@morganpIt is difficult to track on a quarter to quarter basis, as like you said it is always going to be lumpy and skewed to the December quarter as being the highest revenue generator. Then it depends what sort of payment terms and disbursements each individual customer and project is contracted to, and whether they actually pay on time or if there are delays. Then there is the type of mix of projects, and which stage of the project is being converted to revenue, as different portions of each project will have different margins attached.
I did some real rough back of envelope calculations, please note this is not my strength so will be a guesstimate and someone like
@stockrock may provide better clarity.
Looking at actual revenues in 2018.
Q1 - $10.2 mill USD ($16 mill cash received, $13 mill cash outgoings)
Q2 - $22.6 mill USD ($7 mill cash received, $14 mill cash outgoings)
Q3 - $29 mill USD ($11 mill cash received, $13 mill cash outgoings)
Q4 - $43.7 mill USD ($16 mill cash received, $10 mill cash outgoings)
Cash received for each quarter is going to look low and cash outgoings for each quarter high, as $27.2 million USD from Venezuela PDVSA project which was prepaid in 2015 will not show up in cash receipts but expenses will be incurred.
H1 revenue - $32.8 mill USD
Loss of $6.2 mill USD
On $32.8 mill USD revenue, 2018 H1 gross profit was $7.1 mill USD.
2018 H1 Gross Profit Margin = 21.64%
H2 revenue - $72.8 mill USD
Loss of $0.3 mill USD
On $72.8 mill USD revenue, 2018 H2 gross profit was $18.1 mill USD.
2018 H2 Gross Profit Margin = 24.86%
2018 revenue was $105.6 mill USD
Loss after tax was $6.5 mill USD
On $105.6 mill USD revenue, 2018 Full Year gross profit was $25.2 million USD.
2018 Full Year Gross Profit Margin = 23.86%
2018 Expenses
R&D - $3 mill
Product Manufacturing & Operating Costs - $56 mill
Advertising & Marketing - $5.3 mill
Staff Costs - $29 mill
Admin - $11 mill
Total - $104.3 mill
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In 2019
Q1 - $12.3 mill USD ($12 mill cash received, $15 mill cash outgoings)
Q2 - $11.3 mill USD ($15 mill cash received, $8 mill cash outgoings)
Q3 - $13.8 mill USD ($16 mill cash received, $5 mill cash outgoings)
Q4 - ???
There is impact from the delayed San Quintin, Mexico desal project. First disbursement is waiting for local partner equity contribution (will now come from Generate Capital project finance), so revenues were impacted approximately $6 to $7 million.
H1 revenue - $23.8 mill USD
Loss of $17.5 mill USD
On $23.8 mill USD revenue, 2019 H1 gross profit was $3.4 million
2019 H1 Gross Profit Margin = 14.28%
2019 Expenses (Forecast)
R&D - $2.3 mill
Product Manufacturing & Operating Costs - $56 mill
Advertising & Marketing - $3.6 mill
Staff Costs - $27 mill
Admin - $11 mill
Total - $99.9 mill
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From the numbers above, as expenses are remaining relatively constant (or even dropping), to get to break even Fluence will need growth in SPS to get profit margins above 25%. At that margin, a $75 million revenue half should be about the breakeven point. That therefore implies that about $150 million USD in revenue for the full year at a 25% gross profit margin should be the approximate break even point. That equates to about $37.5 million in revenue per quarter.
To see profitable quarterlies you will also need to see that sort of cash payment flow in each quarter, so you will need those cash receipts each quarter above $38 million. If gross profit margin is lower than 25%, then revenue will need to be even higher.
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In 2020
If the Ivory Coast closes, then that will result in about $20 million USD per quarter in revenues in 2020 & 2021.
When San Quintin restarts, that is approx $5 to 6 million per quarter in 2020 and 2021.
There are other large projects that will also contribute to revenue during this period (Brazil desal, Eqypt desal).
The above large projects (and current backlog + WIP) would contribute approximately $30 million per quarter in 2020 and 2021 (although likely lower margin around 20%).
That will mean the gap of about $7.5 mill per quarter that will need to be filled by SPS (MABR/SUBRE/Nirobox) will need to actually be above $13 mill per quarter instead (at approximate 30 to 35% margin) to make up for the lower margin (20%) of the CES projects.
This equates to about $52 million per year.
In 2019, SPS is forecast to be $26 million USD.
That should at minimum double in 2020 to $52 million USD (and grow again in 2021).
So just filling backlog and accounting for minimum growth in SPS should lead to the approximate point of breakeven.
So breakeven target per quarter is at least $30 mill from CES at 20% GP, and $13 mill from SPS at 35% GP.
= Approximately $43 mill per quarter required.This is really rough, and each quarter is going to vary based on what expenses come at what time, margins on individual projects etc.
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As always, things are going to be lumpy, and work is going to be skewed into the 2nd half of the year (as MABR sales ramp up).
This does not really account for any new project wins, within the whole business, this is simply taking into account just filling backlog in CES, and filling demand from the basic iTEST, Hunan Kaitian, and Liaoning Huahong partnerships to account for growth in SPS.
Any additional project wins for the year that contribute revenue for 2020 will help reach profitability faster. Growth in SPS above 100% will also do this.
There have been many new territories and partners across the world for both MABR/SUBRE and Nirobox in 2019 alone (outside of China), and some of these will lead to accelerated growth. (Eg Philippines, Jamaica, Spain, South America, USA, Australia). Fluence has so many opportunities across the full water spectrum that unexpected wins can come from any category across the world (as we recently saw with lithium Ion Exchange processing). There has been a lot of news this year about water stress, I would expect the desalination category to have more wins in 2020 as well.
Waste-to-energy has been going well for Fluence Italy in South America and there should be more wins from that category.
