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 2nd 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