This week, we thought we’d share a small excerpt of the Fireside Chat we had with a company that distributes products and supplies for the personal hair care industry. We know, not very exciting, but you don’t need an extravagant business plan to have an exciting movement in your stock price. Sometimes boring is beautiful. And this is the multi-bagger setup we think we have here.
If you were able to attend, great. If not, the full replay is available at our pro portal, In prior communications, we elaborated how the company fits into a rare group of GeoInvesting multi-bagger candidates that adhere to the bulk, if not all of our 10 Tier 1 quality microcap criteria. You can see them here at our events page that lists upcoming chats and forums accessible by our premium community.
In the following snippet, our guest conveys an optimism towards the company’s gross and EBITDA margins as the company grows its revenues and scales in multiples.
“I think that as we scale, there is room on the gross margins. I think that over time, what this business looks like if you if you run the math that you’re talking about, and you look at it as it scales to $15, $20, $30, $40, $50 million and beyond, we should definitely be – we’ve done double digit margins – we just did that in 2020. I think what ended up being about a 12 and a half EBITDA margin. So of course, we can get back there in the short term, and longer term I think 15 is a reasonable number, if you just think about the leverage on the SG&A.
We don’t really model a lot on the gross margins in terms of expanding that. But we think that there’s certainly room over time, but not in the near term. So yeah, I think a 15 margin is about right
Now, having said that, that’s going to take more scale, so we can leverage the fixed SG&A expenses we’ve got. And the way to think about it is we’ve looked at some private companies that are really well run in this space. And funny enough, we kind of have a higher G&A burden than them because even though we’re on the OTC, we still have a board of directors, we’ve got a CEO, we have a CFO, and they don’t have any of these things.
So, if you think about it, can we get there? Over time if we scale, those expenses don’t really affect us as much. So, we could get to those kinds of margins. I think 15 is about right.”
We urge you to try and make future events to get a priority peak at the companies that we are taking hard and serious looks at for inclusion in our featured model portfolios. To be clear, these companies are not asking or paying us to speak with our community. It is by invite that they participate in our chats. We thought you should know that.