More fiction from Baystreet??? you decideThe latest article from the literary masters at Baystreet is ridiculous at best and intentionally misleading at worst. The equipment pictured at the start of the article is a drill for tunnelling, remember the tunnelling operation was sold in Q1, gotta like that attention to detail!!!!
OK enough of the petty stuff lets have a closer look at their claims.
The Company also hit some fantastic milestones during the period Jan – June 2018: - Debt free
- Raised asset value to C$1.01
- Shares trading at $0.40
- $40 million in funds available for growth (developmental, organic, acquisition)
- Further refinement of its proprietary StarChain technology.
Debt free, that is a stretch the company has $8.3M in real debt, accounts payable, bank loan’s, mortgages, finance contracts. Total debt remained almost the same from Q1 to Q2. However, the bank loan increased by 657K. Living off debt to finance current operating costs seldom has a great outcome.
$40M in funds available for growth! Alberta is slowly coming out of one of the worst recessions. Enterprise has been unable to acquire a complementary business during this period. There had to be businesses for sale at favorable valuations that Enterprise was unsuccessful at acquiring. What multiple of earnings will Enterprise have to pay in the future for acquisitions?
Here are some others amusing points from the writers at BayStreet: Why Own Enterprise? Salient Points: • Refocus to grow the lucrative industrial/resource rental business
• Cash flow positive since the beginning of 2015 downturn
• The profitable trend seems intact last three quarters
• Trades at less than half book value (C$1.01)
• Development of StarChain, a revolutionary monitoring and asset management software
• 15 proprietary patents for specialized equipment and processes
• Cost effective custom solutions
• Significant acquisition and capital expenditure
• Significant domestic growth plans
“Refocus to grow the lucrative rental business”, really their web site clearly states continue to execute the corporate mandate to be the largest equipment rental organization in Western Canada…just a small disconnect.
Cashflow positive, they were only cash flow positive because of selling and divesting more than half of their operations, Q2 was not cash flow positive.
Cost containment, sure, a negative gross margin of 40% supports that claim!
Wow this is a good one, “profitable trend seems intact the last three quarters”. Someone please tell me what I am missing. Q2 2018 had a negative gross margin and a reported loss of $3.3M or (.06/share)
“Development of StarChain” BayStreet contradicts themselves; “further refinement of proprietary of StarChain technology. Well what is it, we have been told that this revolutionary technology has been implemented and will result in huge savings. By now shouldn’t the folks at Enterprise know and be able to quantify these amounts?
Significant capital expenditures, another “ambitious” statement! Per the notes t the statements Enterprise is restricted to 1.125M in capital asset acquisitions. Does anyone believe this is significant? This amount isn’t enough to replace the existing aging assets!
Significant growths plans. I honestly believe the folks running Enterprise indeed have some very ambitions plans! We have been told this for more than four years and the results has been divesture of more than 50% of their operations and no growth or acquisitions.
The company continues to mention the shares are trading at less than 50% of book value. This “discount” is not a temporary reaction by the market. The market and investors is far to savvy to get burned again by Enterprise's old stories. These paid articles by firms like Baystreet further discredit any genuine efforts by the staff at Enterprise.
Ok Enterprise pumpers take your shots at my comments, I welcome them. Let’s try and debate the financial facts and keep emotions out of the discussion.