BQE: Continuing to Generate Strong Cashflow
What you need to know:• BQE reported Q3 financial results yesterday that were mixed relative to our expectations, missing on revenue and beating on profitability.
• Q3 proportional revenue came in at $10.7M (+12% YoY), below our estimate of $13.1M. Adjusted EBITDA was $3.3M compared to our estimate of $3.0M.
• The quarter was driven by strong performance from the technical services segment; however, we expect the recurring operations segment to resume growth over the coming quarters.
Yesterday, after market close, BQE Water (BQE:TSXV, BTQNF:OTC) reported Q3
financials that were mixed compared to our expectations, missing on revenue and beating on profitability. Q3 was similar to H1, with technical services leading the charge, resulting in a record $22.6M in revenue through the nine months. While the recurring operations segment’s performance has been weak lately, BQE commissioned a new selenium plant in the US and a new SART plant in China, setting up for stronger recurring revenue in Q4. We view this as a material catalyst, and the stagnant share price makes for a great entry price at just 5.6x 2025E EBITDA. We are maintaining our BUY rating and $80.00/share target price on BQE Water.
Key Highlights
• Q3 proportional revenue came in at $10.7M (+12% YoY) vs. our estimate of $13.1M. This was comprised of $2.3M in operations services revenue (-40% YoY), $7.0M in technical services revenue (+137% YoY), and $1.3M in BQE’s share of JV revenue (-60% YoY).
• Gross margin was 51% vs. our estimate of 36% and 59% in Q3/24.
• Adjusted EBITDA for the quarter was $3.3M (-24% YoY) vs. our estimate of $3.0M. This represents a 31% margin compared to 46% in Q3/24, due to the lower margin technical services representing a larger portion of sales.
• BQE’s share of JV net income was $0.3M, compared to $1.6M in Q3/24.
• Net income was $2.8M or $2.15/share vs. our estimate of $2.2M or $1.71/share and $3.5M or $2.91/share in Q3 last year.
• The Company ended the quarter with $17.0M in cash after generating $2.9M in OCF (before WC). BQE ended the quarter with $2.3M in debt (leases and non-interest-bearing debt).
• BQE also ended Q3 with record working capital of $20.5M.
BQE Water is engaged in the acquisition and development of processes to treat metal-laden, sulphate-rich waste water streams for acid neutralization and metal recovery. The principal operations of Co. are to build process plants and earn revenues from recovered metals, treatment fees, plant sales and process licenses.
Atrium Research provides institutional quality issuer paid research on North American public equities using deep fundamental analysis. Our research reports are disseminated through Bloomberg, FactSet, Capital IQ, Reuters and many more, as well as through our social media and email distribution lists.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.