Uninterrupted History of Monthly Distributions
In every month from its inception in June 2005 through November 2010, Coast Wholesale Appliances Income Fund (the Fund) paid a monthly cash distribution to its public unitholders and to the 35% non-controlling interest retained by the previous ownership. No distribution was paid for December 2010 after the double payment in November 2010 due to the final work being completed in preparation for the Fund’s conversion to a corporation on January 1, 2011.
Going forward, we anticipate that Coast Wholesale Appliances Inc. (Coast) will pay a monthly dividend approximately equal to 50% of our net income. Our current monthly dividend is $0.025 ($0.30 per annum) per share of Coast Inc.
Solid Industry Fundamentals
Major household appliances represent a $3.5 billion market opportunity in Canada. While new housing starts are currently down from the record levels of recent years, the growth in home renovation, as well as product innovation, an increasing focus on home décor and energy efficiency, and favourable demographics continue to generate demand.
Proven and Sustainable Business Model
Coast has operated successfully since 1978. We deliver complete appliance solutions with an unusually wide selection of products and brands, and a superior service offering. We benefit from strong, established supplier relationships and a loyal, diversified customer base.
Leading Market Position
Coast has an estimated 25% share of the developer and builder market in Western Canada, as well as a significant and growing share of the retail market. In Southern Ontario, where we established a strong foothold in early 2009 with the acquisition of a well-located appliance dealership in the Greater Toronto Area, we are continuing to steadily advance our market position.
Track Record of Stable, Growing Cash Flow
Since opening our first store in Vancouver, BC in 1978, Coast’s growth has been driven by a long-term vision of providing superior service to customers, complemented by a wide selection of new and innovative products. The company has benefited from a balanced business model that draws revenues from all three of the new home, home renovation and appliance replacement markets, as well as the essential nature of the products we sell. These factors have historically allowed Coast to maintain a stable growth trajectory across more difficult economic periods.
A significant opportunity exists for us to increase sales from our existing stores over the longer-term as the economic climate improves in Canada by capitalizing on growing customer recognition of the Coast name and tailoring our product offerings to meet regional preferences. Geographic expansion also offers growth potential, particularly in Ontario, Canada’s largest market.
Experienced, Proven Management
Coast’s management team has a demonstrated ability to successfully execute the company’s business strategy.