November 24, 2024
BIOREM (BRM.V / BIRMF) has a mission to engineer, design, manufacture, and distribute the most innovative and effective air emissions abatement technologies in the world.
The company was established in 1990. They are based near Guelph, Ontario (Canada) but they operate in 23 countries around the world. BIOREM has done over 2,000 installations. They have 50+ employees with an average tenure of 10-12 years.
BIOREM offers a full range of engineering and technical solutions. The company is transitioning from being a capital equipment vendor to providing more services, such as upfront engineering, site work, or after sales market.
These are the areas the company works in:
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- Municipal Wastewater: collection system & headworks; liquid phase treatment; solid treatment.
- Solid Waste Management: compost; anaerobic digestion; transfer stations; recycling facilities.
- Industrial: pet food; chemical production; petrochemical; food & beverage; agribusiness; semiconductor; surface coatings; wood products.
- Renewable Energy: biogas desulfurization; biogas conditioning; emissions abatement.
Here are the results from the third quarter of 2024 in Canadian dollars:
BIOREM reported record quarterly revenues for the third quarter of $14.9 million, an increase of 103% over the previous quarter and 170% higher than the same quarter in 2023. Year to date revenues totalled $28.1 million, a 117% increase over the $13 million reported for the first nine months of 2023. The increase in revenues is largely attributable to the increase in order bookings and continuing delivery of projects from the Company’s large order backlog.
The company commented:
During the quarter the Company booked $6.6 million in new orders resulting in an order backlog of $48.4 million on September 30, 2024. This compares to an order backlog of $57 million on June 30, 2024 and $54.5 million as of September 30, 2023.
The Company expects order bookings to continue to grow and delivery of projects from the order backlog to continue generating strong revenue and earnings growth over the next 12 months.
“In the third quarter, delays related to industry-wide issues with construction projects eased somewhat, allowing BIOREM to catch up on orders in the Company’s backlog,” said Derek S. Webb, President and CEO. “Even as project deliveries accelerated, BIOREM’s sales funnel, outstanding bids, and order backlog remain robust with no signs of softening over the near- to medium-term.”
“Population growth and the need for significant increases in housing construction throughout North America is driving demand for municipal and industrial infrastructure projects that require air emission abatement systems. BIOREM’s experience and performance in delivering both large and small successful air emission abatement projects makes them uniquely positioned to benefit over the long term from this growth cycle.”
Here are figures are in U.S. dollars: BIOREM reported EPS (earnings per share) of $0.12 on a fully diluted basis. EBITDA is $2.18 million. Cash flow is $3.17 million. Revenue is $10.73 million. The market cap is $31.1 million, while enterprise value is $28.5 million.
And here are the metrics of cheapness based on annualizing the most recent quarter:
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- EV/EBITDA = 3.27
- P/E = 4.38
- P/B = 4.36
- P/CF = 2.45
- P/S = 0.72
ROE is 59.7%, which is outstanding.
The Piotroski F_Score is 7, which is quite good.
Insider ownership is 16%, which is good. Cash is $7.3 million while debt is $3.9 million. TL/TA (total liabilities / total assets) is 59.0%, which is OK.
Intrinsic value scenarios:
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- Low case: If there’s a bear market and/or a recession, the stock could decline. That would be a buying opportunity.
- Mid case: BIOREM should have a P/E of at least 10. That would mean the stock is worth $4.80, which is over 125% higher than today’s $2.10.
- High case: Arguably, the company should have a P/E of 15. That would mean the stock is worth $7.20, which is over 240% higher than today’s $2.10.
- Very high case: If BIOREM can continue to grow its revenues and backlog, while also transitioning towards services instead of just capital equipment, the P/E could reach 20. That would mean the stock is worth $9.60, which is over 355% higher than today’s $2.10.
RISKS
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- If there’s a bear market or a recession, the stock would probably decline temporarily.
- If the company does not continue to win new business, revenue and earnings would decline.
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