Stockhouse Ticker Trax is equity specific research (Canadian listed and market cap < $300 million) published every Monday to paid subscribers. Our free Friday column may feature companies previously featured to paid subscribers (with a minimum one month delay) or discuss topics of interest to the general investment community and relevant to overall portfolio management.
Webtech Wireless (TSX: T.WEW, Stock Forum; 23 cents)
www.webtechwireless.com
This is a very promising little company but they do little promotion and have a small following so it's a tech that requires patience. We were looking for diversification into wireless and Webtech has a very attractive low valuation and a strong business model (and underlying technology).
It can be tightly held in this range but recently has good liquidity from 23 to 25 cents. Buyers overall are few and far between for these small techs so it’s not a bad time to be looking at higher quality, thinly-traded companies.
Shares outstanding: 105 million /Current market cap: $24 million
Cash and receivables less debt is almost $10 million
This leaves a $14 million market valuation on the business model, technology and almost $40 million in annual revenue (marginal loss).
It is not uncommon to see junior techs trading at half of one times annual revenue but if the growth improves (or the bottom line), valuations will often move to one to two times annual revenue. In the case of Webtech they have strong market penetration and industry leading technology with respect to asset tracking - an area that should start to see better growth as fleet management becomes more and more important (cost savings and security).
“Total revenue increased nine per cent to $10.2-million in first quarter 2012 compared with $9.3-million in first quarter 2011. The increase was driven by growth of recurring revenue from the additions of new subscribers of Quadrant transportation solutions, sales in the theft recovery segment, and several large InterFleet and NextBus projects that were implemented in the prior 12 months.”
“"We are pleased to report our fourth consecutive quarter of positive adjusted EBITDA," said Scott Edmonds, president and chief executive officer."Improving revenue mix and the resultant margins, when combined with the operational efficiencies we have implemented over the past year, continue to pay off for us, and we intend to continue our focus on the highest margin verticals that attract extended recurring subscription agreements.”
Overview
Webtech (since 1999) delivers fleet intelligence solutions and location-based services (LBS), through proprietary telematics software platforms to commercial and government fleets across North America and around the world. Webtech solutions are enabled by their proprietary industry-leading GPS-based vehicle hardware, which is designed, developed, and manufactured in house.
They have more than 1000 customers and 100,000 subscribers with tens of millions of records processed daily. Its technology is used every day by some of the world's largest and most sophisticated fleet operators.
As shown on its website, the company's MRM applications integrate GPS, digital mapping (including Geographic Information Systems or GIS) wireless (and satellite) communications to provide real-time information and decision-ready data about the location, status and performance of drivers, vehicles and mobile resources.
Market-leading capabilities include optimizing fleet performance through automatic reporting, mapping, vehicle maintenance scheduling, driver status reporting, in-vehicle telemetry, messaging, in-vehicle navigation, and route-selection.
Benefits to corporations:
Attract top drivers, comply with regulations, enhance customer service, improve fuel economy, increase safety, lower costs, optimize fleet performance, prevent theft, and reduce emissions.
“Jeff Johns, trucking manager for Cascade Sierra Solutions, states: "To date, we've deployed more than 1,000 WebTech Wireless units that employ the Quadrant solution to monitor and measure the reduction of idling of the port trucks we've replaced as part of our clean air efforts in Southern California.” [July 12th News Release Excerpt]
Customers include:
Emergency services, government fleets, oil & gas, service fleets, public transit, transportation fleets, utility companies, waste management, winter road maintenance fleets.
Andy Hodges, owner of Northwest Companies (1968, Oklahoma), said: "We have a diverse fleet of vehicles. Quadrant is the only solution that can handle our unique requirements. Quadrant provides visibility, accountability, safety, improved customer service and reduced fuel taxes to Northwest Companies. Mr. Hodges reports, "All team members now have visibility into the location of cranes and vehicles letting everyone know where they are in real time, making our operations safer and more efficient." [May 15th News Release]
Webtech Wireless solutions are delivered under three brand names:
Quadrant – the leading commercial fleet solution
InterFleet – North America’s #1 independent winter maintenance and municipal fleet management solution
NextBus – the top supplier of real-time passenger information systems (RTPIS) for transit fleet operators
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…. WebTech Wireless has completed a project that delivered more than 750 additional units and related multi-year subscriptions for ASP services to an existing utility customer in the southeast United States. The project was completed in a record time of less than six weeks and has in the weeks since completion led to a further expansion order for 2012 delivery. Once all projects are completed, WebTech Wireless's Quadrant and InterFleet products will be used by the client to monitor over 1,500 vehicles and assets. The private utility operates a diverse fleet of vehicles, including specialized boom trucks and other vehicles unique to the gas and electric utility sector. Installations included sensor technology to provide accurate power-takeoff (PTO) data as well as interfacing to the vehicles diagnostics bus (ECM). In addition to operational improvements, this deployment and related ASP solutions solve critical safety and crew supervisory issues for the customer. [December 2012]
….. The Globe and Mail reports in its Tuesday, March 20th 2012 edition that Versant Partners analyst Justin Kew is bullish on WebTech Wireless (33 cents). The Globe's Darcy Keith and Jody White write in the Eye On Equities column that Mr. Kew continues to rate WebTech Wireless "buy," with a target price of 60 cents. The analyst says WebTech Wireless's management has successfully restructured the business and delivered a solid fourth quarter, but the market has yet to realize the value of the company.
In addition to this weekend column and the bottom fishing research sent to paid Ticker Trax subscribers on Monday, I also provide free MicroCap alerts throughout the week. These are based upon News or Abnormal Price/Volume Activity on the several hundred stocks we track from our own research, brokerage analysts, or third-party newsletter writers.
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Disclosure: Danny Deadlock owns 40,000 shares of Webtech Wireless (TSX: T.WEW).
