To the "thread,"
Advantages of Simula's 16G seating:
1) reduced weight. Over the course of the year, airlines using the SMU models save money on fuel costs.
2) reduced width. With a 5/8" savings on each seat, virtually every airline configuration will allow for an additional row of seats on an aircraft, increasing revenue miles per trip.
3) engineering superiority. Its ability to stay attached to a 9G rated floor (which can't be increased in capacity, because the additional weight would be cost prohibitive to the airlines when flying the "upgraded" floor), means that passengers have a better chance of surviving a "survivable" crash. Moreover, it meets the FAA's existing regulations.
For what it is worth, the FAA is expected to issue regulations on retrofitting the existing airliners some time in the next 2-3 months. Although we are dealing with the government, and are therefore subject to delays, it is possible that we will have more information on this in short order.
Today's announcement of additional 16G orders was important. For Simula to garner $ 24 million in orders in one quarter is indicative of continued market share gains and absolute acceptance of the product. It should be remembered that prior to the first quarter of 1997, virtually *no* 16G revenues came to Simula. For the company to grow to an annual $ 96 million order run rate in less than four quarters is a triumph for the company's technology.
Simula detractors can still point out that the company hasn't made any money on the incremental sales, a fact that is both obvious and likely to be shortly moot. With the San Diego plant consolidation a mere one quarter away, one can reasonably expect this product line to achieve profitability within the next few months.
We are approximately 9-12 months behind where I expected to be in Simula's development. Nevertheless, short-term price action is of secondary importance to an investor (traders obviously feel otherwise), and the initial reasons most of us had for entering this position still exist: growing acceptance of 16G seating and at least "average" profit margins from that effort, and achieving market dominance in side-impact head protection with the ITS. It should be noted that NHTSA has not yet tested any competing technology in that arena.
I remain of the view that we will get a large percentage of the side-impact head protection market. Perhaps we can all question the efficacy of that investment thesis if we do not see other orders (beyond BMW) by mid-second quarter...but until then, I continue to view this situation as on-track.
Have a good evening. |
