Congrats holders. The investment is RKN is looking like a very good bit of business!
Assuming the sale goes ahead and they receive the special dividend, there'll have 12+ months runway. This'll give them some much needed breathing space to execute their growth ambitions, but they'll still be under pressure to reduce their cash burn. I don't think that they necessarily have to start producing positive cash flow by this time next year, but neither can they continue to burn $15m+ per annum (unless they can demonstrate explosive organic growth which is unlikely).
Product manufacturing costs consume 75% of sales revenue, before any normal operating costs are factored in, such as, staff, marketing, admin etc. The latter are over $8m per quarter, so the business has to generate enough sales revenue to service an annual cost basis of $32m+ per annum.
Even if we are generous and assume that operating costs remain constant whilst revenue grows, NOV would have to generate approximately $128m in sales revenue to break even.
It seems a big ask to grow sales 3x, which could take years. What are the other levers that NOV can pull to improve margins?
Congrats holders. The investment is RKN is looking like a very...
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