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.

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