Apologies for the long post, but "I believe" it shows (irrefutably?) that management were not sincere in their forecasts and statements, but this cannot be proven until we see the actual sales data from the company for the quarter - which I have requested.
In the AGM video, at speficically at the 47 minute, 58 second mark Wayne talks about the ADAPT forecast specifically. He says, and I am directly quoting here because I listened (and re-listened multiple times) to every word and typed it out as he said it.
Press play and read along below
I have
highlighted the key statements
Then he goes off about phasing, and he goes into more detail on the growth numbers.
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So, here are the key take aways for me, and my commentary (and I will try to be as objective as possible):
When you see the step up on that forecast, and again, what I wanted to point out on the curve is that's not significant by standards.
The numbers you see are completely attainable, and I standing in front of them and telling you that they are realistic.
We have productivity metrics, we have execution metrics, so we are also measuring what's going on out there
We have data that supports everything we have forecasted and we have confidence in this data.
March was a record month for the company, so that was last quarter, and of course last quarter you've already seen the results for and we were about 2 % above our internal forecasts.
Our track record is good when it comes to hitting our forecasts.
NOTE: their internal forecast was 2% UNDER actuals. He calls out the 2% figure to show the accuracy and confidence of their forecasting abilities.
Second quarter, our April was slightly off,
April was soft, but nothing to worry about.
we are in the middle of May, as I said, I spoke to The Saint this morning,
He is getting regular updates from the people leading the sales teams, he is across the sales of the business.
yesterday's sales on a daily basis
Confirms they breakdown sales and have granularity on a daily basis
I think it's important to know a forecast is a forecast.
This is a standard disclaimer, I need to call out he says this.
not to say it is inaccurate
It isn't gospel, but you can have a fair to high degree of faith in it.
I have spent my whole career phasing, big markets, billions of dollars and forecasting those.
Here he implies he is an expert, and in fact built a career on is forecasting / phasing abilities. He has done it on a much larger, more dynamic scale than the scale he is doing it at the moment. "I've got this" is what he is saying to me.
We work this out at a hospital level, a unit level, a product level and a rep level.
It is all about data, and there are multiple metrics we use to create our forecasts, and we reference and cross reference them to ensure accuracy.
Now things can go wrong, and they do. That's a fact.
Another disclaimer.
you look at the end of the year, are we on track for that? the answer is absolutely yes.
Literally after the above disclaimer.
"Are we on track? Absolutely yes"
He is telling us that despite the disclaimer above, to trust his forecast as they are ABSOLUTELY on track.
https://www.merriam-webster.com/dictionary/absolute
This quarter, May is looking fantastic, April was definitely growth over previous April, but it was under my expectation, and I will say that straight out.
May is on target - perhaps even above expectation due to the nature of the word.
In fact, in the spirit of being objective, fantastic has 2 meanings which I have put below, but I will "assume" his reference was the first definition.
So what does Wayne explicitly NOT say:
"we will hit our target of $4.4m for the quarter"
And what does Wayne imply.
Well, this is where it gets tricky... One could argue that there are implied obligations of good faith and reasonableness in the information Wayne provides investors in the performance of his role as CEO of the company.
He implies that the guidance is solid, and it is backed by data, and despite disclaiming statements, he then goes on to provide statements that counter the disclaimer, rather than make statements which support or tend towards his disclaimer.
He implies his guidance is valid and accurate despite the disclaiming statements.
The fact that he is standing before the numbers posted on the screen and NOT implying they will be missed, reinforces (more implies?) they WILL BE HIT.
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Now, time for a little bit of mathematics, and PLEASE bear with me as I set up the scenario...
The quarter started on 1st April and ended on 30th June. There were exactly 91 days in this period.
30 days in April, 31 days in May, 30 days in June -
30+31+30 = 91 (just in case).
The AGM was held on Thursday 24th May 2018.
If we take the 30 days of April, and the 24 days in May, we end up with a total of 54 days having passes in the quarter up until the time of the AGM.
But let's be generous and say Wayne only had weekly sales figures, and lets back date it to the previous Friday 18th May.
But we know this isn't the case as he states / implies they have daily metrics to the "hospital, unit, product and rep level" (above)
That means 54 days into the quarter at time of AGM which was on a Thursday, MINUS 6 days (Friday 18th) = 48 days into the quarter.
Cool, that is our baseline.
Now, $4.4m, let's divide that by 3 to keep things simple - $4,400,000 / 3 = $1,320,000 per month (or $48,350/d) to hit guidance.
April was slow, let's say they did $1m
(which is actually 23% off the target of $1.3M for the month).
That means May and June are now at $3.4m / 2 = $1.7m (or $56,666/d) to hit guidance.
Let's say we were 18 days into May, which was looked "fantastic", which means we were at least on target to hit our $1.7m for that month.
One can reasonably deduct that we should have already done 18 * $56,666 =
$1,019,988 from Tuesday 1st until Friday 18th May.
OR we should have done $1m (23% miss on the month) + $1,019,988 (what was required to hit the guidance) = $2,019,988 from Sunday 1st April until the Friday 18th May before the AGM.
NOW - the company only did $2.7m in adapt sales for the WHOLE QUARTER
This means
in the 43 days remaining, we had to make $4.4m - $2,019,988 =
$2,380,012 ($55,350/d)
If we should have been at roughly $2m for the quarter by the time of the AGM, how can we only make $700k when we should have been making close to $2.4m
How can a professional "working and forecasting with billions of dollars" get it so wrong?
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One more thing.
Open the PDF and go to slide 30 at
https://hotcopper.com.au/threads/an...an-and-ceo-presentation.4208573/#.W2Pka9gzYk8
"New Australian business manager on-boarded – driving upsides in SAS and building launch readiness ahead of TGA approval (Q3)"
He states that TGA approval isn't forecast until Q3, but then uses the unapproved TGA status as an excuse for not entering markets in Q2.
