A few the Companies we follow have recently released earnings or important updates.

With the most recent quarterly financials ending March 31st, many of the financials are not going to show the full effects from COVID-19. Therefore, we continue to look forward to financial results from Q2 onwards, seeking new trends and determining both the winners and losers.

However, we wanted to provide some updates as we continue to monitor each Company closely.

We have provided updates on Lite Access Technologies (LTE-TSX.V), RIWI Corp (RIW.CSE), Renoworks Software (RW.TSX-V.), Immunoprecise Antibodies (IPA-TSX.V), Hamilton Thorne (HTL-TSX.V), Pioneering Technologies (PTE-TSX.V), Atlas Engineering Products (AEP-TSX.V), Aurora Solar Technologies (ACU-TSX.V), Spectra Products (SSA-TSX.V) Thermal Energy (TMG-TSX.V), and Network Media Group (NTE-TSX.V). Highlights are below:

Lite Access Technologies (LTE-TSX.V) – Price $0.55 Market Cap $18.5M

• April 21, 2020 Awarded a $20M contract with CityFibre for rollout in Cambridge, England
• Anticipated initial ramp up of operations immediately and expected to be at full scale by July 2020
• Installation to over 20,000 homes
• Anticipated completion within 21 months
• UK government has declared telecom infrastructure an essential service
• Work in Lowestoft and Bury St Edmunds continues to progress, although in some cases on a modified basis
• Cancelled their planned acquisition, due to COVID-19
• Strong cash position ($4M) and zero debt
• $53M backlog of work in the UK

Our note:

With a total of $53M in contracted work in the U.K., and with all this work delivered over the next 24 months, we think Lite Access is a compelling opportunity at these prices. We anticipate the Company generating strong free cashflow in 6 months, and have a simple valuation as follows.

U.K. work = $53M
Gross margin = 35-40%
Canada work = $6-$10M
Gross margin = 15-20%
Selling, general and administrative costs = $5M per year

Therefore, if half the U.K. revenues deliver that is $26.5 million in U.K. work per year. At 35% gross margin, there is $9.3M in gross profit. Subtract the $5M in selling, general and administrative costs and there is $4.3M per year in EBITDA. With 50.5 million shares it equates $0.085 per share in EBITDA. With zero debt and roughly $4M in cash, $2M+ in other assets. At the current price it trades around 3.5 times forward EV/EBITDA, with the Canadian business thrown in for free.

Riwi Corp (RIW.CSE) – Price $3.45 Market Cap $61M

• April 28, 2020 - Reported record Q1 financial results
• $1.3M US in sales for the quarter – an increase of 96%
• $498K US in net income – an increase of 110%
• 38% net profit margin
• $128K US generated in cash from operations
• Signed an agreement with ThinkData Work Inc. valued at US$1M for COVID-19 related data studies
• Recognized by Financial Times as one of the Top 500 companies in the ranking of The America’s Fastest Growing Companies 2020
• COVID-19 has increased the number of sales opportunities
• Hired new Chief Revenue Officer – Neil Weitzman
• Currently expanding its sales team
• Company has achieved US$2.5M in sales since Jan 2020
• Guidance for 2024 remains at US$30M in annual recurring revenue (ARR)

Our note:

We continue to like Riwi and management’s execution. Looking forward, on an annualized basis RIWI would have $5.2M US in sales or roughly $6.7M in CDN which pegs the Company at a 9.1 price-to-sales ratio. While this may seem expensive, especially in the current market, it will provide an opportunity for new investors to purchase on pullbacks with a longer time horizon. In addition, there’s been consistent insider selling (non-management) which also helps create a pullback scenario. This is a strong company that is still a buy on pullbacks.

Renoworks Software (RW-TSX.V) – Price $0.25 Market Cap $9M

• April 15, 2020 – Reported annual financials
• Q4 - $1M in revenues – an increase of 7%
• 40% recurring revenues
• Q4 - $250K net loss
• Annual – Revenues $4.26M up 11%
• 39% recurring revenues
• Annual – Net loss $686K
• Design services increased by 33% to $1.48M
• Gross margins 70%
• Entered into an agreement with EagleView to integrate EagleView property measurements into Renoworks FastTrack platform
• Partnered with TAMKO Building products for use of Renoworks remote measurement and 3D model technology to power TAMKO’s roofing solutions

Our note:

We continue to hold Renoworks and are encouraged by the consistent insider buying. Robert Schulz, a director, has been steadily buying since July of 2019, increasing his position by roughly 1.2M shares. We believe Renoworks has a solid disruptive business, that is likely worth more to an industry acquirer.

ImmunoPrecise Antibodies (IPA-TSX.V) – Price $0.77 Market Cap $54M

• March 10, 2020 - Reported record Q3 financial results
• $4M in sales for the quarter – an increase of 50%
• $2.2M in gross profit
• $625K net loss – a decrease of 47%
• Adjusted EBITDA $717K
• Launched a Coronavirus Vaccine and Therapeutic Antibody Program
• Artificial intelligence collaboration with EVQLV to accelerate vaccine and antibody discovery for SARS-CoV-2 Coronavirus
• Launched a PolyTope mAb Therapy™
• $75K grant for Coronavirus research
• In collaboration with World Health Organization (WHO) for the development of a vaccine
• New Chief Scientific Officer, Yasmina Noubia Abdiche, joins the Company to oversee Talem Therapeutics
• Talem Therapeutics entered into a research licence agreement with Janssen Research & Development, LLC (a division of Johnson and Johnson).
• exclusive access to a panel of novel, monoclonal antibodies against an undisclosed target
• Janssen holds an option to acquire all commercial rights to the antibodies.
• Financial details of the transaction have not been disclosed
• Capital Structure
• Settled $700K of previously issued debentures and interest by issuing 1,244,792 common shares at a price of $0.60 per share
• Announced non-brokered private placement of 10% convertible debentures, for up to $2M CDN due two years from the date of issue and convertible at a price of $0.85 per share.

Our note:

We have been buyers of the Company and Paul Andreola has filed multiple purchases in SEDI. In this current market, we view ImmunoPrecise as an insurance bet. While the Company’s financial statements are beginning to reflect its increasing levels of productivity, the Company could not be more uniquely positioned to benefit from Coronavirus and healthcare/biotech spending. Our money is where our mouth is here, and this will not be our last insider filing for the purchase of shares.

Hamilton Thorne (HTL-TSX.V) – Price $1.15 Market Cap $54M

• April 22, 2020 - Reported record Q4 and annual financials
• Q4 - Revenues of $10.8M – an increase of 35%
• Q4 – Gross profit of $6.1M
• Q4 – Net income of $930K - $0.01 in EPS
• Q4 - Adjusted EBITDA of 2.2M
• Annual – Revenues of $35.4M – an increase of 21%
• Annual – Gross profit of $19M – an increase of 15%
• Annual – Net income of $793K
• Annual – Adjusted EBITDA $7.1M – an increase of 15%
• Annual – Organic growth of 12%
• Full conversion of outstanding debentures in connection with Gynemed acquisition.
• Exchanging US$1.9M for 4.1M common shares

Our note:

We continue to hold shares in Hamilton Thorne. However, we have reduced our position over the past six-twelve months. We are finding opportunities that are more mis-priced than Hamilton and are taking advantage of these other situations, which is the primary reason for reducing our position.

Pioneering Technology (PTE-TSX.V) – Price $0.085 Market Cap $4.4M

• March 2, 2020 – Reported Q1 results
• $2.2M in sales for the quarter – an increase of 73%
• $324K in net income
• $413K in adjusted EBITDA – a 164% improvement
• Gross margins of 53%
• Expenses decreased by 73%
• $0 in debt and $2.2M in cash
• SmartBurner™ Chosen Cooking Fire Solution by Mercy Housing
• New Vice President of sales – Tim Mulroney
• Products can now be found on MarthStewart.com

Our note:

After becoming a select SCD company, Pioneering had multiple years of profitable sales and strong growth. Pioneering faced some significant hardships that almost broke the Company. It is now starting to show signs of life, after being left for dead. We recently purchased shares. We continue to monitor and track the financial performance of the Company and think it is worth following for a turnaround situation.

Atlas Engineered Products (AEP-TSX.V) – Price $0.28 Market Cap $15.5M

• April 30, 2020 – Reported Q4 and annual financials
• Q4 - Revenues of $9M – an increase of 8%
• Q4 – Gross profit of $6.1M
• Q4 – Net income of -$1M
• Note, one time, non-recurring costs, impairments, write-offs, and other factors lead to the decrease in net income during Q4
• Annual – Revenues of $34.7M – an increase of 200%
• Annual – Gross profit of $8.4M –
• Annual – Net income of -$755
• Annual – Adjusted EBITDA $3.7M
• Annual – Organic growth of 12%
• Revenue growth mainly from acquisition growth
• Company has been deemed an essential service and all locations are still operating
• Coronavirus impacts - Laid-off non-essential contracts, working reduced hours and senior leadership team has taken temporary pay cuts
• Closed a $4.59M financing at $0.40

Our note:

Coronavirus has created uncertainty for many industries, and while Atlas has been deemed an essential service, we are cautiously optimistic. We recognize that the impacts from a global recession take time to showup and are yet to experience the aftermath. Given that housing is a secular market and Atlas business serves this industry, while we do not know what happens, we are extremely cautious that the business could be impacted with a slowdown in spending and household expenditures. We are holding our position at these prices.

Aurora Solar Technology (ACU-TSX.V) – Price $0.095 Market Cap $10.5M

• Feb 28, 2020 – Reported Q3 financials
• Revenues of $1M
• Gross profit of $500K
• Net loss of -$100K
• $1M in working capital
• Subsequent to the quarter end, closed a $1.88M in financing at $0.10
• Announced new order from China-based manufacturer for 3 DM measurement systems
• Expected to be shipped in Q1
• Announced it has been granted a key patent in the field of manufacturing process data visualization
• Bob McWhirter discussed the idea on BNN Click here

Our note:

We are not seeing any slowdown in the solar industry. Large solar companies continue to innovate and demand for products continues. While current revenues are from supplying large solar manufacturers with measurement instrument, the Company is focused on developing and commercializing its Insight product. Insight once commercialized will provide a steady stream of recurring revenues and is core to our investment thesis. We continue to hold our shares, waiting for updates on the Insight product launch.

Spectra Products (SSA-TSX.V) – Price $0.03 Market Cap $2.3M

• April 23, 2020 - Reported Q4 and annual financials
• Q4 - Revenues of $388K – a decrease of -14%
• Q4 – Gross profit of $217K
• Q4 – Net income of $437K - $0.01 in EPS
• Recovery of income taxes in the amount of $500K
• Annual – Revenues of $2M – a decrease of 0.5%
• Annual – Gross profit of $1.14M
• Annual – Net income of $872K - $0.01 in EPS
• Annual - $584K net cash from operating activities
• May 4, 2020 – Reported Q1 financials
• Revenues of $535K – an increase of 8%
• Gross profit of $311K
• Net income of $129K

Our note:

We continue to like Spectra products and think anything below $0.05 is a good buy. While the Company is likely experiencing some Coronavirus related slowdowns and impacts, this nimble Company has operated on a shoe-string budget and has low operating expenses. With another quarter of profitability, and improving financial liquidity, we think there’s limited risk to owning shares.

Thermal Energy International (TMG-TSX.V) – Price $0.07 Market Cap $11M

• •April 29, 2020 – Announced delay in financial statements
• Expected release date – May 27, 2020
• Guided for increase in revenues
• Guided for 4th straight quarter or profitability
• Guided for $3.8M in ending cash balance

Our note:

We continue to like Thermal Energy, and the Company is now trading below our original recommendation price. This is a boring business, that continues to grow and allocates free cash-flow into future growth. We do think there is potential for a slowdown from Coronavirus as larger companies hold off on capital expenditures to preserve cash. However, with a strong cash position and a management team that has not diluted the Company since taking the CEO role, we don’t lose sleep thinking about our position. We think this is a good Company to continue accumulating under our original recommendation price.

Network Media Group (NTE-TSX.V) – Price $0.155 Market Cap $11.5M

• March 31, 2020 - Reported record Q4 and annual financials
• Q4 - Revenues of $9.9M
• Q4 – Net income of $2.5M - $0.04 in EPS
• Q4 – Adjusted EBITDA of $2.8M
• Annual – Revenues of $16.3M – an increase of 509%
• Annual – Net income of $4M - $0.06 in EPS
• Annual – Adjusted EBITDA of $5.1M
• Backlog of $17.9M
• April 28, 2020 – Reported Q1 financials
• Revenues of $4.2M – an increase of 328%
• Net income of $298K
• Adjusted EBITDA of $884K
• Backlog of $14.3M
• New Chairman, Ali Pejman of Fort Capital Partners

Our note:

We continue to like Network Media Group and hold our position. We recognize the accounting makes this a difficult Company to understand, and its revenues can be quite lumpy. Overall, the Company has demonstrated continued execution on its growth strategy, and with each successive project delivery Network is maturing as a business. Productivity reached record levels in 2019 and the Company has a strong backlog of new work. In time, we think the growing library of film and TV assets with generate additional value for the Company.