Year end commentsAll the Pumpers of Enterprise sure are quiet. My good friends Nozepak and Waterboy are MIA! I asked Nozepak to restate the valuations of Enterprise using 3 quarters of data not the seasonally biased Q1 results used for the Sep 15 post. Really Noze how many readers do you think you fooled or mislead with this feeble attempt at over stating Enterprise’s value?
Going into Q4 Enterprise had two underwhelming quarters in 2019 and blamed it on an abnormally wet year. The Grande Prairie region as well as northern BC is still strong, some folks are claiming Grande Prairie is the new Fort Mac! If this statement is indeed correct it is sad but true as Enterprise has not secured any large new contracts for their “specialized rental” equipment. Flameless heaters and well site equipment are indeed very specialized, so specialized there must be a limited niche market for the equipment.
Enterprise’s current asset to liability is 0.5 (insolvency?). Enterprise’s management claims they are discussing renewal terms with their lender and expect a new long-term agreement to be secured in 2020. A few issues with this statement; assume Enterprise has not changed lenders for many years they would have been in a position to renegotiate lending agreements prior to reporting the balance as a current liability, perhaps Noze or Waterboy can help us out, was Enterprise ever in a position to report the entire loan balance as a current liability? If so what was the outcome? If not, was the bank previously more confident in Enterprise’s future? If the loan is not renegotiated prior to year end will Enterprise have to also report a Going Concern? How certain is the renewal with the existing lender? Enterprise still claims they have a strategy for growth and is committed to being the largest specialized equipment rental organization in Western Canada and beyond!!! Beyond, go where no man has gone before!!!! Perhaps if they managed their existing geographic area well their investors would be rewarded.
Finally, what will the year end bonuses be for Len and his sidekicks? Revenues are down, margins are up slightly (all attributed to Q1 ‘19 the only successful quarter in the past 4 years), losses to date for 2019 are up 3x’s compared to 2018. Are there any positive metrics or events that will justify another obscene “Success Fee”?
As always, I welcome comments and challenges to my statements, open debate and dialogue. I wish everyone a prosperous 2020 remember do your own DD before parting with your hard earned money and control your emotions.