BeWhere Holdings ($BEW.V) FINS Review
Q2 2024 (3.25 / 5 stars) *Upgraded
“Liked it, didn’t play it” is something that I’ve thought or said far too often this year it seems. Can’t catch ‘em all but some sting a little more than others.
I gave BeWhere a three star rating for their annuals back in April, and with today’s close has exactly doubled since so congratulations to those of you who have been deep and long. The market has been in love with this Q2 release as well as it is up 35% since their financials dropped. On the surface, it seems this could be worthy of an upgrade - but let’s do the work first.
Balance Sheet:
Super solid looking current ratio, just shy of 4 that consists of $4.8M in cash, $3M of accounts receivable, $935k worth of inventory and about $500k of other short term assets against only $2.33M of liabilities due within the next twelve months which is easily covered by their current cash position. Only debt is a minor $368k government loan. We’re off to an impressive start.
Cash Flow:
$471k of operational cash flow through their first six months compared to $391k a year ago, a 20% improvement. Due to some timing differences within their A/R, I would expect this has a very good chance of improving even more throughout the year as they had nearly a $1.2M working capital adjustment for their receivables. Their A/R looks great at 90% current, and I suspect the company had a really good June revenue month based on this. They paid off the $40k government debt from the covid days, and utilized $75k through their NCIB buyback program. Overall their cash position has slightly improved by 3% since the beginning of the year.
Share Capital:
87.2M shares outstanding, about 600k shares less than they were at this time last year thanks to share buy backs
There were 10.7M warrants outstanding at year end, almost all at .35 cents which expired Feb 15th. Stock was 28 cents on that date and exactly one month later, roared beyond that exercise price. One month was the difference between 0 and 12% dilution. Ouch for those that held them, good for everyone else.
3M options outstanding (450k awarded this quarter) , all ITM but none expiring until Feb 2026 and beyond.
Per YF, insider ownership of 21%. If there is a knock on insiders, it is they have not participated in the open market other than some loose pocket change purchases at twenty cents last June.
Income Statement:
Another great top line performance at $4.3M in the quarter, 40% better than the comparable quarter and at the mid way point of 2024, $7.8M, 36% better, and on a QoQ basis, 23% better than what they achieved in Q1.
That extra business did come at the expense of a little bit of margin erosion though, and from what I recall their margin is already a little soft compared to their peers. Q2 came in at 32.6% down 220 basis points taking their YTD margin to 35.2%, off by 190 basis points to what they achieved mid way through 2023.
Expenses were virtually flat to last year which is fantastic conversion on 40% more business as that extra margin dollars go to the bottom line. Payroll did increase by 25% which was made up for with a 39% reduction in R&D spend. Expenses for the year are up 8.5% on 36% more revenue - once again excellent conversion.
Even with their tax bill going up by 14x ($143k vs $10k), their comprehensive income improved by 380% to $388k in the quarter vs $80k last year and YTD almost tripling what they did last year at $598k vs $222k. It’s notable that about $100k of this variance was due to a foreign exchange birdie to last year.
Overall:
Well if this wasn’t a homerun quarter, you would at the very least have to call it a stand up triple. They are checking almost all the boxes.
I guess the big question here for me is the valuation. Is BeWhere currently worth a $65M market cap with $14M TTM, probably trending to $16M - $18M this year and an EV/EBITDA of 35 and P/E ratio in the high 50’s. Sorry bulls but based on those numbers I’m going to suggest that BEW is getting a little ahead of it’s ski’s. Those aren’t the ideal metrics I look for making an entry position. But, if you’re in for a year or more I don’t think you have much to be worried about either. With that said, based on those valuation metrics and a slightly overbought RSI in the low 70’s, I suspect there will be some cheaper days ahead to average up or get in.
The FINS themselves are great progress - definitely worth of an upgrade, probably in the 3.5 - 3.75 star range. I’m going to go with a slightly less 3.25 based on the perceived over valuation however
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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 and I do so without compensation. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements.
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.