Revised 2021 Earnings, page-5

Revenue...looks light.

EGL in their Baltec Contract Win Update of July 22 2020 declare that revenues for 2020 will be around $37 million growing to $50 million in 2021, the current financial year. Also disclosed is that Baltec will deliver revenues in 2020 of around $11 million growing strongly to $26 million in 2021. Using this information we can derive the revenue of Tomlinson and Gas & Vapour as in the table below.



The first observation is that management believe that Tomlinson and Gas & Vapour revenues on a combined basis will decline by $2 million.
To assist in understanding the forecast, below is a table of known financials for the Tomlinson acquisition.




EGL acquired Tomlinson (TES) 7 January 2019 and so accounted for TES for the rest of the year during which it recorded some $8 million of revenue and delivered EBIT of $1 million. The margin seems out of keeping with the pre-acquisition margin. Annualised, the 2019 TES 2019 revenue comes in at around $16 million and the EBIT at $2 million, odd given that in 2021 TES will only contribute $1 million on a full years revenue rather than as in 2019, on just six months revenues.

I have assumed a small increase in TES revenue for 2020 at $18 million and used the EGL Update forecast of EBIT of $1 million for 2020. For 2021 I have used $23 million revenue for both the EGL low EBIT of $1.5 million and the high EBIT of $1.8 million. These revenues are then applied to the 2021 forecast.



So what I find interesting is that using the TES estimates for 2020 and 2021, the G&V revenue declines to virtually zero. Gas and Vapour have won a $12.9 million (announced March 15, 2019) with Hastings Technology Metals (HAS) which was delayed last year and is expected to be completed this current financial year. I also question my margin assumptions for TES which imply that higher revenues for TES than I have accounted for are probably more likely.

All this leads me to conclude that the $50 million revenue EGL forecast for 2021 is more than likely to be increased, hopefully leading to higher profits than the $1.7 million hinted at in the 22 July 2020 announcement.