Buy Cematrix while it’s cheap, Beacon says

Russell Stanley, a Beacon Securities analyst, has maintained his Buy rating and $0.35 price target on Cematrix Corporation (Cematrix Corporation Stock Quote, Chart, News, Analysts, Financials TSXV:CEMX) in an April 30 Q1 preview.

Cematrix, based in Calgary with offices in Chicago and Bellingham, manufactures cellular concrete for infrastructure, industrial, and commercial construction projects across North America. Because the company’s revenue tends to fluctuate from quarter to quarter, Beacon hasn’t published specific estimates for fiscal 2025, but noted that Q1 is typically the slowest due to winter weather dampening construction activity.

“For context, DE produced Q1/24 revenue/adj EBITDA of $8.4M/$1.0M (an 11% margin), with operating cash flow of $4.8M following a $3.9M working capital release,” Stanley said. “Our focus will be on management’s comments re: its F2025 outlook, given CEMX has predicted that F2025 will be a record year, implying revenue/adj EBITDA will exceed F2023’s $53M/$4.9M (9% margin).”

Earlier this month, Cematrix announced it had secured $9.7-million in new contracts—its third such announcement this year—bringing total new business to $20 million so far in 2025. That builds on a $70-million backlog the company had at the start of the year. “This bodes well for the company exceeding F2023’s top line of $53M, and our marginally higher forecast at $55M,” Stanley said.

Also in April, Cematrix announced plans to buy back up to 13.5 million of its own shares, or about 10% of its public float, under a normal course issuer bid running through April 2026. Stanley said the move is well-supported by a strong balance sheet.

“Cematrix exited Q4 with cash/equivalents of $10.3M, with modest debt + leases of $3.6M. The company also has an unused $8M revolver with CIBC paying bank prime + 1.25%. Moreover, a seasonal decline in revenue in Q1 would likely produce a working capital release, supporting an increase in that cash balance. Combined with modest CAPEX needs, CEMX has ample balance sheet flexibility to be active on the NCIB.”

Stanley projects Cematrix will post $6-million in adjusted EBITDA on $55-million in revenue for fiscal 2025, improving to $8-million in EBITDA on $69-million in revenue in 2026.

The stock is showing technical strength, now trending upward and potentially testing its 200-day moving average after breaking above the 50-day.

“Cematrix is now trading at 3.7x our F2026 adj EBITDA forecast,” Stanley added. “This represents a 51-58% discount to the 7.6x average amongst infrastructure/engineering companies and the 9.0x average amongst cement producers. Potential catalysts include the Q1 results next week, further contract wins and M&A activity.”

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