Q: Can you update your opinion of Blackline Safety and its cash flow milestones? Would you recommend as a small/micro cap?
5i Research Answer:
BLN is a small-cap manufacturer of worker safety monitoring product, and is now trading at 3.0x times' Price/Sales (historically the multiple ranges from 2.1x to 12.5x). In the last five years, growth was impressive, around 41% on average, and growth was driven mainly organically. However, BLN is still operating at a loss and burning cash. The trailing twelve-month cash flow is -$25.5M. The balance sheet has a net cash of $16M. The momentum here is solid, and the company is now sizeable enough to attract more investors. There has also been some insider buying. We would be OK starting a position, but would expect the gains to consolidate in the short term, and a possible equity raise could be the time to buy more.