is... a buy and hold investor of dividend US and Canadian stocks
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I am talking about companies with established products in a manufacturing environment. JBI should ba classified as such by now. THe R&D excuse is getting old. Besides, the context of the post I was responding to was full production. My point is that that is not going to change cost per barrel by much, and it will take a heck of aloof production to offset that SG&A.
Do you think that increased production is going to offset that SG&A or something? SG&A has nothing to do with product cost. Have investors ever questioned or wondered why SG&A is so high? What is it anyway? Ever work out what kind of throughput they would need to offset that SG&A and actually make money? It is astronomical.
I am flabbergasted that posters say such things without explanation. It is very simplistic to say that once throughput increases all that cost will be spread over lots of units so that cost per unit will magically become a fraction of what it was.
I doubt it. First off, the production process utilizes the concept of machine time, does it not? Each barrel of oil uses so much machine time at some standard cost. Direct Cost. All the costs of P2O go into that.
THe only overhead is the lights, utilities etc. I am not a CMA, but.. I would guess that OH is no more than 5 or 10% of the Total Cost. So, with increased throughput, 10% becomes 5%. Total cost per barrel does not change that much. Margins are slightly better.
The main advantages of mass production is better efficiency and throughput. More output means more margin which means more money. It is a question of repaying invested capital with a decent rate of return.
My post simply stated that there was no relation between the $10/ barrel figure and the uptime. There still isn't.
You can't say that fixed cost will decline massively. We have no idea. It is just common sense that the majority of the cost (I would say 80%) of a manufactured item is what goes into it. The catalyst, the feedstock, etc. Machine time wold be charged at some standard cost. Overhead is minimal and will decline slightly with increased production.
I don't think there is any connection between the $10 cost figure and the uptime. The $10 cost figure was contained in a PR a long time ago. No detailed estimate was given.
Uptime is another matter.
My guess would be that that cost would not change much with increased uptime, because it is mostly Direct Cost.
My analysis is still very accurate, regardless of whether or not I included the I, T, or A.
You have pointed out another problem with the SAIC Summary.
It would never have been prepared for project investors as stated. It would have been prepared for JBI and would have used ROI or IRR as the performance measure. JBI could then have done something for project investors, maybe even proforma statements using EBITDA. To do otherwise would be to break the confidentiality agreement between JBI and SAIC. Both sides require confidentiality.
If SAIC were to agree to prepare a docuiment like that they are basically overinflating numbers, cooking the books. They would never agree to that. They do not need to. Engineering firms are very busy.
Another thing that does not add up.
What you have done is some internet research that backs your point-of-view. I could do lots and annhilate your point-of-view. What we are talking about here is investing money in a plant, not an accounting view, which is what you are suggesting. Having been involved in this analysis, I can categorically state that these accounting numbers have nothing to do with ROI and anybody in the Engineering/ Construction industry would agree with me. SAIC does things the same way as any other Engineering firm because they all compete with each other. Having worked for them, I know what they do.
Because this is a plant investment and we are not looking at a business financial statements and trying to do ratio analysis or something, EBITDA is not a useful ROI-type measure.
All you have to do is look at the numbers. SG&A and R&D are 3M for the quarter, approximately. Revenues are 319k. SG&A and R&D dwarf revenue. those costs have nothing to do with the decision as to invest money in an operating plant. They are neither Direct nor Indirect Cost. They don't matte and will be there whether the plant gets built or not.
No professional engineering or construction firm would use this number as a measure of profitability of a proposed investment.
Yes and you are correct, EBITDA does not include the I, T or A, But, it does include R&D. You are wrong there. R&D is completely unrelated.
So we are not talking about the financial community. We are talking about the engineering consulting community, which I know. They use ROI or IRR., not EBITDA.
Your post is completely inaccurate. I have the advantage of having worked on these Studies in my work and actually seen them, but still... you are dead wrong. You seem to be making it up.
Yes the SAIC report does give a figure for capital. As I said, the SAIC report is an assumption. The whole thing. Believe it if you want. They say that they did an Order of Magnitude estimate. The way it is worded and the language is a bit suspect, but they do say that and they give a figure. It is just that the whole document is suspect because that report is an unconfirmed figment, an assumption.
I just looked on yahoo at JBI financials to make sure. I tried to copy the Income Statement, that did not work.
EBITDA includes:
-R&D
- SG&A (this is a bad joke in the case of JBI)
- Other expenses
- and Taxes, Interest and Amortization as you state.
None of these things have anything to do with ROI. They are accounting numbers that are entirely unrelated. Why would an outside firm be interested in anything other than Direct or Indirect Cost related to the investment? Now Ingham could take their analysis and produce an EBITDA number, but not SAIC.Depreciation and Amortization are irrelevant, you are correct, so why would they include it? Investors would need an explanation of what numbers were used and why. btw, there is a form of interest called Escalation on projects. It is basically increasing costs over time. And interest does not matter because it is all fed from operating money. Companies track Cash because they have to get Cash from a bank and pay interest on it.
Capital is just money. I am currently involved in a project with 10 figures in capital. Billions. It is just the Total Cost figure.
I have worked for almost 10 years on these projects, so I can speak with authority on what capital is, as well as ROI analysis.
ALl of the JBI hype is bnased on invalid assumptions. The EBITDA number in the SAIC report comes to mind right away. It is an unproven wild assumption. $10/ barrel is an invalid assumption as Goldsmith suggests. Lots of figures have been cited based on that SAIC Summary, which are basically working backwards from that EBITDA assumption. It is a circular argument that cannot be broken. Even worse, the simple math based on the number of processors. Where is the capital and the ROI analysis.
It is a house of cards... and it is starting to collapse.
Yes!!!!
I bet the government would not give money to a business that was a financial sinkhole like jBI is. You can make it on your own, the loan just helps and creates jobs, like you said. Wait until JBI is profitable, then watch the government loans roll in. I bet also that these government loans require some kind of business plan that shows the business making money that they actually have to stick to (or else the loan gets called in??). Judging from JBI's performance against promises made in PR's, they could not put a business plan together to save their lives....
The case was not a steaming pile of bullshit, or else this settlement would not have occurred. It is a significant amount of money for a company that is not making money like JBI. If it was a steaming pile of dung, it would have been dismissed. The reason why a settlement occurred is that both parties knew that if it went to court it would have gone against JBI, and been more expensive due to legal fees.
since when has the ability to deflect multiple accusations been a definition of success anyway? And I would not call 6 figures any kind of success..
I was not talking about the passage of time. I was saying that the amount of money involved is similar to their Gross Margin in a quarter, hence it is not a trivial amount of money or a parking ticket.
"I expect that there has been an explosion in revenues."
Based on what? Wishful thinking?
To say that cash flow positive will be reached is a huge promise to make. I think the debate will be over what exactly that means when the next financials come out. It is going to be difficult for management to reverse the trend of unprofitability to-date.
Given my definition of success and promise... these statements in the PR are... fluff.
I hope that management and the company can survive the disappointment they will generate unless they increase production by maybe a factor of 10 to become CFP.
how do you know anything has been clawed back in the 4th Q? Is this based on various comments posted on this board, of traffic in and out, etc? I think you may be convincing yourself of something.. with no real information.
This suit is a minor issue for JBI. It is good for them it is cleared up, and that can be seen in the stock price, but it has little to do with underlying operational issues.
It will be good for their business, in that it could give cause to some entities not to want to deal with them. The only other issue for potential partners now is the lack of profitability.
Good point. It is investors money. Question: is this a man you admire?
Quote: "investment and revenues generated. "
so you value JB's accomplishments to date? convincing people to invest and generating some revenues, meanwhile not near enough to repay those that have invested... and purely from progress to date, as shown in the Financial Statements, nowhere near it...
I have met too many of these sales-oriented guys to admire such an accomplishment.
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260k is hardly a parking ticket. It is a pretty fair-sized fine for a company that is struggling to get traction in the market and establish the basic economics oif their business.
The only reason why this is viewed as a small number is that the rest of the company's expenses are so huge. It may be comparable to sales for a single quarter, or maybe Gross Margin (sales less CGS), for a single quarter. With total costs exceeding 1 Million/ month, who is counting?
No matter how you look at it, it is another quarter gone. Investors shouod be upset about management letting it happen.
260k is hardly a parking ticket. It is another item that should annoy investors and is yet another waste of investor's money. I personally expected a 7-figure settlement, but then again I had no basis of experience upon which to base that expectation.
The only reason why someone would say that it is a parking ticket is that they are accustomed to such high monthly expenses by this company ongoing. Sure, 260k is a drop in the bucket when you are spending 1 Million/ month.
It is slightly comparable to revenues... at roughly 500k/ quarter? Another quarter gone... due to management foolishness.
I think it may be even more than Margin/ quarter... ROFL..
They need to rationalize their business, figure out their operations, then that 260k would be more meaningful.
The NYDEC could care less whether JBI is profitable or gets past the stack test stage or not. Their job is to proide a permit provided the proper paperwork is filled out and that it serves it's purpose (does not pollute the environment). Maybe the other companies that tried to get permits simply did not go through with the plans because it made no business sense, and permitting owuld be one cost factor they would have to look at.
Where do you get these quotes from? Can you prove that the NYDEC made these comments?
That is fine. All I am saying is that generally speaking skepticism is a good way of separating the good investment opportunities from the rest. Put your emotions aside. Foolish optimism is just that. I don't think JBII can turn it around to the degree it would have to to become CFP next quarter. Just not possible in a manufacturing organization.
Today I heard that someone wants to build a casino in my home town. One of the bidders is MGM. I think casinos are stupid, exploit weaknesses, etc.... but maybe I own it.
Some things I don't want to be involved in, like maybe Payday Loan shops or cigarette companies... but in most cases business is business. I leave my emotions aside. I think MGM is on the comeback trail....
He may as well have said... "Without this financing, we are screwed". And what was the point of ordering parts without financing in place?
You make good points. I don't quite understand it myself. You are right, unless they function as intended they are scrap metal. But, thee may be a few technologies in thee worth something. To date, the whales have invested 11 Million? It is more or less gone.
Skepticism works in investing. Period. Game over.
I find it funny how shareholders interprets everything that management says or does in the most positive way, making wild assumptions along the way. They made a loose statement about ordering parts. They said nothing definitive about new plant. Well, the most likely assumption is that the statement about new parts is intended to generate false hopes... otherwise they would have announced firm plans for new plant...
I think this is part of a larger picture. Yes, getting plastic from grocery stores is kind of desperate, especially if there are shareholders involved. No way it is cost-effective.
I think these preferred shares are part of an endgame. The preferred shareholders get first dibs on assets in the event of liquidation. Looking at the Balance Sheet, the assets are worth about what the Preferred Shares raised. And they get preference in the event of liquidation.
On top of that, they can turn over their shares, selling them at .80 and buying new ones at .50.
In any event, the whales end up with what is left of this company, at the expense of common shareholders.
Hey... take a look at our performance so far this year... Happy New Year...
If you choose to believe the report, then yes JBI is a great investment. That is your decision. It only proves success to people who choose the believe the report. Proves nothing to me. You should invest all your assets and available capital in JBI.
Maybe you missed the point. It would have originally been an internal JBI document. I don't think that the engineering firm would have been informed of the investment purpose. That would put them in a Conflict of Interest position right away. A third party engineering firm is supposed to be objective. They are not supposed to know the reason why they are doing the analysis. That is highly confidential information. Usually these things are done to look at the deployment of internal capital.
Now, I have been a member of project teams that were composed of Owner and 3rd - party engineer. Everybody knew everything from an operational standpoint. We worked as a team. If I had a job interview tomorrow and was asked details, I would not divulge. First time in my career I can ever say that, but it is true.
But, if it was intended for investors? No, no one needs to know. I am sure word would get out. The negotiations with the whales would have been confidential.
If you read it, it is really stating the obvious that the customer (JBI) already knows. In that sense, it is really meant to explain the document to an internet reader that knows nothing. In that sense, it works quite well.
How does a "standard boilerplate disclaimer" apply here? The PR implies that the leaked document is true, in which case they are forecasting an EBITDA that is huge. This is material, so a disclaimer does not apply. It is either true, or it is not. Disclaimers apply to known unknowns. That is a Risk Management term, but it is applicable. Forward-looking analysis can always be wrong, even in Financial Statements. But, this is over an analysis that supposedly took place. It is either true, or it is not. There is nothing standard about it.
If it turns out that that leaked report is not authentic, then they have misprepresented again. Their only out is if they were actually referring to some other leak. Either way they would have to explain themselves.
all that is nice. It has great appeal to sell stock. But.. it has to make money... that is the kicker will all these alternative energy things.
Right in the document, 3rd para. right after the bullets.
"We also prepared an order of magnitude estimate..."
What it says they did is logical. Layout is important, presumably they wold try to reduce the footprint from what it is now, basically a demonstration setup. And that would change the operating characteristics from what they are now. Actually, layout is a critical design step.
But an OOM estimate is not applicable. +- 50% accurate?... no. Should be level 3 or better.
This document appears sillier every time I read it. Tell me something guys, this document was internal to JBI and confidential to both parties. The fact that it was "leaked" proves that. If that is the case, does the first paragraph make any sense? Is it even necessary? Who is it addressed to? The only intended audience would be the unwitting reading it on the internet.
Btw Commodity price changes is about the most common Risk Factor in projects. There is usually some kind of mitigation strategy. The last projexct I worked on, they had Options on a commodity price. It went the wrong way and they did not get an expected payment of 9 figures (hundreds of millions). This was m$oney(sic) slated for the project which suddenly was not available.
Well, you are correct, but any report like this would have to make some pricing assumption such as NYMEX pricing as of a certain date. I worked in Mining for a time and commodity pricing was a key assumption for any kind of analysis. The basic assumptions deserve mention on the summary page, along with the Capital Cost assumptions etc. Pricing used for revenue estimation should be included in the Summary along with ROI. Not EBITDA.
Where did you get that bit about the fuel prices? The report Summary does not mention anything about the pricing basis.
You guys don't get the fundamental purpose of these reports and you are fooling only yourselvea. An Order of Magnitude Study is part of a widely-practised Front End Loaded engineering design methodology designed to do as much analysis up-front as possible so as to totally understand what you are doing before you build anything. An Order of Magnitude Study is an initial study and has an accuracy of +50/ -40 %. Nothing is built until a Definitive Estimate is ready which has an accuracy of +-10%. Any Design Changes are supposed to be included in those tolerances. So supposedly SAIC did an Order of Magnitude study on something that was already built. Does not make sense. These definitions can be easily found on the AACE website or elsewhere. The report that was leaked does not make sense and JBI cannot be legally held to it's accuracy, can they? How interesting...
I remember that yes. Sounds like they just don't want to reveal anything. Keep it at a high level so no one knows what is really going on. I know the Q says parts have been ordered. It is a stupid statement that does not resonate with people who are in the know about how these things are done and it is not helping JBI. Yes I know about the RKT "deal". Not much happening. As far as I know RKT is not putting up any funding, the only advanatage to it is permitting. SO no announcement, what site? Pretty meaningless. I think they would announce a 4th machine.
And yes it is a guess, an opinion.
There have been no announcements of new processors being erected. If they were going to do something serious, they would have announced it. Makes for great PR. Without building any new plant, there is no point in ordering anything. Makes no sense. So my guess is that this is just a fluff statement meant to generate interest.