Compared to 2022, EOS customer receipts soared 123% ($325.4M from $145.8M); making 2023 a new record in it's history since inception. Though it's difficult to determine whether this trend will be ongoing, page 3 does call out a very pivotal nuance regarding market to contract conversion lead time - where previously it took 12+ months to lock in contracts, the market demand is closing that gap which ideally will drive a more robust pipeline for EOS this year
Cash:
Pleasingly, EOS has been able to consolidate a respectable cash position compared to the year prior. What has been a positive sign is that EOS hasn't forced anymore CR's but rather achieve something they should've done all along, which is to focus on contract asset conversion. Again, from 2022 figures, they've been able to convert $100M into cash which is both a positive sign in not only having sufficient capital to meet their April 2024 WC maturity, but a testament to their relationship with large ME customer
Finally, if Q3 guidance remains to be true and lands somewhere around $220M, we would be looking at a well received recovery. Notwithstanding, a 60% revenue increase still wouldn't bring NPAT into positive territory but will definitely signal strong growth momentum which l have no doubt the market has been pricing in the past month.
- Outlook and considerations
Please be mindful that l do have position in EOS and I'm bullish long term so I'm definitely biased. However, l think EOS has been a great case study so far that companies should stick to their guns (no pun intended). The termination of Spacelink program was the right decision. We now have a weapons-system exporting business that has more capital, resources and executive focus to deliver on their money-making products. Furthermore, the current cash cushion should mitigate risk of potential default and hopefully this is further alleviated by (again, potentially) reduced interest rates this year. Given their relationship with EFA, l wouldn't be surprised if EOS refinanced their facilities from WHSP with better terms and rates down the track ...
Furthermore, geopolitical tensions appear to be escalating and one thing we have learned so far is that they are complex and surprisingly more protracted than expected. As such, for the near term at least - EOS is not just well positioned, but aggressively hungry to meet a very niche demand.
Not financial advice. DYOR.
(20min delay)