The dreaded quiet, un-announced Friday after hours earnings drop. When I saw the alert around 5 pm on Friday, my first thought was “uh-oh”.
The 2026 Wolf Pick had been up 16% leading into today’s trading session but these results do bring into question whether the stock can hold those gains.
No need for a long preamble, as it will be a busy earnings week. Let’s get into the review.
Balance Sheet:
Atlas’ current ratio remains solid at 1.6 but that doesn’t tell the whole liquidity story. The company has dipped into their LOC leaving them cashless at the end of Q1 with $6M in receivables, another $4M in federal grants receivable, $10.2M worth of inventory and $1.8M in other short term assets over top of $14.1M in liabilities due over the next twelve months.
The company has $19.1M of debt with $5.1M current. $3.1M of which is from their TD term loans and mortgages with $2M additional on the pre mentioned line of credit.
We will see more of the impact of this on the cash flow statement but the company appears to have pushed through an amount of spending required in order to be eligible for that $4M federal grant.
Cash Flow:
Despite the poor results elsewhere, Atlas generated $1.4M of operational cash flow in the quarter while ending the period with a donut on the balance sheet. This was highly influenced by working capital changes including a good collections quarter.
They utilized $4.7M in investments to meet that federal grant threshold. In order to fund that they dipped into their LOC for $2M thereby increasing their net debt burden in Q1 by $1.3M. Unsurprisingly the buybacks under their NCIB did not continue.
The quicker they receive those federal funds, the better their liquidity can recover.
Share Capital:
70.3M shares outstanding - company has had zero dilution over the past two years due to buying back approximately 300k
3.2M options outstanding. 250k exercised at 29 cents post financials. 2.5M remain out of the money.
15% insider ownership with BMO asset management as the largest institutional and overall shareholder at 10.1%
Insider buying in the fall of 2025 with options exercised post financials.
Income Statement:
There is not a lot of positivity within this P&L. Revenue was down over the comparable period by 15.5% and margins were almost non existent, coming in very skinny at just 3% compared to 16% last year. Gross profit dollars only amounted to $273k, down by 84%.
Operating expenses were down 1.5% but not nearly enough to recoup the terrible numbers above.
The company did have a $400k birdie in tax recoveries which limited their net loss to $1.73M in the quarter, just about double the $846k they suffered in the first quarter of last year.
Summary:
I cited anything near 56 cent support as a buy zone opportunity in my May WWW and that dip never happened, instead the stock shot up 13%.
An hour into today’s trading session the stock is only down a penny, or 1.5% which is not as big of a decline as I was expecting on these numbers.
The news release this morning accompanying the Friday results lists a whole host of rationale for the poorer than expected (mine) results.
Severe winter weather in the largest markets of BC and Ontario were listed among the biggest contributors. Unlike previous years where I headed south for the winter I can vouch for how bad it was. For the revenue they did receive, it appears they bought given it came in just above cost.
Their outlook remains quite positive and orders were up over 90% in the quarter with bidding continuing to be quite strong which may speak to potentially better overall macro conditions. The new robotics facility in Ontario is very near completion and should be operational early in Q3. While their balance sheet does not currently support obvious M&A activity, they are continuing exploring opportunities as the industry deals with historically low EBITDA multiples, and they do have a history of acquiring businesses at attractive multiples. Doing so in the near term appears it would have to occur through dilutionary measures or debt.
Aside from the poor numbers, they listed another faux pas in their news release listing their earnings call date from their April annual filings. Therefore I do not know if they will be holding one for later this week. I’ve reached out to the CEO for clarification.
Have to downgrade them to 2.75 here, but I feel pretty good about awarding them something higher in future quarters.
Disclaimer:
My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from company’s I review.
Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.
Short and sweet. Thanks Wolf!