It’s full speed ahead for Cematrix Corp (Cematrix Corp Stock Quote, Chart, News TSXV:CVX), which just landed a string of new contracts.
Looking at the event in an update to clients on Thursday, M Partners analyst Paul Piotrowski said the new business adds to Cematrix’s already massive backlog.
Calgary-headquartered Cematrix is a North American leader in cellular concrete for infrastructure applications with its business spread across Canada and the US. The company on Thursday announced on $6.9 million in new contracts and provided a COVID-19 update on its business. (All figures in Canadian dollars unless noted otherwise.)
The contracts, won by Cematrix’s subsidiaries Cematrix Canada, MixOnSite and Pacific International Grout, include a tunnel project in Texas, a bridge project in Michigan and an abandonment project in Vancouver.
Management said the COVID-19 pandemic has caused delays of between a few weeks and a few months or more, with a couple of projects worth US$1 million now expected to begin in 2021. For 2020, management maintained its guidance of $40 to $45 million in revenue, which would imply a growth rate of between 77 to 100 per cent over 2019.
“Of most importance, none of our staff have been infected by COVID-19 and no projects have been cancelled. Our employees remain safe and healthy as we continue to service our customers during these unprecedented times. With the continued addition of more projects each week, these short-term delays are not expected to affect our forecast for the year,” said Jeff Kendrick, Cematrix president and CEO, in a press release.
Piotrowski said he is now projected second quarter 2020 sales to be $9.0 million, Q3 at $15.5 million and Q4 to be at $12.0 million for a total of $40.4 million for the year. His full call for Q2 is $9 million in revenue, $2.7 million in gross profit (a 30 per cent margin) and EBITDA of $1.9 million (a 21 per cent margin).
“We continue to have a positive view on CEMATRIX Corporation during the ongoing COVID-19 pandemic. The Company has not had any order cancellations and only minor delays to date as CVX’s end markets are included in essential services. Because of the stability of its end markets and its backlog, CVX provides a level of security as an investment. Further, in the medium term we anticipate that governments in the U.S. and Canada will look into infrastructure stimulus as they have in past recessionary scenarios
for its advantages in generating superior growth in employment and GDP,” Piotrowski wrote.
With the update, the analyst has maintained his “Buy” rating and $1.20 per share target, which at press time implied a projected return of 114 per cent.
Piotrowski’s 2020 forecast calls for $40.4 million in revenue and $5.9 million in EBITDA and his 2021 forecast calls for $50.0 million in revenue and $9.0 million in EBITDA.
Cematrix’s share price has risen for much of 2020 and is now up 68 per cent year-to-date. Over the past 12 months, CVX is up 185 per cent.