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Speaking of volume, the last 4 days have been quite amazing. We didn't break the daily record but we shattered the records for any 2,3, and 4 day span.
The stock skyrockets 28% in 2 days on no news and you figure it will probably backfill a little bit on light volume, but no, it actually goes up a little more the next day, on strong volume!
I had been thinking that analyst coverage would have to wait until they put out their audited year-end numbers but now I'm wondering whether analyst coverage is going to start sooner than that.
Not sure how smart these guys are, to have held off on these buys until after year-end tax loss selling was done. But we'll take new buys any day, any time.
The next week or so should be interesting. There is no material amount of stock becoming free-trading until 1/19, when 164K shares that had been issued to an investment firm will become free-trading. By that point we may be welcoming these shares coming onto the float, to cool this thing off a bit. Those shares were issued when the stock was at $13 (split adjusted) so it would seem unlikely that they would get blown out on the market at much lower than that price.
FTE Networks moves to New York Stock Exchange
Laura Layden, laura.layden@naplesnews.com; 239-263-4818 Published 3:08 p.m. ET Dec. 14, 2017 | Updated 3:10 p.m. ET Dec. 14, 2017
FTE Networks is moving on up.
The Naples-based technology, network-building and construction business is now listed on the New York Stock Exchange.
Shares began trading on the major exchange Thursday, moving over from the less formal and less-regulated Over-the-Counter Bulletin Board.
"It was always our aspiration to get to a major exchange," said Michael Palleschi, the company's president and CEO. "It has been in the works since 2015."
To be uplisted, the company had to meet stringent requirements for the volume of publicly traded shares, total market value, stock price and number of shareholders.
The switch comes with more reporting and disclosure requirements.
"It does add a lot of transparency, which is good for our customers. Our customers love the transparency," Palleschi said.
FTE has reached several important milestones this year.
The company reported record revenues of more than $79.1 million in the third quarter — a 56 percent increase over the previous quarter and a much bigger spike over a year ago when they came in at about $3.8 million.
The company also swung to a profit in the last quarter, reporting net income of $2.5 million, compared with a loss of $5.1 million a year ago.
More: FTE Networks reports record quarterly revenue
In April, FTE completed its acquisition of Benchmark Builders, which provides full-service interior and general contracting services, and FTE continues to grow and integrate that business into its operations.
The company recently introduced CrossLayer, a technology that enables software and hardware ecosystems to be deployed on-site, which can deliver carrier-grade network and cloud services to building tenants. More than $4 million has been invested in the technology, described as a one-stop solution.
When it came time to choose a major exchange, Palleschi said the NYSE seemed the perfect fit because Benchmark Builders already had a good working relationship with it.
Benchmark renovated the exchange and its historic building last year.
With the listing on a major exchange, FTE hopes to expand and diversify its shareholder base.
"We believe we are now better positioned to enhance stock liquidity and attract a broader range of institutional investors," Palleschi said. "We continue to advance our strategy to develop new growth opportunities across our complementary businesses and are optimistic about our prospects heading into 2018 and beyond.”
On Thursday, FTE announced Benchmark had been awarded more than $37 million in new interior build out and infrastructure contracts. The contracts are further evidence the company's three lines of business are "working well together, and they are very synergistic," Palleschi said.
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Above from Naples News. Quite an interesting reason for why they chose the NYSE American exchange vs. Nasdaq.
I hope the company is aggressively working toward getting lined up with a heavy-hitting IR firm, one that can help get them in to the important invitation-only investment conferences. This is a tremendous story and needs to be told to the right people.
We are just days away from the effective end to tax-loss selling season (I know it doesn't technically end until the last trading day of the year but once you hit the last trading day before Christmas its effectively over since the trading volume is so low in the ensuing week). For all those folks who have been on the sidelines waiting for the tax-loss selling to subside before buying or adding, this might not be a bad time to step up the plate and take a swing. Last year, after a long drawdown similar to what we've seen in the last 9 months, the stock price bottomed right around now and then proceeded to basically triple in the next 3 months or so.
Yes, over 1.5 years ago, 5/26/16 to be exact.
I don't understand your question. What dilutive shares are you talking about?
Let's talk FTE dilutive securities. The Series D & F preferred are no longer outstanding, see footnote 2 of the latest 10Q. There are 2 convertible preferred series outstanding, A & A-1, but they have only about 42K shares of common into which they are convertible, less than 1% of the number of outstanding shares.
A new Series G convertible preferred was issued a few weeks ago but that was issued in exchange for an equal number of shares of common, so that's a wash (i.e. the number of dilutive common shares went up by exactly the same amount that the number of actual common shares outstanding went down).
There is a $12.5M note payable that is convertible at $11.875, but only if the company becomes in default on that note, and they are not in default, so at this point that note payable can't be considered dilutive.
There are some warrants that are in the money but the shares into which such warrants are convertible are not registered, which makes it highly unlikely that such warrants would ever get exercised. If you exercise a warrant when its underlying shares are not registered, you have to wait 6 months before you can sell those shares. Given the volatility in the FTE stock price, it would seem unlikely that anyone would accept the risk of the stock price staying over the warrant exercise price for 6 months after exercise.
So the short answer is, there are no material dilutive securities outstanding for FTE, from a practical perspective.
Daxtech, great to see them update their presentation. One interesting tidbit from the new presentation is that they say they have 2.4M shares in the float. This is a lot more than I thought and I'm actually happy to see that since it should make a potential institutional investor a bit more comfortable establishing a position in the stock, than if the float were a lot smaller.
Today's crash on good news more than likely was just some selling on the news and profit-taking from the mo-mo traders who had jumped in when the company announced they were uplisting. If the downswing continues right through the $9.50 mark (which is where it closed on that massive volume day a few days ago), on big volume, then we may have to re-assess things.
Quite an amazing 2 days here. The stock is now just above the price at which $12.5M of notes issued in the Benchmark acquisition are convertible into stock (i.e. $11.875). So I guess folks were trying to buy as much of this stock as they could in the last few days, at prices that would not result in them getting diluted out by these convertible notes.
This stock is going to start showing up on a lot of filter screens in the coming days and weeks, and a lot of folks are going to be introduced to the story for the first time. In light of this, I hope that the company finds the time to update its presentation on its web site, to refer to its new trading venue and to show their stellar 3Q numbers.
The best thing about yesterday was the truly massive volume. That was by far the most volume for any day in the past 2 years and would have been nearly 1 M shares prior to the reverse. I think we had a lot of folks who had sold right after the reverse was announced, who had been planning to buy back if & when the uplisting was announced, and they ended up deciding to buy right back in yesterday due to the big rally in the stock.
The big volume that accompanied yesterday's move tells me that $9 should be a floor of sorts going forward, as long as there is no big negative news that comes out. Hopefully the stock spends a few days consolidating here around the $9.50 mark so it can shed itself of the few remaining weak holders, before the next leg up.
common, great to see the uplisting announcement, its about time. As it turned out they didn't need to do such a large reverse split but its better to be safe than sorry I guess.
The big question now is, will there be enough shares around to soak up the large amount of buying that will come in as a result of this uplisting, to maintain an orderly market for the shares. Hopefully the tax loss sellers will continue dumping into the likely rally here.
If anyone has been on the sidelines it might not be a bad idea to pull the trigger on getting into this stock in the next 2 weeks, while you still have the benefit of tax-loss selling keeping the stock price down.
common, I would imagine so. I'm not that familiar with NYSE since I mostly invest in small cap stocks.
Tradeforprofits, given how thinly the stock is trading, I'm not sure how much validity TA would have on the chart. But its nice to hear your thoughts on that in any event.
It was encouraging to see some big bids pop up this afternoon. It will be interesting to see if those guys decide to keep those chunk bids up there and if so, whether the tax-loss sellers start hitting those bids at some point.
So far it has been disappointing that the company has not done anything to promote the stock, even after they inferred that they were planning to do that sort of stuff in their shareholders' letter that came out awhile back. Not sure why they don't get another IR firm to work with them. Maybe they are thinking that folks are going to just start buying the stock because their financial performance was so great last quarter. That may be the case for the listed stocks but not the OTCBB stocks. They need to go out and start beating the drums.
The company has now maintained a bid price >$4 for a solid month straight. It would seem that, if the $4 bid price requirement had been the only unmet requirement for them to get listed, they would have been listed by now. So now its back to the drawing board. I go back to what I was thinking about this awhile back -- that Nasdaq is asking FTE to file a registration statement for all that stock it issued privately in the last couple of years, before they will allow an uplisting. If so, hopefully FTE sees fit to get that registration statement filed in the next few weeks.
It was good to see this. Even though See-Through is "sell side", at this point this company can use whatever help it can get.
I'm bullish about the stock but I thought that they went too far in calling for such a high PT. They could have called for something like $35/share which would have sounded a little more credible, and then if it started approaching that price they could then always move it up higher.
They are expecting $83M in revenue, which would be quite an achievement if FTE can get there. With the substantial backlog they had as of 9/30 it certainly seems doable.
I imagine there have been a lot of folks who became attracted to this story after the 3Q earnings came out, but who were reticent to buy in the face of the stiff headwinds caused by the combination of the aftermath of the reverse split combined with the fact that we are in the peak point of tax-loss selling season. In light of the rally in the stock over this last couple of days, it will be interesting to see whether these folks continue to stay on the sidelines, waiting for it pull back again, or whether they just jump in and start buying.
FTE Files Application for Uplisting to Nasdaq
February 07, 2017
NAPLES, FL -- (Marketwired) -- 02/07/17 -- FTE Networks, Inc. (OTCQX: FTNW) ("FTE" or the "Company"), a leading network infrastructure solutions provider in the technology and communications industries, today announced that it has applied to list the Company's common stock on the Nasdaq Capital Market. Once accepted, the shares will begin trading on the Nasdaq exchange and will provide investors with added benefits such as improved liquidity and increased trade execution speed.
"Uplisting to Nasdaq is an exciting opportunity for FTE Networks," said Michael Palleschi, Chairman and CEO of FTE Networks. "We are confident that once our application is accepted, trading on Nasdaq will offer investors increased visibility and improved liquidity. Furthermore, we believe this will enhance shareholder value, capture a broader range of institutional investors attracted to our growth proposition and provide for greater access to capital. The filing of this application is further evidence of our long-term objective of penetrating and disrupting the marketplace with FTE Network's business solution offering."
The uplisting is subject to approval based on the Company's ability to meet Nasdaq requirements.
About FTE Networks, Inc.
FTE Networks is on the leading edge of network transformation helping communications service providers, government and enterprise customers evolve their networks to meet advancing technology requirements via network infrastructure, and edge computing solutions to quickly enhance service innovation and deliver new revenue streams. With a focus on smart design, open architectures, and consistent standards, along with expertise in building, operating, and maintaining networks, FTE solves complex network and system challenges that reduce costs and deployment time to accelerate delivery and optimize performance of network infrastructure. Operating five (5) industry segments; Data Center Infrastructure, Fiber Optics, Wireless Integration, Network Engineering, and Compute to the Edge, FTE Networks is headquartered in Naples, Florida, with offices throughout the United States and Europe. For more information, please visit: www.ftenet.com.
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Hopefully this 9+ month long odyssey is about to come to a conclusion.
Scott, what would be a lot more effective than doing that would be getting out to the investment conferences. I'm disappointed that they are apparently not going to the LD Micro conference this year, which is next week I believe.
This stock desperately needs some new blood -- folks that weren't around to suffer through the disappointments of the pre-Benchmark era. That new blood it out there, FTE management just has to go find it. Just putting out great numbers will not get the job done, as evidenced by what just happened over the last week or so.
What would also help immensely is having quarterly conference calls. I really hope they consider this in conjunction with announcing 4Q numbers.
Scott, I agree that the stock is not acting like they are going to announce an uplisting very soon. But it looks like the company doesn't leak news given that they put out a blockbuster quarterly earnings release and the stock didn't run up very much in the days leading to that release.
Some companies use their SEC filings as vehicles to promote the stock and I believe this company may have in the past but in recent quarters they have not, merely providing the bare minimum disclosures without any embellishment. The company mentioned the uplisting in the last bullet of their PR: "Advanced uplist strategy with recent reverse stock split".
If I take their adjusted EBITDA of $11,604K that they reported last quarter and dock that for the $2,033K change in warrant liability (which I believe is appropriate), this says, in my way of thinking, they had adjusted EBITDA of $9,571K last quarter or about $38M annualized. This says they are trading at an EV/EBITDA ratio of just 3.3, an absurdly low ratio for a company that is growing so much.
Their interest coverage ratio (i.e. adjusted EBITDA / Interest exp.) was 5 X for the quarter, which is approaching investment grade. They should be getting a lot closer to being at a point where they can refinance their senior debt and get a lot better terms than what they are having to give on the present loan. The only question I have on that is, would the new lender insist on waiting until they get their 2017 audit completed before issuing their new loan. If so that would push out the closing of the refinancing to March/April.
They have $15M of debt due by 9/30/18, which sounds like a big number but repayment should be doable given that they are now generating nearly $8M of discretionary cash flow (i.e. adjusted EBITDA less interest expense) per quarter.
Schneid, per the link you provided to the listing standards (thanks for that), the tangible assets requirement is only applicable if you are trying to use the $3 closing price requirement. If you are trying to use the $4 minimum bid requirement there is no tangible assets requirement.
None of the listing requirements address liability levels so there is no need for FTE to "quickly lower liabilities" to get listed on Nasdaq.
bearcat, schneidku answered most of your question I believe. In addition to the quantitative standards, based on memory from situations observed many years ago (which could well be inaccurate), I had thought that Nasdaq also had some qualitative standards, one of which is that they don't like to see a lot of the company's stock being unregistered. If that were the case, FTE would have had to file a registration statement for their unregistered stock before getting uplisted.
But now I'm thinking that that must not be the case since if it were, they would have done that before declaring this reverse split, since the reverse is usually the last thing a company does before getting uplisted.
Schneidku, you gotta get off the schneid there buddy (sorry, just couldn't resist!).
1) Why don't you think they meet the minimum bid price of $4? The stock has traded well above that price since the reverse and the bid price has never gone lower than $4 (or anywhere close to that level for that matter).
2) They have 2 years of audited financials -- see latest 10K. The 10Ks for each of the last several years are on their website. They have a year from listing to hold their first annual meeting I believe.
3) They had the opportunity to have NASDAQ do a preliminary review of the company to see whether it qualified. Unless they were complete idiots they would have taken advantage of this. Unless they were complete idiots they would have made sure they qualified on all other points before doing this last step, which is to do the reverse and get the minimum bid over $4. If you are concerned that a company's management are complete idiots then you should probably look to invest elsewhere.
Quite a good quarter, here are some initial observations:
1) Great to see them provide the reconciliations of non-GAAP #'s to GAAP #'s. This is what the SEC is looking for.
2) Not sure why they left out the $2M income from change in warrant liability as an adjustment to get to "Adjusted Net Income". Most companies make this adjustment. If you make this adjustment their Adjusted Net Income per share goes down to $1.24 for the qtr., which is still quite an amazing figure considering where they were just a quarter ago. At the current stock price this puts the annualized adjusted earnings multiple at just under 2 X, an absurdly low multiple given this company's growth rate.
3) Not sure why they couldn't have provided at least a summary balance sheet -- most companies provide that. Makes you think, what are they trying to hide?
4) Glad to see them get this out today vs. waiting for Monday since next week is a short week with Thanksgiving and this will give the stock a full week to run before everybody takes off.
5) After giving this some thought I'm actually glad they didn't include any guidance for 4Q, since the earnings #'s are big enough news for the market to digest for now. This leaves open the opportunity for them to issue prelim sales numbers in, say, early January.
Good point big orange, it could be exactly that situation at this time. I haven't had a chance to look at the trading the last 2 days -- are the low offer prices coming from different market makers or the same one? For awhile they were coming from just one, CDEL.
I agree that there often is a knee-jerk reaction to sell when a company announces a reverse split, especially one with such a large ratio as this one.
I believe that FTE management has taken this situation into account with respect to determining the timing of the announcement of the reverse split. Have the RS announced 2 weeks before they announce a very good earnings report, so that the weak holders who "do not have any confidence in the company" can get the heck outta the stock now, before the good news comes out. Hopefully in conjunction with 3Q earnings they also put out some earnings/revenue guidance for 4Q, which ought to be pretty good. Hopefully they also have one or more stock analysts lined up to initiate coverage of the company once it gets on Nasdaq.
The company has been unable to increase the price per share of this stock, that is a given. Is that because the company has not grown, and grown profitably, or for some other reason?
zagdad, I don't know who the "dumpee" is. I don't get the Vickers service that would provide the Rule 144 filings -- that would give us a clue if it was someone who had stock that had been privately issued. That service is pretty costly, something like $160/month, so I don't get it.
So all I can do is speculate. My experience is that, usually when you have a large seller of an OTCBB stock it is someone who got their stock privately.
When the stock was > $.40 and we started to see the dumping, I was thinking it was the guys who bought in the PP around this time last year, who paid $.40/share for their stock. But then the dumping continued at lower prices, which now makes me think it is someone else, at least at this time.
The company has had to issue a bunch of shares to settle debt and for consulting services in recent years. My hunch at this point is that it could be those guys selling.
I believe the company should be able to get the stock price back up once they get back to the normal ticker symbol and get listed on Nasdaq. The key is, how quickly can they start getting out to investment conferences and get analysts to start covering them.
zagdad, I initially was thinking the same thoughts. But when you look at it from the perspective of them doing that large reverse split last year and that was still not nearly enough to get the price high enough to get listed, I'm thinking that they decided to err on the side of caution when it came to this reverse split.
They simply could not afford to see a situation where the price does not stay high enough to get listed. They know they had this huge seller that has been dumping stock for the last several months. Who knows how this seller is going to react to this reverse split announcement? He could start dumping it even a higher rate than he was previously. So they had to get the stock price so much higher than what was necessary, that even if this turkey started dumping the hell outta the stock, the price should still stay above $3.
The other thing to keep in mind is that there is another side to this coin. FTE can do a forward split of the stock also. If they have a good quarter for 4Q, and the CrossLayer business starts to take off, it would not be a huge shocker if they declare a forward split of the stock soon after announcing 4Q numbers in early April.
Scott, registration statements are filed with the SEC, not NASDAQ. FTE has yet to file any registration statements with the SEC. Given that 6 months have now passed since the Benchmark acquisition, those shares are now free-trading under Rule 144 so I'm not sure whether NASDAQ would still want to see a registration statement filed. Same goes for the shares issued in the private placement through Laidlaw last year around this time.
My hunch is that Nasdaq has in fact not required a registration statement to be filed for these shares, since if they had asked for this, one would think that the company would have filed this prior to the reverse split, since it takes anywhere from 3-10 weeks to get these things approved by the SEC.
Its great to see the stock price come roaring back after the initial knee-jerk hit this morning. I was traveling so I couldn't pull the trigger on any new buys. Probably just as well since I already own too much of this thing as it is.
At this point I'm thinking that the Nasdaq has told the company that if they keep a bid price > $3 for 10 straight trading days they can be listed. So since today is day #1, that period would end on Friday 11/17. They can file a 5 day extension to file their 3Q 10Q on 11/15, which would then allow them to issue a PR on Monday morning 11/20 that would hopefully say, effective with the opening of trading that day, they are listed on Nasdaq, and then issue the 3Q 10Q after the close of trading that day, together with a PR. In that PR, I'm betting (hoping?) they also give guidance on 4Q revenues.
Traderfan, I agree, it seems likely that this reverse is in connection with a listing on a national exchange. I would not be surprised if we see a PR before the market opens on Monday saying that the company has received conditional approval to list on Nasdaq CM pending them having a stock price of > $3 for say 2 weeks, and that they have done this 1:25 reverse so that they would essentially ensure that the stock stays over $3.
I don't fully understand why they thought they needed to do such an extreme ratio of reverse split, it seems like overkill. Now there will be very little shares in the float. I wonder if they also did a private placement that they will announce on Monday also. I would be a bit disappointed if they did this but its not the end of the world if they did.
There is a decent chance that the stock will sell off in a knee-jerk reaction to the reverse split announcement. If that happens I will seriously consider buying more, even though I already have a very large position in this stock.
Welcome to the board stockonhigh, this report by FastMovingStocks was well-timed it appears. It was pretty well written and accurate, except I don't know how they got only 3.8M of shares in the float. I get something closer to 6.7M shares to start, plus another 7.6M shares from the equity raise that happened about a year ago which never got registered but which are now free-trading under Rule 144.
From a long term (or even intermediate term) perspective, I'm not sure having a tiny float is a good thing anyway. The tiny float would serve to cause any of the big boys to shy away from buying the stock since it could become a roach trap for them.
I'm psyched to see the buying hold up in this thing, even after the news has come out. We now have just 2 weeks to go before getting the 3Q 10Q, and I believe there is a good chance that the company could put out some guidance on 4Q when they issue those numbers. We still obviously have a big seller in our midst but the more shares we can wrest from his hands before the 3Q earnings come out, the fewer he will have left to rain on the post-earnings parade.
Now all we need is for the company to present a few investment conferences. They said they would be doing this so hopefully they will come through on this sooner vs. later, now that the stock price chart is looking pretty good.
Its interesting that they have decided to try for a patent on their CrossLayer technology. The downside of going for a patent is that you have to disclose how it works to the public, which might give someone the ability to copy their technology and if FTE never knows about it they can't defend their patent.
Great to see them finally officially rolling this out. It makes sense that they had to wait until they announced the good numbers in 3Q before putting this PR out, because now they are a solid company that is generating gobs of recurring cash flow so they should be around for years to come, to continue to manage the installations of this CrossLayer business.
This is yet another benefit of FTE acquiring Benchmark, in that it beefed up FTE's financials to the point where they could enter into businesses such as CrossLayer that were predicated on the customers being comfortable that the company is going to survive going forward.
I hope that going forward, FTE provides P&Ls broken out by each of their 3 businesses, so we can see how each one is growing. They each have very different gross margins I believe.
Looks like the big seller really wants to unload a lot of their position before 3Q gets announced. Not sure why they have this timing, but maybe they need/want the funds for another investment. Or maybe they are worried that once 3Q comes out the volume will dry up and they will have no one to sell to.
It will be interesting to see whether the company goes back to trying to provide some sort of future earnings guidance when they announce 3Q numbers. They have gotten away from that recently but I'm wondering whether they have gotten comfortable enough with their numbers after having owned Benchmark for > 6 months, that they will be able to at least provide some short-term guidance, such as what range of revenues they are expecting for 4Q.
The best part about today's news was the significant ramp in gross margin vs. last quarter. That tells us that the legacy FTE business must be ramping up by more than the Benchmark business. The FTE business has a lot higher margins so growth in that business would have the most impact on the bottom line.
The most recent See Thru Equity update had projected a 22% gross margin for this company for this year. They are now up to 20%, not too far away from that estimate.
The operating profit of $5M is impressive considering that (by my estimate) about $3M of amortization blew through the P&L last quarter due to the purchase accounting for the Benchmark acquisition. Without that non-cash charge the operating income would have been $8M for the quarter, not too shabby considering their quarterly interest expense is under $2M.
They are obviously generating cash at a good enough rate to get their senior debt refinanced at this point. The question is, do they do it now or wait a little longer and probably get even better terms on the new debt than they would if they refinanced now.
The only fly in the ointment that I could see is that backlog slipped a bit from last quarter, but I have a hunch that they will be able to beef that backlog back up now that they got this quarter announced. The large companies that they deal with will now be a lot more comfortable dealing with FTE and getting into deals that depend on FTE still being around 3 years from now to be available to service the work done today.
The timing of today's PR was interesting. The 10Q is due in just 3 weeks so they could have just waited for that before putting this out. Maybe they are attending an investment conference in the interim and wanted to be able to mention these results at that conference (in which case they would need to do a PR first, as they did). Their shareholders' letter said they intend to present at more investment conferences. Hopefully they keep us updated on that process via the IR calendar on their website.
Great to see the massive volume today. We don't need big price moves right now as much as we need big volume. In fact, the fact that the stock price barely moved on such massive volume may entice more heavy hitters to step in and start buying, knowing that there is some sucker to keep selling them shares. The big boys can build a big position in this thing at this point without having to bid it up to the moon.
The other thing that could happen is that we see some huge cross of 1M shares +, where the big seller(s) get taken out in a single shot.
PCE, after giving this some more thought I have just two questions/suggestions, one for FTE management and the other for you and your buddies:
1) I hope FTE considers having quarterly conference calls. I realize this is very unusual for a company that is trading on the OTCBB but its not unheard of. If they are concerned that they would get a lot of stupid questions on the call, they could limit the shareholders' participation to just having the ability to submit questions via email prior to the call, which management would be able to sift through and answer only those it deems appropriate. I believe quarterly conference calls would go a long way toward answering folks' questions on what is going on with the company, and would do it in a way that ensures that FTE management stays on the right side of Reg FD. If they start answering questions being submitted by some guys from an internet chatboard, that could potentially get them in hot water.
2) I hope that you and your buddies ask FTE management if they are aware of who the big seller(s) is/are, and if so, whether they could share their identity and contact info with you. That way, maybe a line of conversation could be started that may end up with the big sellers and your big buyers doing one or more "crosses", where you guys just take out the big seller in one big trade, for a negotiated price. Otherwise, it seems pretty stupid to be farting around with these little jabs back and forth between your buddies and the big seller, for months on end.
PCE, it looks like you and your friends have perfect timing here, based on the shareholders' letter that FTE put out today. To go from $51M to over $75M of revenues in a single quarter is pretty impressive. And with improved gross margins no less.
It should be a pretty interesting day of trading today, to say the least.
Today's letter from FTE has engendered some more questions but I don't have time to type them out now, will try to do that tonight.
PCE, thanks for trying to do this. My hunch is that you will not succeed in getting any sort of real info from management but heck, its worth a shot if you are willing to spec the time and effort.
Here are a few questions that I can think of off the top of my head, to be addressed to FTE management:
1) What are your thoughts on engaging an outside firm to assist with the IR function?
2) What are your thoughts on FTE management presenting at investment conferences?
3) With respect to future earnings PRs that you issue, what are your thoughts on providing a reconciliation between any non-GAAP financial measure referred to in such PR, and the most appropriate GAAP measure to that figure? This is required by the larger companies that are subject to the SEC and it would provide useful info to your shareholders.
4) FTE has not filed a registration statement for the shares issued in connection with the Benchmark acquisition even though this was contemplated by a registration rights agreement that was entered into in connection with that acquisition. Could you address that issue please.
Good luck!
PCE, welcome to the board, I believe your timing on following this stock will turn out to be quite prescient.
The company unfortunately went through a period of "over promising and under delivering" on some financial guidance earlier this year, and the stock price took a hit accordingly. Now they've decided to "walk softly and carry a big stick" I guess, not issuing any more guidance and letting their quarterly results just speak for themselves.
Just curious, what caused you to start looking at this stock, if I may ask? Was it that big move the other day on massive volume? I imagine the FTNW ticker popped up on a lot of stock screens that day.
Regarding communications with management, I wish you good luck. A while back they lined up a hotshot IR firm but that relationship appeared to end fairly soon thereafter and now they just list somebody at the company for IR, who has yet to return a call from me after several tries. I hope that they get around to lining up another IR firm soon -- as we all know this is an important function for the penny stocks.
I'm actually pretty happy to see the stock consolidating around the $.40 mark here, so as to form a solid base from which to start the next leg up. These OTC stocks tend to drag in a lot of mo-mo traders when they make big moves and I would just as soon see those guys be out of the stock at the time the company announces 3Q, so that the expected rally will not be impeded by those traders cashing in their profits.
I have a pretty big position in the stock at this point so I dare not buy any more, but if I were looking to build a position I would try to buy as much as I could under $.475 since that is the price at which a large amount of notes are convertible into stock. So if you buy under that price you aren't getting diluted by those securities.
shanak, its great to see the big volume continue here. We now have 3 straight days of > 80K shares being traded -- that hasn't happened in quite awhile, at least not in the last 3 months. With this big volume continuing we should be able to attract the big rollers now.
I like the fact that we've let a little air out of the balloon and are consolidating a bit around the $.40 mark. With the rapid and significant rally that came ever since the $.25 low, we've probably dragged in a lot of mo-mo players, and we want to get those guys out of the stock before the company announces 3Q numbers so they don't impede the almost certain rally that will ensue at that time.
shanak, the massive volume today was quite amazing to see. We definitely have one or more institutions or folks with very deep pockets that are building their position(s) in the stock at this point. So far this huge buying has largely been met with nearly an equal amount of dumping, but I can't believe that the dumping could last much more.
In a way I'm actually kinda happy that there has been so much selling into this rally. This has created a situation where any large investors who might be watching from the sidelines, might try jumping into the stock at this point because they see that it is possible to take a large position in the stock without having to bid the stock price up to the moon.
"It's fair to say that Palleschi's optimism is not uncommon for the top executive of a young OTC-traded company; most are quick to express 'plans' for growth. What is an anomaly amongst OTC peers, though, is the execution under the guidance of a solid management team to build an integrated company that can feed revenue and build a brand by cross-selling services. Leveraging the strong sales of Benchmark further gives FTE uncommonly large revenue for a company with a market capitalization that averages about $40 million over the last ten days, according to data from Yahoo! Finance."
Above bears repeating, IMO. By now they should have a pretty good idea on how well they did for 3Q, and assuming it was a good quarter, I hope they get back out on the investment conference track. They have a great story to tell and it would be great to have a lot of new folks who are looking at the stock at the point that they put out their 3Q numbers next month.
Next week should be interesting for the trading in the stock. Over the past 3 months, when they had a good week the next one would usually a pretty bad one for the stock price. Will this latest rally hold or will the dumping resume?
FTE Networks' Integration of Benchmark Built the Stage for a Strong End to 2017
[ACCESSWIRE]
SANTA MONICA, CA / ACCESSWIRE / October 4, 2017 / The New York City commercial real estate market is thriving from both a square footage perspective (2.75 million leased in August) and pricing perspective ($73.86 per square foot). That's good news for FTE Networks (FTNW), as the willingness for NYC businesses to spend is showing up in the microcap's new contracts and large backlog. Through two operating subsidiaries, FTE Networks was making a name for itself in network infrastructure and services, but the addition of Benchmark Builders and its highly complementary operations, an acquisition that was completed in April, substantially added to FTE's scale immediately and for the future.
Benchmark Builders provides construction management for complex projects. Benchmark added to FTE's portfolio expertise in technologically complex interior construction, including telecommunications, commercial real estate, industrial, healthcare and educational, amongst other industries, with a particular specialty for projects in its hometown of New York City.
Benchmark was ranked No. 6 in the May issue of real estate publication "The Real Deal" among the top general contractors for alteration and renovation projects in NYC (based upon initial estimated costs filed on permits with the Dept. of Building). This reputation is evident in revenue generation, which investors are getting a taste of since the buyout was completed during the second quarter.
In the quarter ended June 30, 2017, FTE reported $50.7 million in consolidated revenue, $43.1 million of which was generated by Benchmark during the period of April 21 - June 30, the 39 days the company was a unit of FTE. FTE still operated at a net loss, but as costs associated with the acquisition and operational synergies are realized the company should begin to improve the bottom line results. To that point, FTE reported adjusted operating income of $2.3 million for the quarter, which factored in $4.6 million in one-time cash and non-cash costs associated with the Benchmark acquisition.
Against that backdrop, investors will be watching for results from the third quarter ended September 30, 2017. The stage is also set for the fourth quarter as measured by news last month that Benchmark was awarded an aggregate of $61.6 million in new projects. The three projects, all in the NYC market, include infrastructure and technology expansions comprised of approximately 370,000 square feet of build-outs. Moreover, all of these projects are expected to be completed by the end of the year, speaking to the efficiency at which Benchmark operates.
The $61.6 million in new contracts brings the overall backlog of awarded projects under the cumulative FTE umbrella to $346.7 million, which positions the company for a strong end of 2017 and start to 2018.
Michael Palleschi, President and Chief Executive Officer at FTE Networks sees the combined company as a major force in the interior fill-out sector already with anticipation for continued growth going forward, saying recently, "We expect to dramatically expand even beyond this impressive upward trajectory."
It's fair to say that Palleschi's optimism is not uncommon for the top executive of a young OTC-traded company; most are quick to express 'plans' for growth. What is an anomaly amongst OTC peers, though, is the execution under the guidance of a solid management team to build an integrated company that can feed revenue and build a brand by cross-selling services. Leveraging the strong sales of Benchmark further gives FTE uncommonly large revenue for a company with a market capitalization that averages about $40 million over the last ten days, according to data from Yahoo! Finance.
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Above was put out on the baystreet.ca website yesterday. Maybe this had something to do with the rally?
I firmly believe that the drop over the last 2 months had more to do with 1 or more stockholders that simply wanted out of the stock, vs. any sort of fundamental problem with the company. If I'm right about this then this recent rally should hold up, by & large. If the big dumping resumes and drags this back below $.30 then maybe there is something wrong here that we're just not seeing.
buzz, great call on holding this, with today's pop it has gone up 29% vs. where it was when you wrote your post. Better yet, the pop came with huge volume (largest amount of daily volume since 9/1 at least), and 2 40K share buys right in the last half hour of trading. Dare we dream that we have an institution that has taken interest in this stock? I realize that the large majority of institutions can't buy OTC stocks but there are still a few that still can.
The sort of trading we saw today has the earmarks of an institution -- when they decide to start buying one of these thinly traded stocks, while someone is dumping it, they don't mess around and just keep bidding it up to get the shares they want.
By now they should have a pretty good idea of what FTE's gross sales were for 3Q. If they had a really good quarter (which is very possible given how large their backlog was at the beginning of the quarter) I wonder if they will announce just the revenues for 3Q in the coming days, with the full quarterly earnings announcement to come around the middle of next month. I believe they have made this kind of announcement in the fairly recent past.
Looking back at the 1Q 10Q, they had privately issued a bunch of stock to consultants and for the settlement of debt around 6-7 months ago. That stock became free-trading over the last 1-2 months, and likely has a lot to do with the reduction in the stock price over the last month.
There is one more large private stock issuance that is going to become free-trading soon, 877K shares on 10/22. These shares were issued to settle debt, so it looks like the market is assuming that they will be dumped onto the market when that becomes possible.
Hopefully the company is lining up appearances at the various investment conferences that typically take place in the coming months, to create some buying demand that will soak up that supply.
The company looks to be on a pretty sold financial footing at this point, having generated > $2M of cash flow before working capital changes last quarter. Given that, by all indications, cash flow will be increasing significantly in the next few quarters, they should be in a good position to pay off the $5M of debt that is coming due in the 2nd half of this year. So the days of them having to issue stock for the settlement of debt should hopefully be over. Maybe they could even stop issuing stock for payment of consulting services, and pay cash instead.
They have a hefty amount of debt on their balance sheet but $50M of that is at very low interest rates, something like 4% on average I believe. Assuming they continue to improve their financial performance, it should not be long before they would be in a position to refinance their highest rate debt, the 16% debt with their senior lender.
The only way that would happen would be if they were illogical and if you are worried about management doing illogical things then you should look elsewhere. They already have a huge backlog and don't need any new business so its very unlikely that they would be bidding under cost to get new business at this point.
Some folks here have been complaining about the crappy earnings for 2Q but we need to remember that those earnings are expressed on a GAAP basis. GAAP is generally a pretty good measure of a company's performance but unfortunately in connection with purchase accounting, GAAP ends up providing P&Ls that are basically worthless and that need to be adjusted in order to get to a better measure of how much money a company made or lost in a period.
Its great to see the company presenting at investment conferences again such as Rodman & Renshaw, and providing a kick-ass presentation for that. We need some new blood in this stock, the current guys are just trading it between ourselves.
Great to see them get the 10Q out on a timely basis! I'm now looking for them to file a registration statement for the shares they issued to acquire Benchmark, which will hopefully be followed shortly with an announcement of a reverse split and uplisting to Nasdaq.
The quarter was decent -- once you peel off all the non-cash charges they actually made a few million $$. But the biggest thing that jumped out at me was the massive $347M of backlog that they had as of quarter-end. This is huge boys & girls -- as they proceed to turn this backlog into revenue its going to vault this stock into the stratosphere.
Congrats to all those FTE fans who held on during this last downswing in the stock price. It appears that your patience is about to get rewarded. For those who sold out, I believe this is an opportune time to buy back in.