Water Treatment Co. Reports Strong Q2 2024 Results
Research Report

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Disclosures for Atrium Research, BQE Water, August 28, 2024

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Atrium Research analysts Nicholas Cortellucci and Ben Pirie, in a research report published on August 28, 2024, provided an update on BQE Water (BQE:TSXV; BTQNF:OTC) following the company's second quarter 2024 financial results. The analysts maintained their Buy rating and raised their target price to CA$77.00 from CA$71.00.

BQE Water reported Q2 2024 results that exceeded Atrium Research's revenue expectations and were in line with EBITDA estimates.

Cortellucci and Pirie noted, "The highlight of the quarter was the 79% YoY increase in recurring operations revenue due to new plants coming online." They added, "BQE remains one of our highest conviction names at the moment because of the emergence of this segment."

Key highlights from the report include:
- Proportional revenue of CA$6.1M (+5% YoY) vs. Atrium's estimate of CA$5.7M
- Operations services revenue of CA$2.6M (+79% YoY, 42% of revenue)
- Adjusted EBITDA of CA$1.34M, in line with Atrium's estimate of CA$1.4M
- BQE's share of JV net income was CA$1.1M, significantly above Atrium's estimate of CA$0.4M

The analysts highlighted management's outlook, stating, "Management expects an even stronger H2, led by several new large projects being initiated in Q3 in the technical services segment."

BQE Water's strategic focus includes expanding its recurring revenue segment and capitalizing on increasing demand for water treatment solutions in the mining industry. The company recently renewed its operations services agreement with Glencore for the Raglan Mine in Quebec and secured a new contract for selenium removal in Latin America.

Atrium Research's valuation methodology for BQE Water is based on an EBITDA multiple. "Given the execution in the recurring segment thus far in 2024, we are increasing our target multiple to 11.5x 2025E EBITDA (previously 11x), leading to an increased target price of CA$77.00/share," the analysts explained.

With a Buy rating and a target price of CA$77.00, representing a potential return of 17% from the price at the time of the report of CA$66.00, Atrium Research sees continued upside for BQE Water.

Cortellucci and Pirie concluded, "We remain very confident in BQE and are adjusting our 2025 expectations upward slightly."