Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

A Unique, Ethical, and Profitable Market Opportunity

Dave Jackson Dave Jackson, Stockhouse
2 Comments| August 11, 2021

{{labelSign}}  Favorites
{{errorMessage}}



The science and engineering of remediating environmental damage – at any level – has never been more pressing than now. Resource companies, municipal utilities, government, agricultural and commercial industries of all shape and sizes must adhere to strict regulation and enforcement of environmental protection laws. And it’s the way it should be.

But things go wrong. Pipelines burst, sewage leaks, and toxic spills happen. It’s a fact of life in an ever-growing industrial world.

Big infrastructure jobs need big protection. And it requires big plans, ahead of time, to make sure existential risk is mitigated. That’s where companies like Vertex Resource Group Ltd. (TSX-V.VTX, Forum) step up to the plate. And they’ve been doing is for nearly 60 years – that’s a long time before Environmental, Social, and Governance (or ESG) was even considered a ‘thing.’

Today, Vertex is a leading North American provider of environmental solutions, delivering a unique combination of environmental consulting, field services, and equipment. Headquartered in Sherwood Park, Alberta , Vertex employs a staff of about 750 full-time and contract personnel that provide a wide range of environmental services.

Along with the aforementioned Environmental & Industrial Services provided by Vertex, they are also experts in preparedness. A prime focus of the company’s strategy is Environmental Consulting – to assist business and industry in helping prevent any number of environmental calamities.

In business since 1962, Vertex boasts a rich history and a bounty of experience in the environmental solutions space but with an innovative, modern approach to providing versatile, expert solutions to this vast and growing market. The company believes now is the time to shine as industry, agriculture, and government pivots toward new, massive ESG projects.

INVESTOR ALERT: As the graph below indicates, Vertex continues to be awarded lucrative contracts from some of North America’s largest companies, its biggest projects and across all major industrial, resource, and governmental sectors.


(Click image to enlarge)


Environmental Experts: About Vertex

With major operations across Canada and the U.S., Vertex's integrated environmental solutions support asset development, operations, decommissioning, and restoration in five of the most important sectors –

  • Oil and Gas – Alberta and BC are developing regulations to impose a strict timeline on the clean-up of dormant well sites, while other jurisdictions are imposing higher security deposits to achieve clean up efforts.

  • Mining and Industrial – Vertex continues to be involved in coal and potash mining, processing, and power plant shut-downs including the management of peat, vegetation, and wildlife throughout the life of these projects.

  • Utilities – Vertex provides services to these sectors and is working to grow/adapt their service offering to attract new project awards. Vertex is active in obtaining contracts associated with the expanding Canadian 5G network.

  • Agriculture and Forestry – The Vertex team develops projects while minimizing environmental impacts, keeping stakeholders informed and ensuring regulatory compliance.

  • Government – Vertex has developed innovative solutions that are now used as the regulatory standard required by government entities.
(Click image to enlarge)

In the News

It’s been a busy 2021 for Vertex Resource Group Ltd. On June 8th, the company announce the release of its inaugural ESG report, as part of its ongoing corporate commitment to environmental sustainability – a report demonstrating the company's commitment to creating business resiliency by becoming a primary source of executable ESG-aligned supply chain solutions for its customers.

Vertex President, Terry Stephenson, commented:

"We are excited to release our inaugural ESG report and share our sustainability progress as an organization. For almost 60 years, Vertex has been providing environmental solutions for our customers while ensuring the safety and economic well-being of our employees and the communities we operate and live within. We will continue to enhance and further integrate sustainability elements into our business strategy to ensure future success for our shareholders, customers, Indigenous partners and employees."

While the COVID-19 global pandemic affected the implementation of many projects across the resource and telecoms sectors, as we emerge from lockdowns one of the major changes now is the focus on ESG-related solutions. Not only do humans need to remain safe from viruses, but acceptance of higher standards toward the environment and social responsibility are now reaching widespread acceptance.

On May 12th, Vertex reported its Q1 2021 results demonstrating strong revenue generation despite the challenges presented by the coronavirus outbreak.

Perhaps, the company’s biggest news announcement in 2021 was its acquisition of MAD Oilfield Solutions – a privately-held company providing environmental services specializing in industrial cleaning, waste management and hydro-excavating – back in March.

Corey Madill , President of MAD Oilfield Solutions, commented on the sale:

“The acquisition will position the combined MAD/Vertex Team with numerous opportunities to grow market share and offer more diverse service lines to our valued current and future customer base.”

The purchase was completed for a purchase price of $7.2 million and the assumption of $9.1 million in equipment loans and capital leases. Vertex said it will be using its existing credit facilities to fund the acquisition.


(Click image to enlarge)


Investment Highlights

Vertex's longstanding and growing reputation for developing strong presences in various geographic areas, excellent relationships with clients, and a diversified complement of services have allowed the company to withstand the economic pressures better than other service providers.

Vertex is leading in the Environmental Consulting and Services industry
with the most abandonments completed in the past 10 years.

Of note, the company is forecasting $15 million of free cash flow in 2021 with
planned debt reduction of $16.7 million or 22.8% and is targeting 2 to 2.5 times total debt to bank EBITDA.

Vertex has demonstrated the strength and resiliency of their business model in 2020 and are in an enviable position to facilitate strong growth as the North American economy continues to recover. The company says its strong client relationships, effective safety programs, robust quality control, a reputation for meeting commitments, and various government support and stimulus programs have mitigated the potential for material reductions in gross margins.

Industry is ready, agriculture is ready, governments are ready, and Vertex is ready to meet the demand for their services.


(Click image to enlarge)


From the President

In conversation with Stockhouse Editorial, company President Terry Stephenson – who has been at the helm of Vertex since 2005 – discussed the company’s market growth strategy, its ability to solve a variety of environmental issues, and its unique ESG-centric business model.


SH: You just released your 2020 ESG Report. What can you tell us about this inaugural report?

TS: As an Environmental Service business, we have a natural drive towards sustainability, based on the experts we employ and the solutions we provide. This reports outlines, reinforces, and educates on our corporate commitment to both sustainability and business resilience. For Vertex, the aspects that build an ESG have long been part of who we are as an organization. As an Environmental Service business many of these ESG aspects come naturally and publishing our first report is a way to highlight the great things this organization is doing while holding ourselves accountable to our future organizational aspirations. Accountability makes a dream an attainable goal and ESG accountability will inevitably turn a natural slant towards ESG performance into a culturally-driven corporate commitment. In our current business environment, ESG performance is critical to our customers, regardless of industry and we envision a future where Vertex is a key supply chain partner for our customers in mastering their ESG performance. In mastering our own performance in this important business metric, we can become a primary source of executable ESG supply chain solutions for our customers.

SH: What differentiates Vertex from the competition and makes your business model unique?

TS: We believe that our platform is unique in its broad approach to Environmental problem solving. Our consulting division is a diverse team of dedicated professional who are experts in their field and ready to provide solutions to support clients through-out the lifecycle of their project. When paired with an Environmental service arm complete with a fleet of equipment, able to mobilize at a moment’s notice, this brings incredible value to our clients by providing efficiency and a seamless approach to their operations.

Vertex brings expert advice, and equally weighted excellence in execution. I think you see it in the ESG we released and our approach to providing expert solutions, professionalism and practicality equally weighted as required. Additionally, when it comes to economics, the structure creates economic synergies and cost structures that are difficult to match.


SH: You acquired MAD Oilfield Solutions back in March. Can you walk us through some the deal’s highlights?

TS: The acquisition of MAD Oilfield Solutions has greatly enhanced Vertex’s industrial cleaning asset base and capabilities, adding over 50 specialized units to our fleet, along with other equipment. This acquisition has given Vertex a valuable opportunity to take on larger infrastructure maintenance projects while expanding and strengthening our presence in the long-life infrastructure associated with the heavy oil region in Northern Alberta. This environmental fleet expansion is important to further support the maintenance and infrastructure of our existing clients throughout Northern Alberta. As is always important with a successful acquisition, the cultures of our two companies are very complimentary, starting with core values, management approach and an unwavering corporate commitment to health and safety.

In terms of highlights, the acquisition was structured to be easily accretive for our shareholders with a purchase price of $7.2 million and the assumption on $9.1 million in equipment and loans with recognition of these early financial expectations occurring early in the integration process.


Which sector do you believe offers the strongest growth potential for Vertex’s services?

TS: For Vertex, we see real near-term growth in two sectors Energy and Infrastructure. In Energy, we are aware of and taking part in an ongoing energy transition with significant and growing exposure to wind, solar, geothermal, and other renewable projects. A substantial amount of our Energy growth is likely to come from more traditional areas within the Energy supply chain and our business is well positioned to support sustainable development of existing Energy value chains, while providing Environmental efficiency and improvement to many existing assets.

Post covid, we would see a resurgence of global energy needs and in doing so, saw significant response in the market that will have a positive result for Vertex. The Environmental needs of these projects is increasing, and the industry is tackling new projects in new ways, creating real organic growth opportunities for companies like ours. Energy transition is ongoing, but there are many ways for a service company like ours to pivot its services to support this sector including helping with sub surface carbon storage, geothermal well design, site services to support these development activities, or environment permitting on new wind and solar developments.

We have seen significant growth in these areas over the past five years and would expect the next 5 to only accelerate that growth. Finally in terms of infrastructure, when we look at that opportunity we are talking about both industrial and utility infrastructure and we see a growth and need for so many aspects in this space. Whether it is vac truck services on light and high-speed rail development, the need for telecommunication expansion, safe pipeline assets, the need for electrification of our energy grid to support the growth of EV vehicles or residential and commercial land development, Vertex is positioned with services across the life cycle of these projects.

SH: Can you discuss the long-term strategy for the company moving past Covid and beyond 2021?

TS: The long-term strategy for Vertex has always been to continue to evolve and grow in our expertise. In the past 5 years, Vertex has more than doubled our geographic presence, became a public entity, and established a gradual but noticeable shift from primarily industrial construction to environmental operations. We believe that the next 5 years are a period of growth for Vertex with a realistic opportunity to once again, more than double in that time. The Environmental service platform we have built provides growth flexibility and a responsiveness to market changes. With Environment, such a large component of that is building new facilities, maintaining existing facilities, and decommissioning facilities that are beyond their useful life and Vertex is well positioned to support customers in that growing field.

Our strong balance sheet and geographic footprint allow us to be prudent on acquisitive growth, looking for the right opportunity in the right region to augment what is expected to be reasonable organic growth. While not exclusively in this area, our focus will be operational capital and working to improve the environmental performance, extending the useful life of existing facilities through Environmental service. We still envision some market consolidation in the service sector and see numerous opportunities in both Consulting and Services to augment organic growth with key strategic acquisitions. Ultimately, we strive for substantial growth in our five key North American sectors, providing our unique offering to various regions to support the sustainability of the projects and infrastructure.


Terry Stephenson, President and CEO

The Bottom Line

Vertex Resource Group offers potential investors a unique value opportunity in an underserved market in one of the planets fastest growing sectors – environment solutions and ESG.

With nearly 60 years of expertise, there is virtually no industry this company can’t help. Need meets demand, and that’s something savvy investors should always be on look out for.


(Click image to enlarge)


For more details about Vertex Resource Group, please visit their website at vertex.ca.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.




{{labelSign}}  Favorites
{{errorMessage}}

Comments

No comments yet. Be first to comment!

Leave a Comment

You must be logged in to be able to post a comment.

Get the latest news and updates from Stockhouse on social media

Follow STOCKHOUSE Today