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Clean Diesel Technologies Inc. Message Board

  • rayonman1 rayonman1 Mar 16, 2013 1:18 AM Flag

    Changing their story about the LEZ?

    Previously, if I'm remembering correctly, I thought CDTI had said the reason they didn't sell as much in London as hoped for was that there was more competition than expected.
    Now the story is they didn't know what the market consisted of.

    "In London, we had a scenario where we built a lot of inventory, shipped it to the U.K. based on a certain set of assumptions and forecasts and found, as the market evolved over there, that we've just called it wrong, that it was skewed a lot more to light-duty and mid-range type applications as opposed to the heavy duty larger trucks. And as a result, we got caught out with a lot of inventory of the wrong stuff. "

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    • If you refer back to what was said at the time both scenario were involved in the London LEZ sales. A higher proportion of light duty vehicles than expected came forward for retro-fit of DPFs and in the market for smaller systems there were more competitors with verified technologies. Nevertheless CDTI won at least 25% of the market, albeit having to reduce prices in view of the competition and to recuce excess inventory as much as possible.

      Sentiment: Strong Buy

      • 2 Replies to davidmhunter2
      • And here is all I could find from the Q1 report from mid-May, 2012:
        "Gross profit was consistent at $4.0 million in the three months ended March 31, 2012 and March 31, 2011. Gross margin was 23.2% during the three months ended March 31, 2012 compared to 29.1% during the three months ended March 31, 2011. In both our Heavy Duty Diesel Systems division and our Catalyst division, an increase in gross profit resulting from increased sales was offset by the impact of the write-down of excess inventory related to the completion of the London LEZ program and the impact of other declines in gross margin for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011. Gross profit in our Catalyst division was consistent at $1.2 million as the impact of higher sales volume was offset by a decline in gross margin, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011.
        The decrease in gross margin for our Heavy Duty Diesel Systems division from 30.1% for the three months ended March 31, 2011 to 22.0% for the three months ended March 31, 2012 is a result of the write-down of inventory as described above and the impact of product mix and discounting in the London LEZ. We anticipate that gross margins in this business will gradually improve as a result of improved product mix driven by the expected reduction in sales in the London LEZ and by higher volumes of sales as a result of the California Truck and Bus rules that are anticipated in the second half of the year (see “—Factors Affecting Future Results” above).
        "London, U.K. had mandated that certain heavy duty diesel vehicles entering the London Low Emissions Zone (or LEZ) were required to meet certain emission standards by January 2012. We believe that approximately 20,000 such vehicles were required to have a retrofit emission control device installed on the vehicle by year end 2011. In December 2011, the regulator extended the deadline for compliance i

      • Here's what I got from last year's annual report:
        "One of the largest and most important LEZs is in London, where approximately 8,000 vehicle emission systems were retrofitted in 2008, of which we believe our systems were used to retrofit approximately 14%. Due to stricter requirements that went into effect January 3, 2012, we believe the London LEZ regulations will have resulted in the successful retrofit of an estimated 20,000 additional heavy duty diesel vehicles in 2011 and early 2012. With the integration of our wholly-owned subsidiary Catalytic Solutions, Inc., or CSI, and our legacy operations, we believe we captured a comparable share of this business. "
        Later they say the product mix of the LEZ caused lower margins but not that it was less than expected or that the demand in the market was different than what they expected nor that they couldn't supply what the market wanted.

    • "we got caught out with a lot of inventory of the wrong stuff. "

      Competent Management don't refer to their products as "stuff".
      "Stuff" is for ignorant twits that have no business running a company.

      • 3 Replies to hedgefunddude08
      • I Agree. If you can not forecast products properly , how can you trust the projections for future opportunities. Stuff happens I guess.

      • Using the word "stuff" doesn't bother me at all. He's just trying to be down to earth and we all know exactly what he means.
        What does bother me is if they are changing their explanation of their failure in the LEZ from one of unexpected competition to the incompetent one of they didn't know what the market wanted and they couldn't learn fast enough what the market wanted and they couldn't adjust their inventory fast enough to make sales. That sounds like a poorly run business.

      • Yet again I must agree with HEDGE----I had great expectations regarding Craig Breese when he signed o to the firm. He , on his own--no option, purchased outright shares of CDTI on the open market. When the 3rd quarter came in as a serious disappointment I excused it as early mistakes being new to the job. This latest disappointment though is disturbing. Beginning to ask myself "what exactly are the terms of the deal with HONDA"? How much are we being paid for our product----with 12 million in revenues it appears we may be just barely breaking even in this deal. Please, someone let me know if any shareholders are privey to actual numbers with this deal? And with Hedge---Breese must chose his words with more thought---"Stuff" you hear at a boys club not a Board Room.

        Sentiment: Hold

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