time for some positivity.....the first part of the below post are excerpts from the last 4c and other posts/comments that I and others have made, then finally is my discussion around this information on possible revenue for 2018 and I feel this still lies on the conservative side and does not factor in any sudden large deal for CMABR, nothing for SUBRE and completely ignores PVDSA, nor any sudden large deal relating to the meat processor where our initial treatment plant may well lead to the same in the other 50 plants this producer has. so, pull it apart and do with what you will....other's thoughts?
The Cannacord report suggests US$125m for '18, and they acknowledge they have made no allowance for the African MOU....Fluence feels very confidant this will be able to close this contract......giving us US$160m. My thoughts below also do not factor in gaining even one of the more than 500m euro in contracts coming up in Spain (as a result of the European Commission taking Spain to task over it's treatment of sewage) which are all BOT contracts.
including six new project wins in Ecuador, Brazil and Argentina and further well-advanced opportunities.
Total cash usage in the 3rd Quarter of US$11.6 million was impacted by one-time merger transaction costs and a delay in the drawdown of a customer letter of credit for US$3.1 million which was subsequently received in October. An additional US$1.5 million was spent on building Nirobox component inventory for shipments in the 4th quarter 2017 and 1st quarter 2018.
We continue to get good visibility into 2018 based on our backlog and pipeline. Our goal will be at least 25% revenue growth next year in addition to any revenues that roll from 2017 to 2018 due to project timing. The revenue mix is anticipated to be distributed globally with solid growth in all regions. Fluence’s suite of innovative products and technologies is anticipated to drive growth, especially NIROBOX globally in 2018 and MABR in China building through 2018 into 2019. NIROBOX revenues are anticipated to grow 50% year over year in 2018. We expect to start booking reuse-as-a-service contracts in 2018 which will begin to drive the ramp-up of our recurring revenue streams. We are seeing the business model coming together nicely next year, which is very encouraging. The Company will be able to provide more granular revenue guidance at our next quarterly update in early 2018. Lastly, booking large opportunities like the potential project in Africa, which was not on our original list of 2018 forecasted projects, provides renewed confidence in reaching our 2018 and 2019 targets.
Q3 - revenue $7,690
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below is HC post I did 31/10/17
Suggested growth is a min of 25% y on y for '18, based on suggested US$90m this yr which will slip because of the $14 re San Quentin but new contracts keep arriving so this may be a smaller miss than this? so rough projection for next yr is 90 + 25% (22.5) + 14 (San Quentin slippage) + 35 (African MOU and is not part of forward projections) = US$161.5 = A$215m approx. and this may well prove low towards the end of '18 depending on second and third contracts from China partners later in '18. First contracts for each of the China partners, then installation and confirmation that they are both cheaper to run and produce better quality water than anything else available will lead to bigger and more frequent orders later in '18. Getting these first orders up and running asap is crucial. An important point I was looking for was the confirmation that the China plant is producing in anticipation of orders re both MABR and CMABR, NOT waiting for orders then building. So, with stock available for immediate rollout then some of these early China orders could be up and running by Feb/Mar '18? with bigger orders to follow in Jun/Jul/Sep? after partners are happy with the performance of their first orders,
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post of 13/12/17 by morganp Are you saying you won’t need to raise anymore cash in between now and when you breakeven?
That’s what I’m saying. (Burning $2million per month atm but thinks it will go to $1million next year)
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ok, REVENUE Q3 had only Aug/Sep revenue re group....so effective revenue was more likely $11.5m AND customer letter of credit on a project that was due to be received in Q3 was received in Oct...$3.1m....so Q3 revenue more likely as a group was $14.6m....also remember this is the quietest period of the year for contracts (June/July....mentioned by Henry)
now, CASH BURN, Q3 they burnt $11.6m, BUT this also included transaction costs of the merger....staff movements, legal fees, etc...AND an extra $1.5m was spent on Nirobox that was not projected in Q2 statement, to cover shipments in Q4 '17 and Q1 '18.....so $11.5 - $1.5 - $3-5m (transaction costs, conservative guess) = $5-7M.....which equals the $2m/yr ($6m/Q) that Henry talks about in the morganp post above.
so, we have $22m put aside for product in the projects for Q4.....plus 40% margin = $30.8m..... -$37 in total projected costs = $6m loss....spot on with the $2m/mth ($6m/Q) cash burn.
I think there is lots going on not mentioned in releases....as per above 4c update....6 projects wins in various areas not previously mentioned?....this $22m is spend to finishe current projects as well to produce product for future demand.
so, Q4 4c....revenue of $30m is what we are looking for?....and if lower than this, we would anticipate that costs are less than the budgeted $37m?
as to next yrs projections.....as per my post on 31/10 above.
$90m + 25% ($22.5m) = $112.5 (is this growth mostly courtesy of Nirobox?, so no seperate estimate should be made for Nirobox sales going from say 35-40 to 60-80....possible 100) + $14 (San Quentin) = $126.5 + $35 (African MOU) = $161.5m....this makes no allowance for China re CMABR....nor in fact Nirobox and it appears from china articles and a comment from directors in an emails that this is a big market in China, not just for CMABR, BUT ALSO Nirobox and WTE....and does not factor in any possible SUBRE sales in H2 '18.....So, we already have CMABR sales locked in for next yr and one to be completed in Q4 and more partners will jump on board through '18 and Q4 '17/Q1 '18 sales will be followed by orders later in '18....so, lets say we only do $10m in CMABR sales for '18 (say 500 to 600 modules as selling them as CMABR roughly doubles the revenue?).....so total of $161.5 + $10 = $171.5m = A$229m (exchange rate of 75c....and if we do not raise interest rates or only once, late in the yr but US raises rates 2-3 more times then our dollar will fall to 65-70 or lower most likely? so $229 would be higher)....so we are currently trading at 0.83 x next yrs revenue!!!!
I think our share price fall is simply the market waiting for each Q report and some engineering as per a trader's suggestion I email, some weeks ago, re getting the price down as low as possible re block trades re escrow shares.
based on 2 x forward revenue which would still seem low (7-8 times is normal when EBITDA +ve, which we are not yet, would give us $1.6B) = $458m....$1.17 (based on 390m shares)....doesn't that roughly tie in Henslow base case....Cannacord base case suggests $20m re MABR (2,000 modules)....which would actually be move than $20m revenue as these would be sold as CMBAR....but say $20m.....gives total of A$242m.....which at 2 x revenue gives us $484m....which gives us A$1.24 share price....closer to Cannacord base case......and a crap load of upside from here....so, 3 bagger at min.
kind regards, SEAH.
FLC Price at posting:
47.5¢ Sentiment: Buy Disclosure: Held
(20min delay)