Conference Call Discussions - WRAP-UP
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From: K. Bloomquist Sep 29 6:56PM Reply #3228
We bot TPRO in a private offering some time ago - our shares were registered in June. We started selling on the way up until we started looking at the incredible volume and decided to step back and analyze what was going on. One of the main reasons I started looking at Sil Inv was to try to find out more about TPRO. I am indebtded to the people who did the outstanding research for the thread and to those of you who post news.
Going just from the press release I think the news is very very positive. Earnings before Int taxes ect is good - it is obvious that the money is going into marketing. The big bad debt write off is extremely positive for quarters going forward. No thoughtful (or even quick and dirty) analysis of the news could end up negative, the tone is positive and the numbers are great.
From: Fred Ragan Sep 29 7:15PM Reply #3231
My understanding from the CC is that the $.28 resulted mostly from the withholding of revenue, and the expensing of costs associated with the Marshall Hyman problem along with the creation of reserves for ageing accounts. Management didn't sound like they were uncollectibles either. Looks to me like clearing the decks for some serious growth.
Also noticed comments about Wonderware and 15 to 30,000 CD sets. @$5,000-$7000 pick a number, times 80 -90% gross return. Don't forget to divided by 8.8 million shares. BIG numbers. It can start slow and still add very fast and remember, the CD's are only the entry point!
From: Jack Zahran Sep 29 7:15PM Reply #3232
Did anyone else notice that TPRO is well on their way to being marginable. Their significant reduction in debt and their moves to protect future earnings reports from overdue receivables will make this company very attractive to the institutional investors. These same indicators should make this stock less attractive to short sellers. Did you notice the Merck slip. I don't think they meant to give us their name. TPRO playing with the big boys!
From: B W Landes Sep 29 8:00PM Reply #3237
I would like to point out a couple of things after the conference call/announcement today.
First, this was the yearly report ending June 30, 1997, three months ago. This is NOT the report for the first quarter of the present fiscal year, which ends tomorrow and will probably be reported in October. This report today includes the ramp up in expenditures last year necessary to roll out a new service line, Y2K Plant One, which first became available in July, two months ago. There would not be any revenues available from this service line in the report just seen.
And, given the company's conservative financial style, there may not be significant revenue recognized from Y2K in the current quarter report coming out shortly. So the company has not missed earnings in my book unless they report a loss for the Current Quarter. A loss for Fiscal '97 was expected and is IMHO irrelevant to the present and future prospects of TAVA.
Second, about contracts. This company has ongoing service agreements with many clients (yes, Fortune 500's) and the "direct sales" of Plant One services to these clients will probably not be announced, if possible. Why? Well the bigger clients are probably going to get better terms than the little guys, unless the rules of dealmaking have been suspended here. You don't want to rub their noses in it. I'm very happy about this arrangement, if you want contract announcements, and announcements about VAR alliances and similar non-revenue, non-events, try one of the Y2K's that have no ongoing clients.
This thread has some of the most intelligent posts I've seen in SI, if any of the weak hands want to sell some shares based on "missed earnings", me and my friends (the intelligent posters) will be happy to take them off their hands at a very nice price (for us.) We may sell them back when the CD rolls out, but don't think we will sell at fire sale prices like we may see early on tomorrow. My two cents, and that's all its worth, I see sunrises ahead for TPRO, not sunsets.
From: RDavidson Sep 29 9:05PM Reply #3241
Today's call showed me that now we're ready to do business. Mgt. doesn't want anything to negatively footnote future statements or downgrade earnings. Wonderware deal..... done. Square D deal..... done. Fluor deal..... done. CD..... ready to roll 10/15.
TPRO proprietary embedded database..... ready to give assessments to clients via internet dial-up. Plus, don't forget that those "write-offs" aren't ... they are reserves against losses, BIG difference. Heard them say many are bonded or should otherwise be recoverable. This company has done everything imaginable to go like a bat out of *ell. Capable management, financial, and sales people with a virtual monopoly, needed worldwide, within next 24 months. I'm LONG.
From: Tom C Sep 29 9:07PM Reply #3242
I am also a lurker on this thread. I have followed every post since early July. I have no position in this stock and have good expectations for this stock in the long term, however, I think I will be flamed for this post. I was prepared to take a long position in this stock and I was waiting for this report because I thought it might not be very good. It is not. Here are my concerns:
< DENVER, June 26 /PRNewswire/ -- Topro, Inc. (Nasdaq:TPRO), a leading provider of automation and system integration solutions to industry, today announced the launching of a major new business initiative based on its new product PlantY2K One(TM), a proprietary package of product and services designed to address year 2000 compliance problems in process control and factory floor automation systems.> PlantY2K announced at the end of the fiscal year. Where do you think that the cost for ramp up will occur? I think that it will be this quarter.
<Remember Trippi that loss was based on 16.5 mil but at eventual 23 mil shares its about .07 a share.> So TokyoMex is saying that the per loss share is to be diluted by 39%. Well so are this quarters earnings.
<"While the awareness of and momentum in Year 2000 factory level compliance is building rapidly, many clients are still stepping cautiously, choosing to do 'pilot' projects before launching a full program. As a result, we expect that it will be the third quarter
of our fiscal 1998 before we begin to see significant revenue impact on the Company.> This does not bode well for this quarters earnings.
This the best thread on SI and I still want to invest in this company but I think I will wait until I see this quarters results.
From: Trippi Sep 29 9:15PM Reply #3243
From today's press release: "However, the planned progress in the fourth quarter was setback by the necessary dedication of management resources to our Year 2000 business initiative."
And here was my first post (nearly 60 days ago) on what I saw as the potential problem of missed earnings (Reply #871) ... I rambled about RedChip or Wall Streed edge and then........
Here is the current problem as I see it: (by the way I should report that I am a self-avowed lurker here -- and seldom get the sense that my posts are all that welcome) but here goes:
TPRO has two followings: Many investors became involved in TPRO as a turnaround story -- they saw a $3 to $4 stock with analyists targets of $6 to $8 -- and a return to profitability under strong management and bought waiting for the rest of the world to find TPRO.
The second following is a group of people who found TPRO after the Y2K potential became known.
Karl has put his finger on exactly the problem for TPRO at this time. In order to reach its full Y2K potential TPRO must ramp up quickly on qualified people and structure (this costs money) If TPRO spends the money it needs to ramp up -- there is a very real danger that it will miss earnings estimates in September -- Those in the stock for its y2K potential will welcome the news if its related to spending for ramp up of Y2K -- but any miss in earnings now will have a negative impact on the turnaround players -- many of whom are not versed on Y2K and do not understand its potential.
On the other hand if TPRO is slow to ramp up -- and meets its earnings estimates for the current quarter -- turnaround players are happy but the company then sends a damaging signal about its ability to reach its full potential in the Y2K area.
The question is can the company do both? Can it ramp up its Y2K potential and meet or exceed earnings estmates in September? If it can -- We are looking at a massive upside explosion -- that will make the recent rise look piddly (to use Karl's phrase).
If it doesn't then I believe that right after the September earnings release -- you will see a shakeout of many of the current players in this stock -- this is not bad news -- as I think if this senario occurs and shakes out the turnarounders who don't understand Y2K potential -- it will provide a very good buying opportunity for those who choose to stay.
Either way there is very little danger in owning this stock until it gets into the high $6's or low $7's at that point a miss in earnings could shake enough people out that the stock could fall a buck or two -- but as I said above if you believe in the company's Y2K potential
-- that would just present an excellent buying opportunity.
September may be a very dangerous time for holders of this stock. (and I intend to hold). Now what's not bullish?
From: B W Landes Sep 29 9:26PM Reply #3244
I would like to point out that nearly all of the dilution has finished except for a series of warrants that barely missed being converted because the price didn't stay above 6 3/8 for 20 trading days. TokyoMex can probably give you the current float and projected
final float.
From: RDavidson Sep 29 9:47PM Reply #3246
To an extent, this concern was addressed during the call. The ramp up funding problem is at least partially solving itself- as the % of TPRO income shifts more toward the labor component (and shortly CD) gross margins will increase, and substantially more cash will be available for staffing.
Recent redemption also helps as cash buffer. I don't think that a particular quarter's earnings, barring a bust..., are as important as increasing sales, keeping an eye on margins, and putting all of Wonderware, Fluor and Square D people out into the field with a truckload of CDs each. I think many clients of TPRO aren't going to start major projects till cal.'98. CD assessments over the net will be the best way in the world to prime the pump, while showing client in b&w what problems they have.
From: Jack Zahran Sep 29 10:00PM Reply #3247
Do not forget the Emerald Conference tomorrow (9/30)and the announcements that will come soon. My God people, we are talking about potential contracts with international companies. It's like taking candy from a baby. Low risk with huge potential returns. How many of those RFP's becoming contracts will it take to catapult TPRO? They have no competition, and their isn't time for someone else to jump in.
We are talking huge. TPRO's management is conservative and they even slipped in "like popcorn popping" when referring to the Y2K CD market. Jenkins couldn't help himself and spilled the Merk discussions. You could just feel the forced restraint. They couldn't help repeating that hourly billing for Y2K work was significantly greater than their other work. And future acquisitions would be accretive; they have made very successful acquisitions to date.
Their debt is almost all gone, their financial state solid. This is huge IMHO.
From: Gerald Underwood Sep 29 10:14PM Reply #3251
Good points added to many others in the previous posts. One factor I did not see addressed is that TOPRO also is just coming out of a recovery period of absorbing other companies. I believe this was briefly discussed in the conference.
While this consolidation procedure was costly in terms of overcoming the inherent inefficiencies and helped to create a negative balance sheet for the year, it should now pay off in expanded capacity for y2k as the ramp up in that sector proceeds.
IMO, Topro is in the cat bird's seat. Companies will soon realize that business as usual must take a back seat to the y2k time compression factor and drastically shorten their pilot projects and price negotiation stances. From here on out this process should accellerate. Let's face it, not a lot of IS companies lined up out there to take on the embedded y2k problem. Clients better grab their place in line before there is standing room only.
From: David Sheridan Sep 29 10:25PM Reply #3253
In call,someone asked about DDIM referring Merck to TPRO for plant work. Jenkins didn't really seem to know - he implied that DDIM had heard of them somehow. A possible reason DDIM recommended TPRO for plant-floor y2k work is that there isn't anyone else doing it!
Everen asked questions. ML asked questions. We just might be seeing some buy recommendations before too long.
From: Jack Zahran Sep 29 10:42PM Reply #3255
David, listening to all those investing institutions asking questions made my heart beat faster. TPRO is commanding their attention. I wouldn't be surprised to be reading some buy recommendations soon. TPRO's 98 3rd Quarter is January 98-March 98. That's a few months away. It sounded a lot longer when they first mentioned 3rd Quarter 98 but their fiscal year lands the first volcanoe earning announcement in just a few months.
From: Skipard Sep 29 11:26PM Reply #3259
1. FLR/Daniel is major news, big leagues.
2. 20 large internationals looking, representing 900 plants. Small plants average $250m-$500m, large plants average $500m, spiltting difference at $375m x 900 plants = $337mm
3. MRK is nice, but every drug,and specialty chemical company is going to have to be Year 2000 compliant, no if and or buts. Some company called and started off the conversation ... "HELP"
4. Larry Hagewood said when he joined TPRO on 7/22/97 or later, problem was "HUGE", last 2 weeks it is growing exponentially, and the awareness is coming at the CEO level.
5. WNDR we know about $105mm- $210mm, but that is key to open the door, to further business, but not a bad door opener.
6.DD,XON,DOW will consider pilot plants, sort of a beta test. Saudi Aramco called yesterday, also Venezula Oil.
7. Gross margins will increase.
8. They emphasized cost is last consideration of client. As time goes on, costs go up, and clients go up, and sales go up, and eps go up, and maybe stock goes up.
9. The bottom line is they have so much on their plate, and do try and remeber this is a $6 stock that all the yo yo's have been playing with, and dumping on, and their day ends around noon tomorrow.
10. Lousy quarter, YEP, terrific future, YEP, big upside YEP, let's watch every tick, NOPE, hang on for the ride my friends, the games are about to begin.
From: Douglas Rushkoff Sep 29 11:49PM Reply #3260
Despite the MRK whisper, I think we have to realize that TOPRO will probably be signing non-disclosure agreements with many of the companies it services. Seriously, after seeing the MRK dip (if this was really connected at all) most Fortune 500 will want to keep their y2k vulnerability a big secret. I believe we'll have to wait for earnings, not announcements. This is a discreet business.
Second, the most promising thing to me about the phone call was the manner and tone with which the investment company people spoke to the TOPRO people. Cordial, respectful, and interested.
From: Ron Reece Sep 30 12:12AM Reply #3261
One of the items that I found of great interest is that TPRO has not seen a great deal of cannibalization of systems integration and IT budgets to deal with y2k. Combined with Congressman Davis's (VA) comments from today's y2k investor show here in DC, apparently not many commercial companies have yet come to terms with the expense of implementing y2k remediation.
I'm still holding DELL and CPQ, but I have a feeling that sometime next year we may see warnings from those companies, as the IT market for systems integration start to divert to y2k remediation.
From: Clayleas Sep 30 12:24AM Reply #3262
One more very key bit of info to come out of today's call:
1. This problem is so big that they expect that many of their clients will only be able to get "bandaid" fixes prior to 1/1/00. They will have a lot of work on y2k even after that date.
2. They expect y2k to give them a 50% increase in their base business when all is said and done.
This is not just a 2 year wonder!
From: Ron Reece Sep 30 1:24AM Reply #3263
I thought it was interesting that Jenkins was talking to Tony Keyes at the Cruttenton Roth conference. I'll try and get his reading on the company since he's a local call.
Just finished listening to the conference call. Highly interesting regarding the Fluor Daniels arrangement. Provides a great deal of credibility in my eyes, but I see one of the obstacles that the company must contend with is obtaining enough quality personnel to perform the remediation process. Going to be a very competitive job market for these types of technicians. So long as billing is done on a Time & Material basis as opposed to bid, it should protect the company from adverse labor costs. However, I don't recall hearing this issue addressed fully. Did I miss something?
From: David Sheridan Sep 30 1:26AM Reply #3264
<most Fortune 500 will want to keep their y2k vulnerability a big secret.>
But they won't be able to - public companies must disclose. Just a matter of time before insurers, fund managers, analysts, and shareholders start asking about factory y2k compliance. Who they
gonna call?
From: JDN Sep 30 8:28AM Reply #3267
Trippi: Normally I would agree with you. But in this case the positives far outweigh the negatives. Example, sales soared (and dont include y2k), profit margins soared (and dont include y2k), Fluor deal announced, FORIEGN INTEREST announced (something we never even thought of), most of if not all of the loss was entirely due to writeoffs much of which is likely recoverable eventually (see liens), I could go on but, you get the picture.
From: C.K. Houston Sep 30 9:24AM Reply #3270
Change in product mix and increased profit margins are EXCITING!!
Current Gross Profit Margin for Entire Company: 34%
............Material: 7-19%
............Labor...: 55%
Y2K will have very LITTLE material ... will be CD & Labor
CD-Rom Gross Profit Margin: 80-90%!
"Like popcorn popping"
Current billable labor rates ($100-$150/hr.) will be INCREASING. Fortune 500 companies have been working on correcting Y2K MIS, and top management is now accustomed to higher labor rates.
TPRO projects Y2K to be 20-30% of total revenue by the end of THIS year.
Alliances (Wonderware, Squre D, Fluor, PacifiCorp) pushing CD thru their sales force ... These guys have a GREAT incentive for getting this CD out to their customers - fear of litigation down the road. Fluor Alliance gives them Executive Level Selling opportunity. TPRO is at the very early stage of discussions with Allen-Bradley (Global Technical Services) and Rockwell. But, they are in discussions. One of the alliances (can't remember which, off-hand) has already sent letter to ALL of their clients about Y2K assessment & remediation. The CD is the key element in assessment.
From: Gerald Underwood Sep 30 9:30AM Reply #3271
With gross profit on CD revenue at 80-90%, IMO this will be the MAJOR MAJOR factor in total revenue.
From: C.K. Houston Sep 30 12:40PM Reply #3316
Who Owns TPRO ... NOW
- Soros Small Cap
- Fidelity
- Merril Lynch
- Whale
- Everen
- Cruttens
========================================
Cruttens been buying this all morning.
From: TokyoMex - Tue, Sep 30 10:30 EDT
From: C.K. Houston Sep 30 12:57PM Reply #3318
<Where do you get the investment information? Is it published somewhere or are you deducing it from Level 2 ID?>
I got it from a Japanese guy who owns a Mexican restaurant in NYC. |
