6 months ago
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Air conditioning company CAC 2000 Limited is pinning hopes on its project pipeline to get beyond a string of quarterly losses that’s now compounded by negative cash flow.
CAC 2000’s half-year report to shareholders shows that the company burned through nearly $40 million in cash of the $76 million it had at the end of its financial year, October 2023, leaving it with $36 million as at April. Its operating cash was in the red at $38 million.
CEO Gia Abraham was frank in her assessment of the situation.
“Cash flow continues to be of concern as we deal with the negative impact on our overall cash flow due to increased supplier demand for upfront payments and increased clearance costs due to full container shipments; increasing demand for advance payment and performance bonds on large projects; and customers extending payments beyond the 14-30 days,” Abraham said at the release of the company’s second-quarter results.
To meet its obligations, CAC 2000 took on more debt through a revolving loan facility held at Scotiabank, which has grown from $60 million to $105 million.
Abraham told the Financial Gleaner that the additional borrowing was considered the best option to keep the business humming, while it sought out and competed for projects.
“We’ve been winning jobs, but the reality is that such jobs usually come with performance bonds, which means that they are cash-intensive upfront,” she said, noting that the company was attempting to recover from the blow that the Covid-19 pandemic dealt to CAC’s project portfolio.
“Some of those projects had to be retendered and, as such, that put us in a situation where we found ourselves having to rebuild the portfolio, and we spend most of 2023 and, so far, most of 2024 doing that,” she said.
The company projects that the new projects should start generating good cash flow in another six to 18 months, Abraham said.
In its report, CAC said half-year revenues increased by 15 per cent to $445 million. However, the company posted a bigger loss of $53 million, reflecting an 18 per cent deterioration in earnings from a loss of $45 million in the year-prior period.
CAC 2000 is in the business of installation, maintenance and repair of HVAC, or heating, ventilation and air conditioning, systems to the commercial and residential market segments. It operates from the Kingston industrial belt at Marcus Garvey Drive, where its office and warehouse are housed.
The company also operates a store at Shop No. U3, Village Plaza in Kingston, adding to its retail presence, which includes another CAC store in Montego Bay. The Village Plaza shop shares space with EnRvate Limited, an energy solutions provider that CAC has partnered on with Tropical Battery Company.
“Village is holding its own. It’s not where I’d want it to be, but it is getting there in terms of the targets. For Montego Bay, we still have some way to go. We only recently brought on a sales manager who will oversee western Jamaica,” Abraham said.
The stores were established as touch points for customers seeking CAC 2000’s energy IEQ solutions, that is, indoor environmental quality products and services. Abraham said the company was targeting IEQ sales, which was now a viable area, especially in the post-Covid environment.
In going after new projects, CAC 2000 had to pull back from the retail expansion effort, but now that the project portfolio has been rebooted and is sufficiently strong, there will be renewed effort in building out the store sales.
English (US) ·