Digby board report
- 1. DIGBY CorporationBoard of Directors MeetingDecember 6, 2018Vanderbilt University
- 3. Vision/MissionOur vision is to provide every unique customer with a product that perfectly matches the demand within the sensor industryOur brands keep up with customers’ demand and needs, fully satisfying their most valued preferences. Our significant stakeholders are customers, management and employees, stockholders, and bondholders.
- 4. Strategy ReviewBroad differentiation strategyOperate both as a cost leader in the Low Technology segments and as a quality leader in the High Technology segmentsCore competency satisfies buyer criteria for every segment. Combine elements of a Niche Differentiation strategy with those of a Niche Cost Leader strategy
- 6. Daze: Leader in market share with 19%
- 8. Dell: Leader in market share with 19%
- 10. Dill: Leader in market share with 18%
- 11. Dixie: 2nd in market share with 18%
- 13. Dunce: Leader in market share with 23%
- 14. Dot: 2nd in market share with 23%
- 15. Size Segment
- 16. Dog: Leader in market share with 23%
- 17. Dunce: 2nd in market share with 21%Revenue Growth
- 18. Revenue Growth & Margins
- 19. Market Share
- 20. Performance Snapshot – Return on EquityHighest ROE in industry 2018, and growing since ‘14Retain earnings to reinvestDividends $5.00 in 2017 (4.2% Yield)$7.50 in 2018 (3.7% Yield)
- 21. Performance Snapshot – Stock Price & Market Cap.Consistent investor ROIBalanced & predictable increase in company valuation
- 22. Financial ManagementCapital Budgeting StrategyMinimize costs in low tech segments to price competitivelyRapid expansion, large initial investment in capacityLeverageAvoid financing solely through debt or equity by mitigating asset/equity ratioLeverage returns to shareholdersDividendsRetain earnings for reinvestmentAt 15%-20% ROE, begin dividend issueRepurchase stock beginning in 2016 to create value for loyal shareholders
- 23. Financial Management – ExecutionIncur early losses to precipitate expansion and market dominance Avoid emergency loans by budgeting 10% below forecastSWOT Analysis
- 24. Strongest Competitor – ErieStrategyLow CostSmaller company that benefitted from early profits and consistent controlled growthCapabilitiesHigh automation (less than us)Low capacity in early yearsFuture GoalsForesaw exit from High End segmentAssumptionsProfitabilityCompliance
- 25. Key Learning and AdjustmentsEarly investments in Plants, HR, and TQM key to profitability.Adjusting to current market factors, but maintain foundation. Stockdale Paradox:Early forecasting difficulties are being corrected.Better inventory management.Missed opportunities from withholding cashFear of bankruptcyOverestimating competitor products and market shareTotal Project vs. Actual (25.4%) to (28.0%).
- 26. Why Executive Team Should ContinueGrowthLast years increase in net income 2017-$64,730 to 2018-$105,098Understanding of Current Economic/Investor IdeologyHigh dividend payout. AAA Bond Rating.Diversified product portfolio.Asset allocation across all 5 segments-8 products. Time Tested companyLarge Scale jump- Stock price (+83.90), Net income (+43,368)Can manage this growthCohesive management team
- 27. Future OutlookContinued commitment to paying dividends. Continued Jack Welsh philosophy to every product line, may abandon Low End as competition intensifies.Continued implementation of the balanced score system to follow success and steer company action.Maintain core strategy.Improved understanding of sales forecasting.
- 28. Appendix A – Balanced Scorecard
Editor's Notes
- #2: (Brian)
- #3: (Brian)- Quick slide
- #6: (Megan)- *Talk about new products. We introduced one product in 2012, and another two products in 2013. Quickly exceeded expectations. We will introduce new products in the future.
- #7: (Brian)- New products from competitors in 2015 and 2016 impacted our growth. We also viewed this an ideal time to pursue intensive R&D projects on our product line. During this period, competitors gained market share, however we re-gained this market share (and more) over the past two years.
- #8: (Brian)This chart illustrates the revenue growth seen on the last slide (indicated by the size of the bubbles, each representing one year)Also shows net margin, represented by the bubble’s coordinates on the horizontal axis, and sales growth from the previous year, represented by the bubble’s coordinates on the vertical axis.We grew revenue every year (only company in the industry to do so), same with revenue. Highest contribution margin (53.9%) & net margin (39.4%)Growth has been entirely organic, and we expect organic growth alone to continue to average above 10% for the foreseeable future.
- #9: (Brian)Market share leader every year since we restructured the company in 2011.
- #10: (Matt)- After reaching 15-20% ROE, decide to issue dividends. Viewed ROE as a benchmarking tool, continually retained earnings in order to boost company growth.- Sustainable ROE.
- #11: (Matt)Quick slideErie only real competitor
- #12: (Matt)- Finance aggressive investmentswith 10 year notes and stock offerings;maintain healthy leverage until recent years…retired some bonds early. - Leverage returns – ties company performance to stockholder returns. They get more money if we finance partially through debt because there are fewer shareholders. (SHORTEN THIS?)- Rapid expansion – increase sales NOW to gain control over the industry, seek profits later (MAYBE REMOVE & put in Revenue slides)
- #13: (Matt)-
- #16: (Bobby)