FormerXBC Inc XEBEQ

Xebec has a lot of red flags, this investor says

[ZouZS3]

Kurt VS Del Vicario. Over the past ten years, Xebec has had a tremendous run [but] we look at the stock in the short term here its come off from about $11 to $4.85, says Del Vicario. But if we really want to look at the fundamentals, Im seeing a company here that has never printed a positive free cash flow. So right there, that would be a red flag for us, something that would prevent us from buying the shares. I also see that theyre issuing new shares so theyre diluting existing shareholders, he said. Xebec got in hot water earlier this year when it lowered its overall revenue guidance for 2020 from $70 to $80 million to $57 million, which was then confirmed in a March 25 reporting of its fourth quarter and full year financials. Xebec hit $56.5 million in 2020 revenue compared to $49.3 million for 2019, while adjusted EBITDA was a loss of $22.0 million compared to a gain of $7.0 million in 2019 and the company ended up with a net loss of $28.3 million compared to a loss of $0.5 million for 2019. Despite positive developments in certain segments and acquisitions that we believe position us well for the future, 2020 was a challenging year for Xebecs financial results as a result of different factors, including the negative impact of COVID-19, said Kurt Sorschak. Del Vicario thinks investors need to put the uncertainties around where renewables are headed into their thinking around companies like Xebec. [Xebec] is very much a renewable energy buzzword type of play, but it remains to be seen from our view how the business model does long term, Del Vicario said. The one thing that I will say with these types of companies is Im always very curious whether their product or service stands on its own two feet, absent government subsidies and support. So, right now, the Liberals in Canada and the Democrats in the United States are very supportive politically of renewable energy. But that could change if we have a different type of government or theres just a different route that politicians want to take. Those subsidies and that support can vanish overnight, and if a company like Xebec or even Tesla doesnt have a product that can sustain itself in a normal economic environment, absent subsidies and handouts from the governments, that would obviously be a huge red flag for us, he said. So, I would size this position accordingly. I would have this as a very low conviction position at about a one or two-per-cent weight in a portfolio, max, Del Vicario said. Given the trajectory of the economic recovery and the RNG and hydrogen industry activity, we believe we are at the start of a significant economic upturn that will support the companys continued rapid growth, said Sorschak in a press release. There are positive indications for increased manufacturing activity across North America and Europe, alongside accelerated decarbonization cuts which will drive traction for our cleantech solutions, he said.

[newcoin]

I saw the movie now I have to read the book. I didn't like it the first time around.

[Newtrader1982]

good to know they won't be buying. 35 institutions now think otherwise guess they all have no idea what they are doing.

[tamaracktop]

Here's my take. Xebec reported a 17% increase in revenues at the height of a worldwide pandemic. (pardon the whatever. ) Plug reported negative revenues. Ballard's revenues were down 26% to $17.6 million. Ballard and Plug have had decades to redeem themselves. They're cap'd in the billions. Xebec is smoking them. Xebec's revenues will far exceed Ballard's this year. I

[newcoin]

Agreed.  I can assure you that many of the 'experts" don't even have the slightest idea of how the market really works.

[tamaracktop]

Take a close look at my profile picture. That's my Xebec account

[Newtrader1982]

That's fantastic, too bad it wasn't with real cash, I wish it had been for your sake. While that is an amazing gain you bought at a time when the market wasn't even paying attention to xebec at all. Now we are under the microscope, for people who didn't start buying until roughly 3 dollars or so will xebec be able to replicate that kind of share price growth again and sustain it

[Ciao]

Sounds like a plan, I'll suggest to Kurt and the board that they call you when they are looking at succession planning  :-) 

[kulewater]

I still find it remarkable that some cant see the forest through the trees here. XBC is in a significantly better position today than they have been at any point in their history. PERIOD. The real fun begins this July.

[Newtrader1982]

It was just some open questions to the board to start a discussion about what would happen if their cash position were to evaporate through acquisition costs and net losses it's a valid concern I think. They would have to raise cash somehow in that scenario.

[Resilience19]

Think of Monopoly. Everyone starts with the same amount of money. As you move along you can buy land/services, houses and hotels. It's a bit of a balancing act, trying to determine how long you take before buying - some preferring to keep their dry powder to only buy the best of assets that generate the most income. This said, when the game is over, those having avoided buying, trying to hold

[Newtrader1982]

yeah you are right I don't have the stomach for their strategy I will sell all 73,000 shares first thing Monday morning thanks for the advice.

[ZouZS3]

Why ? That's it for you?

[Newtrader1982]

I was just being sarcastic am not selling. I already held through all nonsense of q4 and COO getting fired if I could stomach their strategy during all that then it would be a little odd to sell now that it's all behind us. My thinking is by June next year as long as the company can achieve guidance which I still have doubts about I think they seem to always overstate their abilities and will

[SORNG1]

The stock price gyrations since January have obviously been painful.  The significant question is what will the stock price be in 5 years when the replacement for diesel debate starts separating winners from losers.  XEBEC has patents for Biostream--the most efficient method for producing RNG from biogas.  HyGEAR--the most efficient method for producing on site Green Hydrgoen from

[westcoast1000]

Zous, Is that post drawn from a publication, or did you transcribe it? I am interest in its source. I know it ultimately comes from the BNN interview by Del Vicario. That guy is not a substantial source of insight or guidance in my view. He does not manage an investment fund as his main job. He advises people about retirement planning etc. and apparently advise on their individual portfolios

[westcoast1000]

I think a far better source of insights than Del Vacario on XBC is 5i advisors. They are growth managers, or growth oriented, and do not offer any services other than advice to retail in Canada. As we have seen from posts by retiredcf, 5i is generally positive on XBC. 

[sumpineh]

I totally agree. You get a qualified unbiased opinion with regular updates on your watchlist.No BS and no vested interest.

[reader4]

I agree. I'm a subscriber to 5i's service and first heard of Xebec through them. Interestingly it was a top growth pick by them and they wrote a positive report on the company.  I like that 5i is very candid in their reporting as they don't trade in Canada.  After the very weak Q which saw revised downward guidance they decided to revisit their report, which I have never seen