RE:After the quarterly dramaYes, the quarter was a dud, but the year over year results were still good. There was decent revenue growth and EBITDA growth, and the company is throwing off good cash flow. They managed to pay off 1 million dollars of the debt which is an achievement when you consider that some of this debt was being financed at 13% interest.
They also seemed to have sorted out their accounts receivable issue. At the end of last FY, there were $724K in AR that were noted as being more than 90 days past due. I was thinking that we would start seeing some write downs; however, this amount is now down to only $194K.
I think that the wider issue is the growth rate that the company can achieve. It took exactly 10 years to double revenue from 13 million to 26 million – that’s a 7% growth rate according to the 10/7 rule. And that’s without considering inflation.
Yes, the pandemic got in the way, but if you strip out the FY 21 and FY 22 pandemic duds the last 6 year’s revenue growth looks like this:
2017 over 2016 = 6% growth
2018 over 2017 = 32% growth
2019 over 2018 = 20% growth
2020 over 2019 = 2% growth
2023 over 2020 = 2% contraction
2024 over 2023 = 23% growth
Now, it’s sort of looking like 2025 over 2024 might be flat. The current backlog is the same as it was last year at this time, so it doesn’t make sense that there will be a massive revenue surge. Maybe they can hit 30 million, but this would only represent growth of 15%. Remember that we're already in Q2. The bulk of the revenue from large projects is accrued in the later stages of the project. Perhaps with all the new hires 2026 will be a great year, but that’s a long way off and many earnings reports away.
A long post to say that I think that expectations are being tempered; the 30% or higher growth rate just doesn’t seem possible to me. Bill doesn’t give guidance, but if he thinks that the 30% is still achievable, maybe he should start emphasizing as much.
On that note, does anyone have access to Beacon’s reporting? It would be helpful to see what they think.