TOP IDEAS: Revenues, operating efficiencies and cash continue to mount for Avante Logixx Inc. (TSXV: XX).
Three years ago Avante Logixx Inc. (TSXV: XX - $0.275) was borrowing cash to fund its operations. Today this full-service security business is generating cash, and more of it.
Avante Logixx released its fiscal 2014 Q2 results last week. Notwithstanding the impressive year-over-year revenue and profit growth reported in Q2, for us the most significant number was the $758,000 of cash the Company generated from operations in the first half of fiscal 2014. As of September 30, 2013 Avante Logixx held approximately $1.43 million in cash, almost $1 million more cash than six months ago. The Company is also debt-free.
The cash generated correlates with the Company's revenue growth and mix. This is driving the improvements in operating margins and efficiencies. The evidence: Gross margins at Avante Logixx have jumped to 39% from 32% compared to the same 6-month period a year ago in fiscal 2013. Gross profit was up 68% in Q2.
In the last quarter, Avante Logixx reported revenues grew 46% to $2.15 million. This was good news. Better news is the fact that the increase in the quarterly sales occurred across all of the Company's revenue streams: Monitoring and Response, Secure Transport Services, International Security Travel Advisory Services and Security Installations.
Avante's monitoring and response revenues are up 25% from a year ago. This monthly recurring revenue stream earns strong margins and represented 36% of the Company's total revenues in Q2. Recurring revenue streams from monitoring and response fees are becoming a cash cow for Avante Logixx's business.
The Company's residential and commercial security monitoring services are provided through multiple channels using different technologies: digital, analog and video. Avante's Intelligent Perimeter Protection Video Analytics service, which the Company says is already very popular with its customers, is expected to grow further and will boost recurring monitoring and response revenues even more so in the near term.
Avante Logixx's stock price is up 25% from the day we first gave our opinion that small cap value investors should accumulate the Company's shares up to a price of $0.40 (See: Avante Logixx: Post-turnaround stock provides value for growth investors). The Company's fiscal 2014 Q2 financial results reconfirm our opinion.
Avante management believes that there are significant opportunities for organic growth or for the Company to consolidate and further improve its market share, which would result in increased profitability. As cash holdings rise, we feel the Company has the financial flexibility to achieve these goals, which could translate into greater upside for growth investors.
Avante has approximately 55.9 million shares outstanding.
Avante Logixx website: www.avantesecurity.com
Author Ownership Disclosure: TSXV: XX - Yes
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