In the late 70's, two ex-hippies - Ben Cohen and Jerry Greenfield, started up a homemade ice cream parlor in a renovated Burlington, Vermont gas station - the business, better known worldwide as Ben & Jerry's was acquired twelve years later by Unilever for $43.60 per share (2000) after raking in nearly $240M in '99.

A lot can happen in a year...

It took Ben & Jerry's quite some time to establish a favorable competitive position within the ice cream industry as well as to gain critical mass and attract acceptable buyout offers.

On the other hand, Tootie Pie Company Inc. (OTCBB: TOOT) - in just over one year of operations, is positioning itself for a top 10 competitive spot in addition to near-term growth that dwarves the company's ice-cream counterpart during its first 3 years of operations.


Things are heating up

During a stellar first full year of reporting with the SEC, Tootie Pie Co. accomplished a number of key milestones including:

1. Logging significant revenues - $611,495;

2. Establishing a Favorable Market Share Position - Closing in on a top 10 competitive spot in the U.S. frozen pie market;

3. Development of Optimal Distribution Relationships - Sysco, Ben E. Keith & US Foods driving product out of home state of Texas (a very big mkt) and into the national spotlight;

4. Moving out of Start-Up Phase With Zero Financing

5. Products Prominently Featured in Key Retail Environments - Toby Keith's, Hilton Hotel; and

6. Award Winning Product Receives Distinction of "Pastry Chef Quality" - First place finish at 2007 APC/Crisco National Pie Championship (Commercial Division) and favored by Hilton Hotel executive chef over pies created by his own salaried pastry chefs.

Just as we suspected - the $0.75 - $0.80 range was short-lived for TOOT. Now trading steadily in the dollar range - Tootie Pie Co. made commendable progress last week. While many small-caps were dead in the water, TOOT was giving investors something to cheer about - besides the 4th of July fireworks.

Announcing near-record sales for the three months ending 7/30/07 - Tootie Pie Company Inc. proved today that what we saw out of the company in year-one is likely just the tip of the iceberg. In addition to near-record sales, one of TOOT's most valuable distributors, Ben E. Keith, recently placed their largest order ever - a key indication that demand is high and suppliers are very excited about the product.

Selling Like Hot Cakes...Err...Pies

Today's press release states that Tootie Pie. Co. sold 9,000 pies for the quarter ending June 30 - if we assume that each pie sold for an average price of $40 - this would equate to $360K. If, speculatively, TOOT is able to maintain ZERO revenue growth for the rest of the year, the company would bring in nearly $1.5M in revenues.

Going off of data obtained from Information Resources Inc., based on 2005 findings - $1.5M in revenues would place Tootie Pie at the #9 spot in the U.S. frozen pie market. Not bad for a two year old company.

As Tootie Pies pop up everywhere from Hilton Hotels to Toby Keith's restaurant, distributors like Ben E. Keith, are facilitating rapid expansion far out of the enormous Texas market. According to news out today, BEK already has 5 sales divisions selling Tootie Pies (Dallas/Fort Worth, TX, Albuquerque, NM, and Oklahoma City, OK, and Amarillo, TX divisions also servicing additional markets in Louisiana, New Mexico, Kansas and Missouri.)

Commenting on today's news, CEO Don Merrill Stated: "This order is significant, not only in its size, but in that it illustrates how our valued added strategy is growing sales. Our pies provide customers with a superior product, which in turn allows them to differentiate themselves in the marketplace and open new markets."

Market Consolidation - Not So bad.

Consolidation is running rampant in the pie industry, an example being Schwan swallowing up Mrs. Smiths back in '05. Already establishing a close to top ten competitive position in just one year of operations and showing promise for greatly increased revenues during the current fiscal year - Tootie Pie Company has food distributors and branded suppliers watching closely.

We're watching closely too. If you've seen this before, either in the TOOT research report published by Amalfi Research Group, or mentioned previously, I apologize - but this warrants another look:

From the report: "Capitalized with approximately $1.3 million in private equity and brought public via the filing of an SB-2 registration with the US Securities Exchange Commission, without relying on reverse mergers - the Company has only one class of common stock held by all shareholders (including management). With a current float of approximately four million shares and utilizing a cash valuation calculation, TOOT could be very attractive, from an acquisition standpoint. Using multiples of between 5X and 10X, and considering the stock on a fully diluted basis, the Company would have $0.40 per share in cash on hand, which would support share prices of between $2.00 and $4.00, utilizing a cash value calculation alone."

By the Numbers

After checking out the Edgarized filings and speaking to a few peers, one key area of concern here is SG&A expenses figure ($746K) for the fiscal year. At first glance, the operating income figure may raise a few red flags. BUT Tootie Pie is coming out of its start-up phase with surging sales and has relied on ZERO financing or financial agreements deemed harmful to future performance AND has cash on hand to fund operations going forward. To start up a company you need capital, and Tootie Pie. Co. has done things the right way.

Right now, we are looking at a company with a stock that has seen ramped up volume considerably in recent weeks while prices soar 25% and show promise for much greater gains. To make things even better, Tootie Pie Company is experiencing near record sales and positioning itself to become the Ben & Jerry's of the pie industry. Our last target was right on and right now, it looks like $1.25 and beyond is the next stop.

Labels: TOOT, TOOT.ob, Tootie Pie Co., Tootie Pie Company Inc.