Synopses, Comments and Questions, 11/14-15
TokyoMex Reply #5978
Wonderware getting one call per hour on y2k issue and TPRO following it up.
Ed Howell 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 '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.
Skipard 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."
Hardrocker 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unpublished basis.
Clayleas 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.
Viktor 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).
Steve Rubakh 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...!!! is out.
Steve Childs 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?
Viktor 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).
Tim J. Flick 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.
Jack Zahran 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!
Joe Gurrieri 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.
Jack Zahran 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.
M. Frank Greiffenstein 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
Stuart Schreiber 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.
Kevin F. Durkin 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?
Steve Rubakh 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.
TokyoMex 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.
Karl Drobnic 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."
C.K. Houston Reply #6027
THE CALL
Fri, Nov 14 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!!
Zebra 365 Reply #6041
Bristol Meyers Squibb? One of the non-publicized?
I hope I'm not speaking out of school, because my tape malfunctioned at this spot. But
I thought I heard that the example was given in the conference call that "BMY" had
worked with TPRO in the past, but had limited them to specific sites on 'SI' (Systems
Integration) work. Now, in the assessment phase of PlantY2KOne work, they have
been given enterprise-wide access and hope to maintain that enhanced relationship
after Y2K needs are met. This means to me that they are doing Y2K assessment work
on "BMY".
I only know one BMY: Bristol Meyers Squibb.
JDN Reply #6046
Dear Kevin: Excuse me for jumping in, but being a conservative accountant by
nature-haha--I am PLEASED that they held off hiring large numbers of Engineers
UNTIL they could get their tool finished and scope out the market better. NOW, they
say they are going to hire 150-190 ADDITIONAL engineers over the next 9 months.
Great, that means they will PUT THEM TO WORK ASAP after hiring and trng.
THAT means more profits. They also said, no problem finding the engineers.
As to CASH, they admitted they were uncomfortable running so tight and were taking
steps, unidentified, to improve the cash level. JDN
John Hanzl Reply #6049
Well, well, well. This thread really takes you for quite an emotional ride! To hell with
skydiving, now I just sit in front of my computer and read SI to get my kicks!
Though I haven't listened to the conf. call (yet) I just wanted to comment on a few
things that I saw posted yesterday (Friday)
1) In responce to a question regarding the # of CDs. There are NOT 7500 CDs out
there for internal use and demos - that was the number initially targeted to be released
on the 15th (today). There are only 50 out now for internal use (plus whatever one-offs
that invariably get created internally). That 7500 number has been scrapped for the
much happier number of 20,000 on the 20th. I just hope that the replicator house that
Topro uses is scalable so that they may keep up with demand! (Uh, Help! the
replicator house needs $$$!)
2) Was there any comment on the Topro vs. TAVA issue? That one still sticks in my
side.
STLMD Reply #6051
Joe's posted numbers of revenue are most likely to happen since Jenkins said
these 3500 sites were already in the pipeline and IF remediation came to all it would
average about $300,000 per site. Add the 20000 CDs through WNDR at a total price
including the tool package of 20K and you get $400 mil more revenue at 60% margins
even without remediation!!! ggggg
Even conservatively if all of the "pipeline" sites only came to CD and tool work we
would have an additional 3500X 20K, for 70 miliion in revs at 60% meaning revs
total for the year of 470 mil at 60%. This is minimum, downplaying everything, not
including the 75K-100K sites with more than 100 employes, or franchising etc.
At 24 mil shares this is 11 bucks a share, people. My prediction on another
board of this being a 600, 900 million co. and growing worldwide has certainly
been understated since the news at Conference Call. Buying all I can. Thanks to all.
jan mccabe Reply #6052
Good Morning All-- The CD's going to Wonderware --20,000--- are free for the first
60 days, and introduce a potential client to the first stage of y2k compliance. If they
wish to continue, the CD can be purchased directly from Topro---I think there is some
confusion on the 20,000 CD's already being sold. It was explained this way to me by
the PR people at Wonderware. Skip or TokyoMex or anybody else, can you clarify
this for us? I'm totally elated after hearing the conference call. Jan
jan mccabe Reply #6054
I went back and reread TokyoMex talking about the Wonderware CD's and he said "I
think their already spoken for" so that answers my question. Jenkins sounded like a kid
at Christmas---you could feel the excitement in his voice. Jan
TokyoMex Reply #6062
Conference Call Raw Notes Stone151
Here is my synopsis of the TPRO conference call. My inferences are kept to a
minimum. My analysis will be posted later.
FINANCIALS
-- Gross revenues qurter on quarter up 42% over q1/97. INcreases purely in base
business, only 100,000 contributed by y2k work. Over 1 million in billables lost
because 15-20 engineers were taken off assingments to get planty2kone DCROM
done on time.
-- Revenue source: 60% consulting, 40% material resales (in other words, markups)
-- Gross profit margin = 34%
-- Expenses up over Q1/97 for (a) Infrastructure, (b) sales and marketing ramp up
related to y2k product and (c) travel related to y2k product. CFO noted increased
expenses "mostly due to higher travel expenses, internal training, recruiting of new
engineers and adding more people."
-- EBITDA, company would have been slightly profitable to tune of 44K if not for
amortization. 240K in interest expenses were saved by calling in subordinated
debentures.
-- Positive working capital of 4 million, total liabilities down 5 million.. Cash of one
million.
MANAGEMENT DISCUSSION
-- Just received a single 6 million $$$ contract from company in Chicago, related to
base business not y2k.
-- "Sharp acceleration of interest " in y2k product out there.
--Cycle time between presentation and orders is only two weeks, an cinredibly quick
turnover.
-- 80% of new y2k interest is by new customers. Jenkins commented that never before
in history of TAVA has he had access to high level management that makes decisions
about multi-plant engagements (menaing, TAVA is tlaking to bigger honchos than
previously), Jenkins is "extremely excited."
-- TAVA is recruting heavily and adding to senior management. Just welcomed Ken
Owens of -Fluor Daniels on board.
-- Verified the new accounts mentioned in press release, Unilever the big one.
-- Due to supply dmenad dynamics, engineering hourly rate has gone from $75-90 per
hour to $160/hour for the y2k work. This is pure gravy as the fees of their engineers
have not gone up correspondingly (COMMENT: Hope no TAVA engineers were
listening in!)
--Marketing is proceeding heavily by word of mouth, may reduce marketing costs in
the long run. Marketing also being helped by IT-y2k firms putting out the word. (And
who might that be, IS It Satan???)
--Jenkins calculates average number of embdded chips is 3,500 per plant.
-- New run of 20K CD-ROMS coming out 11/20/97, some of the discs will go to
Wonderware. No mention of what %.
Q & A
Answers to From Hanifen-Imhoff quesitons:
--Revenues from pure y2k asessments (menaing CD ROM and use of database only,
no renovation work) seen earlier than expected, in Q2/98 rather than Q3 as preivously
predicted.
-- Bae business will be attended to closely even with ramping y2k work.
Answers to StreetCorp Questions:
---- Performance bonds not neccesary for y2k work.
Questions from InvestmentTech
-- Pricing for y2k products as follows: 4K for CD-Rom alone, (b) 5K to access to
database per site, (c) $200 per report per chip/machine. A typical plant will have 100
unqiue devices, so about 20K per site. These are retail prices, per report charges will
be negotiated for larger customers. Jenkins did estimate that 20K per site was the
average
expected revenues taing both retail and bulk work into account. TThe range of per site
costs ghoing into this average is "broad".
-- Strong efforts to enhance marketing and brnading. Wonderware will provide access
to 15-20K accounts. Wonderware getting one call per hour about y2k. TAVA using
'pseudofranchise' model but developing reseller and VAR channels.
Answers to ????
-- TAVA expects the following from AON. They expect y2 products to be marketed
as a means of lowering business interruption insurance costs. AON is after all a
business interruption insurance specliast. THey have a big stake in y2k problems. The
association has already resulted in work.
-- Further marketing being done indirectly by IT-y2k firms, names not mentioned. Ken
Ownes main responsibilities are (a) alliances with IT-y2k vendors and (b) to qualify
subcontracting firms, VARs and other resellers.
Answers to ????
-- TAVA in talks with GM about y2k products. GM has estimated 300K robots
aorund the world with embedded chips. Talks underway about GM getting access to
database. Jenkins says "GM not a client yet, diaglogue going on."
-- Utility business issues. "One y2k project already underway", worth 600-700K.
Jenkins modifying CD-ROM to adapt for utility industry use.
--Marshall Hyman Nonsense. Construciton company is 3.9 million in arrears to
TAVA. Marshall Hyman agreed to "review the bill and take action at end of month."
(My Comment: Meaning, Marshall Hyman is saying "Fuck You"). Because of MHs
screwing TAVA, "money is tight." About 1 million cash.
Answers to RedChip
-- Margins of material reselling about 10%.
-- Added only 12 engineers since 7/97, total staff = 330 but total engineer staff now
280. Jenkins not sure what exact % is y2k devoted ast this time.
Answers to ????
-- MSFT like strategy, give y2k toolkit out to as many people as possible.
-- Tight managemnet of growth, don't want to exceed 400 engineers. y2k and base
work beyond capabilities of 400+ would be subcontracted. THis includes y2l
remediaiton. Reason? TAVA wants to be a resource for Fortune 500 companies well
into next century, so will concentrate on developing long term relationships.
-- TAVA has other non-y2k related software. Products were not mentioned.
--IVAX pharmaceutical referral came from an IT company.
-- TAVA goal is engagement with 3,500 plant sites with estimated revenues of 20K
per site. That works out to 300K per plant (menaing of crouse a "plant" has multiple
sites).
-- They will actively pursue the oil rig and utility substation market.
-- Fluor Daniel Alliance out of piture now (?????) "Not as important as it used to be."
Word of mouth turning out to be good enough! Keith Owens of
descirbed as so frustrated wiht 's indifference to y2k market, jumped ship to
TAVA.
-- y2k database has 4,000 cirtical items in it.
-- Unilever y2k contract categorized as "food industry" work.
Answers to Moishe Spitzer/Smith Barney
-- Competition: One other "large" engineering firm doing similar work, not using same
methodology as TAVA.
Jack Zahran Reply #6065
We cannot forget that estimates are not including the next version of the Y2K CD
made for A&E firms doing their yearly Power Utility work. It appears that this opens
up a huge high margin Software Tools narket @ $20,000 a pop. It sounded to me as if
the Utlities have no choice but to allow the A&E firm to do the assessment. How many
more CD sales does that add on top of already projected market size? It is huge!
TPRO needs more news releases regarding additional Y2K contracts and growth in
base business to clearly show their progress. I am also looking forward to reading
more on their other software offering. |
