Pivot Technology Solution’s dividend is likely secure, says Cantor Fitzgerald

Pivot Technology Solutions’s (Pivot Technology Solutions Stock Quote, Chart, News: TSXV:PTG) Q1, 2015 guidance was weaker than expected but the company’s dividend is probably secure, says Cantor Fitzgerald Canada analyst Ralph Garcea.

On Friday, Pivot Technology reported its fourth quarter and fiscal 2014 results. In the fourth quarter, the company posted adjusted EBITDA of $11.0-million on revenue of $377.5-million, a topline that was up 11.7% over the same period a year prior.

“We are pleased with the progress we made as a company in 2014,” said CEO Warren Barnes. “Our results reflect the continued execution of our strategy, which has enabled us to record solid revenue growth and improving profitability for both the quarter and the year. We strive to exceed our customers’ expectations and build a strong track record of delivering innovative, results-driven solutions. In an increasing number of our customer interactions, services are an integral part of these solutions. Since 2012, we have doubled the contribution to revenues from this higher-margin business from 5.5 per cent to 11.1 per cent. Operationally, we are making good progress with our integration initiatives and these are continuing into 2015 and beyond.”

Garcea says the fourth quarter was better than he expected with both revenue and EBITDA topping what he had modeled. The analyst says that although his Q1, 2015 revenue estimates will drop slightly after weaker than expected guidance, he full year estimates remain essentially unchanged .

Garcea notes that Cash Flow from Operations (CFOPS) came in at $6.9-million in the fourth quarter, and he expects that Pivot will generate more than $30-million in CFOPS in fiscal 2015. With just $5.5-million in contingency payments remaining, this is plenty of support for the company’s dividend, he says.

In a research update to clients this morning, Garcea maintained his “Buy” rating and one year target of $1.25 on Pivot Technology, implying a return of 220% at the time of publication.