BluMetric Environmental ($BLM.V) FINS Review - From the Archives
3 / 5 stars *Originally published March 14, 2024
A former four star darling way back in January of 2022, and downgraded twice since then with my last review coming last June.
The stock is down 35% from that raving review over two years ago now, but has since stabilized and actually caught a bounce from it's low of 25 cents at the beginning of the year, up almost 50%. If you caught the dip after tax loss season you're a happy camper, if you've been in since my initial review, not so much.
Balance Sheet:
Current ratio remains very strong at 2.8, and that consists of $1.45M in cash, $8.85M in receivables, $4.7M in contract assets and $2.5M in other current assets against $6.2M in liabilities due over the next twelve months. BLM has $700k of debt, with the vast majority scheduled to be paid off in the next twelve months at a very attractive 3.28%
Their accounts receivables have gone up by 38% during the year, and that is on declining revenues. Anticipated credit losses have increased by 33% and while the total number isn't overly concerning, they do not provide any A/R aging to make me feel better about it.
In terms of comparisons to the last time I reviewed their financials thee quarters ago, it isn't as good.
Cash Flow:
$1.2M in operational cash burn for their first quarter of the year, which is more than double than their burn rate a year ago. Almost all of this is due to the growth in the accounts receivables already mentioned. I don't know that there is a problem with their AR collections but all indications point to the potential for one and providing no aging reports isn't going to make me feel better. Due to this (mainly) their overall cash has depleted by over 50% during the quarter. Something to definitely keep your eye on next quarter.
Share Capital:
Still at 29.4M shares which is unchanged over the last five quarters
13% insider ownership (per Yahoo finance)
Some small recent insider buying
Income Statement:
$8.5M in revenue during the quarter, a terrible 18.6% decline from their first quarter of last year. The excellent news is they were able to beat gross profit dollars on much fewer sales growing their GP rate to 42% from 32.4%. Nearly 1000 bps is no joke but sadly this is just due to movement of expenses from cost of goods to SG&A costs as those costs grew by 20% on 19% less business. That excitement was short lived. So at the bottom they still managed to pull out positive earnings of $245k, missing last years bottom line result by 47%.
Overall:
A terrible result when comparing to last years Q1, but they were still profitable so to see the share price way down here and only at a $10M MC is surprising, in the neighbourhood of .3 MC to Revenue. The burn rate may be an aberration, but the state of the A/R may have some underlying problems as well and until more could be known about that, I'd be cautious. It's almost worthy of another downgrade based on that, but with the share price and market cap showing some potential value if it's a nothingburger, I'm sticking with three stars.
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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. 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 companies 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.