Let's look at something positive - revenue outlook 2022As I mentioned earlier, cash must be concern at this point, but let us look at some revenue estimates for 2022. The company has released some statements that will allow us to make some solid assumptions:
Support Segment Q1/22 revenues of 22.4 million (from the FS), which would imply annual revenues of close to 90 million, let's assume they can achieve around 35% gross margin = 31.5 mill in GM
Biostreams - the company announced that they will be delivering 30 Biostreams in 2022 at a price of USD 1.5 million (CDN 1.9 mil) = 57 million, given their struggles with RNG projects let's assume a low GM of 10% = 5.7 million
Hygear prior to being purchased by Xebec was listed on NPEX and had revenues (publicly available) of around Euros 9 to 11 million (CDN 14 million) the company generated GM of about 25% = 3.5 million
Summit Order of USD 113.5 mil (CDN 145 mil) Let us assume here that the company can recognize about 30% of this amount in 2022 = 43.5 mil - normally customized engineered compression equipment carries a GM of about 15% (see Enerflex's (ticker EFX) Investor presentation, a competitor in this space to XBC and who produces customized engineered systems). 43.5 mil @ 15% = 6.5 mil
What remains are the air products, gas products, helium, oxygen and nitrogen units. Let us assume 35 mil for all these products at 25% GM = 8.75 mil - I would think that the revenues for all these products should be higher than 35 mil, but this is diffcult to gage, since there is no public information available.
This would roughly give us the following 2022 revenues and margins:
Revenues GM
Support 90 31.5
Biostreams 57 5.7
Hygear 14 3.5
Summit 43.5 6.5
Rest 35 8.7
Total 239.5 55.9 (23.3%)
This might be off by 15 to 20 mil, (I did not account for any other compression revenues (UEC business or any potential M&A), but from what is publicly available I think this should be a good estimate.
The real question will be what will the corporate SG&A look like (Q1/22 SG&A was 16.2 mil., which would give an annuallized SG&A of 64.8 mil.) Here is where management needs to reduce costs, and given their tight cash position I think cost cutting is virtually inevitable and will happen near term.
From the above, I believe that Xebec is fundamentally a strong, diversified business with great potential, but GM and SG&A management will be the key to success. The company has the technologies, people and know-how to shine, all it needs is execution.