That $5.8 million charge against Derivative positions (warrants) really hurt the quarter's results. From what I see, they only suffered a $200K loss on the Zephyr Wind Farm, so they should have been profitable minus that huge charge.. (which they hope to have sold within the next few months, given a fair offer.. YEAH!!)
On the upside, in the CC, they stated that, of the 9.5 million warrants outstanding, 1 million are probably never going to be exercised, being so far out of the money. However, 8.5 million of them should be exercised by April of this year.. If they don't exercise, they will expire. CFO expects to realize $25 million from that exercising, so that will add to cash reserves for expansion.
And speaking of expansion, the CEO has this to say..
"We're also going to build out capacity that is well founded and well based on what we are seeing happening in the industry. But we want to be able to add capacity. Could we -- after we add a second facility, that's another 25,000 units, could we have another potential issue in 2016 or 2017 that we just don't have enough capacity? That's -- and we will -- every month, we're monitoring and trying to understand our expansion plans. But yes, we could eventually be tripping up with where this industry can go in the next 3 to 5 years. That 50,000 tanks will seem like nothing. And that's -- I mean, that's a bold thing to say. But if we're talking 20% adoption rate by 2017 in the heavy-duty market, that is a lot of cylinders, especially -- earlier in this call when we're talking about it could be anywhere from 3 to 5 cylinders per truck. It's a lot of cylinders in the next 5 years that potentially this industry needs." seekingalpha.com
Figure $3,000 to $5,000 per cylinder, based upon previous calculations, and that's a lot of revenue at 31% margin. Then add potential sales for fuel systems.... I'm liking what i'm hearing..
I really hoping to see the CNG vehicle markets taking off by the end of this year. But I think they are smart in being disciplined with regard to their expansion plans. It's important to see the demand increase from customers, but also it's tricky as their has to be a sufficient supply of CNG tanks/fuel management systems to meet any surge in demand.
But I think Mr. Olsen does a pretty good job in explaining the potential.
What I did find disappointing was the lack of any analyst questions related to Hydrogen tank demand. I really want to see it nailed down as to whether the Toyota FCV is using a Quantum manufactured tank. All of the specifications for their tank match what I've seen related to Quantum's tanks. And Quantum, several years ago, developed a 10K PSI fueling station, which Hydrogen FC vehicles would require in order to obtain sufficient onboard fuel storage capacity.
Anyone else have some thoughts?
Hawk |
