Re: IPO proceeds - we both are right. Gross proceeds was $82.5m, net proceeds was $75m. You are righter.
Re: cash burn. Total cash declined by $8.2m in 1Q08, to $27.3m. If they continue to burn at that rate, all the cash will be gone in 10 months from March 2008, which is January 2009, which is 6 months from now. That's not a year and a half of cash, unless they cut the 1Q08 burn rate by 2/3's. Possible, but only with a dimunition of operating activies, which is belied by their recent hiring binge.
I believe you have listed some (recent?) BWTR contracts. Historically, BWTR's contracts have been money loosers. There is no evidence available - yet - that they will make money from new business. Intuitively, one would think that they would only sign business that is profitable, or which has a very high probability of being profitable. However, that is not that case for BWTR historically. This company is exceptional in that regard. Even if the service contracts are profitable, they likely will be back-end loaded -- lots of upfront cash costs, with cost recovery spread over years, and true cash profit realized only at the end. BWTR does not have the balance sheet anymore even for that business model.
"I think that BWTR does not have a real business, and that its primary asset is the $27m cash (as of 3/31/08)remaining that has not yet been flushed away since the $83m IPO 2 years ago. "
Not quite right. It was 75 mil. With which they paid off a lot of debt. At the end of 06 (the year they went public) they reported aprox 55 mil in cash. They bought a company for 6.5 mil.
If they burned at the current rate, they would have almost a year and a half of cash.
"A more relevant question is what could lead BWTR to become a profitable company."
10 year - East Valley water contract. Well #107.
Walla Walla system should come online this month.
10 year - East Valley water contract. Well #40.
10 year - Millersview-Doole contract.
A year and a half is a long time to obtain new long term contracts. Especially with their expansion efforts.
Birddong2310, it seems that we both agree BWTR is losing money and burning cash, but you have not correctly identified the reason why I label it a 'scam'. I call it a scam because the company created a book of business that was intrinsically unprofitable, but advertised itself, including in its IPO, as a growing company with great prospects. The growth was an illusion, and the claim of great prospects were based on fiction.
You also say that I think BWTR "should be worth zero", but I don't think I made such a claim. It currently has a market cap of $95 million. I think that is too high. I think that BWTR does not have a real business, and that its primary asset is the $27m cash (as of 3/31/08)remaining that has not yet been flushed away since the $83m IPO 2 years ago. Until the cash is gone, BWTR is not yet a zero. However, BWTR is burning this cash away daily, and shareholders, I believe fair best with a liquidation and return of cash, rather than maintaining a going concern. A liquidation now probably yields shareholders betyween $0.40 and $0.70 per share.
Your comparrisson of BWTR to the US Government is facetious. BWTR is a public company, and should be operated for the benefit of its shareholders.
Where would BWTR be trading if it were making money? I don't think that's a relevant question, as BWTR is not profitable. A more relevant question is what could lead BWTR to become a profitable company. Why not pursue that avenue? Ranting, and simply insisting that BWTR will make money in the future is not likely to convince anyone. Try instead to identify the exact path the company could take to get there.
Interesting observation. You have identified a company that is losing money, burning cash, and you conclude it is a scam and should be worth zero (I guess the US gov't should be woth less than zero based on that logic). Tell me, oh wise one, where do you think BWTR would be trading if it was making money and earning a cash profit? And if it were to be so, do you think the stock would move only after they reported a profit? WAKE-THE-F-UP! If you assume the markets discount the future (a fairly good assumption), then waiting around for financial reports to tell you they are losing $ (or making it) is a LOSERs game.
Well Suedannam, yes, you have found 2 investors that own shares of BWTR, and that have added to their existing (money losing) positions. KBC appears to be a water targeted fund: they own MWA, CWCO, INSU. Not very discriminating investors, if you ask me, as they owned about the same number of BWTR shares on 7/3/07, when BWTR stock was $11. That's been a 60% loss for them in a year on their BWTR position.
Avenir - i can't speak to them. Heck, somebody's got to own this scam, otherwise it already would be at zero, right?
Frankly, I don't know what the holders of BWTR think. The only reason I describe BWTR as "a money losing company, with declining revenues and negative margins . . . burning cash" is because that's what they report on their SEC filings. It's how the company describes itself with its financial reports. It's not my opinion, it is fact. Of course, you can believe whatever you want.
please, enlighten me. what do you see that I reference as bad news, and what is the good news? maybe you should reread, then learn/relearn that markets are most often discounting mechanisms. I am most curious.
"BWTR is a money losing company, with declining revenues and negative margins. Burning cash. "
Avenir Corp and KBC Asset Management doesn't think so:
It amazing how all news is bad news to you. First you say its a pump and dump. Of which you've been able to provide no proof. Then they have unprofitable contracts on large systems - so they come out with small systems. Still bad news. Then they are desperate to put out press releases. When 2/3'ds of their obgligation is pretty much filled on the NH deal,it is perfectly valid to make a presser. That is booked revenue, since they don't get paid until the systems are installed.
Suedannam, let's be clear: no one said that you said that California is running out of water. However, I did say that you said that BWTR is a great way to play the California water crisis: "When you can't get reliable / clean water from the municipalities, BWTR starts to look awfully attractive." However, your conclusion for BWTR makes no sense, and strikes me as a bunch of hype. BWTR is a money losing company, with declining revenues and negative margins. Burning cash.
Your press release clipping service - posting BWTR's press release from today - belies your own view about BWTR as a California water crisis play. Clearly, they are depserately trying to announce any deal they possibly can, including deals for rinky dink condo complexes. (1) New Hampshire is far away from California. (2) Only 1 of the 3 condo complexes even shows up on a search
(3) these are tiny systems at best - for a condo association! gimme a break. This is completely marginal business - not something upon which a business is built. No, I think the cash bleed continues.