The timing of the addition to the Bull List could not have been worse! That being said, a good company is a good company and we aren't in the business of timing the market. It rebounded today, as the 20% drop on earnings was overdone.
Now, on to their earnings. The biggest issue was that they guided EBITDA downward by 9.7% (180m to 162.5 at the mid-range). The are experiencing higher than expected costs as they roll out a new ERP system. Higher costs are expected through the end of the year. Management does however, expect to exit 2020 with a much improved G&A run rate. In other words, it is a temporary issue. Outside of the downwards revision to EBITDA, it was a solid quarter.
- US remains strong with double-digit revenue growth (US accounted for 80% of revenue in the 3rd quarter)
- Canada continues to struggle (down 5%) - this is no surprise
- It repurchased almost 600k shares
- It has achieved its 2017 goal of doubling its U.S. size in under three years (ahead of schedule)
- It also announced that it will be setting a new goal, which is the same as the last - double U.S. operations over the next 3-5 years. Considering, the U.S accounts for the majority of revenue, this means big things ahead for the company.
I have no concerns with Badger.