Mathieu Martin - Stocks and Stones A month ago, I travelled to Vancouver to attend a conference. Two of my favourite organizations in the microcap space, Planet MicroCap and Smallcap Discoveries, joined forces to create what I think was one of the best conferences I ever attended.
The two-day event had everything you’d want: a super high-quality company lineup, educational keynotes, and great people to meet during the breaks and cocktails. It was fantastic to reconnect with old friends and meet new ones.
When I attend conferences, I tend to have many one-on-one meetings with companies. Most microcaps aren’t covered by analysts, and little information is available publicly. You can really gain a deeper understanding of a business when you spend time asking the CEO questions.
For this conference, I had 17 meetings. Typically, I expect at least half of the meetings to be mediocre or even totally useless. The problem is that you can’t tell which ones in advance. I’ve been surprised countless times by a company I wasn’t super excited to meet, only to come away rushing to do more research (there’s one example below). That’s why I try to turn over as many rocks as possible - you never know what you’ll find. And honestly, the batting average at this conference was much higher. Most meetings were actually excellent.
I won’t provide a recap of all the companies I met, but I’ll give you some of my main highlights: the standouts, the companies I’m keeping at the top of my watch list, and the one that surprised me the most.
Let’s dive in!
The thesis on Biorem is fairly simple. They provide air emission control systems to eliminate odours and air pollutants. They are also very active in the municipal space, with wastewater and solid waste management facilities.
Over the last few years, Biorem has won many new contracts and built up a record backlog of $57 million (as of June 30, 2024). This backlog typically gets delivered over the next 12 to 18 months with near 100% certainty (once a project is contracted and added to the backlog, it’s almost impossible to lose it).
Based on historical revenue figures ($24 to $28 million in revenue per year during the last four years), it’s pretty easy to see the kind of growth that Biorem will be able to generate over the next couple of years based on its current backlog. From a quarterly perspective, it will be lumpy based on the delivery schedule, so taking a longer-term view (yearly) makes more sense.
Strong second-half results (especially Q3) and potential M&A activity are catalysts to watch. Derek mentioned he has a few deals in the pipeline, and one seemed fairly advanced. The lumpiness should also play in Biorem’s favour as Q3 is shaping up to be a solid quarter based on project deliveries in the quarter.