Pivot Technology boasts $359 million in revenue: approves dividend

Pivot Technology Solutions (PTG:TSXV) shook up the TSX Venture Monday after the junior tech stock announced a quarterly dividend. Pivot Technology was up 71% Monday, roaring to a new 52-week high of $0.365 per share, on over 3 million shares traded.

Pivot reports $359 million in Q3 Revenue

Pivot is no ordinary TSX Venture stock as it reported $359.7 million in revenue for just the third quarter of 2014. The company’s market cap crested above $35 million Monday morning.

The tech stock delivers solutions that enable organizations to design, build, implement and maintain computing and communication infrastructure that addresses their unique business needs.

Pivot boasts having over 2,000 clients, many of whom are Fortune 1,000 companies. The company extends its value added solutions to help organizations of all sizes improve operating efficiency, reduce complexity and enhance service delivery through virtualization and cloud computing.

Pivot was somewhat of a sleeper stock over the last 52 weeks, drifting between a 52-week low of $0.12 and a high of $0.365 per share. However, after today, it is a TSX Venture sleeper stock no more. Pivot hit new highs on near record volume this morning.

The company put out its third quarter results on November 25th. Below is a short excerpt:

“Financial highlights Q3 2014

• Revenues of $359.7 million, up 10.3% compared to Q3 2013 attributable to both increased product sales and growth in services.
• Product sales of $319.1 million, up 9.6% compared to Q3 2013.
• Service revenues up 14.4% to $37.7 million compared to Q3 2013.
• Gross profit up $3.5 million, or 9.6%, to $40.1 million from the same period in the prior year.
• Gross margin for the quarter of 11.2% remained unchanged from Q3 2013.
• Adjusted EBITDA* came in at $8.5 million, up 2.1% from Q3 2013 and up 10.8% from Q2 2014.
• Series A Preferred Share dividends of $0.7 million were declared during Q3 2014.
• Adjusted for changes in non-cash working capital balances, the Company generated $3.7 million in cash from operating activities.”

Click here to read the full press release.

Pivot differentiates itself by approving quarterly dividend

On Monday, Pivot did something to wake up the general markets to its unique position in comparison to the vast majority of its peers on the TSX Venture: it announced the approval of a quarterly dividend.

How many TSX Venture stocks, excluding the odd oil and gas junior, pay a quarterly dividend? Not many that we know of… the Venture largely consists of speculative stocks after all. Below is a short excerpt from this morning’s press release.

“Concurrent with the approval of the preferred share conversion and the adoption of the NCIB, the Board has also approved the initiation of a CAD$0.03 per share annual dividend, to be paid quarterly.  Pivot anticipates declaring the initial quarterly dividend of CAD$0.0075 per share at the time of the publication of the financial results for the second quarter of 2015, with payment in September 2015. The Company will confirm and approve the record date for the initial dividend in a subsequent news release.”

Click here to read the entire press release.

Warren Barnes, the company’s CEO, made this comment in respect to the development,

“Following a lengthy and thorough review of options regarding the company’s capital structure, the Board has determined that a conversion of the Series A Preferred Shares into common shares is in the best interests of all shareholders and the Company.  We are pleased to bring this process to a conclusion and to move forward with a simplified capital structure.  Additionally, the Board believes the Company is now in a position to adopt certain policies that will make a positive contribution towards creating shareholder value.  Specifically, I am referring to the adoption of the NCIB and the quarterly dividend.”

This news was so unprecedented for a junior tech stock on the TSX Venture that it resulted in Pivot becoming the second most liquid stock on the exchange, at least for today.

Investors, both retail and institutional, have been voting with their wallets by flooding into revenue generating tech stocks on the TSX Venture in recent quarters. Pivot Technology is the latest stock to go viral on the Venture as investors gobbled up shares of the junior tech stock Monday.

We discussed the shift from mining to tech in a January 2014 article titled Vancouver Financiers Shifting TSX Venture to Technology Stocks.

We highlighted this trend as recently as October 2014, in an article titled Which Canadian Small-Caps are Fundable?

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