SUMMARY OF THE AGM (Informal Portion):
After the formal part of the meeting, CEO John Babic gave shareholders a presentation of the company. It started out with a description of the company, hilighting each of the four divisions. I was impressed with management as they are all hands-on, not stuffed shirts sitting in fancy offices.
Founded in 1996, HYD had its best year in 1998 with profits of $2M and earnings of 27 cents per share. 1999 was a crappy year for the oil patch and they lost just under $1M or .13/share. They are currently sub-letting manufacturing space out, earning an extra $8500/month, and they moved the Canwest division to Nisku, saving an additional $3500/month. Working capital was $1.87M on April 30, long-term debt $135,000, total assets $8.3M with 8,264,607 shares O/S. So it's trading at about it's book value. Clients include Precision Drilling, Ensign, Bonus and Luscar among many others.
Babic said that they will have a small loss in the 1st quarter of 2000 (ending July 31, 1999), but that the rest of the year looks good. He figures 2000 will be a lot like 1998 for oil patch activity and he guesstimates an EPS in the 12-14 cent range for their fiscal 2000. Basically he says "it's coming, it's a matter of when". This statement was based on the recent increases in the price of oil and gas and drilling activity.
Several times throughout the presentation the words "aggressive acquisition strategy" were used. Nothing specific was mentioned and he wouldn't specifically respond to my direct question about a possible near-term acquisition. He kind of smiled and said it is an important part of their strategic direction and basically left it at that. However, a call from a buddy of mine revealed that a rumor is floating around in Toronto that a major acquisition (bigger than Hyduke itself) is in the works. I got the feeling at the meeting that something was going on that they wouldn't talk about.
So, in summary, at these prices the company is trading at book value, they are in a "lean and mean" operating condition, the oil patch is turning around, the Bank of Montreal just bought shares at $1.60, they are positioned for a TSE listing and appear to be in acquisition mode. Looks like a good time to begin a position in the stock IMO. |
