Love this acquisition, creating a North American cellular concreate company that has capacity in excess of 1,000,000 cubic meters and is now well positioned for growth on both sides of the border. Digging into the numbers makes it look like a steal.  All that insider buying in 2017 is looking real smart. Here’s how I see it;
 
Core CDN Cematrix Business
 
They were already seeing underlying momentum in its core business as they transitioned and focused on infrastructure projects away from oil and gas and already had preannounced its book of business was up 48% YoY looking into 2018 and sales pipeline of 10x of 2017 revenue. So you had a business generating 14-15M in revenue and 1.0-1.5M in EBITDA growing 50%.
 
Add: MixOnSite USA Business
 
Already has orders for 15.5-16.0M CAD for 2018 revenue up 20-30% YoY generating positive EBITDA. You put on a comparable margin profile (10-15%) on this increased sales level that is generating EBITDA of 2.0-2.5M CAD in EBITDA growing 20%+.
 
Combined Company
 
Conservative target for 30M in revenue or 200% growth YoY and 3.0-4.0M in EBITDA growing its core book of business on both sides of the border ahead of a massive infrastructure bill coming in the States and with a recovery in Capex spend in its once booming Oil and Gas business. They will be able to move around assets as they see fit with demand and the economies of scale should be significant as they combine these 2 parallel businesses.
 
Financing
 
If they raise 2.5M in debt and 3.5M in equity @ 0.25/share to pay for the deal makes this deal highly accretive even before synergies on a Revenue and EBITDA basis. If I use a 55M diluted share count going forward this company is an absolute steal.
 
Real smart for these guys to open the stock for trading before announcing the financing so the market can vote on what they think of the deal before announcing financing pricing.  

HINT: I think down here its an absolute steal and they are smart and don’t want to dilute existing shareholders if they can help it at these depressed prices.
 
Projecting Out Valuation
 
On my 30M in revenue figure and 3.5M in EBITDA I get to a share price target of 0.50/share using or 100% upside using a 8x EBITDA target.  
 
Scary thing is if I look out to 2019… if I assume 20% growth for 2019 given the momentum in both these underlying businesses and the historical margin profile of CVX back in 2015 being in the 30% range vs the 20% range in 2017 you could have some serious margin expansion as they realize economies of scale as they integrate the 2 businesses.  
 
On my 36M in 2019 revenue figure and 5.5M – 6.0M in EBITDA!!! put a 8x EBITDA figure on that and you are looking at a 0.80/share or 220% upside target if they guys can execute. Upside is defiantly there as the macro environment for these guys continues to improve.

 
ON THE RADAR