1) a drag/lost revenue 2) unexpected gift as it will force QTWW to sharpen its focus, STAY COMPETITIVE and increase profits by gaining market share through vertical integration? 3) other ? Thanks. Nope.. no lost revenue as Agility will maintain it's purchases through, at least, Dec 2014. RUMINT has it that Agility attempted to strong-arm Quantum's CEO into a JV and sharing 50% of the profits of their CNG tank production.. CEO (Olson) rejected the offer.. So Agility went to Hexagon which, I believe, only makes tanks, not fuel management systems. And more RUMINT has it that it will be AT LEAST a year before that JV produces their first CNG tank. Where will Agility get their tanks in the meantime? Quantum, and maybe some from Hexagon (if they have any spare capacity)..
But I have a feeling that Agility will no longer be a priority customer for Quantum. They'll get what the company has available without permitting them to lock up their production capacity.
And when that JV gets up and running, Hexagon will only net 50% of the profit from it. Not a particularly good deal for them.
In the meantime, pay attention to that Ryder PR. They are buying DIRECT from Quantum and will do the installations using their own personnel, thereby cutting out such middlemen as Agility. And, of course, Quantum will provide them whatever technical advice and assistance they require.
With 30,000 trucks, for Ryder to convert them all (assuming they will eventually as it will offer a tremendous fuel cost savings to their customers), it would take up nearly 3 years of Quantum's current CNG tank production.
It's a VERY big deal..
Quantum wants to cut out the middleman.. and capture all the profits.
Right now the "bottleneck" to a major CNG fueled vehicle expansion is the shortage of tanks. Car manufacturers, like GM or Ford, would like to offer more production to interested customers (and there are many out there). But they can only build so many while CNG tank production is ramping up.
So don't worry, IMO, about this short-term correction/consolidation based upon fallacious news and a "Bear Raid". There will be NO revenue shortfall this year, and it's likely we'll see increasing production expansion plans being announced.
It's good for Quantum to diversify their customer base.. Agility is unreliable, and from what I can discern, prone to stab Quantum in the back (I don't think Olson was made aware of what Agility was planning with Hexagon, so I imagine he's pretty p*ssed off..
I added to my position, EVEN THOUGH I'm concerned about a correction in the overall markets. With in 12 months, I'm pretty sure will see a far higher price..
Hawk |
