Supportsave Solutions (OTC BB:SSVE)

Supportsave Solutions is starting to pique our curiosity. While the company is not producing earth-shattering EPS numbers in an absolute sense, it has remained profitable throughout the global recession.  In fact, SSVE believes that the recession is spurring demand for its management outsourcing business:

"Our services are in great demand as small to mid-sized corporations across the globe look to reduce costs to withstand the economic downturn. Going forward we plan to cater to a wider segment of the market and expand our client base."

Furthermore, it appears that the SSVE is beginning to embark on an aggressive growth strategy:

• The Company understands its position: "To become more profitable and competitive, we have to attract more clients, sell our services and generate more revenues."
• Increase in advertising budget:  Larger cash flows have allowed SSVE to reposition the company to attract larger clients via a more vigorous marketing campaign.
• The company has issued impressive financial guidance which it stresses is still conservative:

^a EPS figures eliminate one time charges/gains as well as any tax benefits. A tax rate of 36% and first quarter pre-tax margins of 32% are applied.

^b SSVE did not provide EPS guidance.  The GeoTeam® used the company's first quarter pre-tax margins and outstanding share count to calculate an implied EPS figure.

Strong Financials Characteristics:

• Current Ratio: 9.93 to 1
• Strong cash position: $766 thousand in Cash representing 63% of total assets
• "GOING CONCERN" warning recently removed from financials
• No long-term debt
• No short-term notes
• 32% pre-tax margins

Shareholder Friendly Management:

• Shareholder letter stressing importance of saving money and enhancing shareholder growth.
• Management Confidence:
  
  • "We have repurchased 266,869 shares on the open market and will continue to do so at our discretion until we reach 500,000 shares. We truly believe the company's shares are very undervalued and will take advantage of buying opportunities."  
    
  • "We finance our operations through significant positive cash flows and not through the sale of stock. Our management team and directors have never sold a single share of stock or exercised a single option since inception and have no plans to do so for the foreseeable future. With our strong liquidity position we will not require additional capital to execute our plans for the future, unless we expand into additional facilities or grow through the acquisition of complementary businesses."

We still would like to interview SupportSave.  The company is tiny and certainly will carry a level of perceived risk with investors.  Furthermore, SSVE has not been able to break out of the $0.01 EPS range, a factor that does not support our implied EPS assumption based on company guidance.

The Company seems to have a conservative management philosophy as evidenced by its balance sheet structure--our view that it is maybe a little too conservative. If we gain confidence that SSVE guidance will lead to more substantial EPS figures, then the SSVE story may have legs.

We are actually excited to track SSVE and are coding it as a low tier GeoSpecial.