November 2020 Update – $CSW/A.to & $CSW/B.to, $OSS.v, $REPH, $PSD.to, $ISV.to $IDG.to, $STC.v, $VMD.to, $SYZ.to, $MCB.to, $FRD, $FRII.to, $MTLO.v

Very busy month. 3 new company’s profiled ($MTLO.v, $DWSN, $SVT) and lots of updates.

Let’s get to it.

• Corby Spirit and Wine Limited (tse: $CSW/A.to & $CSW/B.to)
  • Reported their fiscal Q1 2021
    • Strong q
      • Rev up 12%
      • Opex down 14%
      • Net earnings up 68%
  • Dividend upped to 0.22/share
    • Yielding almost 6%
  • They have made notes that they don’t expect this to continue for the full year
    • Some pull forward for holiday season but higher than prior consumption may continue due to reinstated lockdowns
• OneSoft Solutions ($OSS.v)
  • JV to expand presence in Middle East – find it here
  • Released Q3
    • In line with expectations
    • Rev up sequentially and slightly up yoy
    • Best MD&A in the Canadian small cap space
      • New pay as you go sales model being trialed
      • A few customers in the trial phase – likely to be announced in 2021
    • Admitted that doubling of 2019 rev won’t happen this year
• Recro Pharma ($REPH)
  • reported results – mixed bag
    • rev up from Q2 but still down yoy
  • positive
    • seeing some wins in business development
    • some renegotiated of debt to push out current payments and increased flexibility
  • negative
    • still no new CEO
    • still high cost debt
• Pulse Seismic ($PSD.to)
  • reported Q3 and was a tough q
  • sales down to 1.8mil
    • still generate 860k for shareholders which shows how little their operating costs are
    • interesting that they had very little traditional data sale revenue and had a transactional sale
  • trading at about 50mil MC and a little more than 14x annualized FCF at the most depressed biz environment in the company’s history
  • You can see how low the active rig count is in Alberta relative to the prior 10 years

• Information Services Corp ($ISV.to)
  • Reported a pretty decent quarter
  • There was some catch up from previous quarter as the economy in Sask reopened
  • Trading around 12x EV/EBIT and a little over 4% yield
  • It will be interesting to see if they do another acquisition in a couple of quarters and/or increase the dividend
• Indigo Books & Music ($IDG.to)
  • Reported fiscal Q2 2021
  • Results were better than I was expecting
  • No questions on the call from analysts – I continue to think I’m the only one watching this one
  • Also announced an addition to the board that seems like a good fit
  • The holiday quarter is the most important quarter for IDG, it will be interesting to watch as Canada managed the 2^nd wave of Covid
• Sangoma Technologies Corp ($STC.v)
  • reported fiscal Q1 in line with expectations
    • they really are navigating the current environment very well
  • still looking to deploy cash from recent financing – I’m expecting something soon
• Viemed ($VMD.to)
  • Reported Q3
    • Revenue was up 22% yoy
    • Still seeing impact from covid getting into hospitals and preventing new customer wins
      • Thinking there would have been even more growth if this wasn’t the case
    • Ancillary sales at 18% and growing fast
      • I liked how they focus not on incremental gross margin as the ancillary side of the business grows, but incremental gross profit in dollars
    • Some temporary PPE and equipment sales due to the pandemic
      • Still see this as a testament to mgmt. being nimble and adapting
      • Really seeing some gross margin compression
    • Prepared remarks had dialogue about a potential acquisition
      • Will be interesting to see if they find a potential company to acquire
      • They have 32mil in cash at this point
    • I continue to hold
• Sylogist ($SYZ.to)
  • new CEO announced
  • seems well credentialed to execute their M&A strategy
• McCoy Global ($MCB.to)
  • New credit facility that gives them some additional flexibility and lower borrowing costs
  • Released Q3 results
    • Rev way down
    • Adj ebitda positive
  • Backlog stable at 10.6 mil
  • Continue to wait while things turn around – NCAV is stable to support margin of safety
• Friedman Industries ($FRD)
  • Reported their fiscal Q2 2021
  • Smaller loss sequentially with some better expectations for Q3
  • Capital expenditure project costs are coming in higher than anticipated but I do appreciate them investing in the business
• Freshii ($FRII.to)
  • Reported Q3 results
  • Non event as they are just above EBITDA breakeven
  • Closed a few more restaurants
  • Good news is that cash balance (and my margin of safety) is being maintained
• Martello Technologies Group Inc ($MTLO.v)
  • Released fiscal Q2 2021
    • Numbers were below what the market was expecting and MRR was lower than I thought it would be
    • I believe there was higher expectation for organic revenue growth
    • Will keep monitoring the position
  • Announced a partnership with Rapid Circle (a Microsoft Gold Partner)
    • Further validates their value to customers in my opinion