Earnings
Alert for #Energy and #Infrastructure Stock Enterprise Group (TSX: $E.TO)
@EnterpriseGrp; Q1/2018 eps $0.06 vs. Q1/2017 eps ($0.02)
May 16, 2018 (Investorideas.com
Newswire) Earnings commentary - Enterprise Group (TSX:E) has experienced almost four years of share
price consolidation, following the vicious 2014 resource sector decline. The
Company is now stronger and leaner than pre-2014, and management’s aggressive
initiatives have seen the stock price rise to new 52-week highs. The Company
remained cashflow positive throughout and profitable Q3, Q4 2015 and Q1 2018.
Read this in full at http://www.investorideas.com/CO/TSXE/news/2018/05161EarningsQ1.asp
Background Facts:
·
Book Value $1.01
·
Current share price $0.55
·
No debt
·
NCIB of 5% of E stock ongoing.
·
$40 million in bank lines available for
funding acquisitions
·
Net income Q1 2018 $3.2 million versus
Q1 2017 ($50,627)
·
Q1 2018 Revenues down 3% from Q1 2017
·
Development of proprietary ‘Star’
inventory tracking software system will cut costs and significantly enhance
revenues.
One-quarter
of profits can be a fluke; two, lucky but three a reasonable trend. For
Enterprise, it is the result of planning and execution. From the depths of the
resource malaise, the shares are now debt free, cash flow positive and
profitable. Not to mention on the acquisition trail with $55 million of
cash.
Management
has positioned the Company to be the premier resource for industrial equipment
rental; initially in the West, ultimately North America and possibly further
afield.
Just
as the shares received an unfair shellacking as the oil price fell, there seems
to be a renaissance afoot that sees oil, currently $70 plus, hitting $100 by
2019. Not that would drive the shares back to their all-time high of $3.50 in
2014, but one has to figure there is excellent potential to regain a good chunk
of that decline should oil, and the sector continues to improve.
Given
the initiatives put in place and arguably to come, the price may also benefit
from proper, old fashion management.
Yes,
management is still a thing.
|
Consolidated:
|
Three
months ended
March 31, 2018 |
Three months ended
March 31, 2017, restated (2)
|
Change
|
|
Revenue
|
$6,810,906
|
$7,015,278
|
($204,372)
|
|
Gross margin
|
$2,126,160
|
$2,695,739
|
($569,579)
|
|
Gross margin %
|
31%
|
38%
|
(7%)
|
|
EBITDA (1)
|
$1,487,253
|
$1,835,990
|
($348,737)
|
|
Income before tax
|
$290,616
|
$210,495
|
$80,121
|
|
Net income (loss) and comprehensive
income (loss)
|
$3,190,242
|
($50,627)
|
$3,240,869
|
|
EPS
|
$0.06
|
$0.00
|
$0.06
|
Revenues Down 3%?
Should investors Care?
“In
the first quarter of 2018 no construction work was completed on a major
construction project in Northeastern B.C,” states Desmond O’Kell, SVP of
Enterprise. “Otherwise
the
Company continues to see increased activity.
The increased activity experienced by other customers did not fully
offset the loss of revenue earned in the first quarter of 2017 associated with
that project resulting in a slight decrease in revenues for the quarter. At
March 31, 2018, after adjusting for goodwill and deferred taxes, the Company
has assets more than total debt of approximately $54,000,000. Enterprise will continue to look for and
secure opportunities that improve its financial position and opportunities that
will allow the Company to diversify and expand.”
Management owns 21 percent of
the outstanding shares.
StarChain
While
maximizing revenues and reducing costs is often espoused by the management of
most companies, Enterprise has developed StarChain technology, proprietary software, and
attendant hardware. Modules will be attached to each piece of rental equipment.
Simply
put, Star technology enables its customers to automate and schedule the
utilization of the equipment which delivering several benefits that include
reduced fuel expenses, lowering onsite maintenance costs and real-time
reporting. Several features will be available to the customer in Q3, Q4 2018.
The
Company has a history of developing solutions for its customer and has fifteen
plus patents in its IP portfolio.
One
of the initial cost savings is several thousand dollars a month the technology
gains by rendering individual GPS. Other benefits are utilizing the SaaS tech
as a base platform for future applications, improves margins and of course
maximizes revenues.
Not to mention the incredible competitive advantage afforded
Enterprise as it has no plans to sell or license StarChain at this juncture.
There appears to be no competitive software.
So, What Now?
As
business continues to build, Enterprise has been able to raise its pricing in
line with demand. One of the first things it did when the sector imploded was
to reduce costs to remain competitive. It also became a resource to customers and prospects to ensure not
just its viability but that of its customers. That practice has served the
Company well as the business builds.
Enterprise
also recently sold its infrastructure subsidiary Calgary Tunneling (CTHA), to focus on the industrial rental business
that brings its subsidiaries’ strength to the fore and provides a stable base
for growth. The last four years meet as the culmination of two cycles. First,
it heralds that the Company is ready and capable of exceptional growth as it
enters this new phase with a clean balance sheet. Second, it proves that the
planning, execution as well as pain and suffering since June 2014 has been
constructive.
There
are many acquisition targets currently being evaluated by the Company. Each
will be acquired with not only growth in mind but immediately accretive and
strongly complement its existing subsidiaries.
YTD
2018 Enterprise Group (E: TSX)
For questions or additional information, please
contact:
Leonard Jaroszuk: President & CEO or
Desmond O'Kell: Senior Vice - President
780-418-4400
Article source – Baystreet.ca
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