Laxputs Posted August 13, 2015 Author Share Posted August 13, 2015 Q2 2015 Their consistency to over-promise and under-deliver is comical. Risks Two customers make up 44% of revenues. That's not good. Mgmt continues proving to be poor operators separate from the troubled environment they are working in: they miss on most projections imaginable, they grant too many options, try to grant more after the share price falls 80%, take on a lot of debt, over see project delays, etc. There is risk from their debt levels. It's hard to say how much of their revenues are actually recurring or maintenance in nature if Western Canada faces a more severe and prolonged resource sector operating environment. MOS Their ability to service their senior debt covenant looks fine and they recently picked numbers with the bank that are manageable. They can only keep a relatively small amount of cash on the balance sheet and have to pay debt. Only 6m allowed for cap-ex on the year (including the second DP). They need about 3m to service their interest costs and about 4m to s-capex. That's 7m needed to stay solvent. They are projecting mid-20's consolidated EBITDA for 2015. Say they do 20% EBITDA in times worse than this, that's 35m revenue needed at the bare minimum. They believe Q4 2015 will be higher revenue than Q1. So they likely do close to 70m revenue on the year. Revenue 2015 looks like it is only dropping 13% vs 2014. It would need to fall 50% from 2015 numbers, going forward, to not meet payments. These are rough numbers and if they got that low, covenants would be an issue, but their ability to fund the business without even considering asset sales seems safe. Previously about 50% of their business was thought to bring in recurring revenue. Some of their UICS, Rentals, and DP will earn money going forward and it won't take that much at very depressed revenue numbers and EBITDA margins to keep them operational. Valuation They have about a 3.2x EV/EBITDA multiple at today's .375$/share price. Even a 4x multiple on 16m EBITDA and paying off some debt is 100% appreciation. Enterprise Group doesn't need an O&G recovery to bring in a high IRR from today. It just needs to steady its margins and not go bust. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 21, 2015 Share Posted August 21, 2015 Lenny just bought a ton of shares, privately, $108k. Made an additional open market purchase for $9k. Can't make out if it has anything to do with the consolidation filings done as well. https://canadianinsider.com/company?menu_tickersearch=E%20%7C%20Enterprise%20Group Link to comment Share on other sites More sharing options...
yadayada Posted August 21, 2015 Share Posted August 21, 2015 What does Stock split or consolidation mean? Should that not be a positive number since the number of shares has gone up instead of down with the split? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 21, 2015 Share Posted August 21, 2015 What does Stock split or consolidation mean? Should that not be a positive number since the number of shares has gone up instead of down with the split? The 3 for 1 consolidation would've reduced the number of shares. Link to comment Share on other sites More sharing options...
yadayada Posted August 21, 2015 Share Posted August 21, 2015 oh yea my bad, brain fart:) Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 21, 2015 Share Posted August 21, 2015 oh yea my bad, brain fart:) Ha. No worries, hopefully they are seeing some activity with the LNG projects starting up. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 27, 2015 Share Posted August 27, 2015 Len made another insider purchase worth $22,400. https://canadianinsider.com/company?menu_tickersearch=E%20%7C%20Enterprise%20Group. Link to comment Share on other sites More sharing options...
Laxputs Posted August 27, 2015 Author Share Posted August 27, 2015 Historically, this has meant large share price drops :) Just show me results... Link to comment Share on other sites More sharing options...
Gamecock-YT Posted September 9, 2015 Share Posted September 9, 2015 Another $23,825 purchased over 3 days. He's now up to owning ~8% of the company. Surprisingly the other two stooges (Warren and Dez) haven't been as enthusiastically buying shares like he has. Link to comment Share on other sites More sharing options...
Laxputs Posted October 2, 2015 Author Share Posted October 2, 2015 Anyone know what that buying above the market price means "Acquisition under a prospectus exemption" : https://www.insidertracking.com/company?ticker=E*CA Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 2, 2015 Share Posted October 2, 2015 Anyone know what that buying above the market price means "Acquisition under a prospectus exemption" : https://www.insidertracking.com/company?ticker=E*CA Looking at the previous times this guy did this, it's a private placement. Granted, previously there was always a news release preceding the filing of a private placement....this time not so much. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 2, 2015 Share Posted October 2, 2015 Anyone know what that buying above the market price means "Acquisition under a prospectus exemption" : https://www.insidertracking.com/company?ticker=E*CA Looking at the previous times this guy did this, it's a private placement. Granted, previously there was always a news release preceding the filing of a private placement....this time not so much. and it was. ENTERPRISE GROUP, INC. ANNOUNCES CLOSING OF PRIVATE PLACEMENT October 2, 2015 - St. Albert, AB – Enterprise Group, Inc. (“Enterprise” or the “Company”) (TSX:E) announces that the Company has closed a non-brokered private placement (the “Offering”) of 6,183,500 units of the Company (“Units”) at a price of $0.40 per Unit for gross proceeds of $2,473,400. Each Unit is comprised of one common share in the capital of the Company (“Common Share”) and one Common Share purchase warrant (“Warrant”). Each whole Warrant entitles the holder to acquire one Common Share at an exercise price of $0.50 at any time for a period of two years from the closing of the Offering. All of the securities issued pursuant to the Offering are subject to a statutory hold period of four months plus one day from the date of completion of the Offering, in accordance with applicable securities legislation. In connection with the Offering, 2,387,500 Units were issued to certain directors and officers of the Company. The participation of directors and officers in the Offering constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying upon exemptions from the formal valuation and minority approval requirements of MI 61-101 based on a determination that the fair market value of the Offering, insofar as it involves related parties, does not exceed 25% of the market capitalization of the Company. The Company was not in a position to file a material change report more than 21 days in advance of the closing of the Offering as the participation of the related parties was not confirmed at that time. The proceeds from the Offering will be used for working capital and general corporate purposes. Between this and the CEO buying shares hand over fist, something is up. He bought 1,000,000 shares in the private placement today too. Link to comment Share on other sites More sharing options...
Laxputs Posted October 3, 2015 Author Share Posted October 3, 2015 I don't understand it but it seems shady on the surface. "the Company is relying upon exemptions from the formal valuation and minority approval requirements of MI 61-101 based on a determination that the fair market value of the Offering, insofar as it involves related parties, does not exceed 25% of the market capitalization of the Company. The Company was not in a position to file a material change report more than 21 days in advance of the closing of the Offering as the participation of the related parties was not confirmed at that time." So 6.2m new shares sold privately, meaning large dilution? And then 2.4m shares granted to executives? And they relied on a policy that doesn't need to consult minority shareholders? The shareholder meeting saw the majority of shareholders voting no to options grants and they do it anyways? Link to comment Share on other sites More sharing options...
doc75 Posted October 3, 2015 Share Posted October 3, 2015 At this point, any shadiness is hardly a surprise. I'd expect nothing more from this team. I'm now a disinterested party, but I just glanced through the Q2 financials. I was happy to see that "management fees" for the 6 months ended June 30 had gone from $342k in 2014 to $404k in 2015. I mean, they've had such a good year and all. Turning off the sarcasm: I presume the 2mm shares issued to management "in connection with the placement" are part of the 6mm total, not in addition to it (i.e. as a completely over-the-top finders fee). But the timing/pricing is shady. Why do they want to raise $2.4mm in this way at this time? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 3, 2015 Share Posted October 3, 2015 At this point, any shadiness is hardly a surprise. I'd expect nothing more from this team. I'm now a disinterested party, but I just glanced through the Q2 financials. I was happy to see that "management fees" for the 6 months ended June 30 had gone from $342k in 2014 to $404k in 2015. I mean, they've had such a good year and all. Turning off the sarcasm: I presume the 2mm shares issued to management "in connection with the placement" are part of the 6mm total, not in addition to it (i.e. as a completely over-the-top finders fee). But the timing/pricing is shady. Why do they want to raise $2.4mm in this way at this time? The Site C dam is starting construction right in their backyard, which would kind of coincide with when the CEO started buying back shares in bulk. It wouldn't be surprising if they picked up some work for it. Also with Petronas' LNG project getting the go-ahead they are sure to probably pick up some work with it. Given the timing of the CEO's trading, they are probably sitting on some news to enrich themselves with the private placement/share buybacks. Link to comment Share on other sites More sharing options...
sculpin Posted October 5, 2015 Share Posted October 5, 2015 Mgmt setting themselves up for a nice payday? Rumour has it that they could potentially sell their utility/infra division. Did $10mm in Ebitda in 2014 and maybe $7mm this year. Potentially $35mm to $50mm in proceeds would wipe out their debt and put them in net cash position. Something to think about that may be the reason for the strong public and private insider buying (at significantly above market pricing). Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 5, 2015 Share Posted October 5, 2015 It's clear something is going on. These guys have shown they absolutely look out for themselves. They wouldn't be buying in bulk if there wasn't a clear catalyst on the horizon. Where did you find the rumors about a deal? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 5, 2015 Share Posted October 5, 2015 Anyone know what that buying above the market price means "Acquisition under a prospectus exemption" : https://www.insidertracking.com/company?ticker=E*CA Looking at the previous times this guy did this, it's a private placement. Granted, previously there was always a news release preceding the filing of a private placement....this time not so much. and it was. ENTERPRISE GROUP, INC. ANNOUNCES CLOSING OF PRIVATE PLACEMENT October 2, 2015 - St. Albert, AB – Enterprise Group, Inc. (“Enterprise” or the “Company”) (TSX:E) announces that the Company has closed a non-brokered private placement (the “Offering”) of 6,183,500 units of the Company (“Units”) at a price of $0.40 per Unit for gross proceeds of $2,473,400. Each Unit is comprised of one common share in the capital of the Company (“Common Share”) and one Common Share purchase warrant (“Warrant”). Each whole Warrant entitles the holder to acquire one Common Share at an exercise price of $0.50 at any time for a period of two years from the closing of the Offering. All of the securities issued pursuant to the Offering are subject to a statutory hold period of four months plus one day from the date of completion of the Offering, in accordance with applicable securities legislation. In connection with the Offering, 2,387,500 Units were issued to certain directors and officers of the Company. The participation of directors and officers in the Offering constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying upon exemptions from the formal valuation and minority approval requirements of MI 61-101 based on a determination that the fair market value of the Offering, insofar as it involves related parties, does not exceed 25% of the market capitalization of the Company. The Company was not in a position to file a material change report more than 21 days in advance of the closing of the Offering as the participation of the related parties was not confirmed at that time. The proceeds from the Offering will be used for working capital and general corporate purposes. Between this and the CEO buying shares hand over fist, something is up. He bought 1,000,000 shares in the private placement today too. Just filed another insider report by the #2 in charge for an additional 450k shares in the private placement. Link to comment Share on other sites More sharing options...
doc75 Posted October 5, 2015 Share Posted October 5, 2015 I agree the timing is likely opportunistic. But remember that these guys were getting into it good and heavy last fall (warrants, too), knowing very well that their numbers were bad. So I take all their purchases with a grain of salt. While it's reasonable to think something good is coming, there's also a good chance they'll continue to turn in "unexpectedly" bad quarters. Maybe Len actually believes his crazy projections, such as all that EBITDA from their fancy tunnelling machine. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted November 12, 2015 Share Posted November 12, 2015 You'd think with them buying hand over fist they'd have a knock-out quarter. Not so much. Though their rental margins actually improved in the quarter. Link to comment Share on other sites More sharing options...
Laxputs Posted November 12, 2015 Author Share Posted November 12, 2015 Insolvency risk looks low. They could go down to sustaining capex and some asset disposal if need be. They are projecting better than 20% EBITDA margins in 2016. 20% should correspond to at least 4.8% net margins. They can cover interest payments by about 2.5x. They should chip away at the debt. The senior leverage ratio of max 3.25 to ttm ebitda is very manageable even at these reduced ebitda levels. There are very real risks though. Management could continue to execute poorly. The O&G sector could stay idle for a long time resulting in less revenue and continued weakened margins. Their customer concentration was very high last quarter. That said, there is a chance for the stock to explode as well. If they win contracts for pipelines. If they win contracts from infrastructure spending from the new Liberal government. If O&G pick up. If their direct pipe drilling system gets some activity. Etc. It would be reasonable for them to earn their current market cap in net income in just one fiscal year. If only one had faith in management. Still a small position for me. Link to comment Share on other sites More sharing options...
Laxputs Posted August 29, 2016 Author Share Posted August 29, 2016 Anyone still owning this? Any analytical thoughts? Obviously an industry in a hard spot. Making losses. No revenue projections. Sold TC Backhoe. Lots of debt but I believe it was reduced from 36m to ~23m. Shady management. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 30, 2016 Share Posted August 30, 2016 I had to exit for compliance reasons but I maintain these guys are scumbags. I would never recommend anyone do any business with them. Overpromise and underdeliver are the Len and Des way. Link to comment Share on other sites More sharing options...
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