STT Enviro Corp.’s (TSXV: STT) water treatment equipment has immediate economic benefit through a reduction in the amount of chemical usage by up to 40%, overall reducing a customer’s costs as well as its carbon footprint. The company, meanwhile, has been growing both organically and through strategic acquisitions.
Alex Cutulenco | August 21, 2015: To put it simply, STT Enviro Corp. (TSXV: STT) supplies cost effective, environmental improvements to traditional industrial processes. Its industry focus lies in mining and oil & gas by providing environmental systems to neutralize pollutants (usually acid water) created from the recovery of ore (in mining) and recovery of oil. Its water treatment equipment has immediate economic benefit through a reduction in the amount of chemical usage by up to 40%, overall reducing a customer’s costs as well as its carbon footprint. The company also engineers and constructs custom bolted storage tanks that are 25% cheaper than field-welded alternatives.
Figure 1: ZMI Portec Slaker, used for water and waste water treatment; source: company website
STT Enviro has recently released its Q2/2015 financial and operating results, reporting the greatest quarterly revenue figure in the company’s history at $11.2 million, with a 23.2% gross margin. A more impressive stat is the company’s current backlog of $25.1 million is almost double last year’s figure of $12.9 million in Q2/2014.
Figure 2: Revenue growth and Gross Margin progression; source: company financials
As outlined in the company’s MD&A, the great improvement STT has been seeing over the years is in its sales funnel. While the company is still seeing many potential orders in the $500,000 to $3 million size range, it is now tracking approximately a dozen projects from $3 million to $15 million in scope. The company’s main strategy still lies in organic growth, coupled with strategic acquisitions. It has been in a continuous process of reviewing acquisition opportunities and continues to evaluate potential acquisitions in terms of fit, reducing cyclicality, and financial accretion. STT Enviro currently has a cash balance of $3.8 million, along with $5.6 million in working capital, sufficient sums for acquisition purposes.
Overall, STT Enviro Corp. is uniquely positioned to help companies reduce excessive water use and waste water reinjection. While both the mining and energy sectors have been underperforming, the company has still maintained respectable financial results, and in the longer term, STT will benefit from the revival of these industries. For more information please visit the Analyst Research section on SmallCapPower, as STT Enviro Corp. is a constituent company of the Ubika Sustainability 20 Index, or reach me directly by email at alex@gravitasfinancial.com or via LinkedIn.
