1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

ESE.V - ESTec Systems Corp.

Discussion in 'Canadian Stocks' started by Theoilguy55, Jan 7, 2016.

  1. Theoilguy55

    Theoilguy55 New Member

    Joined:
    Aug 19, 2014
    Messages:
    115
    Likes Received:
    3
    ESTec Systems Corporation Due Diligence

    Symbol: ESE.V
    Price: $0.095
    Common Shares: 10,461,629
    Insider/Institutional Holdings: 8,933,955 (85.4% as per Information Circular on Sedar)
    ***Only 1,527,674 retail shares***
    website: http://www.estec.com/

    2015 Q1 Financial Results

    ASSETS
    Cash: $448,156
    Receivables: $716,316
    Inventory: $410,635
    Income Tax Recoverable: $74,549
    Prepaid Expenses: $77,810
    Property & Equipment: $139,287
    Intangible Assets: $305,164
    Goodwill: $774,478
    Total Assets: $2,946,396

    LIABILITIES
    Payables: $631,269
    Deposits: $34,335
    Current portion of debt: $83,364
    Remaining Debt: $1,007,175 (Due by July 2026, see MD&A Highlights)
    Advance from parties: $465,650
    Total Liabilities: $2,221,793

    2014 Year end and 2015 Q1 Results

    2014 Total Sales
    Revenue: $5,834,345
    Gross Profit: $3,219,573
    Net Income: $656,878 - $0.063c EPS
    **Stock is trading at exactly 1.5 times last year’s earnings which is way too low**


    2015 Q1 Sales
    Revenue: $1,298,639
    Gross Profit: $655,650
    Net Income: $86,200 - $0.008c EPS
    **much of the sales are US based, which adds to revenue when converted to CDN dollars**

    Over 5 quarters, ESE has done a total of $7,132,984 in sales with net income of $743,078

    MD&A Highlights

    ESTec Systems Corp. is a holding company that owns Allan R. Nelson Engineering (1997) Inc. and Encore Electronics Inc. Allan R. Nelson Engineering (1997) Inc. (ARN) is a group of professional engineers and technologists who carry diverse skills and a variety of professional backgrounds. The company is located in Edmonton, Alberta ARN provides forensic engineering & design engineering services to the oil and gas, mining, manufacturing, transportation and forestry industries. The largest part of ARN’s business is forensic engineering. Committed to continuous improvement, ARN utilizes state-of-the-art software to provide timely and competitive solutions for our clients. Encore Electronics Inc. is an electronics design and manufacturing business located in Saratoga Springs, New York. Its product line includes signal conditioners, strain gage amplifiers, vibration monitoring equipment and computer controlled signal conditioning instrumentation.

    Edmonton – 25 November 2015
    Once again this quarter is impacted by the continuing low price of oil. The engineering division shows almost a 40% decrease in revenue over the same period last year. On a straight US dollar basis the electronics division is down slightly, although after adjusting for currency, the Canadian dollar value of the first quarter sales are up slightly from the first quarter last year. Overall our revenues are down about 10% from the first quarter last year.

    The Allan R. Nelson Engineering division has reduced staffing and continues to monitor costs. We anticipate continued slow revenue for the foreseeable future due to the continued low price of oil and the resulting impacts on the Alberta economy.

    While revenue potential for Encore Electronics continues to look good, slow parts delivery in the first quarter has pushed some customer deliveries into the second quarter. The net effect is that while still profitable, the level of profit is down from this quarter last year.

    The company has positive working capital. Over the next year the company expects to meet all cash requirements from cash flow. While the Company has a significant amount of its receivables invested in a small number of clients, these funds are largely attributable to insurance clients and they have reserves allocated to pay these receivables.



    A demand non-revolving term facility has been negotiated to cover the cash requirements to purchase Encore Electronics Inc. Debt repayment is scheduled over 15 years to July 2026 to be repaid from the operating profits of Encore Electronics Inc.
     
  2. Theoilguy55

    Theoilguy55 New Member

    Joined:
    Aug 19, 2014
    Messages:
    115
    Likes Received:
    3
    2012 was the game changing year for ESE when revenue started to increase substantially and yearly losses turned into major profits. Revenue between 2009 to 2012 was under $2.5 million per year. Afterwards it was always over $5 million. Assets started to increase and liabilities decreased. This was all done without dilution. ESE is leveraged towards the US dollar and this is a major benefit right now as a Canadian based company. Below are the yearly breakdowns from 2012 to 2015 + Q1 2016

    Year End: 2012
    Total Assets: $2,415,938
    Total Liabilities: $2,577,937
    Revenue: $5,113,248
    Earnings: $197,953 or $0.018

    Year End: 2013
    Total Assets: $2,838,026
    Total Liabilities: $2,634,966
    Revenue: $5,578,487
    Earnings: $374,557 or $0.035c

    Year End: 2014
    Total Assets: $2,462,691
    Total Liabilities: $2,481,167
    Revenue: $5,248,724
    Earnings: Loss of $232,038 – Read MD&A statement below (Due to oil price starting to drop)

    The financial results for the year ended June 30, 2014 show a loss as compared to a profit at June 30, 2013. The decrease in comprehensive income can be attributed primarily to Allan R. Nelson Engineering (1997) Inc showing a significant loss during 2014. This was exacerbated by reduced profits in the Encore Electronics business unit. Allan R. Nelson Engineering saw its year start off with several major projects being put on hold or cancelled by clients as they anticipated market changes. Our clients told us that many of these projects were due to restart soon, however that status remained throughout most of the year.

    Year End: 2015
    Total Assets: $2,911,638
    Total Liabilities: $2,273,047
    Revenue: $5,834,345
    Earnings: $656,878 or $0.063c – As you can see, the company made changes and was profitable again

    This year has seen modest improvements in sales in both the engineering business and the electronics manufacturing business. Combined with modest improvements on the cost side we have had a significant improvement in the bottom line for both business units. Engineering has attained just short of break even and the electronics manufacturing has doubled its bottom line contribution to the business. During the year the company continued to capitalize R&D into new products. Management is confident that the potential market for these new products exceeds the capitalized value of the R&D. A significant portion of this year’s income is a direct result of increases in the value of the US dollar investments in our electronics manufacturing subsidiary in the United States.

    Quarter: Q1 2016
    Total Assets: 2,946,395
    Total Liabilities: $2,221,793
    Revenue: $1,298,639
    Earnings: $86,200 or $0.0082c

    If you read the MD&A, this quarter had some issues with orders and of course decreased demand from the oil engineering subsidiary. However, with the US dollar rising and added orders coming in Q2 that were supposed to be in Q1, it’s inevitable that ESE.V will keep putting out profitable quarters and paying off liabilities while increasing their assets. Their callable debt only has a small portion to be paid yearly and then will be fully paid by 2026, so there is little concern in this department.

    From MD&A: Once again this quarter is impacted by the continuing low price of oil. The engineering division shows almost a 40% decrease in revenue over the same period last year. On a straight US dollar basis the electronics division is down slightly, although after adjusting for currency, the Canadian dollar value of the first quarter sales are up slightly from the first quarter last year. Overall our revenues are down about 10% from the first quarter last year. The Allan R. Nelson Engineering division has reduced staffing and continues to monitor costs. We anticipate continued slow revenue for the foreseeable future due to the continued low price of oil and the resulting impacts on the Alberta economy. While revenue potential for Encore Electronics continues to look good, slow parts delivery in the first quarter has pushed some customer deliveries into the second quarter. The net effect is that while still profitable, the level of profit is down from this quarter last year
     
Loading...

Share This Page