Post by mrmoribundon Nov 18, 2022 1:24pm
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Post# 35110944
Q4 result comment
Q4 result commentGood quarter. A few thoughts.
I see from the MD&A that they're ditching the T-Lite because of a lack of commercial potential. I had wondered about the T-Lite in that it might have been apt to simply cannibalize their bigger/better TD-100 sales.
I'm sure they're making the right decision and it's good to see they're able to change direction when needed (some companies can't or won't). But I know they had high hopes for it.
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They compared their current demand situation to what they faced in 2019. I would have thought it would have been better than that--when you look at, for example, the monster results coming from tank-trailer-maker Wabash National. But their Q4 only went up to the end of August. The last two years Q1 was reported on January 20. So, likely it will be around then this time. I would be expecting results to involve another good-sized bump up. If that were not to happen . . . hmm . . . you'd have to start wondering if they're keeping up with the competition. But I have faith.
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There's one thing that's odd about the Bri-chem warrant exercise and that is the fact that Titan exercised the warrants at all--instead of just keeping them until closer to the 2024 expiry. An investment firm or private equity firm would never exercise warrants early. Better to keep the cash and earn interest on it. Also, there's less risk in holding the warrants. Though I don't think it's likely, suppose oil went back down to $10 per barrel and drilling just stopped. And Bri-chem then dropped below 10 cents per share (again). Then you would just let the warrants expire and have saved the cost of having exercised them.
So in exercising them two years early Titan did Bri-chem a big favour. Bri-chem got a cash injection plus the warrant exercise let Bri-chem tidy up their balance sheet a little (by getting the warrants off the balance sheet).
You'd think Titan should have gotten something in return for this favour they did for Bri-chem. An obvious guess would be that Bri-chem become a flagship customer of Titan Data Services (TDS). Would Bri-chem not have lots of trucks carrying bulk this-and-that all over the place? I don't know what fraction of the bulk transport is Bri-chem's own trucks vs. customer trucks showing up at the warehouses. But Bri-chem MUST have a lot of trucks.
Regardless, the early warrant exercise suggests that Titan and Bri-chem must have a relationship that is more than just investor and investee. If that's right then it would be interesting to hear about that relationship at some point in the future.