(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long ABM.V)
ABM Reports Q1 2015 Results
ABM reported a less than inspiring quarter and some guys are clearly blasting it out here. The balance sheet still looks "okay"; they have $83k/month payments due on their bank line this year and receivables + deposits more than offset their payables, so there doesn't appear to be a debt bogie to sink them in the near term.
If they don't start delivering some earnings in the next quarter or two, the vultures might start circling as the market is clearly losing faith in the ability of management to deliver on the frac sand (and aggregate for that matter) if they are left to their own devices. I could see a scenario where activist investors could start to call for an overhaul of management and/or the board in order to actually realize the value of the Firebag project. While I realize that you can't push water uphill in a tough oil/gas market, the lack of market visibility and confidence is clearly impairing the company's cost of capital.
There are very few projects that can deliver $1B of after tax cash flow on capex of ~$85mm, so I'm sticking with it, but if you haven't been a trader of ABM over the last year, you're certainly not making any money on the name.
View the quarterly release here: