Ann: Appendix 4C- strong ARR growth, cash receipts & cost control, page-98

Update:

The caveat is that I am getting this update second hand from an Aussie source. We have not been able to catch up with management ourselves in detail since they are currently all in Australia. OpCo is suggesting there may be opportunities for US investors to meet with management in NYC later this month/ early next month.

Management have had a series of one-on-one meetings with Aussie institutional investors. The message is simple and unchanged but it is delivered in an emphatic manner:

The conclusions/feedback I am hearing are

• The growth in ARR in December was $5.8 million with a $ 1 million currency headwind. Thus organic, constant currency growth was approximately $6.8 million. That is a good number. (Im quoting Aussie investor)
• The company does not wants to go back to the market for capital again. The CEO is determined not to dilute again at a low valuation. He has spread the message throughout the whole company that LVT reaches cash flow breakeven with the current cash balance. This sets a very clear and simple cash burn target that everyone in the organization understands. This is the single most important key performance metric in the company. Its not some esoteric quarterly cash burn budget that has loopholes or exceptions. It is a very simple, "no excuses" goal and anyone who doesn't "get it" is answerable to the CEO.
• This means no more acquisitions for the foreseeable future. The company believes the consolidation opportunity is there but they have plucked their # 1 choice (Wizdom) and added another good acquisition. Now, nothing further, until the cash goal is safely in the bag.
• The valuation is too low. Making no allowance for pipeline. The company is exposed at a Valuation under $350-450 million
• The pipeline is real. This is a growth company.
• The product transition is not only about orientating product towards a partner channel. It is also about focus and simplicity. It is better to be selling 3 clearly defined bundled products than 14 products. The product demonstration is convincing.

I share these views

Here are my thoughts.

1. There is really no new news.
2. The share price is doing well because the management are emphatically restating the message from the end of 2019. Investors like consistency and they like the determination and shareholder alignment.
3. It is gradually dawning on the market that the December quarter numbers were good.
4. Disgruntled investors from Q3 have stopped selling. A couple of significant new institutional investors who have been following the stock have stepped in.
5. If the market does not recognize the value,institutional investors are starting to realize that an acquirer can buy LVT's combination of product,revenue and pipeline on the stock market for less money than it would take to create in house..

That's my 2 cents. I am not one of the savvy folks who bought stock at 33 cents yesterday. I bow my head.