RE: Anyone catch the c.cThanks Queensman, I also listened to the call and made some notes and have been trying to decipher the information and outlook. I think each investor will have to choose which type of investor they are with regard to this stock.
In some ways I think FY2004 is going to be a washout compared to what had been expected before the year began in terms of EPS. Based on what I heard I would give estimates as follows, Q1 -0.02, Q2 even-$0.03 cents, Q3 $0.20-27 cents, Q4 $0.45-$0.57 cents, FY2004 $0.70-$0.85 cents. That's the bad news.
The better news is startup of St. Ambroise appears to be likely for May 15 with steady throughput of better margin soil after that. They said that Q2 could still be profitable even after losing 6 weeks but I have my doubts. They are clearly uncomfortable discussing margins or pricing for specific contracts. The other good news is that Belldune should startup in full production this year albeit in early October...I am certain we were led to believe it would be sooner. More mis-communication? It should open July 15 but require about 10-12 weeks of prep and compliance testing. They expect to announce more new contracts in 2004 including hopefully Saglek Phase II near end of Q2. Soil margins for remainder of year should be as good as last years average. Backlog $218M/400K tons but that works out to only $545 per ton...I think something is amiss there. They have been doing Saglek soil in every month since July 2003 but it was mixed in with other higher margin soil. They really had no decent explanation for the revenue distribution for Saglek that led to the lousy Q1. Obviously they got caught with their pants down when they ran out of other soil.
The best news is for FY2005 and beyond. They expect to fill both plants for 2005 plus build soil inventory in storage by the end of 2004 and throughout 2005. JB, who participated in the call, pointed out that the large scale soil remediation business is still early stage and it takes time to build the business and work through the bidding process. Changing regulations will ensure soil for many years ahead. I expect EPS for FY2005 to be $2.00-$2.25, possibly more. So the stock is now trading for 7.5 times estimated 2005 EPS of $2.12 Cdn at $15.89.
A short term investor might see this as a disaster and run for the exits but a medium term investor could see this a screaming buy. So which type are you? I see great value here but hate this short term pain. I will sit on my position and wait out this perfect storm.
I was satisfied with what I heard out of the new CEO who was very active in the call. Hopefully they can get their act together and meet expectations moving forward. We have all learned to be conservative with what they tell us. Hopefully I have applied enough of that in my analysis. Cheers!!!