Q: Just wanted to clarify that E is indeed profitable and has a decent balance sheet. How is it that they are not cash flow positive ? Any comments on the recent acquisition - seems to be well received
5i Research Answer:
The acquisition of Flex looks good. At $20M, it is a fairly big bite for the company, but it gives E exclusivity to FlexEnergy turbines in Canada and higher market share. The grid remains under pressure and thus the acquisition we think is well-timed. E did not go into financial details but overall we would consider a good move for the company. E is net debt free (prior to the closing of this acquisition) and had $3M net cash at Dec 31, 2024. It has been profitable since 2022 and 11 cents in EPS is expected this year. It has been operating cash flow positive for more than a decade, though free cash flow (after spending) has had a few negative years. We would not consider this negative.