KNR: Light Q1 Financials; 15% Discount to Net Cash
What you need to know:• Kontrol Technologies reported Q1 financial results that were below our expectations. Revenue came in at $1.5M vs. our estimate of $1.9M and adjusted EBITDA was ($0.2M) vs. our estimate of $0.2M.
• KNR ended the quarter with $11.2M in cash & equivalents with minimal debt ($0.20/share in net cash), compared to its market cap of $9.1M.
• Management’s strategic plan for 2025 includes adding new customers to its existing platform of 400 buildings through both organic and inorganic growth opportunities.
Yesterday after market close, Kontrol Technologies (KNR:Cboe, KNRLF:OTC) reported Q1/25 financial results that were slightly below our expectations. KNR ended the quarter with a cash and equivalents of $11.2M and negligible debt, compared to its market cap of $9.1M, placing it at an 15% discount to its net cash holdings. We remain patient with KNR as it deploys capital on tuck-in acquisitions, while operating in an industry with long-term secular growth. We are maintaining our BUY rating and $0.35/share target price on Kontrol Technologies.
Key Highlights
• Revenue in Q1 was $1.5M compared to our estimate of $1.9M and $1.7M last quarter. This was impacted by delays in certain project revenues due to the tariff policies effecting large equipment manufacturers. Management stated that customers have been hesitant to engage in new upgrade projects and it expects this to continue through Q2.
• Q1 gross margin of 54% compared to our expected 51% and 62% in Q1/24.
• Adjusted EBITDA came in at ($0.2M) compared to our estimate of $0.2M and ($0.3M) last quarter. Management expects improved results from its industrial HVAC group through the remainder of the year.
• Net income of ($1.1M) in Q1 vs. our estimate of breakeven.
• KNR ended the quarter with $11.2M in cash and equivalents and $0.4M in debt. The $11.2M is made up of $1.2M cash, $7.0M in GICs/fixed income, and $3.0M in the iShares Bitcoin Trust ETF and related call options.
• Management stated its strategic plan for 2025 including adding new customers to its existing platform of 400 buildings through both organic growth and acquisitions.
Kontrol Energy is a public mineral exploration company listed and is involved in the exploration, discovery and development of precious metals deposits located within the South American country of Guyana.
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