Estimating the Value of ADM Endeavors
New Fixed Assets
Book Value of Land US$970k versus Potential Fair Market Value of US$3M to US$5M
Book Value of New Facility US$2.4M versus Potential Fair Market Value US$8.9M to US$10.7M
Sophic Capital client ADM Endeavors, Inc. [OTCQB:ADMQ] (“ADM Endeavors”, the “Company”) is a diversified direct marketing and value-added manufacturing company. Its core offering revolves around custom promotional products, uniforms, and wearable items. Strategically targeting contracts with government bodies and educational institutions, ADM Endeavors has commenced construction of a new facility to support its organic revenue growth (by increasing capacity up to five times) and M&A roll-up strategy. Scheduled to open at the end of 2024, we believe the property and future facility are hidden assets not reflected in the stock price, in addition to their potential to drive additional revenue growth. In this report, our focus is on estimating what the fixed assets could be worth.
ADM Endeavors is currently building a new two story facility with about 85,000 square foot of floor space on 7.5-acres of land located at 1900 East Loop 820 in Forth Worth, Texas (Exhibit 1). The new facility will serve as a centralized manufacturing hub, fulfillment center, and retail storefront, consolidating operations under one roof, which is also expected to drive margin expansion and better enable ADM Endeavors to grow and serve its customers.
As Exhibit 1 shows, the property is close to the intersection of two major highways – Interstate 30 and highway 820, which is an auxiliary route of Interstate 20. The future facility is situated in a high traffic area, further benefitting to its proximity to AT&T Stadium (home of the Dallas Cowboys), Globe Life Field (Texas Rangers), and a Six Flags amusement park. The current facility does not have this high traffic attribute which should greatly enhance retail sales and increase exposer to new customers at the new facility.
Exhibit 1: Location of ADM Endeavors Facility Under Construction in Fort Worth, Texas
Source: Google Maps
Currently, ADM Endeavors leases an 18,000 square foot facility in Haltom City, Texas. As Exhibit 2 shows, the book value of the land and property on the current facility was US$256,387 as of June 30, 2024. As well, land the Company owns at 1900 East Loop 820 is worth US$970,455 (the Company’s July 2020 8K form states the land was purchased for US$498,000 with 22,232,143 restricted units) and the construction of the new facility was worth US$2,442,567 for a total of US$3,413,022. Our question is what could the land and the new facility potentially be worth?
Exhibit 2: Book Value of ADM Endeavors Property Less Accumulated Depreciation, as of June 30, 2024
Source: EDGAR
Howdy Neighbour!
Zillow showed a neighbouring 0.84-acre lot for sale (Exhibit 3) at 1809 East Loop 820 Fort Worth, Texas which is across the highway from ADM Endeavors property at 1900 East Loop 820. This neighbouring lot (36,590 square feet) was priced at US$250,000 or approximately US$6.83 per square foot. However, information from a local real estate agent had another peer property priced at US$12 per square foot.
Applying some “back of the envelope math” using these per square foot values to ADM Endeavors remaining 10-acre (435,600 square feet) lot provides a property valuation of PERHAPS between US$3.0 million to US$5.2 million, about 3 to 5 times what the balance sheet shows and 6 to 10 times the original US$498,000 purchase price. We emphasize “PERHAPS” because we are dealing with few data points to compare to ADM Endeavors land value and real estate market conditions remain in flux.
Exhibit 3: Neighboring Property For Sale Across the Highway at 1809 East Loop 820 Fort Worth, Texas
Source: Zillow
Building Value Through A New Facility
With ADM Endeavors remaining 10-acre property at 1900 East Loop 820 Fort Worth, Texas POSSIBLY worth 3 to 5 times versus what the June 30, 2024, balance sheet indicated, what could the new facility be worth once completed? For our estimation below, we will only be using the 59,500 square foot footprint of the building, excluding the 35,000 square foot second floor, which COULD hold additional value.
Information we received about peer industrial properties in the area suggest valuations between US$150 to US$160 per square foot. However, as Exhibit 4 illustrates, commercial office space for sale about 2 miles away from the location of ADM Endeavors future facility. On a price per square foot basis, the building is valued at US$180 per square foot. Again, using back of the envelope estimates and applying the lower end of the US$150 per square foot comparable property and the near peer’s US$180 per square foot (Exhibit 4) to ADM Endeavors future 59,500 square foot facility yields a POTENTIAL building value between US$8.9 million to US$10.7 million or about 3 to 5 times more than what Exhibit 2 shows as the value of construction June 30, 2024. As a reminder, the US$8.9 million to US$10.7 million only values the 59,500 square foot footprint of the building and does not include the POTENTIAL additional value that yielded from the 35,000 square foot second floor of the facility. Again, we emphasize “POTENTIAL” and “COULD” because we are dealing with few data points to compare to ADM Endeavors facility value and real estate market conditions remain in flux.
Exhibit 4: Commercial Office Space For Sale Down the Highway
Source: CityFleet.com
Conclusion
ADM Endeavors remaining 10-acre (435,600 square feet) lot has an estimated property value that could range from US$3.0 million to US$5.2 million, which is roughly 3 to 5 times higher than the current balance sheet valuation and 6 to 10 times the original purchase price of US$498,000. The Company’s upcoming 59,500 square foot facility (reminder that this calculation only represents the ground floor footprint, and excludes the 35,000 square foot second floor, which could hold additional value) could have a potential building value between US$8.9 million to US$10.7 million, approximately 3 to 5 times more than the construction value listed on the balance sheet as of June 30, 2024 (Exhibit 5).
Exhibit 5: Summary of Book Value versus Potential Fair Market Value of ADM Endeavors Assets
Source: Sophic Capital Estimates, Local Real Estate Listings
We caution that investors should not rely upon these estimates since they are based off of a few data points of unsold properties. We are saying that we believe that ADM Endeavors [OTCQB:ADMQ] property at 1900 East Loop 820 Fort Worth, Texas and new facility under construction may be undervalued. Beyond this asset perspective, we believe management can extract additional value through future revenue growth at the facility and potential margin expansion. One could make the case that this hidden asset value and business/margin expansion opportunities are not reflected in the Company’s share price.
Disclosures
ADM Endeavors Inc. [OTCQB:ADMQ] has contracted Sophic Capital for capital markets advisory and investor relations services.
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