(TSXV:TGH | OTCQX:TGHLF) On the heels of Tornado Global Hydrovacs reporting Q1/2023 financials that saw the Company achieve its highest ever quarterly sales, Gross Profit and EBITDAS, Beacon Securities analyst Russell Stanley noted that, “these results demonstrate the company’s demand picture.”

Tornado, which designs and manufactures hydrovac trucks for safe excavation around critical infrastructure in urban areas, saw revenue soar 111% to $21 million compared to $9.9 million in the first quarter of 2022.

On a comparative basis Q1/2023 vs. Q1/2022:

  • Gross profit $3.44 million up from $2.34 million,
  • Net income jumped to $785 thousand from $474 thousand,
  • EBITDAS up 75% to $1.66 million from $946 thousand.

(Earnings Before Interest Taxes Depreciation & Stock Based Compensation)

Mr. Stanley had expected revenue of $17.5 million and adjusted EBITDA of $1.0 million. Margins were also 2.23% better than expected and “we view that margin expansion as particularly impressive.”  

For additional context, full year 2022 results saw Tornado generate revenues of $59.28 million, net income of $2.45 million and EBITDAS of $4.46 million. 

In his April initiating coverage research report on Tornado, Mr. Stanley called for revenues of $91 million and EBITDA of $13 million in 2023 and $124 million in revenues and $20 million EBITDA in 2024. There are 133 million shares issued and 143 million fully diluted. Insiders own 46% of issued shares.

Importantly, he writes that, “We also believe that Tornado would be a worthy acquisition target for heavy equipment manufacturers looking to establish or add to their hydrovac manufacturing capabilities.”

Tornado’s major customers such as Ditch Witch, a division of Toro (TTC-NYSE) and Custom Truck One Source (CTOS-NYSE), speak to not only the quality of the company’s hydrovac trucks and its ability to consistently deliver on schedule but the growing North American demand for hydrovac services.

As of this writing, Tornado is trading in the $0.50 to $0.55 range with a market cap of approximately $65 million. Beacon’s stock price target is $1.00.  

The Howard Group (HG) is not a registered investment advisor and as such, individuals should consult a registered investment advisor prior to making any investment decisions. The information presented was obtained from sources believed to be reliable but is not guaranteed, is not all conclusive and should not be relied upon as the sole source of information/opinion for making an investment decision. The Howard Group receives remuneration for Capital Market Communication activities and HG or its employees may own securities in client companies.