I asked the CEO specifically when they might expect the NZTA service delivery statement of work to be formally contracted - and the response was by the end of FY2025. So fingers crossed.
While everything is looking very positive for our company from the viewpoint of having a leading product and service and securing various contracts across multiple geographies, they have yet to prove they have a sustainably profitable business. This is a capital intensive business and the time frame to becoming free cashflow positive is a long way out. Yes, they are financially strong with a large cash balance to fund all the impending investment in new equipment, but at some point soon we're going to need to see a credible path to profitable growth. I didn't appreciate management's focus on the dubious metric EBITDA before share based payments, because if you include these payments (as one should) then guidance suggests EBITDA will fall about $1m in FY25.
Perhaps I'm marking ACE harshly, but the ASX is littered with businesses that have strong demand for their products and services but this doesn't translate to earnings nor cash to support a reasonable valuation. I'm remain optimistic and hope ACE is not one of these companies.
ACE Price at posting:
$1.21 Sentiment: None Disclosure: Held
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