11/14 Conference Call - Synopses, Comments and Questions
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From: TokyoMex Nov 14 1997 Reply #5978
Wonderware getting one call per hour on y2k issue and TPRO followin git up.
From: Ed Howell Nov 14 1997 Reply #5988
Did I hear correctly that Smith Barney should be telling their clients to buy TPRO.
Only negative I heard was that Fluor Daniel had made an internal decision to not push
Y2K issues. I think it is Fluor's loss and not TPRO's tho.
Everything else was positive, including some Y2K revenue being moved into 2nd qtr
rather than waiting for the 3rd qtr.
From: Skipard Nov 14 1997 Reply #5990
If you didn't like this conference call, you are from another planet. Forget all the BS,
hype, whatever you call it. They laid it on the line. All of the work on his board is going
to be very well paid.
I have been trying to figure out what we are missing, and after this call the answer is
nothing. This is the horse for the long run. Only 100k for Y2K in first quarter, and
$2.1mm already in works, with $2mm more to come . 2nd qtr is going to be very nice,
3rd qtr will be great.
I spoke to 2 small institutions after call, and both said "Gee, this is really going to be a
big stock, never believed it before."
From: Hardrocker Nov 14 1997 Reply #5992
Yes, that's what I heard, too. So did the other two guys who were listening on my
speakerphone. Then my ML broker called (he listened to the entire conf call) and told
me the conference call sounded great. He also said that we're on the ground floor of
something which could become huge.
Skip, during John Jenkins' prologue, did I hear him say that the companies listed in the
press release (Unilever, etc.) allowed their names to be used, but other clients had not
given similar permission?
This might imply that other "high profile" clients are also in the pipeline on an
unpublished basis.
From: Clayleas Nov 14 1997 Reply #5993
Doug Kelsall mentioned they have only $1MM cash but didn't mention the new shares
& someone looks like they are trying to keep a lid on the stock today at $6.5. Perhaps
the new shares will be sold at today's closing price. Just a thought.
From: Viktor Nov 14 1997 Reply #5995
Wonderful conf. call! Gives every reason to be confident in Topro. If I had more
money I'd buy more. Coupla quick notes:
1)I saw a lot of enthusiasm on the part of institutions.
2)Fluor Daniel - bad news (They are huge, I counted on them!). Good news is that
due to their Y2K reluctance they lost Owen and Topro hired him.
3)They've hired only 12 engineers since June and want to hire more than 100 during
next 9 - 12 months, that will be paid from the CD ROM revenues. I think they would
like to speed up the hiring but can't afford it at this point.
4)They don't expect any performance bonds on the Y2 projects, which is very good
(perf. bonds tie up the cash).
From: Steve Rubakh Nov 14 1997 Reply #5998
Raj, no name was given. May be Rayothen. They worked on project by
project basis and don't have a specific tool set like us.
Up to 330 engineers. Cost of CD's is peanuts. New/stronger co to
assist with utility projects. Going into franchising concept.
Forget 3000 sites, it is 3500. and 41 accounts in assesment stage.
Got big order/6 mil in base business from co from Chicago. Old
rate $75-90, new rate $160. No increase in pay scale for engineers.
Talking to GM, might be letting them use TPRO's data base.
Smith Barney guy loved it. Call was cut short...!!! Fluor is out.
From: Steve Childs Nov 14 1997 Reply #5999
I wasn't on call, but did they specifically say their slowness in hiring engineers is due to
a cash shortage, or is it due to lack of available talent?
From: Viktor Nov 14 1997 Reply #6001
<<did they specifically say their slowness in hiring engineers is due to a cash
shortage, or is it due to lack of available talent?>>
No, they didn't give a reason, but if it was due to the talent shortage (btw, shortage in
anything ... here, in America! Impossible! :-)), they most probably would not be
looking forward to start adding 10-12 new engineers a month , which is 4 times faster
compared to today's rate (12 people in 4 months).
From: Tim J. Flick Nov 14 1997 Reply #6002
Conference call was mouth watering. I love the part about moving forward revenue
expectations to the second quarter. Anyone that thought that they should wait through
the second quarter to buy the stock must make adjustments now. Also y2k group had
strong rally today after a couple of weeks of pounding.
From: Jack Zahran Nov 14 1997 5:40PM EST Reply #6011
Quick Notes from the Conference:
Pleased with Revenue increase in base businuss
-Engineers on Y2K would have added 700K - 1Mil
Resale of Materials causes fluctuations in Revenues mix.
Y2K Mix
60% Services
40% Materials
Gross Margin on Eng. Serv. 52%
Higher Expenses on Infastructure, distribution, and Sales and Marketing on Y2K
product. $300,000 increase in S&M due to Y2K
G&A Expenses on traveling, expensive internal training, Recruiting
Conversions will save company $240,000 yearly.
Very strong Y2K activity.
$4 Mil working capital increase at the end of quarter and reduced liability by $5 Mil.
John Jenkins
Revenue & Gross Margin delayed for 15-20 engineers working on Y2K product.
Many clients in Aug & Sept were aware of issues and TPRO showed up with a
demostrable product made a big difference.
Continue to be successfull in base business. Last few weeks received $6 Mill in sales
on base business.
Y2K interest continues to accelerate in an even sharper slope. Everywhere presented
have received RFP or promised to receive one. No one turned them away. Cycle time
from Presentation to Order: as short as two weeks. Happening very quickly. 41
Accounts, 3500+ Plant coverage. 80% of accounts are new to company. Expect to
hold onto that access and leverage accounts after Y2K. Recruiting heavily on
execution side and management. Flour Daniel hire adds significantly to our sales
capability.
Press release mentions some accounts by name and their are more that have not been
announced. Billing $160+/hr. Expectations are definetly happening. Numer of 20,000
CD going to Wonderware, which hasn' started yet. Lot of word of mouth and referrals
from IT services companies. Companies coming to TPRO to complete their Y2K
offering.
Q & A
q. Y2K 1Mil 1/2 in sales in last 2 weeks, will we see results soon.
a. Short term contracts, majority of revenues in next 90 days. We are definetly seeing
pull back from third to second quarter. Margins will remain the same into remediation.
For clients using tools, Tool activity higher margin and as services come in back to
50% margin range.
Base business is being attented to. Reality is that most people want to talk about Y2K
issue. We are the game in town for the Y2K activity.
q. (Street Corp.) Requesting Performanc Bonds?
a. Certain base business bonding requirements, but we don't expect Y2K bonding.
q. (Investment Tech, small hedge fund) Rev. Expectations from CD?
a. Base 4K for CD, 5K for vendor compliance per seat, then 2K for reports per seat,
etc...Total facilities 70K - 100K that need to address this problem...Conservative # of
$20K per site still works. Trying to do better forecasting as more orders come in.
Targeting Mulit-plant sites. Wonderware alliance is getting 1 call/hour handed to
TPRO as leads. Wonderware is emphasising the entire system, not just the
Wonderware Software. Square D (IBM, Mars, Coke) marketing talks next week.
Training others to resell to areas that TPRO doesn't cover.
q. Purpose of new hire? impact of AON alliance?
a. Develop relationships with other Y2K providers and formalizing the relationship.
Driving the franchize model and his contacts in industry.
Aon relationship is expected to be a source of leads and that is already happening and
we expect it to grow. Relationship is not exclusive. In the utility market their is yearly
assessment that is done and those A&E (Architect and Engineering Form) coming to
TPRO to provide them tools to do these risk abatements on their Yearly audits.
We have an ongoing dialogue with GM. We can provide them access to our database
using their own Engineers. (GM is not yet a client but there is a dialogue).
q. Alliance w/ Pacificorp? Hymen Marshall News? Cash?
a. P. alliance is building momentum already worked on $700K project with them.
Replaced P. with another expert to take advantage of Utility Y2K business. P. referred
them to other to partner on Y2K oppurtunity.
MH is reviewing claim in Nov. and TPRO is taking steps to protect their interests in
that situation.
Have 1 Mil cash and looking into means to expand that.
q. (RedChip) Breakdown on Y2K businees on current? Equipment margin on base?
How many billable engineers and allocation?
a. Less than 100K. 10 - 15% margin on materials, but they look at the blended margin
with services. 12 people added. 280 techs. Non Y2K projects are not tailing off yet.
There will be an impact but probably not till 1st Calendar Qtr. of next year. But Y2K
replacement will probably drive base business.
Get the CD out to as many as possible. On the services side adding 150 people over
the next 6-9 months. Subcontracting for additional manpower.
Core business has other propriety software that is being received well besides Y2K.
q (First NY Securities) Internal Leads? 3500 potential site at 20K?
a. IVAX came from other. Even larger # of sites, but 3500 equivalent to amount being
paid on tools when negotiating with larger corps. Potential market is 70K plants with
100+ empl and beyond that the utility market. We use 20K estimates for tools alone,
but 300K for individual plant remediation.
Flour Daniels will not emphasize Y2K (We don't need that after all). he is leaving Flour
to work with a smaller faster company with what he sees is a very real business. Some
people are still in denial, others taking this very seriously; concentrating on serious ones
and others will wake up. Much greater state of awareness today than 30 days ago.
Y2K business still active after Year 2000.
q. (Smith Barney) Any competition?
a. No CD ROM competitor. One large engineering company doing work in this arena.
The other company is approaching this business from a A&E perspective only and not
from a tool perspective. Too late for them to get into tools area.
Smith Barney: We need to do our job and tell our clients to buy the stock!
From: Joe Gurrieri Nov 14 1997 Reply #6012
Steve I was in on the conference call also. Agree with most of what you heard. Would
like to correct you on one item. Employment level is at 330, technical staff represents
approx. 280. Jenkins said they have had only 12 new hires since June but are actively
recruiting. As far as Smith Barney, I thought it was great to hear the analyst say I will
be putting my clients into the stock! The "big boys" are starting to take notice. Also, I
would agree that it was Raytheon Automated that Jenkins was referring too. Site by
site without a toolkit? Man thats a tough way to make a living :-) Only kidding. I'm sure
Raytheon will want to get licensed or partnered so they can approach this in a sensible
way.
From: Jack Zahran Nov 14 1997 Reply #6014
They already gave us a few contracts and multi-plant ones at that. Jenkins said that
there were definetly others that they cannot announce yet. Remember $300K per plant
remediation, 20K just for plant tools/plant. Square D meetings next week to go after
the likes of IBM, Mars and Coke (I know they already did base work for IBM and
Coke). We are going to hear announcements coming out every week. This baby is not
going to wait. Buy now, don't risk chasing.
From: M. Frank Greiffenstein Nov 14 1997 Reply #6016
I'll be posting my synopsis of the conf call later, too busy counting up all the shares I
bought today <g>.
But let's face it: the balance sheet is a friggin nightmare. Who the hell uses a single line
for Current assets, no breakout of cash vs, A/R? That looks sleazy to the average
accountant. We know now they have 1 million cash, so the quick ratio is awful; even if
the current ratio looks a repsectable 1.4.
I'm not too worried, but the cash crunch is a BIG problem. Warrants better be
executed soon. Can we send some muscle over to Marshall Hyman?
DocStone
From: Stuart Schreiber Nov 14 1997 Reply #6018
Just listened again to conference call. A couple of things:
Sales have been direct thus far. Just wait until Square D, Wonderware, network of
system integrators, utilities, and any busines from AON kick in.
Yelled out loud at the answer to the GM question.
Stu
From: Kevin F. Durkin Nov 14 1997 Reply #6020
TokyoMex, Great call on TPRO qtrs business and pending contracts. Assume now that we will
start to see contract announcements over next several qtrs. Only minor disappointment
is hiring seems slow and if in place could handle new business and Y2K business. Did
you find anything of concern ie cash on hand or anything else?
From: Steve Rubakh Nov 14 1997 Reply #6022
Any ideas on new utility company that will working with TPRO?
Also, CEO said that core business doing well and they do have some
kind of unique software addressing those needs. Average Y2K project
is $300.000. Joe, did first question come from the people brokering
the placement? Did anyone hear Bristol Myers? More contracts ready to
go. They only announced the ones there are very comfortable with.
PS. Did anyone expected more of a pop in price?
From: TokyoMex Nov 14 1997 Reply #6023
A few days ago I made a numbers game of 500 mill rev by end 99.
Well according to CEO their immediate target is 3500 sites at $300,000 = 1 billion 50
million dollars at a blended margin of 33% = 347 million dollars. You do the math !
This is more outragous than I originally thought.
I also think the new 20,000 cd production already has been spoken for before it ever
comes off the press and that will give us immediate 140 million in revenue.
As for the Unilever , they have stipulated for TPRO to finish the analysis on 30 plants
sites in Canada and USA by end of Nov. Unilever happens to have some 500 plants in
North America alone.
We also picked up AMAT through VIAS alliance.
IVEX is a new chapter.
We got PPW, GM, BA, MRK, KO, GLAX, to name a few that we are talking to
now and our conversation has increased to 30 Fortune 10s from 12 of September.
The continuing dialogue with GM is a positive note also.
As far as the shortage of engineers its a double edged sword and it is my concern as
well. One good thing is that we have the cds that wil do the preliminary assesment tool
that can rely on existing clients labour pool. Hence alleviating TPROs excess at same
creating cost saving for the clients.
Naturally when we talk of 1.05 billion revenue a critical mass wil have to met and this I
trust will be managed by Messrs Jenkins and Kelsall et al. They have done a good job
with poise and the faith in the management is what its all about.
As for me they have kept all the promise that they have made on public and private
level to this writer.
From: Karl Drobnic Nov 14 1997 Reply #6024
Conference Call: All our hard work on this thread is validated It is no longer a "going
to happen" situation. It is already happening. One of CK's topic headline rightly
emphasizes that the record revenues reported today include only about $100,000 in
Y2K revenues. We are now at the heart of the matter - accelerating revenues and
expanding profit margins. Several quarters of triple digit revenue gains are in the
pipeline. Great sequential and year to year EPS comparisons are lined up and ready to
pop. This is how a small-cap becomes a momentum stock. As Mick Jagger said,
"Time is on our side - oh, yes it is."
From: C.K. Houston Nov 14 1997 Reply #6027
THE CALL
Fri, Nov 14 From: Dewave1 (AOL MF)
I replayed the conference call for my wife (she's much more
intelligent then me, but loves to spend money instead of gambling it
,stocks) she pointed out these comments to me.
1. "yes, there is an on going dialoge with GM"
2. "Jack Moss loves it" ??!!??
3. "An additional 160 personnel between 6 and 9 monthes for Y2K."
4. "Will Tava/Topro be active(profitable) after Y2K.......YES!"
5. "Conservative average 20,000 toolsets at 300,000 floor plants
possible (correct us if we are wrong)"
6. "Will replacement of affected systems hurt or help TPRO?"
7. 'What is BEV1????"
8. And Skip Davidson's question (Who I think she would leave me for,
since he's made more money[CCSI] for us then both of us combined)
"Show me the Money?
Anyway as she walked away from me she slapped me in the back of the
head and said "I hope you doubled our position"
But I'll have the last laugh because I tripled it!! |
