Bud, I asked you to tell me when WPRT knew about the problem and what information you had to support your premise that they had quantified the cost and (as you said ),"put it in their numbers"
Your reply goes on for 4 paragraphs and manages to answer neither question.
Which is not to say it wasn't enlightening.
For instance, regarding warranties, when you talk about them being well defined, part of a signed contract, and covered by well defined tort law, I didn't know tort law covers these agreements.
I thought that if two parties had a written contract, it was covered by a branch of law called Contract Law. I appreciate you clearing that up for me. hehe.
When you talk about tort law being "well defined", I think about one of the most famous tort cases in recent history. The lady who got burnt by McDonald's' coffee when SHE spilled it on herself. Is that the "well defined" tort law you're referring to?
And thanks for the heads up on recalls. Who knew it was just a business decision
I think you should share this information with the President, because somehow the National Highway Traffic Safety Administration seems to think it has the authority
to require manufacturers to recall vehicles that have safety-related defects. THOSE GOOFS!
Here's something to consider.
Maybe, just maybe, CWI recognized that a school bus shooting flames out the exhaust could catch kids or other things on fire. That a logging truck with flames shooting out the exhaust, operating in a dense forest , might start a forest fire.
Maybe they said to themselves, this IS a safety related defect. So there's no sense in worrying about costs since we have to do the recall. Let's focus on getting the recall information out to the customers, thereby mitigating the hazards, and we'll worry about calculating the costs later.
..." however they have put this in their numbers and it has no effect on the guidance provided as it was already known. "
You talk about the half truths of others, what part of this is true?
When did they become aware of the problem? December? January? February?
If it was a few weeks before the c. call, what makes you sure they have enough data to make an estimate on the costs?
If a software update fixes the problem, will companies with dozens of trucks have a technician come out on the weekend and update the software to the entire fleet? Wouldn't that kinda depend on the company? If the fix requires a trip to the dealership, will some companies with large fleets negotiate compensation for down time?
Here's a thought, maybe they don't know yet, in which case it would be impossible for them to have " put this in their numbers".
Please provide any information supporting your statement that they have quantified the cost of the problem and "put it in their numbers".
In Nov. 2013 they stopped taking orders everywhere except Australia.
An exact accounting of warranty costs and payments for extended warranties for HPDI is difficult (and I'd say probably impossible for anyone outside the company) because they estimate future warranty costs and then add it in with the cost of revenue. Not to mention, the cost of revenue on their income statements isn't separated by product. The separation is only by business unit.
Finding information in WPRT reports is a huge pain in the butt. The quarterly reports aren't to SEC standards, because they're Canadian, they changed the year-ending date in 2011, they changed their accounting for CWI in the last year or so, and they've changed how their business units are aligned .
They have a 50% JV with a Chinese company that builds the LNG tanks, but they don't account for it like CWI or WWI. They hardly account for it at all.
I am interested in this company and have spent numerous hours studying the company and many of the peripheral subjects relating to its products. I think the company will most likely be successful.
I believe people can learn from each other by sharing knowledge and opinions. When I held a position, the vast majority of the time, the stock's price was less my average purchase price. So if I had a rational opinion that reflected badly on the company, like most investors, I'd grumble to myself and not voice it..
Now I feel free to speak my mind.
I've recently been reading c.. call transcripts and financial reports from years ago, some as far back as 2003.
It has improved my perspective and helps me judge management's view on a variety subjects.
The success of HPDI and how to measure growth are two of the subjects where I differ from management's view. I will probably voice my opinions, and the basis for my opinions on those subjects, in the near future.
You seem to have been a prolific poster on this board over the last few months. A lot of atta-boys and little of substance. If you don't like my posts, please ignore them, I'm not likely to respond to yours in the future.
First of all, I have no position in this stock. I started taking a position in Nov. 2013, bought more as it declined, traded a portion, and sold out a.h. on 2-26 for about a 23% net loss. I made the decision to sell primarily because I felt the company's revenue growth no longer justified its premium valuation (compared to stocks like FSYS and GTLS).
Now about the warranty provision, in order to have an understanding of the significance of the 21.4 million, you need to at least know unit sales. Yearly sales for the HPDI product were listed in the annual reports until year 2013. In 2013 WPRT decided to stop reporting unit sales A reasonable estimate for 2013 sales can be deciphered from other information provided by the company. I have added 8% to my calculated 2013 estimates, for end of model discounts. The year an engine is sold gives some perspective on warranty exposure. And remember, the 21.4 million provision excludes all previous warranty payments for the HPDI product. (I may discuss this later)
Yearly HPDI unit sales are as follows:
2007 --- 8
2008 -- 36
2013- 469 (estimate)
Total sales for HPDI = 1,423
If you divide the 21.4 million by 1,423 units, the warranty provision comes out to about $15,030. per unit.
Two things I really don't understand.
1) Why is the provision so large? If you look at the information in the 2010 annual report, for the year ending 3-31-2010, they had the average sales price down to about $63,000 each. So they sold about 1,130 of the units for about 63,000 each.
The 15,000 dollars per unit warranty provision represents about 23% of the sales price for these 1,130 units. I was stunned when I read this number.
2) Why is this huge warranty provision showing up all at once? The company's warranty policy clearly requires a quarterly review of warranty data. Was this negligence? Was it some newly revealed primary component failure or design flaw?
(Not that those carnival barkers wouldn't highlight the synergies in office supplies and janitorial services)
Chances for a GE buyout basically disappeared when WPRT partnered with CAT across a variety of engine applications. Too much competition in Rail, Marine, Oil Services, and Mining.
We really don't know.
Is the (alleged) software update a temporary fix? Seems like if it were a simple fix, they would have announced it. They've known about the problem for at least 10 days,
If the fix requires real engineering work, it might involve a change in the position of the sensor, or maybe re-engineering the intake, maybe adding a heater.
These kind of fixes aren't likely to be cheap or fast.
Other important questions are:
Have they halted production?
And do Cummins workers get paid if they can't work because of CWI's design error?
I can see Motley Fool's take on this,
"In an effort to increase long term employee productivity, CWI has decided to give their entire production facility a month off, with pay. This one-time Human Resources pilot initiative will be studied and amortized over a 4 year period. Investors should not be discouraged that this initiative coincides with the recent recall of the company's newly developed flamethrower weaponry. Westport is assured of reaching cash flow positive by the end of 2014 since their CFO has recently completed Wizard training and can turn bagels into bullion."
Do any rational investors believe their explanation?
After the CWI recall and the Ukraine issues have died down, I intend to provide my analysis of the per unit warranty costs for the HPDI product. I will also provide the basis for my opinion of WPRT"s veracity regarding their explanation of the additional 21.4 million in costs.
Here's the problem though, these are exhaust fires from natural gas fuel systems that also happen to be found on school buses. Which most likely means local news coverage, maybe even tv coverage, in parts of the country where the engines have been deployed in school buses, instead of being limited to mentions at commercial vehicle websites.
Yeah, that's the ticket.
U seem to misunderstand.
Westport is not predicting they will be EBITDA positive by the end of the year, only that parts of the company will be.
They are not predicting that they will be cash flow positive by the end of 2015, they are predicting they will be EBITDA positive.
For 2013, Westport paid out more than 5.2 million in Interest and taxes, so they can could get to EBITDA positive in 2015 and still be burning millions in cash.
The concluding paragraph in today's article titled, "5 Big Reasons the Market is Overreacting to Westport Innovations Inc.’s Earnings Report" , is as follows:
"Foolish bottom line
The good news is that despite lower fourth-quarter profits, Westport re-iterated its projections of turning cash-flow positive by the end of this year. That should keep investors hopeful, and they shouldn’t read much into one weak quarter."
First of all, Westport re-iterated no such thing.
They have only projected being adjusted EBITDA positive by the end of the year, AND only in the "operating" segments of their business.
Being EBITDA positive in no way guarantees being cash flow positive.
Furthermore, it's"non-operating" segment lost (adjusted EBITDA) 62.3 million in 2013.
So Westport can meet its 2014 projections to be EBITDA positive in its operating segments by the end of 2014, and still be burning 15 million in cash per quarter.
Natural gas equipment stocks gonna have a spring breakout!!!
Sentiment: Strong Buy
IT'S SHORT SLEEVE WEATHER DOWN SOUTH TODAY!!
WINTER'S JUST ABOUT OVER.
NAT GAS GOING TO DROP ANOTHER 33% BEFORE JUNE!!!
There were 618 public locations on 11-1-13, so that's a growth rate of 8.7% over the last 115 days, and a growth rate of more than 27% on an annual basis.
I think the (stock) market got ahead of the natural gas transformation in transportation, and now it's fallen behind.
Sentiment: Strong Buy
Futures down over 5% so far today, stars aligning for the great SHORT CRUSH!!
Sentiment: Strong Buy
McNeilus is owned by Oshkosh Corp (OSK).
OSK reported a few days ago, revenues were down about 13%. They were hit by a 40% decrease in military truck sales. Commercial truck sales were up.
Sentiment: Strong Buy
( from an article titled: Natural Gas Now Powering Up Big Trucks
Wednesday, January 29, 2014 )
"....McNeilus, the largest manufacturer of trash and cement trucks says that 30% of their production right now is going into natural gas powered models."
Sentiment: Strong Buy