see if they can carve out, you know, a bit quicker path to profitability and post reasonably strong growth. And maybe the market will start to reward it with, you know, a higher valuation multiple. But I do have a bit of a feeling that this entire thing is a bit related to the Nuve, you know, going private valuation multiple. But I do have a bit of a feeling that this entire thing

is a bit related to the Nuve, you know, going private, being scooped up. It's just a big shift in mentality. And there's definitely been some management shuffles here, now employment shuffles, big changes with Lightspeed. Yeah. Yeah. I think, I mean, obviously he's feeling pressure somehow. He's talked about the the one of the major shareholders but i mean i do question like dax is a very you know lovable guy if you hear him talking interviews and stuff he's very passionate so i'm not taking that away but i've always i don't know i've never had really a lot of confidence in it it's just me i know you're like it's a small position for you so i do get that and i do have here a graphic that shows their cash position so kind of shows what

you were saying so they obviously got cash somehow i'm assuming like it was by issuing shares around the peak in 2021 and then that they had over a billion in cash and then it's been steadily going down ever since. Now it sits at around $750 million. So it's been going down. My biggest criticism here is you don't have anything better to do with the money than buying back shares. I mean, you can just like I asked just for fun, Chad GPT to, you know, what can you do with excess profits, which is not even the case for Lightspeed because they are burning money. But, you know, here's a few answer. And obviously, I knew pretty much all of these, but you could invest in R&D and CapEx, marketing and sales,

employee training and development, technology upgrades and so on. So there's just, you know, there's just, I think, better things that they could be doing with the cash, especially when they're not profitable. If you're profitable and you want to buy back shares because they are too cheap in your view, then have at it. But as a shareholder, I just would kind of scratch myself and kind of question management's ability to actually like, you properly invest that money if they're thinking about buying back shares that's that's the main criticism i have for them and also i've said it before where i just think they're in a really competitive space yeah and i just you know i'm

sure they if they continue they'll probably achieve profitability but i just don't know if that profitability will be, you know, sustainable for the long term on the one hand, and if it'll be very profitable, it may just be kind of volume thing, you know, where they make enough to be profitable. Yeah, it's definitely an insanely competitive space. And that was one of the main reasons why it made a few acquisitions back in the pandemic days. And it, I mean, looking back now, it's severely overpaid for them, probably because it is so competitive. I mean, you know, back then you're probably paying a premium for any company you want to acquire just because the competition, I mean, when there's more competition,

there's higher prices to acquire. And I think like you could use a lot of this capital to acquire companies as well. But, you know, just two, three months ago, they had stated, you know, acquisitions weren't off the table and the stock absolutely bombed on that news because I think maybe a lot of people realize they overpaid a few years ago and they, you know, don't want them to waste this cash pile on more more overpaying so then you know the ceo was replaced then they come in then they they change the tune to like a profitability turnaround things like that i mean it seems like there's a lot going on here yeah and you know too with how much dax is involved like i know he's a major shareholder too in the business like there's no way he wasn't on board with what the former ceo said for sure yeah it just didn't didn't work out well yeah exactly probably said it took the fall for it and then dax kind of comes back and says like oh actually our focus is profitability yeah that's i don't know if something fella smells a bit fishy

yeah there's there's so many changes going on in the background here. Clearly, yeah. I mean, it's a relatively small position for me. And I ended up buying and selling this thing probably five or six times during the pandemic. I bought it on its IPO. And then when it bombed to $10 a share during the peak of COVID, like lockdown, like March 2020, bought a bunch more and it's just been a constant buy and sell for me, but it's a very, very small position for me. So I'm willing to wait it out to see if they can turn it around, but there's a lot of stuff going on right now. The buybacks are, the buybacks, like I said, are just as confusing to me as the nuve dividend which was

extremely confusing yeah it just seems like yeah yeah i don't know yeah it's just trying it feels like it's trying to appease shareholders which is never you know that's never what i want to see from a ceo i want to see how to think longer term but again we'll see how it goes but we'll move on and probably finish with this one i know you had prepared no fruit tesla but i will we're running a bit long and i do have another recording right after this so speaking of you know highly valued stocks during the pandemic teledoc so teledoc had its ceo uh leave pretty abruptly i don't know if this was in the works or not. Does not sound like it. So they announced last week that their CEO, Jason Gorovic, was leaving the company effective immediately.

Mala Murthy, the company's CFO, will act as interim CEO until they find a permanent successor. Gorovic was CEO of Teladoc for 15 years and he was CEO when the company went public in July 2015. If you've been following the podcast for a while, you'll know that I used to own Teladoc. I sold my remaining share in early 2023. And the main reason for selling is I simply did not trust Jason Grovich anymore as CEO of the company. And the reason I lost this trust was because of the livongo acquisition they had made at the time even braden and i said that it was a high price to pay but i said i was going to give them the benefit of the doubt although i did trim some of my position

around that time which was basically around the peak and the idea was to create a platform that would be unique in the range of services that it would provide and that the chronic care services brought in by Livongo would really help set them apart and fuel growth for years to come. And that was in the summer of 2020. And in early 2023, when they provided their guidance for the year, that's when I decided to sell the stock because the Livongo acquisition was supposed to fuel growth. And they were forecasting growth to be 8% for 2023, which was definitely not in line with what management had been saying years prior. They basically said, like, I'm vulgarizing or kind of putting in my own words, but they would see like double strong double digit growth for years to come based on that.

And it was obvious that they made a bad acquisition at that point when you consider that they wrote off more than 13 billion in 2022 related to the Livongo acquisition. So you have that plus a week guidance that they provide in 2023. That was just kind of the tipping point for me. And I decided to sell my shares. And obviously, you know, at this point, looking back, it was a good decision. But to be fair, Grovich did do good as CEO. So the company grew revenues at a CAGR compounded annual growth rate. So CAGR of 66% from the time it IPO'd in July of 2015 to 2019.

They even generated $26.5 million in free cash flow in 2019. Notice how I'm stopping at 2019 here because I think the pandemic ended up being a blessing and a curse at the same time for Teladoc, so obviously it boosted demand for its offerings but also increased competition and probably was a driver behind the overpaying for Livongo and I ended up selling the last of my shares like I mentioned in early 2023 I sold them at the time I checked back what price I sold them at and it was essentially $26 a share and the shares are down more than 40% since. I wanted to mention this just because I've done plenty of mistakes in the past and obviously this was a good sell at the time but clearly I should have sold before. But I did trim the position at the

peak and despite making money on the overall position I sold the remaining shares at a lower cost than my average cost for the ones that were remaining at that time. And clearly, in hindsight, it was a good move because Teladoc underperformed the S&P 500 by a whopping 70% since. And it would have been easy for me to keep the position in the hopes that it would get back to the average cost I paid and sell. in the hopes that it would get back to the average cost I paid and sell. But, you know, I just was looking at the information I had, and I decided not to do that, that the right decision for me was to sell at the time. And I don't know what you think about that, Dan, but a lot of people get kind of focused on what we call an anchor bias. So they may have a position that's down 10%, 15%, 20%,

and the writing's on the wall that it's not going well for the company, but they focus on that purchase price and they just say, I'll sell them when it goes back to that initial purchase price. And that can really be dangerous because at the end of the day, you have to look at it at what is it right now and what do you think it will do in the future? Not try to get back even with your position. Yeah, it's sunk cost fallacy, really.

You buy it and I think it's also like a mental block of not wanting to take a loss on something. So it's difficult to explain. But I mean, if you have something that you're 20% down on and you want to somehow get it back to even before you sell it and invest in something else, it's almost like you just want to worry about where that money is today moving forward. You know what I mean? You can sell something at a 50% loss and invest in something that is going to provide better returns than kind of holding that bag per se to recover that 50%. But a lot of people get hung up on the fact that, oh, I don't want to sell this

at a loss. So I'll wait until my brokerage turns from red to green and then I'll sell it. I've trimmed plenty, plenty of losers. And I mean, it's something you just have to get used to for sure i didn't realize teledoc was down this much though 96 percent from the peaks that's crazy yeah i mean it's down 40 something percent since last year and i i said this 70 figure because i'm adding like the total returns from the snp 500 so like okay i am adding the gap between the two. So, you know, what that money would have done with just being in the index. Yeah, exactly. So, I mean, obviously, I'm glad in hindsight that I did, but it just at the time was like,

okay, you know what? I just don't see where this company is going, you know, moving forward. And I think there's a real risk that the share price will continue trending lower i could have been wrong right like they could have come out with much better results and maybe the stock would have been like 35 40 dollars and wish i would have kept it but at the time with the information i had to me that was the right decision to make and kind of you know forget about that anchor bias and you know it's just uh it's a a, it's a sunk cost. It's a sunk cost. That's it. Yeah. It's the most important thing to, is to look at, you know, what, how much money you have today and where it's best, best invested. Cause like you said, even if you say bought Teladoc at, you know, even $291,

absolute peak, and you're, you know, you in 2021, you're thinking about selling it at 100 but you don't want to because it's a big loss you probably would have not made all your money back but you would have made more just by selling that and buying say like you said the index whereas with teledoc you'd be down what another 90 some percent from that 100 price point so yeah not doing well yeah no i think that's great perspective, just because I think it's really, you know, it's easier said than done. I totally understand it. It's hard to, it's not fun to take a loss. You know, the, I've read enough investing, psychological books, psychology of investing to know that, you know know the pain you feel from a loss is much greater than the enjoyment

that you feel from a massive gain so i understand it's not easy but sometimes you just have to take a step back remove the emotions out of it and then just take the best decision you can take yeah yeah it happens to me all the time like everybody is going to feel that way you'd never want to sell anything in the red i had um a position in ovintive they used to be in canna and during the during the pandemic i was down 96 on it and i was the same way like it was complete sunk cost but at that point i was like oh i'm down 95 i'm just gonna keep holding this thing and uh that was an extremely rare case i ended up selling it in the green oh wow okay because of the right run the um right when the oil and gas like boom came in 2021 2022 that's like that's not going to be the case for the most part yeah i should have sold it like long before

that type of situation happened but i had that same mentality i didn't want to sell it at a loss and i just kind of kept holding on and just ended up getting lucky in a way. That's not going to be the case for the most part. I don't see Teladoc getting back to $291 anytime soon. I think that's fair to say. Well, I think on that, we'll call it an episode for today. Thanks everyone for listening. Of course, if you haven't done so, if you can give us a good review on Spotify or Apple Podcasts, five-star there, we do appreciate it. It helps people find us.

If you have a friend, family member that is interested in learning more about investing, you can send them our way. That's how it helps us grow and keeps us motivated to keep doing this although we love doing this but having new listeners all the time makes it all worthwhile you can find me at fiat underscore iceberg on twitter slash x and then dan at stock trades underscore ca and also stocktrades.ca you If you go on the old browser, whichever browser you're using, it is compatible with everything.

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