Engage:BDR year-on-year revenues tracking well

By Trevor Hoey. Published at Apr 27, 2020, in Mining

engage:BDR (ASX:EN1; EN1O) has provided an unaudited trading update in relation to its interim April 2020 financial performance with a comparative analysis relative to the previous corresponding period in 2019.

EN1 has just received the US government Paycheck Protection Program (PPP) funding of $690,000 (US$435,000).

This funding is entirely forgivable and creates no liability for EN1 within 60 days if used entirely on US employees’ payroll.

PPP funding qualification criteria did not require EN1 to prove financial hardship, and the program was strictly for US small businesses with US resident employees.

The program paid for 2.5 months of payroll, with some restrictions (caps on executive pay, etc) and required the funds to be used exclusively on payroll of these employees, entirely forgiven within 60 days.

The net impact to EN1’s balance sheet adds $690,000 to working capital and assets, without any incremental liabilities.

Management expects additional PPP funding in the near future, as the US government has approved and extended the program, currently doubling the initial budget.

As US quarantines continue, management expects the US government to continue deploying funding to small businesses.

EN1’s cash balance is $2.4 million, which is significantly higher than the average cash balance of $1.4 million in 2019 and the 2019 ending cash balance of $1.8 million.

The following table shows the group’s significant outperformance compared with the previous corresponding period, including an improvement in gross profit margins from 38% to 41%.

Revenue building after quarantine leads to subdued start

April 2020 revenue started lighter than expected due to brand budget pauses throughout the US because of the quarantine orders across 85% of the country.

This coupled with the start of a new quarter has resulted in lighter revenues temporarily.

Revenue is expected to continue to increase throughout the balance of the month and greater through subsequent months of the second quarter.

Daily revenue analysis shows an increase of more than 25% over the past 7 days, and management expects revenue to continue to normalise over the balance of the month and into May.

Based on EN1’s average gross profit margins, PPP funding is similar to incremental revenues of $1.65 million.

Management took measures in early March to defer and significantly reduce all operating expense categories to limit cash outflow.

All vendors, partners, and companies EN1 works with have been very malleable, and management expects business to continue as usual.

There have been across-the-board reductions in operating expenditure, including board and director compensation.

Alto, the company’s primary lender, has proactively and voluntarily deferred recent amortisation payments.

During the quarter there were payments of $250,666 associated with executive and non-executive fees paid to director's fees for the March 2020 quarter.

Management anticipates EN1’s industry diversification will work in its favour in terms of weathering the COVID-19 storm.

As the US economy reopens, management expects advertising activity to ramp up.


Where to invest $1,000 right now

When the experts at Next Investors have a stock pick, it may pay to listen.

The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.

They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.

Click the link below to see what they are currently investing in.


SEE THE PORTFOLIO

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!

X