Will Payfare break even in Q4 or Q1?

  On November 10 Payfare will announce it's Q3 results.Analysts predict that it will show substantial gains in both active user growth and revenues.But when will it break even?

 Payfare is a junior technology company that handles digital payments for the GIG economy.And it has experienced outstanding growth in revenues since 2019 but can revenues grow fast enough to exceed expenses?In other words,will it break even in Q4  of 2022 or Q1 of 2023?Payfare will tell investors on November10 how  close they are to break even in Q3.But before this announcement PAY told investors that it's active user growth has increased by 155% over Q3 of 2021.And it's revenues are $12.7 million in Q3.This is up 286% over Q3 2020 and 45% over Q3 2021.Furthermore it is recording a gross profit margin increase of 5% in Q3.                                                                                                               It is still difficult to get figures or even estimates on net income for the year.A website called Tradingview estimates that there will be a net loss of more than $10 million for 2022 compared to a net loss of $22 million in 2021.This computes to a loss on average of $2.5 million for each quarter.But this blog sees that revenues will  climb every quareter and expenses will be fairly stable.If that is true then PAY will likely only have a small loss in Q4.Payfare may not  be close to breakeven for the year but approaching it for Q4.So with continued improvement it may be at breakeven status (or close to it) for the Q1 of 2023.

     What about it's Share Price?

   Payfare has drifted lower gradually since the first of the year;it was trading at that time in the $8-$9 range.In fact, it drifted down to $3.80 in June.Now it is trading in the $4.50-$5.75 price range.This blog feels that investors are gradually seeing "breakeven" of it's business model.PAY is sketchy on it's net income data but this blog estimates that it will approach breakeven in Q4 and maybe have a small net income or net loss in Q1 of 2023.This however may only keep PAY in the $5-$6 price range.As mentionned in another blog on Wordpress (Blogdaleup) Payfare has done well with it's partner/customer arrangement with Doordash and needs another partner/customer like Grubhub to get to $7.50-$8.00 price.

                    https://www.zacks.com/;https://www.zacks.com/     

 

Will Data Communications (DCM) move towards printing or digital assets

 Data  Communications Management (DCM) has been covered by my blogs on several websites including Wordpress Blogdaleup and Wordpress Econothon II. The pandemic in 2020-2021 hurt DCM's sales of printing and office products.And in 2021 it appeared to this blog as if revenues had plateaued.But revenues have bounced upwards in 2022.For example,revenues in Q2 2022 were ahead by 23% over Q2 2021.This was partly because of some new acquistions made recently such as Informetrica and partly because DCM introduced a new  revenue producing product-medical marijuana.And this has allowed DCM to bring new products to market,for example, it brought in $22 million of new business in the form of a single contract.At the same time it reduced it's Q2 operational expenses by 4% or $.5 million.As a result net income increased by 490% over Q2 2021.

    Just give us the Facts

In Q2 as stated above revenues were up by 23% over Q2 in 2021.And adjusted EBITDA was ahead by 30% over the same quarter in 2021.Basic and diluted e.p.s. were $.09 and $.08 respectively compared to $.01 in 2021.And the share price has moved from about $2 a share in 2018 to the $.90 -$.95 price range in 2020.As the pandemic ended the price moved up to the $1.25 -$1.50 price range where it now stays.DCM  has decided in this uncertain environment to reduce it's debt burden.DCM management has reduced long term debt by almost 2% or by $6 million.So that now their debt/capital ratio is  a healthy  80 %.

                                         

 

    New Revenues 

In my last blog on Workathon I suggested that DCM  look at adding new revenues by making acquisitions in unrelated fields such as gamification.There are several small firms around  such as FDM  and ISM but it is not clear whether they would be accretive to DCM.Anothern proposed addition was NEX J Systems which is in the area of artificial intelligence.But this gem was snapped up by another acquirer.The idea of this blog is that DCM needs new blood in management to widen it's product lines.Furthermore this blog sees little new growth in the competitive printing area.And these  new areas open up the possibilty of increasing it's P/E ratio and then the share price.It is also true that their debt/equity ratio is not at a dangerous level as it is below 1.

    These possible acquisitions offer maximum diversification but also maximum risk.This blog suggests a better choice could be VIQ Solutions,a Phoenix based, translation and legal document inscriber.It is a combination of printing and digital assets and even has some artificial intelligence.However this blog warns DCM to be vigilant about the substantial reduction in market value of VQS.In fact it might want to take over in tranches which will give time to study the operation.    www.zacksinvestmentresearch.com      

Richelieu Hardware gains from new Acquisitions and Sales in U.S.A.

    Yes,the train is just leaving the station as far as Richelieu Hardware is concerned.But 2021was a very active year for Richelieu(RCH).It made 5 acquisitions including 2 in U.S.A.and one of them was a door and window maker in New Brunswick.Consequently Q1 sales were almost 33% higher than in 2021 with a 50% splurge in sales in U.S.A.With this new growth RCH now has a market cap of $2 billion.Not a rival to Canadian Tire yet but it has a good market share in  Quebec and Eastern Canada.

 Q1 Highlights

  RCH is a specialty hardware company primarily located in Quebec and with it's new acquisitions it brought in an additional annual sales of $70 million.And one of the most recent acquissitions was a window and door manufacturer in New Brunswick.And with these additional sales Richelieu has increased it's EBITDA margin.Consequently both net income with a 26% and e.p.s. have increased,So that net earnings per share was $1.37 for the first half and it is on track to hit almost $3.00 per share for the year.

     Consolidation of it's Acquisitions

     RCH saw a 51% increase in American  sales over 2021 from it's American acquisitions.But investors will have to see if some of these sales shrink  in Q3 and Q4 after consolidation.At the same time investors will have to see if RCH can increase it's sales from it's new window and door manufacturer in New Brunswaick.For example, can RCH put new windows and doors and related products in it's Quebec outlets?If these problems can be handled then maybe shareholders will see annual e.p.s. of $2.80-$3.00.And then shareholders may be rewarded with a higher P/E ratio of 14-15 because of this new growth.As a result this blog is forecasting a target price of $42-$45 by the early part of  Q4. 

                         

https://www.marketbeat.com/  https://www.zacks.com/

Facedrive Reports Q1 loss but Better Financial Metrics

  A number of my blogs on various websites including  EconothonII,Econothon,Workathon,and this one(Blogdaleup) have discussed the financial reporting problems of Facedrive.As Facedrive (FD) has moved erratically from a high of $60 to it's present low of $.60 per share.And it even stopped reporting financial results for a quarter.This blog has criticized the CEO Suman Parapajah for acting like a dictator although he only owns 35% of the shares.He and three other directors control about 60% of the shares.But surprise,surprise FD board reported it's Q1 results  on time.This however does not solve FD's main problem of an inconsistent CEO and board of directors.

       Q1 Highlights  

    Facedrive showed $10.7 million of revenue in comparison to $2.8 million for the same quarter of 2021.However net loss was up 45% to $8.1 million.Operating expenses were $4,950,000 of which $3.2 million were non-cash expenses.FD is still taking excessive impairment charges and depreciation and amortization expenses.These items are charged against revenues and making the loss bigger than should be.In addition, FD charged $737,000 to research in Q1.This is excessive for a mobile food company that does not need much  research.

        What was not in the Q1 report was information on it's acquisitions.In particular, shareholders need information on it's newest acqusition called Tally.It is not clear whether it is accretive to net income or not.Nor was there any mention of  a Special General Meeting being called to discus the sloppy reporting of financial information that shareholders need.

                                       

     

      Who needs the Board?

    The board of directors has been responsible for Facedrive falling in price from  $60 to $.60 a share.There appears to have beenhttps://www.zacks.com/ some insider short selling as directors made profit on the backs of shareholders.But there have not been any removals of board members.Instead the former CFO was fired.But still the overly aggresive accounting continues that expenses almost 60% of their expenditures in non-cash or arbitrary items.Once again in Q1, FD could be closer to a positive net income with more reasonable management.

     This blog has and will continue to push for a Special General Meeting to look at replacing board members with ones more sympathetic to  the price of the stock and to shareholders.Only when I see empty board seats will this blog be happy and the price start to climb.Until then the share price will trade below $1 a share.

 

Ovintiv doubles Cash Flow and Free Cash Flow but net Income drags with Risk Management Losses

 Q1 was an unusual quarter for Ovintiv which has it's headquarters in Denver,Colorado. True,it's operating income, cash flow and free cash flow were almost double Q4 in 2021 but it's revenues and earnings (net income) was well below the estimates made by many analysts.The consensus for revenues was $1.97-$2.05 billion and for earnings  was at about $2.25-$2.40 per share with some analysts forecasting $2.60-$2.65 per share.Production was lower than estimated because of natural gas and liquids.Oil hit it's target production figure. .Consequently Scotiaitrade reported a net loss for Ovinitiv but other analysts,including Zacks, reported e.p.s. of $1.97-$2.05.Because of the unusual nature of the losses Ovintiv should have reported it as an adjusted net income or loss.An adjusted net loss shows that the losses were due to extraordinary items.                                                                                                                 According to Scotiaitrade Ovintiv declared large losses due to risk management.Risk management is ususally done by hedging their oil,with traders, at prices higher than market.Consequently hedging or risk management ususally raises not lowers revenues.But in a fast rising oil price sceanario the oil producer could end up by selling oil that has been hedged below the existing market price.However this is an unrealized loss in revenues not an actual one.It appears to this blog that Ovintiv management has mixed together actual losses with unrealized losses.And so this confusing unrealized loss(according to Scotiaitrade) should not be emphasized by investors nor shareholders.

       Shareholder Returns

  Ovintiv has created a new measure of financial performance;they call it total shareholder retutrns. Ovintiv now has 259 million outstanding shares but since March31,2022 OVV has repurchased almost 5 million shares.And it has increased it's dividend by 25%.OVV calls these two actions total shareholder returns as they both benefit their shareholders.And Ovintiv states that they will have further shareholder returns of $$200 million in Q2.In addition, they will redeem a promissory note for $1billion.$400 million will be repaid in Q2 consequently bringing debt to $4 billion.This will also benefit shareholders although indirectly as it strengthens their balance sheet.           

  

        Other Analysts

Many analysts thought that based on the trend seen in 2021 that OVV would report earnings of $2.05-$2.40 with the high estimate being at $2.61 per share.Ovintiv reported total costs per barrel of oil at $15.48 and with rising oil prices the netback was $36.12 per barrel.And furthermore it met it's production guidance at 500,000 BOE/day and 175,000 barrels/day of oil. Consequently cash flow at $1,043 million was double that of Q1 in 2021.This has allowed OVV to pay down debt so that it will be only $3 billion in Q3 of 2022.Also OVV tells shareholders that it will buy back $200 million of shares in Q2. 

    Forward Earnings

 This blog sees that there will not likely be any significant increase in production from 2021 levels.However it should be said that this blog sees oil prices rising throughout 2022. And this will likely make projections made in Q1 below the final outcome in earnings.For excample, the price of oil has already raised 22% since Oventiv reported it's Q1 earnings.But the price of Oventiv shares has raised 42% in this time frame.Right now Oventiv trades at about 20 times earning,saccording to Scotiaitrade, (P/E ratio of 20), or almost $80/share.Estimates for OVV's annual earnings are $6.50 according  to Scotiaitrade and $9.50 per share according to Zacks Research.The difference is due to the calculation of Q1 earnings by both brokers.Both estimates may be low with the recent run-up in prices.But if so then the share price will probably break through the $85-$90 mark by summer's end.

                        https://www.marketbeat.com/

Has Northland Power weathered the Storm?

    For part of 2020 and most of 2021 Northland Power has suffered from mild weather in the North Sea and brought earnings down from expected levels.The North Sea is considered by many as having the strongest winds in the world.But during this period the North Sea has not produced strong enough winds to turn the turbines on NPI's 3 large wind farms here.It appears that the trouble is really caused by a minor technical adjustment as the winds,themselves,but it is true that the winds have been more moderate than usual.Some analysts think the new German member of the board will help NPI to adjust to the unusual weather conditions in the North Sea.

    Q4 Highlights

    NPI  produced a very average performance for the year(2021) both in revenues and earnings but performance picked up in Q4 and that augurs well for 2022.NPI points out that although revenues were flat in 2021 that performance from their Spanish and Columbia assets provided a strong contribution to their annual performance.Consequently sales increased by 30% in Q4 over Q4 2020 but only by 2% for all of 2021.Consequently the same pattern followed for adjusted EBITDA.That is, adjusted EBITDA increased by 35% in Q4 to $364 million but decreased by 3% for the year.Similarly net income increased by 383% in Q4 and decreased by 44% for the full year. And Northland Power points out that annual losses would have been greater if not for the offsets by their Colombian and Spanish portfolio.                                       

 

      Future Projects

 Northland Power did not point out in this quarterly report that it has major wind farm  projects in the system that are almost ready for commercial operations including Hai LongHai Long 2 and Hai Long 3 offshore of Taiwan and a solar project called La Lucha in Mexico. These are mentionned in my blog dated 03/23/2020 on Blogdaleupsome-Blogger. But it surprised shareholders with the news that it has a new Colombian solar project nearing completion and a large- scale offshore project  Scotland (2340MW) expected to be commercial in 2029 and 3 more Nordsee projects (1350MW ) expected to be ready for 2026 to 2028.               

       NPI has just had a good Q4 as measured by all of it's financial indicators.This points to a better trend for 2022 as contributions come in from it's newly acquired assets like Baltic Power.Northland mentions the contribution from it's Spanish and Columbian portfolio but does not mention the status of it's newly acquired Baltic Power in Poland.Neither does it mention the expected contribution from Hai Long 1 and 2.But perhaps it is too early to see a significant contribution from it's Taiwan wind farm.It is clear that the weather has not cooperated with the ususally strong North Sea winds.Perhaps their new board member can help them harvest more power from the existing winds and make the required adjustments to weather the storm.If so then investors can expect a better 2022 than that of 2021.However this blog cannot give a price target until Q1 of 2022 has been examined.     https://www.moneysense.ca

    https://www.zacks.com/  

Facedrive owes it's Shareholders a Q4 report

     On Novembner28 Facedrive released it's Q3 report. The Q4 and annual report was due to be released on February 28.But Facedrive management thought it better to keep the financial figures to themselves.The only message from FD management received was that FD replaced it's CFO.As they agreed with the content of an earlier blog on Wordpress EconothonII dated December 25 that stated operating expenses were overstated and operating revenues were understated.Shareholders may have objected to downplaying the potential of Facedrive and the Facedrive share price.It almostv seems that Facedrive management is trying to make financial matters look worse than they are and keep the share price down.This,of course, is ludicrous as the stated objective of the CEO and the board of directors is to maximize profit and shareholder's equity.This behaviour by management is not doing that.What can the rationale for hiding the performance of Facedrive when it appears to be on an upwards trajectory?                 

                  The Expected Path 

    My last blog on Wordpress (Blogdaleup) dated February 15,2022 showed that FD had made quite a few astute acquisitions when the Facedrive share price was higher.Yet little information was shown to shareholders on companies like Foodhighway,Steer and Tally. But what was clear is that although there was a substantial amount of revenues and adjusted EBITDA in Q2 and Q3 management  made efforts to overstate expenses and understate revenues.In other words management downplayed their earnings.Consequently this blog applauded management for letting go the ultra -conservative CFO that clearly was understating e.p.s.That aside,this blog was expecting a report for Q4 better than Q3 based on the trajectory of revenues and adjusted EBITDA shown in the first 9 months of 2021.Although the end of the pandemic in 2022 meant that mobile food delivery would gradually  be reduced in Q4 the business from their sit- down restaurants would increase.It is likely most analysts saw increases in mobile food delivery for Q4.And any decreases in mobile food delivery would only take place in Q1 2022.

   When will Shareholders get their Annual Report?

   

 In my Feb.15 2022 blog I predicted that revenues would likely be up to $12 million in Q4.And if management made an attempt to control opertational expenses then e.p.s. could be as high as a loss of ($.02)- ($.03) for Q4 and a loss of ($.27) for 2021.This would be an encouraging sign for shareholders and new inverstors.This could even send the  Facedrive share price towards $3.00.Only an extraordinary event could knock FD off this path on the operational side.So why would the CEO not at least provide shareholders with a corporate update explaining why there was no Q4 and annual report?There was no significant event to change the path on the operational side between Q3 and Q4.There were some changes to the share price but that should not affect opertational performance.So the trajectory seen in the first 9 months should provide the best estimate of Q4 results.But shareholders need the CEO to confirm this in a corporate update or the release of Q4 results.

     Going Forward

   There have been quite a few changes to Facedrive personnel since Q2.And it can be seen how this could upset the CEO.Nevertheless skipping a quarterly report and the annual report is inexcusable.At least a corporate update might explain the rationale for this behaviour.But this blog believes that the CEO has until May 28 (the date of the next quarterly report) to correct this situation.Now it is likely that dominant shareholders are preparing an ambush by calling a Special General Meeting to discus filing an interim performance report and electing a new CEO.Until then it is impossible to predict the share price.

                                       

 

Dale Mcintyre M.S.Sc. is a freelance writer that works chiefly with Zacks Research and Moneysense.     https://www.zacks.com/  MoneySense 

 

One of my Biggest Slip-ups ; my forecast for VIQ Solutions (VQS)

     This blog(Workathon) has made several accurate forecasts of the future for Canadian small cap stocks.But one of my biggest mistakes was VIQ Solutions (VQS) it transcribes  legal documents into digital format and captures court documents on video.I forecasted it would go up to $5 and then $8 a share.It did make it to $5 for quite awhile and even $8 for 4 months but now it has fallen off to the $2.50 area.Where did I go wrong?

    Former Blogs

   I wrote 3 blogs on Wordpress (EconothonII) - one on August14,2020; one on October17,2020 and one on April23,2021.The first 2 were fairly accurate as the stock climbed to $5 and even $8 for awhile.But VQS could not raise it's annual revenue to $35 million and adjusted EBITDA to $4-$5 million.It has a loyal or dedicated customer base but it could not increase it's customer base.All 3 of these blogs counted on VQS making a new acquisition in 2021.Finally it did make a substantial acquisition in Australia late in 2021.VQS says this will increase revenues by $14 million (40%) in 2022.And this will help cover it's fixed costs as VIQ Solutions has expensive equipment to amortize.

    Using their Capital Base

  VIQ Solutions has come a long way since 2019.But this blog and VQSmanagement  thought that VQS shares would continue to trade in the $8 price range.The stock has fallen because VQS did not reach it's forecast of revenue and adjusted EBITDA.The pandemic did not help this stock.But on the bright side VIQ Solutions now has reduced it's debt completely.And it only has 30 million shares outstanding.This is not much for a small-cap technology stock.And this is after their Australian acquisition.

      It appears that the 4 acquisitions made since 2019 have been carefully made with a minimum of good will paid out.There may be few  other acquisitions around that can be immediately accretive to income.But this blog believes that VQS may have to either make a few more risky investments or pay considerably more goodwill to increase their revenue base.After all they still have negative net income.Many companies find themselves in this position after making 2 or 3 accretive acquisitions.Otherwise a larger company with a broader revenue base may start looking closer at VQS.

     Consolidation

   VIQ Solutions now is debt free as well as having a small number of shares outstanding.VQS is likely worried about issuing more shares and diluting shareholder's earnings.So expansion of the customer base likely will be accomplished by another acquisition.A future acquisition may require some shares issued but mostly new debt.

         

                                                             

      This blog see the next quarter as pivotal.If revenues aren't at least $50-$52 million and adjusted EBITDA around $7 million then the stock price will likely drift lower.This may bring an unsolicited bid for purchase or rerquire VQS to make a less than desirable acquisition.In fact, VQS management may be talking to both kinds of partners right now.

                      DaleMcintyre is a freelance writer that works primarily with Zacks Research and MoneySense websites.     https://www.zacks.com/   https://www.moneysense.ca/