Enterprise Group, Inc.
Q1 Misses, but Acquisition and Debt Reduction Alleviate Impact
Published: 5/13/2025
Author: FRC Analysts
Sector: Energy | Industry: Oil & Gas Equipment & Services
Ticker Symbols:E.TO - TSX 🔹ETOLF - NASDAQ 🔹
Rating and Key Data
| Metrics | Value |
|---|---|
| Current Price | CAD $1.71 |
| Fair Value | CAD $2.58 |
| Risk | 3 |
| 52 Week Range | CAD $1.08-2.69 |
| Shares O/S (M) | 78 |
| Market Cap. (M) | CAD $133 |
| Current Yield (%) | N/A |
| P/E (forward) | 17.3 |
| P/B | 1.6 |
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Report Highlights
- Q1-2025 revenue and EPS were down 16% YoY, and 50% YoY respectively, due to an unusually inflated Q1-2024 driven by a one time major gas project from a client. Additionally, the delay of the Kitimat, B.C. LNG plant, a critical coastal project for shipping Canadian natural gas globally, from mid-2024 to mid-2025, has led several gas producers to postpone their drilling plans. Revenue and EPS missed our estimates by 11% and 32%, respectively.
- On a positive note, E used proceeds from a $29M bought deal financing in Q4 to pay down most of its debt in Q1, significantly strengthening its balance sheet. In contrast, many peers remain highly leveraged, leaving them exposed to unfavorable market conditions.
- Last week, E acquired the Canadian operations of FlexEnergy Solutions for $20M. FlexEnergy, based in Colorado, is a manufacturer of turbine and microturbine power generation systems. The acquisition includes 17 turbines, and expands E’s role from the exclusive Western Canada supplier, to the exclusive nationwide supplier of FlexEnergy products. Revenue details for FlexEnergy’s Canadian operations were not disclosed. Based on an average sector EV/revenue of 2.3x, we estimate the acquisition would need to generate at least $8M in annual revenue to justify the valuation. We believe this incremental revenue will partially offset the negative impact of lower Q1 revenue.
- E is up 44% YoY, outperforming the S&P Oil & Gas Equipment & Services Index, which is down 36% due to lower oil prices, a broader market pullback, and concerns over a potential re
