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Xebec 2Q20 results -2

12:35 11-Aug-20

The Xebec conference call has just concluded.  The only interesting part for me was that management still sees a 10-15 year ramp for landfill to RNG, thereby replacing 10-15% of fossil gas.  Hydrogen is characterized as taking much longer even though it is "rapidly developing".  This is in contrast to some other accelerated projections that have been put forward.  The discussion did confirm my outlook for much more distributed production, though.

Despite the growing & pandemic pains, including a night shift for production, as the BioStream product is ramped this year in North America and next year in Europe, management is still planning on making 20-30 service company purchases over the 3-5 years, with the next ones being announced around the time of the next quarterly report.  The pandemic is pushing projects being developed through GNR Quebec Capital back to the end of next year.  It's also worth noting that the stock is on track to up-list with TSX around the turn of the year.

I'm neither alarmed nor enticed by today's drop, but I will continue monitoring it as pricing closer to $3 would look more attractive to me.

Xebec Adsorption has announced its second quarter earnings:

• a loss of a penny per share misses by 2 cents
  
• from $19M.6 of revenue, which beats by $1.3M
• maintains revenue guidance for $80-90M,
• withdrawing EBITDA & earnings guidance, but still expects FY20 profit
  

Management says that it is seeing delayed impact from COVID-19 in the form additional growth costs, and that slowdown in Italy is expected to last the rest of the year.  It also cites a 60K building addressable market in NYC from yesterday's announcement.

XBC/XEBEF has not traded in the pre-market, but I would not be surprised to see a little retreat in the shares.  The conference call at 11am and I will comment further if appropriate.

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