Author Topic: MCR.V - Macro Enterprises  (Read 107813 times)

50centdollars

  • Sr. Member
  • ****
  • Posts: 407
Re: MCR.V - Macro Enterprises
« Reply #10 on: March 13, 2014, 05:59:31 AM »
Good set of results for 2013 and positive outlook for the next quarter. Still trading less than 7 P/E on a fully diluted basis.

http://www.macroenterprises.ca/documents/press_releases/2014/MCR-2014-03-12.pdf

Good results. They are guiding to higer Q1 revenues but lower profit margins. I'm curious to see what the market reaction is going to be to these results. Also, management is hosting its first conference call today. Wondering if they will start promoting the compnay now?
50centdollars


bz1516

  • Full Member
  • ***
  • Posts: 131
Re: MCR.V - Macro Enterprises
« Reply #11 on: March 13, 2014, 07:45:12 AM »
Good set of results for 2013 and positive outlook for the next quarter. Still trading less than 7 P/E on a fully diluted basis.

http://www.macroenterprises.ca/documents/press_releases/2014/MCR-2014-03-12.pdf

Good results. They are guiding to higer Q1 revenues but lower profit margins. I'm curious to see what the market reaction is going to be to these results. Also, management is hosting its first conference call today. Wondering if they will start promoting the compnay now?

I'm a little disappointed with the results.  Lower margins on higher revenues may balance out, but with more shares o/s looks like earnings will be down more than in Q4 before Q4 was normalized.

I have a doctors appointment at the time of the call so if anyone listens would like to hear as I have a feeling there will be no replay.

50centdollars

  • Sr. Member
  • ****
  • Posts: 407
Re: MCR.V - Macro Enterprises
« Reply #12 on: March 13, 2014, 09:03:55 AM »
Good set of results for 2013 and positive outlook for the next quarter. Still trading less than 7 P/E on a fully diluted basis.

http://www.macroenterprises.ca/documents/press_releases/2014/MCR-2014-03-12.pdf

Good results. They are guiding to higer Q1 revenues but lower profit margins. I'm curious to see what the market reaction is going to be to these results. Also, management is hosting its first conference call today. Wondering if they will start promoting the compnay now?

I'm a little disappointed with the results.  Lower margins on higher revenues may balance out, but with more shares o/s looks like earnings will be down more than in Q4 before Q4 was normalized.

I have a doctors appointment at the time of the call so if anyone listens would like to hear as I have a feeling there will be no replay.

Yeah I hear you. I was only able to listen to the call for about 20 mins. All the questions I heard were about margins. They expect margins to be between 20 -30% going forward with 25% being average. They said that margins were down due to strategic moves to win new customers with initial work at lower margins and most of that work would be done in the next few weeks.

Frank also said that they are biding on LNG projects. He said he thinks they can add around $70 million in more work with existing resources. From what I heard, they sounded upbeat to me.

One think that seems fishy to me is that the management team wouldn't talk to anybody in the last 2 years as the stock went from $0.25 to $7. Now all of a sudden they host a conference call and are willing to talk to analysts and the street. Why is that? Is it because the party is over and promoting starts? Seems fishy to me.
« Last Edit: March 13, 2014, 11:44:06 AM by 50centdollars »
50centdollars

PJM

  • Jr. Member
  • **
  • Posts: 78
Re: MCR.V - Macro Enterprises
« Reply #13 on: March 13, 2014, 06:47:27 PM »
I think the management is upbeat but they want to keep expectations low. They are not trying to bid aggressively & accept lower margins not just to win any contracts, but to penetrate into some strategic, larger clients. They don't expect margins to go down for existing clients. Interestingly enough Frank said that the landscape is becoming less competitive, which means they should continue to have some pricing power.

They do expect revenues to grow, so if revenues grew at 25% and PBT margins went down to 15%, they would still be able to generate same EPS.

I've no comments on why they have now started to speak to analyst. I guess with the firm growing they probably want to have some media behind it.

50centdollars

  • Sr. Member
  • ****
  • Posts: 407
Re: MCR.V - Macro Enterprises
« Reply #14 on: March 13, 2014, 07:38:14 PM »
I think the management is upbeat but they want to keep expectations low. They are not trying to bid aggressively & accept lower margins not just to win any contracts, but to penetrate into some strategic, larger clients. They don't expect margins to go down for existing clients. Interestingly enough Frank said that the landscape is becoming less competitive, which means they should continue to have some pricing power.

They do expect revenues to grow, so if revenues grew at 25% and PBT margins went down to 15%, they would still be able to generate same EPS.

I've no comments on why they have now started to speak to analyst. I guess with the firm growing they probably want to have some media behind it.

Ya I think if it works out it will be a good strategy. The market obviously doesn't like like it right now. Does anyone know whats the proper metric to use when valuing a company such as MCR? I dont think you can use P/E ratio because earnings can be lumpy depending on when contracts start and end. EV/Ebitda? Cash flow? Any thoughts?
50centdollars

bz1516

  • Full Member
  • ***
  • Posts: 131
Re: MCR.V - Macro Enterprises
« Reply #15 on: March 13, 2014, 08:01:23 PM »
I think the management is upbeat but they want to keep expectations low. They are not trying to bid aggressively & accept lower margins not just to win any contracts, but to penetrate into some strategic, larger clients. They don't expect margins to go down for existing clients. Interestingly enough Frank said that the landscape is becoming less competitive, which means they should continue to have some pricing power.

They do expect revenues to grow, so if revenues grew at 25% and PBT margins went down to 15%, they would still be able to generate same EPS.

I've no comments on why they have now started to speak to analyst. I guess with the firm growing they probably want to have some media behind it.

Ya I think if it works out it will be a good strategy. The market obviously doesn't like like it right now. Does anyone know whats the proper metric to use when valuing a company such as MCR? I dont think you can use P/E ratio because earnings can be lumpy depending on when contracts start and end. EV/Ebitda? Cash flow? Any thoughts?

I use PE ratio, just because its easy.  Price/FCF is ok, but I like the version of FCF that subtracts maintenance capex and not sure if MCR even has that number or if it would be better than the PE ratio?


PJM

  • Jr. Member
  • **
  • Posts: 78
Re: MCR.V - Macro Enterprises
« Reply #16 on: March 13, 2014, 08:04:52 PM »
I'd still use PE even though earnings may be lumpy quarter by quarter. In case of MCR working capital is more lumpy because it is a factor of number of projects they are working on, so cash flows/FCF will be volatile as well. It is not capex heavy business, so i'd not look at EBITDA as a metric.

Andy Dufresne

  • Full Member
  • ***
  • Posts: 152
Re: MCR.V - Macro Enterprises
« Reply #17 on: May 30, 2014, 04:45:45 AM »
Lots and lots of warning signs:

1. Company has a negative cash position of 3.3 million - down 21 million in a single quarter (!) due to the
2. Ballooning of receivables from a steady 41 million (from end of 2012 and 2013) to more than double at 89 million, and I suspect the credit risk has gotten worse [cf. the already deteriorating situation of the receivables in Note 15 of the Q4 2013 report (p. 28 )]; also payables doubled from 22 to 44 million  ... and this is on the back of extremely
3. "Suspect" growth - income up 45% QoQ but at what cost?
4. Management being callous at best and dishonest at worst with their "explanation" that they had a large contract on which they lost money:

"EBITDA and net income were lower than anticipated primarily as a result
      of a loss on one particular pipeline construction project in the Fort
      McMurray region. For strategic reasons this project was originally bid at
      lower than normal margins but the resulting loss was unexpected."

see the press release here - http://online.wsj.com/article/PR-CO-20140528-912093.html

Anytime I hear that losing money is a STRATEGIC decision I have significant doubts about the ability and/or honesty of management (and I am well aware that the CEO owns 30% of the company)

Sadly, even this we can only gather from the press release because as of now the link to the Q1 2014 MD&A sends you to the Q1 2013 MD&A ....

Patmo

  • Sr. Member
  • ****
  • Posts: 472
Re: MCR.V - Macro Enterprises
« Reply #18 on: July 02, 2014, 08:29:43 PM »
Without doing too much digging, valuation looks very attractive on this company right now. Normalized P/E is something around 4, pretty nuts for a company whose biggest blimp is one relatively crappy quarter.

The company did not have low margins only because of aggressive project bidding. It lost $7mil on one project because of "unanticipated problems", ON TOP of the aggressive bidding. Operating income would have been $10mil instead of $3mil, for a operating margin of 11%. Not great, but reasonable considering the strategic considerations.

As for AR, $60mil is a month old or less so I'm not too worried since the majority is obviously from those big projects. What worries me a little is that close to 90% of AR is owed by only 3 customers. I guess that's inevitable when doing large projects in this kind of business.

At first glance this looks like an extremely easy buy. Is there any underlying issue I'm missing that anyone is willing to share?
« Last Edit: July 02, 2014, 08:39:11 PM by Patmo »

jouni1

  • Sr. Member
  • ****
  • Posts: 307
Re: MCR.V - Macro Enterprises
« Reply #19 on: July 03, 2014, 05:02:02 AM »
the issue that has kept me from buying is the low valuation and the .V at the end. seems too good to be true :D having said that, everytime this thread pops back up i feel like i should buy a bit. maybe i will  ;D would love to hear a proper bear case for this.