After dismal volume the past couple of days today opens strong. Probably due to the 8K being released and getting the lease obligations off the balance sheet as a long-term liability. The company is officially debt free, just like the old days!
Stock action the past couple of weeks is consistent with one ready to breakout. I think Sege is the guy to get this jump started and it can happen soon.
Great move!! Continue to reduce operating expenses and long term lease obligatoins while at the same time making them more attractive to be acquired or grow their business while reducing the breakeven number. Sege needs to hit the marketing efforts hard the next several months and it starts next week. Good Luck!
Under the terms of the agreement, the existing leases, which run through 2020, have been terminated and replaced with a short-term lease for a smaller portion of the facility that will run through the remainder of 2015. In return for this early termination, the company has agreed to a one-time up front cash payment of $10.0 million and lease payments for the balance of 2015 totaling $900,000. This will eliminate the remaining lease obligation payments of $21.4 million.
“This is an important example of our commitment to reducing our operating expenses in alignment with one of our three strategic initiatives,” said Ron Sege, Chairman and CEO of Echelon. “While the accounting rules are complex, we expect this transaction to significantly lower the company’s breakeven and to translate into considerable long-term economic value for the company.”
As a result of this transaction, net cash (total cash and investments less lease obligations) on the balance sheet will increase by approximately $5.5 million. On a non-GAAP basis, the company estimates facilities related savings will be between $400,000 and $600,000 per quarter for the balance of 2015. On a GAAP basis, the company anticipates that the transaction will result in additional depreciation expense of approximately $1.5 million per quarter through the end of 2015 as the remaining building assets are amortized off its balance sheet.
For Q2 2015, the lease termination agreement results in a revised estimated non-GAAP loss of ($0.04) to ($0.07) per share versus the previous guidance of ($0.05) to ($0.08). On a GAAP basis for the second quarter of 2015, the lease termination results in a revised estimated
This isn't a new development but Amtrak is planning on spending 10 billion over the next ten years to upgrade their infrastructure and they will be using LonWorks.
You raise valid points and get no disagreement from me on any of what you said. The next six to nine months are critical for this restructuring to start gaining traction.
It's worth a shot, the company has a long history of being inventors and innovators and if they can come up with a product (e.g. Nest thermostat) that can be widely distributed than it can still become the successful investment we thought it could be. You never know what could happen tomorrow whether its a new contract, product, joint venture, etc and as long as they can continue funding operations and innovating we have a shot. Sege has had a difficult job but he seems to be managing the changes and restructuring well and making the tough decisions that keeps CEO's up at night. I admire his persistence and stamina.
They had a 4M burn this past quarter primarily due to restructuring and getting rid of the grid business and had nearly 40M in cash at the end of the quarter. Their gap and non-gap losses for the quarter were in the neighborhood of 1.3 to 1.4 million so lets say they have losses of 5 to 6 million for the year, and they continue to have these type of quarters going forward. During the call they eluded to continuing to pare down operational expenses while at the same time hoping to increase revenues through new and existing initiatives. After the first quarter, they don't have a huge cash burn and based on this info they have five to six years of cash probably more.
Your math is off, based on current run rates they have 6+ years. That's a lot of time to get this company profitable with a much higher market cap.
Sentiment: Strong Buy
I didn't think the conference call was too bad. Gaining traction in the commercial lighting market is a huge market and that could buy them time before other products or the IZOT platform and IIOT market takes off.
Seriously??? It only siphoned revenues away from them and had a profound effect on their income and balance sheet. They essentially had a multi-year contract with a Chinese company get cancelled after they stole AMSC's IP and tried to flood the maket with lower priced products that created an oversupply in the industry and ruining new orders for several years. If everything had worked out like it should have AMSC wouldn't be needing additional cash and adding more shares. Keep in mind before the infringement of their patent the CEO of AMSC was buying shares in the upper 30's and that is well before the reverse stock split..
AMSC is a special case, within the past few years they have suffered through a severe case of criminal corporate espionage which has cost them dearly. It's a credit to the company they are still around.
Some expenses you don't scrimp on and keeping one of the big four accounting companies as auditor makes sense. Going to a regional accounting firm to save money wouldn't look good to a potential suitor.
Should have also included in my diatribe above that the research is indicating going back to a salary based comp model for corporations in lieu of stock based.
Agree. It use to be BOD received a stipend for attending meetings, not six figure compensation packages. Echelon has to streamline their comp packages since they are no longer positioning themselves as a multinational grid controls company.
Incidentally new research is showing that stock buybacks and executive compensation plans has caused companies to focus on short term results over longer term strategic initiatives and investment. This is directly responsible for less capital investment leading to less jobs formation contributing to a shrinking middle class and widening income inequality. Add in police brutality and racism and we could see social unrest like the 1960's again.
AMSC is up because they announced a contract with the Navy. SCON can skyrocket too once they announce something of substance but getting back with RESN isn't a good idea at this point, the shareholder lawsuits are just getting started.