Yesterday saw Enterprise Group announce its Q2 numbers. They were soft as anticipated.

In July I cautioned, "Ignore quarterly numbers. At the moment this is a business focused on oil and gas which is a seasonal industry, so some quarters are stronger than others causing short-term volatility in the share price. However, as it diversifies beyond oil and gas industries, this seasonality will disappear. This is a business to buy and hold for 5 years, if not more - and once in the portfolio, ignore the short-term noise."

Following the Q2 numbers, I would urge investors to take a step back. Look at the big picture.

The company just invested $9.01 million during the first half to upgrade existing equipment and meet specific customer requests (a sign of future revenues coming down the pipes). A growing number of clients are shifting from diesel to natural gas as a cleaner, more efficient option, boosting demand for natural gas generators and micro-grid packages.

For a company with a market cap of ~$100m, spending another $9m on upgrading the fleet following a $20m acquisition, which almost doubled the number of generators in the fleet, is not the sign of a company that is slowing down.

If you look at revenue numbers, you’ll see Q1 2024 wasn’t just good, it was the best quarter in the company’s history. Q1 2025 wasn't quite so good, but still the second-strongest quarter the company has ever had. The trajectory is still growth and the investment thesis is in tact.

The synergies from the Flex-Energy acquisition have not fully kicked in yet and neither will they have seen return on their recent $9m CAPEX investment. That is all coming down the tracks.

We were already expecting a softer result and the second quarter is typically a slower period for them. Management had also flagged this in advance. On July 29, they announced a major new client, with CEO and Chairman Leonard D. Jaroszuk noting that the win aligns with expectations for increased activity in the second half of the year, following the usual spring slowdown in the services sector. In other words, the dip was no surprise.

But the major new client is probably linked to the recent $9m CAPEX investment.

Meanwhile, margins and adjusted EBITDA were affected this quarter not only by lower seasonal activity but also by non-recurring costs tied to the recent acquisition.

However, if you look at the cash flow from operations, the picture is different. For the first six months of 2025, cash flow from operations came in at $10.13 million, only marginally below the prior period, but against much lower earnings, so cash conversion is improving significantly (operating cash flow divided by EBITDA). That has to be a good thing. What might it mean for cash flows when EBITDA ticks back up again?

Given the seasonality and the groundwork being laid, I’d wait for the second-half numbers before drawing conclusions, you might just be pleasantly surprised.