Digby report to shareholders

1. Digby’s Report to Shareholders
Industry #C59908
Presented by Eric Willinsky, Francis Naccarati, Maite Schloesser,
Clare Singley, Stephanie Radziminski, Mark Rapposelli

2. Promise to our Shareholders
Steady 10% annual increase
in stock prices over 5 years

3. Industry Stock Market Summary

4. Previous & Future Company Drivers
1. Cost Structure and Stability
2. Market Share Dominance
3. Dividend Payout

5. Previous Cost Structure Strategy●
● Higher prices for quality products
○ Aligns customer-targeted pricing with
higher R&D budget
● Early investment in TQM
○ Lowered Variable costs by 12.9% avg
○ Lowered Administrative costs by 60%

6. TQM Results
Digby's TQM Results
2019 2020 2021 2021 Industry Avg.
Material Cost Reduction 11.80% 11.80% 11.80% 8.85%
Labor Cost Reduction 14% 14% 14% 4.67%
Administrative Cost Reduction 60% 60% 60% 44%

7. Previous Cost Structure Strategy●
● Higher prices for quality products
○ Aligns customer-targeted pricing with
higher R&D budget
● Early investment in TQM
○ Lowered Variable costs by 12.9% avg
○ Lowered Administrative costs by 60%
● Emphasis on Capacity
○ Takes advantage of competitors’ unmet
demand and eliminate second shift
variable costs

8. Average Plant Utilization

9. Continuing Cost Structure Stability
• Due to prior success in cost management, important
profitability & efficiency ratios are growing but at a
sustainable pace as compared to competitors
o Growth Rates (YoY):
 ROE = 10.5%
 CM = 1.25%
 Profit Margin = 7.1%
• Lower ROE compared to competitor can be attributed
to lower profit margins. Innovative methodology for
improvement of profit margins includes:
o Automation Investment (lower variable costs
outweigh initial cap. ex)
o Inventory Management (targeted inventory levels
to prevent excess inventory costs)

10. ROE & Profit Margins for Industry

11. Market Share Dominance
● Focus on high market share to offset fixed costs
● Differentiate semi-homogenous product lines in a
competitive market through early promotional
marketing and bolstering R&D to mitigate
competitors power
● Digby’s Accessibility rate of 100% and Awareness
rate of 83% ultimately resulted in Market
Dominance

12. Average Product Awareness
Average Product Awareness (2019-2021)
2019 2020 2021
Andrews 41.60% 51.30% 51%
Baldwin 92.30% 94.70% 96%
Chester 54.70% 54% 55%
Digby 81% 81.80% 82.60%

13. Market Share Moving Forward
• Lower ROE also attributed to lower sales than competitor
• Opportunity to gain additional awareness and increase competitive
advantage by increasing the promotional budget & reducing sales budget
• Continued adherence on R&D and increased focus on catering product
lines to consumer demands mitigate customer power
o Product Age
o Product Price
o Product Reliability

14. Dividend Payout
● Only company paying dividends
at .5%
● Potential to offer increased
dividends in the future to match
sub-sector average at 2%
*cited from dividend.com

15. Why Should You Invest?
● Digby’s cost structure stability, market dominance, and
dividend payouts has contributed to its positive
profitability
● Historically, Digby has outperformed its competitors and
holds the highest stock price coupled with the strongest
EPS showcasing our current strength
● With a changing environment, Digby has prepared a
strategy moving forward that includes provisioning
infrastructure, revising inventory management protocols,
and strategically increasing dividend payouts

16. Appendix
● Dupont Model
● SWOT Analysis
● Porter’s Model

17. DuPont Model

18. DuPont Model

19. SWOT Analysis

20. Porter’s Model