| Small & micro cap project / Activism insight

Micro & Small cap companies that provide essential services during the current Coronavirus pandemic

by | May 12, 2020

During the current COVID-19 pandemic, some businesses and services are considered essential. Even though the companies are NOT 100% insulated, they benefit from some level of insulation to the fallout the economy is experiencing. Here is the list of few small and micro-cap companies that have obtained essential service status.

Extracts from the company filings

Boingo Wireless (WIFI) (M.Cap: $588M, Revenue: $257M)

Since Boingo has been deemed an essential business, we have been able to not only support our existing wireless networks, but continue to build out new neutral-host networks at a time when many other companies are not as fortunate.

Boingo delivers a vital neutral solution in the essential space of connectivity, and is supported by a business model with approximately 95% contractual or recurring revenue. We have a strong balance sheet with ample liquidity and the ability to continue using our cash flow to fund our network builds where we have carrier commitments. Our focus on reducing expenses and increasing profitability at the end of 2019 has prepared us well to weather the recent events. While we cannot predict the nature, duration or scope of the overall impact of the COVID-19 pandemic on our business, we believe that Boingo will emerge from this period with velocity and continue to deliver a critical, and essential, service to our military men and women, our venues, our customers and our partners. 

CounterPath Corporation (CPAH) (M.Cap: $20M, Revenue: $11M) 

The COVID-19 global public health emergency has resulted in strong demand for CounterPath products and services so far during the fourth quarter ending April 30, 2020. CounterPath solutions enabled many businesses, including essential services, to continue to communicate remotely.

Increased demand has resulted from both new customers and existing customers. For example, new customers include a large U.S. federal government entity that purchased Bria Enterprise as part of an effort to support on-site and remote workers, while a major North American airline selected a carrier partner leveraging the CounterPath Bria solution to deliver a remote call center agent solution.  CounterPath solutions are also being deployed in essential service environments such as by health care solution providers to enable communication between health professionals within hospital environments

Guidance

Fourth Quarter Ended April 30, 2020 Guidance (unaudited): Revenue of $3.6 million to $4.0 million, resulting in growth of 26% to 40% compared to the fourth quarter of fiscal 2019.

Atlantic Power Corporation (AT) (M.Cap: $175M, Revenue: $281M)

With power generation deemed a critical and essential service, to date, the pandemic has not materially affected the Company’s ability to continue operating its plants safely and reliably.

Ameresco, Inc. (AMRC) (M.Cap: $919M, Revenue: $930M)

Qualifies as an “Essential Service” Under Most Government Directives.

In most of the states and federal facilities in which we operate, each of Ameresco’s three operating groups is considered to provide “essential services”, which has minimized the COVID-19 impact on our ability to execute projects and develop our asset portfolio.

2020 is off to a very strong start, showcasing Ameresco’s resilient business model characterized by excellent year-end project and asset backlog and healthy asset and O&M businesses generating recurring revenue,

Evoqua Water Technologies Corp. (AQUA) (M.Cap: $1.9B, Revenue: $1.5B)

Our business has been considered essential under federal and local standards, and we have maintained business continuity at our critical service branches and manufacturing facilities.

Water treatment is an essential, non‑discretionary market that is growing in importance as access to clean water has become an international priority.

The COVID-19 pandemic did not have a material impact on our consolidated results of operations in the three months ended March 31, 2020. Our business has been considered essential under federal and local standards, and we have maintained business continuity at our critical service branches and manufacturing facilities.

COVANTA HOLDING (CVA) (M.Cap: $1B, Revenue: $1.8B)

Our WtE plants and material processing facilities provide a vital service to our municipal and commercial clients. As waste disposal facilities, they have been recognized as part of Critical Infrastructure by the Department of Homeland Security and as essential services by state and local governments. While we remain a primary waste outlet for numerous municipalities and commercial customers, the downturn in economic activity has affected patterns and volumes of waste generation.

Residential waste represents the substantial majority of our contracted volumes, and there has been limited reduction in these volumes to date. We also process commercial waste, including profiled waste, at many facilities and volumes of these materials for disposal have fallen, which has required us to internalize more waste volumes from our transfer station network as well as access more third party replacement waste volumes at a lower revenue basis per ton.

Diebold Nixdorf Incorporated (DBD) (M.Cap: $419M, Revenue: $4B)

The Company was recognized as providing essential critical infrastructure service by the U.S. Department of Homeland Security and other government agencies around the world

The Company has been designated as providing “critical infrastructure” services by the majority of government entities including the United States Department of Homeland Security in order to promote public health and safety, as well as economic and national security during the COVID-19 outbreak. These designations recognize the vital role Diebold Nixdorf plays in allowing consumers to reliably and safely access financial services and essential retailers across more than 60 countries.

NAPCO Security Technologies, Inc. (NSSC) (M.Cap: $414M, Revenue: $108M)

Importantly, since over 80% of our sales are conducted in the commercial security sector and thousands of our dealers are deemed an “essential service” during the pandemic, this provided our Company with some level of insulation to the fallout the economy is experiencing. Also, a large majority of our recurring service, subscription-based income stream is comprised of non-discretionary, commercial fire and intrusion alarm communication, largely mandated by local code and laws. Going forward, NAPCO should be well positioned for growth, as we manage the challenges wrought by COVID-19.

BioLargo, Inc. (BLGO) (M.Cap: $23M, Revenue: $2M)

We believe that BioLargo is uniquely positioned to weather the storm of the COVID-19 crisis. Many of our major clients constitute “essential services” – such as municipalities, landfills, air force bases, and so forth. As we are supporting these essential services, our commercial units are continuing to operate and are still solving clients’ challenges every day.

AMCON Distributing Company (DIT) (M.Cap: $38M, Revenue: $1.1B)

AMCON is an essential service provider and a key component of the United States supply chain as a distributor to convenience stores, truck stops, rural grocery stores as well as our role as a health food retailer,”

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, foodservice, frozen and chilled foods, and health and beauty care products with locations in Illinois, Missouri, Nebraska, North Dakota, South Dakota and Tennessee. AMCON’s Healthy Edge Retail Group also operates twenty-one (21) health and natural product retail stores in the Midwest and Florida.Both of AMCON’s business segments are open for business.

Sharps Compliance Corp. (SMED) (M.Cap: $112M, Revenue: $51M)

Sharps Compliance is a full-service national provider of comprehensive waste management solutions including medical, pharmaceutical and hazardous.

As an essential service provider to healthcare, we believe we have improved revenue visibility over the next twelve to eighteen months and we anticipate that revenues could be favorably impacted by what experts believe could be a strong flu immunization season, potentially followed by a COVID-19 immunization effort, coupled with potential growth from our core markets including long-term care, home healthcare and the professional markets. Additionally, the expansion of our route-based footprint coverage to 32 states, or 70% of the population, significantly increases the pipeline of new prospect opportunities of larger small and medium quantity generators. We are confident that our leadership position as a comprehensive provider of medical, pharmaceutical and hazardous waste to small to medium quantity generators will provide diverse opportunities for the growth of our business through the balance of fiscal 2020 and beyond.

BrightView Holdings, Inc. (BV) (M.Cap: $1.3B, Revenue: $2.4B)

Throughout virtually the entire country, landscape maintenance is recognized as an essential service as defined by the Department of Homeland Security.

All branches operational; isolated limitations on the scope of services we can provide.

U.S. Xpress Enterprises, Inc. (USX) M.Cap: $196M, Revenue: $1.7B)

U.S. Xpress provides an essential service to our customers and their customers as millions of Americans depend on us to ship their products and keep their store shelves stocked.

U.S. Xpress’ employees are playing an essential role in the country’s fight against COVID-19 as they work to keep critical supplies moving and store shelves stocked.

At the peak of the COVID-19 crisis, customers representing 96% of the Company’s pre-COVID-19 revenues remained operational, and incremental volumes from those customers more than made up for the non-operational customers.

U.S. Xpress has a strong customer mix of Grocery, E-Commerce, Consumer Products, Discount Retail, and Home Improvement, with little exposure to automotive, manufacturing, and restaurants. The Company has not seen a drop in total load volume to date through April; however, the Company has experienced a sequential decline in spot rates compared with the first quarter of 2020.

The active support of the entire team enabled U.S. Xpress to handle a sharp increase in demand from the Company’s grocery, consumer products, and home improvement and hardware customers during the early days of the shelter in place orders while transitioning capacity from other customers where volumes declined.

Mueller Water Products (MWA) (M.Cap: $1.4B, Revenue: $1B)

Our primary end market is the municipal repair and replacement segment, which accounts for approximately 60 to 65 percent of consolidated net sales. Although water utilities are essential service providers, the economic and operational effects of shelter-in-place orders and physical distancing practices are being felt by all to varying degrees. They have shifted their priorities leading to delays for some ongoing projects and postponement of new projects. As a result, we expect to see a significant near-term sales volume decline in the project-related areas of our business, which primarily affect our metering, leak detection and specialty valve products. To be clear, we believe that the majority of our products for the municipal end market are essential for water utilities to do their planned and unplanned repair and replacement work in this environment.

Residential construction is the second largest end market for our core products and made up approximately 25 to 30 percent of consolidated net sales in 2019. Given the economic impacts from COVID-19, we anticipate a sharp decrease in activity as new residential construction significantly slows down with builders focusing on their existing lot inventory.

Osisko Gold Royalties Ltd (OR) (M.Cap: $1.5B, Revenue: $392M)

The Québec Government has made the decision to classify mining activities as an essential service. Following the Government’s decision, the operators of the Canadian Malartic and the Lamaque mines announced that a phased resumption of their respective activities will begin on April 15, 2020.

TECOGEN INC. (TGEN) (M.Cap: $23M, Revenue: $33M)

Significant portions of our business are deemed “essential services” under various state shelter-in-place orders, and we have been able to maintain critical manufacturing and service operations.

Moving to sales, I think the order we announced this morning is important on several levels. First, it shows that business continues to get done in the HVAC industry, which is also designated as an essential service. And while most of you are familiar with our water cooled Tecochill product line which typically dominates industrial cooling facilities, our air source unit is very functional and cost effective for smaller rooftop AC needs, particularly with natural gas prices so low in many areas. And it’s also noteworthy that this sale is to a cannabis grower in Florida who is expanding their grow operation. Florida is increasingly becoming a leader in the cannabis cultivation industry in terms of ease of permitting, construction, and financial flexibility associated with the industry. With the vote on recreational use expected later this year, we anticipate more cultivation facilities will emerge in Florida that will similarly take advantage of the tremendous economic advantages of natural gas cooling with Tecochill.

CPI CARD GROUP INC. (PMTS) (M.Cap: $9M, Revenue: $285M)

CPI is currently deemed essential in all jurisdictions where we operate. All of CPI’s operations remain open and continue to provide direct and essential support to the financial services industry.

CPI’s net sales and net income in the first quarter of 2020 has increased over the first quarter of 2019.

Ceragon Networks Ltd. (CRNT) (M.Cap: $184M, Revenue: $272M)

We have successfully obtained Essential Service status in many regions around the world, which improves our ability to continue our delivery and support as best we can, still facing, of course restrictions and obstacles. 

ASPEN GROUP, Inc. (ASPU) (M.Cap: $168M, Revenue: $45M)

  • Aspen University’s pre-licensure BSN clinical degree program and United States University’s MSN-Family Nurse Practioner (FNP) clinical degree program which account for 42% of revenues are relatively unaffected for two reasons: (1) the in-person simulation/immersion activities have, with regulatory guidance, been developed to work in a virtual environment; and (2) both programs have structured academic calendars, so nurses are expected to continue classes unless they request a leave of absence. To date, Aspen has not noticed an increase of leave of absence requests;
  • Aspen expects that the BSN pre-licensure business will strengthen on both a short-term and long-term basis; and
  • Course starts in Aspen’s traditional 100% online post-licensure nursing degree programs are typically seasonally affected in the summer months as these nurses tend to take time off in the summer and therefore the Company typically sees less course starts in our fiscal first quarter ending July 31, 2020. However given these RN’s are in an all-hands on deck situation in response to COVID-19, we could potentially see more seasonality in our fiscal first quarter than is typical;
  • Assuming the pandemic recedes by the end of the summer, Aspen anticipates that its strongest seasonal quarter beginning August 1 could possibly be stronger as nurses return to class and focus on their future; and
  • Management still expects that the planned opening of its Tampa campus for August is on track since it has been told that the needed tenant improvements are considered an “essential service.”’

GULF ISLAND FABRICATION INC (GIFI) (M.Cap: $46M, Revenue: $314M) 

We are deemed an essential service by the U.S. government, and while our utilization has been impacted, we have been fortunate to continue to operate our facilities.

Evolving Systems, Inc. (EVOL) (M.Cap: $11M, Revenue: $26M)

In the current global pandemic, we are fortunate that our services continue to be used by wireless carriers whose businesses are widely considered to be an essential service….Due to the geographical distribution of our employees, over the years we have developed a culture of successfully managing our business through telework. This skill has helped us during the current situation. The largest practical impact we’ve seen has been to our traditional modes of sales and business development, but we are quickly working with our current and prospective clients to find new ways to communicate, sell and service.”

CURO Group Holdings Corp. (CURO) (M.Cap: $270M, Revenue: $1.1B)

CURO Group Holdings Corp., operating in the U.S. and Canada and powered by its fully integrated technology platform, is a market leader by revenues in providing short-term credit to underbanked consumers.

The Company’s 416 stores in the United States and Canada have remained open and, where applicable, have been designated as an essential service by local regulations.

Daseke, Inc. (DSKE) (M.Cap: $103M, Revenue: $1.7B)

As an essential business under the guidelines issued by each of the Company’s states of operations, the Company has been allowed to continue to operate its business through the COVID-19 pandemic.

The last half of March saw demand decline, as sectors of the economy began to shut down. The Company expects that its results of operations and financial condition will be more significantly impacted in the second quarter of 2020.

Covetrus (CVET) (M.Cap: $1.3B, Revenue: $4B)

Covetrus is a global animal-health technology and services company dedicated to empowering veterinary practice partners to drive improved health and financial outcomes.

Operationally, all of the company’s distribution centers and pharmacies currently remain open, as veterinary medicine has been deemed an essential service in most geographies around the globe.

Net sales have weakened over the last four weeks as a result of the impact of COVID-19 on many of the Company’s customers. 

ATN International, Inc. (ATNI) (M.Cap: $903M, Revenue: $446M)

Company Continues to operate in all Markets as an “Essential Service”

As a communications services provider, we are designated as an “Essential Service” under U.S. and international government directives and have been operational throughout this crisis. Additionally, we are prioritizing service continuity to those whose financial situations have been affected by the pandemic by lowered prices, increased speeds or capacity at no charge, extended payment terms and waived late fees for individuals, students and small business customers.

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