The following was posted on Motley Fool in responce estimates of very high sales this last quarter:
Robert, your estimate of 500,000 to 800,000 pounds would be very optimistic, but not impossible.
As they were at essentially zero production at the beginning of the quarter and have stated that they want to get to 70% by the end of the second, a straight line assumption would put them at about 35% at the end of the first. If you integrate the area under the line, that would put them at about 17.5% for the whole quarter. 0.175 X 5,000,000 / 4 is 218,750 pounds, or $2.2 M in revenues which would take total carbon fiber revenues to about $8 million for the quarter. To get to the 800,000 pounds, the per cent of capacity would need to be 64% AVERAGE for the quarter, meaning they almost certainly would have to have exceeded the 70% target during the quarter. Not impossible, but HIGHLY improbable. Improbable enough that I will bet a LOT of money it hasn't happened.
Further, the operational margins, if any, at that (218,750 pound) capacity would be lower than that of a fully operational facility due to fixed costs, no matter what the percentage of fixed costs are. I find it tough to argue with projections of $0.18 for the quarter, especially since analysts tend to be well led.
If they produced their own precursor for the carbon fiber, even 500,000 pounds of carbon fiber would represent 1.1M pounds of spun acrylic, at $1.5 per pound, this is not a big thing for the Hungarian operation, representing less than 5% of gross sales, not eventful enough to merit a lot of attention.
In short, the KEY number to watch is the carbon sales number. $8M would put them on target for the operational capacity they targeted. If they did $8M or marginally better, I would consider that a buy signal. Less than $7M, there are problems and the whole target and timing become questionable, $10M or more, and I'll post a personnal apology about everything I said about the production problems.
Regards
Bill
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