Author Topic: MCR.V - Macro Enterprises  (Read 101132 times)


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Re: MCR.V - Macro Enterprises
« Reply #280 on: August 24, 2018, 08:09:54 AM »

Momentum Drivers: A recent contract award worth ~$200 MM will see MCR construct the Aitken Creek Section (Spread 2) of the North Montney Mainline project. Construction has commenced and MCR’s JV partner (Spiecapag) will provide personnel and equipment for the project. We note, however, that the project sits outside Macro’s JV and our estimates imply the whole ~$200 MM contract value sitting on Macro’s P&L. With most of the project expected to be wrapped up in Q1/19, we are currently modeling EBITDA margin contribution in the 14% range, meaningfully boosting our 2H/18 EBITDA estimates to $23.6 MM from $3.5 MM previously and our 2019 FY EBITDA forecast to $39.6 MM from $30 MM.

Macro remains situated to benefit from a positive LNG decision having a $900 MM contract awarded to its JV with Spiecapag last month. The JV will complete work on a ~166 km section of the ~670 km Coastal GasLink Pipeline project. We value MCR’s portion of the recently awarded contract at roughly $0.80/share, using a 10% discount rate. A Final Investment Decision on the LNG Canada project is expected to occur in Q4/18.

On the heels of the decision by the Canadian government to purchase Kinder Morgan’s Trans Mountain Pipeline and related terminals, MCR still stands to gain as the odds of the TMX project moving forward remain favourable. While we are not factoring in imminent, material revenue contribution this year, we do expect the TMX project to contribute in 2019 and part of 2020.

Cormark Outlook: A strong net cash position of $32 MM (as of Q1/18), upside to LNG-related work with the GasLink contract and significant exposure in relation to the TMX project place MCR in a very attractive position. Our $5.00 target on MCR implies a 2.5x 2019E EBITDA multiple. We attribute a 4.5x multiple on the base business (2020 estimates) while also attributing $1.25/share of value to the TMX ($0.45/share) and GasLink ($0.80/share) projects.


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Re: MCR.V - Macro Enterprises
« Reply #281 on: November 23, 2018, 10:09:03 AM »
So let me get this straight. This is a company that has a market cap of ~$85mm, cash on hand, a fleet of equipment valued at ~$60mm and a backlog of business around $805mm! The CEO is aligned with shareholders given his ownership of ~31% of the company. What's the catch? Oh, Canadian pipelines represent the backlog and we all know Canada will never approve or build another pipeline. But wait!!! In the backlog Trans Mountain (arguably the pipeline that carries the greatest amount of risk to reach completion despite the press conference by a Prime Minister Justin Trudeau on Wednesday informing the country that O&G producers in Canada are in a far better place today than in the last 10 years) only accounts for ~$190mm. And ~$260mm of the backlog is projects that are already underway? And once these pipelines are facilities are built they represent future business for MCR in the form of increased maintenance and integrity work (a higher margin business)..... MCR trades at 1.9x 2019 consensus estimated EBITDA of $30mm. Buying MCR at these levels given the bright future and current valuation can almost be equated to stealing.


·         MCR reported third quarter revenue of $42mm, EBITDA of $5.3mm and EPS of $0.05. This compares to our estimates of $65mm, $3.5mm and $0.12; respectively. The miss is due to a slower ramp up of work on the Northern Mainline project than we had forecast. During the quarter depreciation was higher than our estimate resulting in lower EPS. The company generated ~75% of its revenue during the quarter on work related to pipeline and facilities construction.

·         MCR has increased its revenue expectation for 2018 to $170mm, from $160mm previously. The company has also released 2019 revenue guidance of >$250mm. The 2019 guidance is based on work related to the North Montney Mainline project, the Groundbirch facilities and work related to the Coastal GasLink pipeline project. MCR is also expecting an increase in maintenance and integrity work moving into 2019.

·         A brief summary of the existing book of business:

1.     Coastal GasLink pipeline project is ~166kms of 48 inch pipeline, bid as a 40/60 JV with Speicapaq Canada for an estimated $900mm.

2.     Aitken Creek Section of the North Montney Mainline project - Spread 2 is 67kms of 42 inch pipeline and related facilities for an estimated $220mm.

3.     The Groundbirch Compressor Station is a two unit greenfield compressor station near Dawson Creek, B.C., with an initial contract value of $37mm.

4.     Spread 5B of the Trans Mountain Expansion Project is ~85kms of 36 inch pipeline, bid as a 50/50 JV with Speicapaq Canada for an initial estimated value of $375mm.

·         MCR exited the third quarter with a net cash position of $25mm. The company has PPE on the books of $59.3mm and a positive working capital balance of $34.8mm.

  Jason Tucker
  Partner, Research Analyst

  110 9th Avenue SW, Suite 500
  Calgary, Alberta, Canada  T2P 0T1

  Tel: 403.513.1031
  Fax: 403.265.8721


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Re: MCR.V - Macro Enterprises
« Reply #282 on: January 05, 2019, 08:23:36 AM »
Cormark 2019 top idea...

Macro Industries Inc. (MCR-TSXv)  Brent Watson

Buy, $4.50

  Company Description:  Macro Industries is a pipeline and facility construction and maintenance company located in Fort St. John, British Columbia. The company offers investors exposure to a series of projects in Western Canada linked to LNG activity. With positive net cash and relatively modest future capital requirements to execute on these contracts, Macro’s financial position will improve markedly as 2019 progresses, while the resumption of the Trans Mountain pipeline expansion (TMX) project represents a key catalyst potentially in H1/19.
Cormark Outlook:

 Macro’s JV partnership with Spiecapag Canada, a subsidiary of a major global construction entity, has allowed Macro to win two large pipeline contracts in Western Canada. The Coastal GasLink pipeline contract ($900 MM gross, 40% MCR) will underpin the company’s growth next year, while a resumption of the TMX project could see the Macro/Spiecapag contract ($375 MM gross, 50% MCR) reactivated and potentially contributing to results in the latter part of the year or in 2020.

 Macro has guided to $250 MM of revenue next year, excluding any contribution from the TMX project. On this base-line for 2019, we estimate that Macro is trading at just 2.1x EV/EBITDA next year while a potential scope expansion on Coastal GasLink could offer some upside to our EBITDA forecast.

We have based our $4.50 target price on a NPV model of Macro’s secured contracts, with the TMX contract included and representing approximately $0.50/share of the total. With the market still suggestively somewhat skeptical about the Coastal GasLink project and TMX fully discounted (in our opinion), progression of these two projects could see MCR move meaningfully higher in H1/19


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Re: MCR.V - Macro Enterprises
« Reply #283 on: January 06, 2019, 11:37:49 PM »
Thanks for posting these. I realized nobody was responding. I am reading, just don't have much to comment!


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Re: MCR.V - Macro Enterprises
« Reply #284 on: March 21, 2019, 08:16:47 PM »
Quite the 4th quarter & outlook for a $3.25 stock with no debt and $1.50 of net cash...

Macro Enterprises Inc. has released its fourth quarter and year-end 2018 results.

 Summary of financial results                           
                                                      (thousands of dollars except per share amounts)         
                                                      Three months ended December 31   Year ended December 31     
                                                         2018          2017               2018       2017       
Revenues                                                $137,595        $26,897         $191,060   $103,980   
EBITDA1                                                  22,318         416             21,705     2,872     
Net income (loss)                                        14,054         (2,050)         8,965     (3,446)
Net income (loss) per share                              0.46           (0.07)          0.30      (0.11)


The Company continues to materially exceed industry standard safety averages. As at December 31, 2018, Macro Enterprises has now exceeded 22 quarters and 4.2 million man hours worked without a single lost time injury.

The Company generated $39.2 million in positive cash flow from operations for the year compared to $4.6 million for the prior year.

The Company recorded EBITDA of $21.7 million based on improved margins and strong 4th quarter results.

Total working capital as at December 31, 2018 was $50.1 million of which the Company's cash position net of debt was $50.5 million. The Company continues to remain unleveraged and undrawn on its credit facilities.

The normal course issuer bid was renewed for another 12 months in December 2018.

The Company expects revenue to exceed $300.0 million in fiscal 2019.

The Company is reporting shareholders' equity of $88.5 million or $2.92 per share based on the weighted average common shares outstanding as at December 31, 2018.


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Re: MCR.V - Macro Enterprises
« Reply #285 on: March 22, 2019, 08:30:35 AM »
Once again, Macro goes through a downturn unscathed and debt free, and comes out of the hole bigger than the previous cycle. Where is the love? Where is the hype? Usually this board laps up hero management stories, Mr. Miles and his team continue to draw circles around everybody else but few notice... I'll take a suite of old scruffy men who know what the hell they're doing over silver tongued salesmen who play "the game", any day of the week.

Not sure what the rant was for, but it's some pleasant news we got, it really crystallizes the picture.


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Re: MCR.V - Macro Enterprises
« Reply #286 on: March 22, 2019, 09:20:19 AM »
Totally agree. Book value of $2.92,$2 of which is cash, likely earn at least $1.20 next two years. Not that PE is best way to look at this, but this is at ~1.3x 2019 earning, if you strip out the cash. And that assigns no value to TM pipeline being built. Basically mkt is saying the company has no value beyond 2020.

The company is also buying $30mil of equipment. As you say management has been very disciplined capital spenders. Bullish that the are doing so.