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Price: $3.20 CAD
MC: 56.6 mil CAD
EV: 92.4 mil CAD
1 year performance: -22%
KUT reported last Thursday and held a call Friday morning. Results were ahead of my (lowish) expectations given the decline in paper prices and the outlook was as expected. The stock has bounced a bit off the lows but is still off over 20% in the last year.
Thank you for reading Petty Cash . This post is public so feel free to share it.
Share
Revenue up 5%
This was driven mostly by acquisitions
Shredding revenue up to 11.9 mil from 10.1 mil
E-waste at 678k from 351k
Scanning at 624k from 536k
Recycling revenue down to 1.7 mil from 3.1 mil
EBITDA was down 16%
This was mainly due to decline in paper prices
Sounds like they will meet the objectives for M&A this year
Ebitda excluding the impact of recycling was up 121%
Working on obtaining SOC 2 certification as an information protection company
This will allow them to do more business with governments
Security Shred has been integrated
Baltimore acquisition integration going as expected
Q4 is off to a bit of stronger start than typical
The business continues to hum along. They grew shredding revenue by 21%. As well, they continue to grow e-waste and scanning services. If we remove what the business can control, they are doing well.
Q3 and Q4 are the toughest comps for paper prices, so I’m expecting that the stock to bottom and the narrative to change a bit as we move into 2024. The incremental margin from recycling is more of a driver than I originally anticipated when I purchased shares. Having said that, I never expected paper prices to be a material contributor to the thesis.
Thanks for reading.
Dean
* long KUT.v
By Dean · Launched 2 years ago
Canadian Microcap Investing & Some Lifting
