The decline in margin that they mention of 11% was NOT impacted by the inventory writedown. With the writedown they had negative margins. Excluding the $12.1M of inventory writedown they had product margins of 12%. In Q1 2014 they had product margins of 24%. This is not good. From Q1 to Q2 the product shift has swung from old to LED and the margin is collapsing.
I have to listen to the call still but the numbers are ugly.
There is a little leeway but when I worked in finance for a manufacturing company we would writedown any asset if we could not expect to use it in a year. Therefore if we had $3M in parts of one type and we sold $400k of it annually we would write down $2.6M. Based on the size of this writedown compared to their inventory they probably didn't writedown any asset unless it had not been used in a period of time. Per the item above they may have not written down anything as they were still using it.
I'm not a fan of it and I'm not an accountant but an outside accounting firm probably has been on them. I wonder if the head of operations being out delayed this decision.
Obsolete inventory has been languishing for a couple of years. Finally bit the inevitable bullet.
margin was effected by a huge inventory write down of old product.. This should be the last time this management group can put the blame n prior actions. Now its all on them. The last two quarters are typically the strongest and they enter this quarter with the highest backlog ever (partly because they couldn't get product out he door fast enough due to supply chain issues as they switch over to new LED product. They have also expanded their "direct" distribution network and sales from all of those new additions should start to hit in a quarter or two - or three........- and yes they also reduced debt.
was long. Should have been short.
-They commited to the low end of the sales guidance for the year. That means they have to do $53M in the next two quarters. I was worried that they might not hit that. If anyone was expecting the high-end they were crazy, (if the market was the stock is going to get crushed).
-If we use the last Q backlog to this Q sales its a 2:1 ratio. That would mean the current backlog of $11M would put us at $22M in sales in Q3 which would leave $31M in sales in Q4. That sort of ramp Q over Q would be impressive.
- Low end of guidance
- GROSS MARGINS - 11%. That is awful. You are giving away the product to hit sales. To breakeven in a quarter they would need $75M in sales in a quarter.
I'll continue to hold but my focus will be on margin. Any idiot can sell stuff with no profit. Mgmt should get roasted on this.
I just saw the results on the investor page of their website. Looks like a disaster, including a reduction in revenue guidance for the rest of the year. And working capital is decreasing, obviously funding losses. Hang onto your hats, the wind is going to be blowing in Manty.
Thanks for the correction. I found D and A in the cash flow statement, and now understand how to correctly calculate EBITDA, and agree with your calculation.
I had a whole long reply typed up. You are off by $1M per quarter. The ($4.352) is the EBIT number, EBITDA was ($3.244). Using the same metric I think they lose $1M this quarter or ($.05)/share.
That said the rest of that 8k also quoted they had to have 20M in liquidity. They have had that amount in the last couple quarters that I looked at so they must have to borrow some. Nice way to force the company to borrow against the lines set up to make some money.
The referenced 8k quoted minimum EDITDA for six months ending Sept 30. If I am correctly reading the cash flow statement for last quarter, the EDITDA loss was $4.352M. This suggests they expect second quarter earnings of over $0.85M when they report next week, or 0.04 per share. Similarly, one could infer earnings of 0.18 and 0.12 for the subsequent two quarters. Who knows if they will meet these, but at least they seem to think so.