Friday, 30 March 2012

The Howard Group & CEMATRIX Cement A Firm Relationship

CEMATRIX Corporation
CVX - TSX Venture
Shares issued: - 33.4 million
Fully diluted: - 37.4 million

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Bad pun aside, The Howard Group is very pleased to introduce the Calgary, Alberta based cellular concrete company as the newest addition to HG’s client portfolio.

First, what is cellular concrete?

Cellular concrete is a lightweight concrete with a cement base containing many small air cells uniformly distributed throughout the concrete. Simple and precise control of the volume of these air cells, produced mechanically with specialized foaming agents, results in a controlled density material with insulating and lightweight characteristics.

What are the advantages?

It has significant advantages in weak, wet unstable and frost prone soil conditions. Typical cellular concrete on average is approximately one-fifth the weight of regular concrete and “literally floats”. Sub-surface, the high insulation factor is a major plus when it comes to protecting roads, runways, facilities, tank bases, water lines and other buried infrastructure in cold climates.

What is special about CEMATRIX?

It has a proprietary process and “special sauce” that enhances the qualities of cellular concrete. CVX not only talks the talk but walks the walk when it comes to service. It has garnered multiple accolades from customers and engineering firms and is the only cellular concrete company approved for infrastructure applications by a number of provincial ministries in Canada.

Where is it used?

Road sub-base & insulation

Runways and runway aprons

Bridge embankment & approach fill

Tank foundation systems

Tunnel & void fill

Pipe embedment & protection

Shallow utility insulation

Shallow foundation support & insulation (ex: large tank-storage beds)

Grouting abandoned utilities

Retaining wall & wall backfill

CEMATRIX has a “stick to it” attitude as since 1998 it has been developing markets in Canada through education programs with engineering firms and provincial governments. This has not been a quick process, as getting companies and governments to stray from the “old way” of doing things can be a painful process. However, the company is now gaining steam and is also making inroads in the United States.

While CVX now has multiple projects and case studies under its belt, which can be viewed at its website (www.cematrix.com), we point to a recent project at Ronald Reagan Washington National Airport in Arlington, Virginia, which is across the Potomac from the White House.

The Howard Group has history with CEMATRIX. Approximately three years ago we assisted CVX with a $500 thousand debenture. The funds were important at the time.

CEMATRIX, like so many companies, had the wind taken out of its sails and sales, due to the 2008 economic crisis that brought its work in Alberta’s oil sands to a grinding halt along with infrastructure contracts it was starting to win. Members of The Howard Group and the associated Insight Limited Partnership II invested along with CVX management and directors. By way of disclosure, the Insight LP II and members of HG are current shareholders.

Like clockwork, each quarter the debenture holders received their interest payment and this past January, CVX paid out the debt instrument. This speaks to the integrity of management.

Having witnessed over the last several years not only how the company pulled together to get through the downturn, but also to gain business traction, has given us an appreciation for the quality and tenacity of the people driving CEMATRIX.

So why is it the right time for CVX to emerge from its cocoon and begin to trumpet why it deserves more attention in the public market?

You’ll see in the financial bar chart of annual results that since 2008, CVX has not only stepped back from the abyss, but is clearly making headway.

Not only was 2011 a profitable year, revenues of $7.8 million marked a 143% increase over the $3.2 million in 2010 sales.

OF NOTE: CVX’s market cap is approximately $2.4 million or 30% of 2011 sales!

As of this writing the stock, when it does trade, has been south of a dime. There are 33.4 million shares issued.

Based on what is in the rear view mirror and where management believes CEMATRIX is now heading, it is time to share the story with the market.

We will have much more to say about what was and what is expected to be when we release The Howard Group’s introductory commentary on CEMATRIX in the coming weeks.