You Won’t Believe What TXGE’s CEO Did To His Previous Company
Good morning readers and welcome new subscribers.
In last night’s email we told you that we found a company in their 10th year of operation that generated over $9M in quarterly sales and just announced a 60% growth in year-over-year sales. The market opens in just a few minutes so let’s not waste another minute! Our new report is here!
Today’s alert is:
TXGE – Texas Gulf Energy, Inc.
Solid growth companies are hard to come by in the small cap arena. The actual “Growth” label applies here. Companies that tout “acquisitions” as growth could be creating an illusion and have yet to really hit their stride. Others may claim that their sales have seen “significant growth” as they jump from $200k to $400k. Going from peanuts to peanuts is not impressive enough for us.
TXGE is providing shareholders with REAL GROWTH – the kind that investors really like to see. The CEO of TXGE previously turned a start-up service company into a $226M buyout.
Having the right management is 99% of the battle in finding successful small cap stocks, and the same team of players is here to turn TXGE into their next big move; they have already put $3M of their own capital into the company. The Commodities and Energy Sectors are the focal point of recent market trends, socio-political platforms, great businesses, and the future of global business and lifestyles in all honesty. Major oil and gas, construction, and engineering firms need to outsource skilled crafts, technical positions, executive personnel, and services to fulfill their duties on time and within budget.
If that didn’t grab your attention then just take a look at some of the names on TXGE’s client list:
Texas Gulf Energy (TXGE) is an integrated provider of energy services, oil and gas production, project management and professional consulting services to the US and international refinery, chemical, construction, mining and power industries. Their wholly owned subsidiaries providing these services include International Plant Services (IPS), Texas Gulf International, Texas Gulf Professional Services, Texas Gulf Industrial Services, and Texas Gulf Oil and Gas.
IPS - is the current focal point of TXGE from which the vertical integration of acquisitions will be based upon. Since 2003, IPS has deployed thousands of engineering, construction, technical, skilled crafts and project manager personnel to major international energy companies including Exxon Mobil, Conoco Phillips, Chevron, Valero, and many others. They are particularly well known throughout the energy markets for our ability to provide professional, experienced and well trained teams to maximize the ability of our customers to complete major projects safely, on time and on budget. Now entering its tenth year in business, they have vertically integrated our service offering into other energy market segments, including wellhead services, oil and gas production, electrical and instrumentation services and professional consulting services both domestically and internationally to better serve the needs of their customers.
What were the highlights of the outstanding 10Q for the First Quarter of 2012?
TXGE hit a homerun to start off 2012. The company did significantly better in several facets, and they have provided the framework and explanation for why there could have and WILL be a positive EPS going forward. TXGE Reported a 60% Increase in Revenue to $9.1 Million in First Quarter of2012. An increase from $5.7MIL YoY is no small task. In light of such strong top-line growth, TXGE managed to accomplish a 21.6% Gross Profit up from 5.6% YoY. The gross profit improved due to improved utilization and rates. The Company has increased its employee utilization from 76% to 95%.
TXGE expects SG&A as a percent of revenue in future quarters to drop as new business units bring on projects and associated revenues in accordance with our 2012 plan. This was the MAIN reason that TXGE did not achieve profitability and a positive EPS. The increase of the quarterly $1.2 million in expenses was primarily related to higher operating costs due to the addition of new operating units that did not generate revenue in the first quarter, additional finance and legal expenses related to becoming a fully reporting public company, acquisitions, and increased business volumes and strategic initiatives.
As the company continues to grow and the New Units (acquisitions) begin to drive sales via synergy, TXGE may achieve profitability. TXGE shares could flourish upon such strong fundamentals, continued growth, and fiscal precision.
Does TXGE have any partners or Joint Venture?
TXGE’s key strategic partner is Industrial Maintenance International (IMI), located in Tunis, Tunisia. IMI is a Joint Venture partner sharing the same majority shareholders and representing Texas Gulf Energy through their offices in twenty three countries globally. Their global relationships, impeccable reputation and experience provide IPS with access to international growth opportunities for their services that other companies can only aspire to.
What developments has TXGE made and what are they planning on for the future?
Beginning with the acquisition of International Plant Services in December 2011, followed by the purchase of Texas Gulf Oil & Gas in January and petrochemical services company Fishbone Solutions, Ltd (www.fishbonecompanies.com) in March, TXGE continues to meet or exceed targets established for 2012.
TXGE CEO David Mathews commented, “We are building Texas Gulf into the vertically integrated energy company we announced to our shareholders in December 2011. Per our recent Reg FD disclosure on February 24, 2012, we believe that gross revenues in 2012 will be in the range of $40-45M, and US GAAP income is projected to be from $2.6M to $2.925M. Our acquisitions and revenue are proceeding as expected in 2012, and we look forward to reporting more positive results throughout the year.”
2011 saw TXGE hit Record Sales of over $30M and an EPS of $0.04. The company then executed perfectly in the first quarter by smashing previous quarter sales figures as TXGE marches towards $40M+ – the lower end of their target. As they bring profitability into the mix, maintain cash on hand, and continue to grow organically and externally on an international platform, the stock could turn into one we wish we didn’t ignore.
Make sure you keep an on TXGE today!
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