Pulse Seismic Quick Update - $PSD.to
Quick update after Q3 2023
Price: $1.78
MC: 95 mil CAD
EV: 85 mil CAD
Yield: 3.1%
1 year performance: -9% (not including dividends)
PSD reported yesterday after market close and results were in line with my expectations. It helped that they telegraphed top line after the license contract win at the end of Q2.
During the quarter they declared a special dividend of $0.15.
Quarter Recap
Rev up from 2.1 mil to 5.1 mil
EBITDA up from 0.7 mil to 3.3 mil
They should show increased revenue from Q4 2022 this year due to the previously announced contract win. The balance sheet has 3.6 mil in deferred revenue related to this.
Contributing to the higher level of sales year-over-year, in the second quarter of 2023, the Company signed a $9.0 million seismic data licensing sales contract, which resulted in the recognition of $5.4 million of revenue related to the initial delivery of data under the contract. The remaining $3.6 million of revenue will be reallocated from deferred revenue and recognized when the data is delivered to the customer. The majority of the remaining data will be delivered in 2023, with the final tranche of data to be delivered before the end of 2024.
Closing Thoughts
I own PSD in the OFS basket. They have low visibility on business activity quarter to quarter, so the market never really gives them a multiple. They are trading at around 5x my estimated 2023 EV/FCF. I can see them doing an additional special dividend next year as excess cash continues to build on the balance sheet. They have an NCIB but are quite limited due to the illiquidity in the shares.
I’m expecting the business to continue to perform well from here. If we get some decent M&A in the oilsands then they likely see a jump in revenue due to transactional revenue related to their library.
Thanks for reading.
Dean
* long PSD.to