DALLAS, TX -- August 29, 2022 -- Vertex Resource Group Ltd.(TSXV:VTX): Stonegate Capital Partners updates coverage on Vertex Resource Group Ltd. (TSXV:VTX). The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/VTX.V_Q222.pdf
COMPANY DESCRIPTION
Vertex Resource Group is a leading North American provider of environmental and industrial services. The Company has over 60 years of experience helping clients achieve their developmental and operational goals through a versatile suite of integrated environmental consulting and service offerings. The Company serves a very diverse customer base that spans multiple industries, including energy, mining, utilities, public infrastructure, telecom, and government to name a few. The Company operations are primarily in Canada, but also has operations in select areas of the US. Vertex is headquartered near Edmonton, Alberta.
COMPANY SUMMARY
- Fully integrated environmental service offerings to drive long-term performance – Vertex provides a full suite of services to clients that encompasses all stages of work from project assessment and environmental studies to the final abandonment of a project. Additionally, increased regulations and laws are driving clients to increase their focus on environmental liabilities. Given the Company’s integrated suite of services, it is well positioned to help clients with increased regulation and can identify various points of revenue generation through-out a client’s project life cycle that can range from 3 to 6 years.
- End market growth acting as tailwinds – Management is positioning the Company to take advantage of key, end market growth drivers. These areas of focus include infrastructure project development, E&P operating and maintenance spending, and new funds for abandonment and reclamation. These key areas should generate solid revenue growth for Vertex for multiple years.
- Organic growth strategy to drive growth – The Company is seeking a dual pronged approach to its organic growth objectives. First, it is seeking to expand its geographic footprint. Next, it is also looking to expand its service offerings and cross sell Vertex’s diverse offerings to its customers. The main goal of this two[1]pronged approach is to increase utilization rates of the Company’s primary assets, its people and equipment.
- Acquisition opportunities in fragmented market to drive additional growth– Part of the Company’s business strategy if focused on seeking accretive, strategic acquisition opportunities. With a highly fragmented market, management believes there are ample opportunities to consolidate at attractive valuations.
- Strong backlog – Vertex closed F21 with an improved backlog of projects for both its segments, driven by customers across all its businesses that are showing signs of increased spending relative to levels in F20 and F21. With a backlog reaching record levels, Vertex is well positioned for growth in F22.
- Valuation – We are using a multiple analysis framework to driver our valuation range. Coupling current and historical multiples, along with Vertex’s growth profile and focus to improve its debt profile, we believe an EV/EBITDA range of 5.0x to 7.0x is reasonable. Applying this range to our F22 estimates, we arrive at a valuation range of $0.45 to $1.00, with a mid-point of $0.75. See page 6 for further details
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.
