Stonegate Capital Partners Initiates Coverage on Input Capital Corp. (TSX-V: INP)

DALLAS, TX / ACCESSWIRE / November 29, 2017 / INP Corp. (TSX-V: INP):

COMPANY DESCRIPTION

Input Capital Corp. (“Input” or “the Company”) is a Canadian Grain Commission licensed and bonded grain dealer that has adapted the streaming business model from the mining and metals industry and applied it to agriculture. The result is an innovative, growth-oriented agriculture streaming company with a focus on canola, the largest and most profitable crop in Canadian agriculture. Input enters into multi-year streaming contracts with farmers across western Canada and generates revenue by selling the canola purchased from these farmers to well-established grain handling companies and canola crushing plants located across Alberta, Saskatchewan, and Manitoba. Since inception, Input has deployed approximately $160M into streaming contracts and is headquartered in Regina, Saskatchewan, with 24 employees, as last reported.

SUMMARY

Over the last two years, this well-managed, financially disciplined company has fine-tuned its business model to decrease risk and increase Input’s number of revenue-producing canola streams. Input is now fully funded to carry out its plans to grow the company three- to four-fold over the next five years. This growth will be funded primarily through internally generated cashflow, with a non-dilutive revolver for operational needs, while maintaining zero long-term debt on its balance sheet.

Successful new initiative: the marketing stream – At the beginning of 2017, Input launched a new initiative, the marketing stream, an alternative offering to the original capital stream, resulting in a dramatic expansion of its customer base. Input signed up over 160 new producers in just the first six months and currently reports the Company’s total number of revenue generating contracts at over 300 (up from 112 reported this time last year).
Improved portfolio – The marketing stream focuses on aggregating a larger number of smaller contracts, resulting in a more diversified and stable portfolio. While with both offerings Input makes a deposit, and the producer commits to delivery of a specified amount of canola (tonnes) each year over the life of the contract, the marketing stream differs from the capital stream by offering smaller deposits with the crop payment tied largely to the sales price, rather than a fixed price. Thus, marketing streams have the potential to generate higher cash returns at lower risk.
Large addressable market – By providing a wider range of offerings to farmers, recent initiatives have significantly expanded the Company’s addressable market. Given Input’s current market penetration of over 300 farms and its impressive momentum since the beginning of the year, the Company has a sizable opportunity to make the more than 50,000 Canadian canola farmers into Input clients.
Growth opportunities in canola farming – The steady increase in the global population, particularly in developing countries, combined with developed countries’ demand for healthier oils, are two factors driving the steady growth of canola. In western Canada, one-third of the cultivated acres are planted with canola, and Canada, as a whole, exports 90% of its canola production, which accounts for approximately 70% of all global exports.

Attractive IRR – Input’s streaming contracts provide attractive returns. The Company’s legacy capital stream contracts generate IRRs in the 15% to 20% range, and the newer marketing contracts generate IRRs in the 30% to 40% range.
Insider ownership – In April 2017, the three co-founders increased their fully diluted ownership to over 27%. This level of insider commitment is reassuring to the Company’s current and potential stakeholders. Notably, the Company pays a regular dividend to shareholders, which is currently yielding ~2% – 3%.
Valuation – For the investor looking to benefit from the growing global canola market with reduced risk, Input Capital should offer that near-term appreciation as the model continues to yield impressive results, and INP.V begins to trade more in-line with comps; see full report for further details.

The full report can be accessed by clicking the following link:

http://www.stonegateinc.com/reports/INP_Initiation_Nov_2017_Final.pdf

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high quality investment opportunities.

SOURCE: Stonegate Capital Partners

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