Blackline Safety’s deal pipeline is growing, PI says

Another large deal closed for Blackline Safety (Blackline Safety Stock Quote, Chart TSX:BLN) is part of an encouraging trend for the company, says PI Financial analyst David Kwan.

This morning, BLN announced it had received a $1.1-million purchase order from Welsh Water, the sixth-largest company in Wales. Blackline’s G7c will be employed in the company’s in-house safety operations centre.

“Blackline’s G7c is the only comprehensive safety device on the market with 2G/3G connectivity that future-proofs customer investments into connected wearables,” said Simon Rich, zone manager — U.K. and Ireland, Blackline Safety Europe. “Blackline has over 10 years of cloud-connected safety experience, and only our G7c product features a broad range of customization and capabilities that grow with customer needs over time.”

Kwan notes that there is a very plausible reason why this order may lead to more business for Blackline.

“Management indicated that it is seeing more large deal opportunities in the pipeline, including in the water utility space. Given many water utilities talk (openly) with each other (as they do not compete), BLN’s wins with Yorkshire Water and Welsh Water (along with the BLN team’s past experience in the space with BW Technologies) should help it win more than its fair share of these RFPs,” the analyst says. “The Company is also increasingly realizing the rewards of its past S&M investments, particularly in North America and more recently Europe, which has translated into quarterly revenue records in each of the last three quarters. With its S&M investments accelerating, we expect to see the exceptionally strong growth continue, including a near doubling of revenues this year.”

In a research update to clients today, Kwan maintained his “Buy” rating and one-year price target of $9.00 on Blackline Safety, implying a return of 44 per cent at the time of publication.

Kwan thinks BLN will post Adjusted EBITDA of negative $2.2-million on revenue of $33.1-million in fiscal 2019. He expects those numbers will improve to EBITDA of positive $8.4-million on a topline of $53.5-million the following year.