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NEWS! General Cable Revs IT UP!
http://biz.yahoo.com/prnews/050118/latu066_1.html
Now they need to go out and sell the heck out of it!
Kipp
MSGI - surprised you sold SWTX
Your P&F chart shows a $4.38pps target. Why did you sell?
Kipp
Martin Luther King Jr. Day closings
Sunday, January 16, 2005
All city, county, state and federal government offices will be closed tomorrow in observance of Martin Luther King Jr. Day. The stock markets, bond markets, courts, banks and state liquor stores will also be closed.
There is no city garbage collection. Garbage pickups will be one day later than usual this week.
Mail will not be delivered, but it will be collected. The Port Authority will provide regular weekday service.
SWTX - Email to IR
I sent an email to the folks in IR. I have talked with them a few times and they have always answered my questions. The main thing I asked was the single digit growth per quarter vs for all of 2005. I will be shocked if they went to a dog and pony show to display a dog vs. a rehabilitated race horse....would make no sense. The CC said steady to slight growth in all segments with 20-80% growth in display film.
I will post reply when it comes.
Not going to get spooked by this and may add more if panic dip on the open.
Kipp
CPTC - Product shown in General Cable Catalog
Here is link:
http://www.generalcable.com/North_America/NA_Assets/TechPapers/TransPwrBklt_indv.pdf
This is getting more real!
Kipp
Link to General Cable Catalog
http://www.generalcable.com/North_America/NA_Assets/TechPapers/TransPwrBklt_indv.pdf
Lentinman - RStandard modular composite pole??
Len,
I was looking around for market information on composite polls and found Resin Systems product the "RStandard modular composite pole". You are up on CPTC, I own some, but too many posts on RB for me to keep up with. Has RS been talked about? It is a wrapping process, not pultrusion.
http://www.netcomposites.com/news.asp?2634
http://biz.yahoo.com/cnw/041213/resinsystem_comp_pole_1.html
http://biz.yahoo.com/prnews/041215/to112_1.html
http://www.google.com/search?hl=en&q=RStandard+modular+composite+pole&btnG=Google+Search
I first bought this stock at $1.81, around the time Bobwins found it and road it down. I got more in the 3's after China deal was mentioned. I view this as an all or nothing play. They either have the real deal or they don't. I put my shares in a drawer and plan to hold them for ZERO$ or MEGA$. It is the only "story" stock I own. Only recently did I start to factor in the poles as a big potential contributor.
There is no doubt that creosote is on the way out, look at the lawsuits:
http://news.google.com/news?as_q=creosote&svnum=10&as_scoring=r&hl=en&lr=&tab=wn...
Thanks,
Kipp
P.S. I bought a few CXTI when you mentioned it at $.90. We shall see!
Lots of stories about China riots.
http://news.google.com/news?q=china%20riots&hl=en&lr=&sa=N&tab=wn
China Riot Story 12-27-04
Thousands Riot in China in Year Marred by Rising Civil Violence
Dec 27, 2004 Beijing
Thousands of workers in southern China have clashed with police in riots that left several dead and scores injured.
State media say the violence in Guangdong province erupted after security forces Saturday beat a 15-year-old boy to death for allegedly stealing a bicycle. Other news reports suggest the beating victim may have been involved in a traffic accident.
Regardless of the cause, all the reports confirm that several people were killed and a least one hundred injured in subsequent riots. According to the different reports, between one thousand and 50,000 people joined the mob. Government authorities acknowledge there has been a rise in civil disturbances across the Chinese interior.
Thomas Bernstein, an expert in Chinese politics at New York's Columbia University, says the violence reflects the mounting anger and frustration of the country's rural poor.
"The recent outbreaks suggest an escalation - in terms of crowds and force used to quell these outbreaks. There is a kind of development which I am sure is of concern to the regime," he says.
A recent World Bank survey indicates Communist-run China is one of the world's most unequal countries. Some urban populations are profiting from tremendous economic growth but the nation's farmers are being left behind.
The gap between rich and poor is growing larger and resentment is on the rise. Riots and violent demonstrations are now almost commonplace throughout rural China.
In 2003, the Chinese magazine Outlook estimated there were nearly 60,000 local disturbances involving more than three million people.
Mr. Bernstein says many of the protests focus on corrupt local governments, which impose illegal taxes.
"These protests are not against the regime as such. They are against local officials who abuse power or distort policy as the locals see it to their disadvantage," he says.
But some local authorities say Beijing must share the blame. The central government has approved a series of new social programs for the rural poor but has not given local officials additional funding to pay for them.
Wade - SWTX EGSR DD
Thanks for kudos but I can only take credit for SWTX. I only re-posted the great work done by marvelmeister2002 on EGSR. I am very long SWTX as I think they are going to be a good turnaround story of 2005, the stock was $15 3 years ago!
I know Bobwins knows how much we all appreciate his selfless sharing, and the creation and management of these 2 new boards, and I try to contribute to them when I can but I have a full time job and 2 kids entering their teens.....Yikes!
Thanks and good luck in '05.
Kipp
Joe - Thanks!
Good job getting this board going. I made a bunch on MDF and decided it was too big a percentage of my portfolio and sold 2/3 of my long term cap gain. I went overweight PDGE and hope it swells to give me the same problem......too BIG would be a great problem to have. I also got in SWTX and started a board here on Ihub. What else do you like?
I married a gal from Maquketa, IA, where are you?
(Off to the Bronco game here in Denver now, will check in later)
Kipp
Hilton spent $55mil on 1 hotel clean-up
"When mold was found in hotel rooms in the Kalia Tower at the Hilton Hawaiian Village two years ago, the tower was nearly gutted and the mold cleaned up at a cost of $55 million."
http://www.thehawaiichannel.com/news/4004672/detail.html
Mold is out of control!
I have been sewrching mold on Google. Check these stories out:
http://www.google.com/search?hl=en&q=mold
http://mold-help.org/content/view/504/
http://www.mold-help.org/
http://news.google.com/news?as_q=mold&svnum=10&as_scoring=r&hl=en&ned=us&ie=UTF-...
MSGI - Your P&F site is 1 year off.
I went to your stock charts.com and typed in SWTX, it shows a date of 1-2-04. It also shows a price target of $0.00. If this is what it showed 1 year ago you would not have invested in SWTX. Also shows $0.00 on MDF.
http://stockcharts.com/def/servlet/SC.pnf?chart=swtx,PLTADANRBO[PA][D20040102][F1!3!!!2!20]&pref...
It will be interesting to see if they get the site fixed.
Kipp
EGSR Due Diligence
By: marvelmeister2002 Raging Bull Board
29 Dec 2004, 10:09 PM EST
Msg. 1165 of 1186
Jump to msg. #
EGSR Due Diligence
EGSR currently has the dreaded "E" due to a late quarterly filing (caused by a change in auditors, which was necessitated by the fact that the company's prior auditors stopped auditing public companies.) Unfortunately, I have to submit the write-up below by tomorrow night to a large group of professional investors and the 10Q might still not be filed by then. If it isn't, many of them probably won't take this idea seriously. I believe that this would be a mistake, as I consider EGSR to be one of the best plays I've seen in the last few years.
Company Overview
I believe that EGSR.OB offers a very high probability of a 100% return over the next year, with significant potential for much greater appreciation over a 2-4 year time horizon. I also believe that the long-term risk in this name is minimal considering the challenges they have already faced and overcome in the last 6 months, along with what appears to be a low risk drilling plan for their main natural gas production field.
EGSR is an OTC microcap drilling and production growth company that is developing its main Kentucky properties to help fuel a run to AMEX in first or second Q 2005. In addition to its primary fields in Kentucky, EGSR currently has commercial oil and gas production in Oklahoma, Wyoming and Kansas. These locations vary from proven producing offset drilling locations at conventional depths to shallow shale NG wells that have long life reserves. EGSR appears to have hundreds of millions of dollars, if not billions of dollars, worth of BTU's under their land holdings versus a 35 million dollar market cap. And as the company's cash flow ramps up throughout 2005, with significant production increases expected in every quarter going forward, the present value of cash flows also brings us to a value many times that of today's market cap.
EGSR began drilling their Kentucky wells in October of 2003. Drilling results have been very encouraging- 32 out of 33 wells drilled thus far have been successfully completed, thus giving me a high level of confidence with respect to the drilling risk at their main field. One well was temporarily abandoned during mid drilling due to a rig break down, but that well is expected to be finished successfully.
The company appears to be on its way to quick profitability. However, production, revenues and profits have been elusive thus far. The culprits have included lack of compressors, improper size of piping and the firing of their original drilling contractor. These problems have contributed to the undervaluation of EGSR, but have recently been resolved, and the company should be currently cash flow positive even before the bulk of drilling projects start commercial oil and gas production.
EGSR PRODUCTION AND RESERVES
Pulaski County, Kentucky EGSR currently holds the land rights to 20,000 acres in this field, with 60 active wells. EGSR owns 100% of the reserves and production from 29 wells that it bought and 13 wells it drilled itself. EGSR owns half of the 20 "Bluegrass" wells that were financed through their partner, Double G, with 80% of cash flow from those wells going to Double G until their drilling costs are recouped and half of the net production (which excludes a 12.5% leasehold interest) for these wells accruing to EGSR thereafter. EGSR's Bluegrass arrangement with Double G applies only to the first 50 wells drilled.
EGSR just recently installed a new booster station in the middle of the field to help raise line pressure and add gas that is currently behind pipe to production.
The total net production from this field is currently about 500 MCFPD, but should equal at least 2000 MCFPD as soon as the gas stuck behind pipe is added to production (which should happen within a couple of weeks).
This production could increase significantly, as roughly half of the 60 working NG shale wells at the field will be reentered and deepened to hit the gas zones that have been found under other wells in the field (the majority of the wells to be reworked are solely owned by EGSR.) They are also in the process of a frac stimulation program, which could likewise increase production.
EGSR currently has about 500 PUDs in Pulaski County. Having the land rights to drill a total of about 500 wells in this field is central to the value here and our cash flow estimates in coming years. And that number may increase. I believe, because of the success of the drilling in KY to date, that the company is maintaining a low profile and attempting to acquire more property in the area before the headline success is common knowledge to competitors and local land owners.
EGSR has a rig on site that will be staying with the company for at least a year. That rig can drill at least one new well per week. If new wells average 70 MCFPD before stimulation (which I feel is a reasonable projection based on press releases in the last year and discussions with management), they should be able to be put on production at closer to 100 MCFPD, on average. If the rig drills 60 wells per year, that will add 6000 MCFPD (roughly 1000 BOE) in new production per year. I expect that as cash flows start to ramp up at the end of 2005, the company will start to bring on additional drilling rigs to complete the field development in a more timely fashion.
Whitley County, Kentucky- EGSR has 8000 acres of Dovian Shale acreage in Whitely County, with 5 active wells currently on production. Those wells are doing 280-300 MCFPD, with 200+ MCFPD still behind pipe in one of the wells. The extra production behind pipe should bring Whitley County up to 500 MCFPD, or about $270K per Q at $6.00 NG prices, once it is brought into production. EGSR expects to frac the wells in this field in the spring to further boost production. The company also plans to drill some additional wells, once cash flow picks up. These wells are more prolific and more expensive to drill than the Pulaski County wells.
EGSR currently has about 100 additional PUDs for this field. This field is a quiet ace in the hole as it is currently contributing only 300 MCFPD, but could provide large upside to future reserve growth if/when the company starts to drill new wells here.
Kansas- EGSR has a 13% net interest in the two wells drilled thus far in the first Kansas field (the main location), where it owns the land rights to 2750 acres. Those two wells are currently producing about 275 MCFPD net oil and gas to the company.
EGSR is currently drilling at 160 acre offsets to better define the field characteristics. The company can drill for natural gas at 80 acre spacing and oil wells at 40 acre spacing. Now that EGSR has found both oil and gas at this field, it should offer them the chance to drill out 12 - 20 wells in Kansas.
There also is a second field in Kansas, about which the company has conveyed no specifics.
Wyoming- EGSR's two Wyoming wells are currently producing about 50 MCFPD net to the company. They also have two more prospects in Wyoming. The first to be drilled was brought to the company by the former engineer of Kerr Magee. I believe that they own about 2500 acres in Wyoming, but the specifics regarding these two prospects are currently unknown.
EGSR has spudded the first well; however, work on that well was halted due to the end of the BLM property drilling season. They will return to the site and finish the well in spring of 2005. The well is a wildcat crude oil prospect with a vast majority of the drilling carry cost covered by outside investors.
Oklahoma- EGSR has two Oklahoma wells, currently flowing at about 100 MCFPD net to the company. Additional details are unknown.
In summary, even if EGSR doesn't drill another well this year, the company is looking at a January 2005 production run rate of at least 2000 MCFPD, which is equal to about 320 BOEPD. That compares favorably against the 30 - 40 BOE rate in January 2004. I expect that they will exit 1Q with close to 500 BOEPD. With production at that level, they should be able to expand their production with internal funding as the wells in the Pulaski County field only cost $40K to $50K each in capex.
RESERVE PROJECTIONS
EGSR should be able to book 250 to 300 MMCF in proven producing reserves for each well drilled in KY this year. With 30 new wells drilled, they will have added 6.6 BCF of proven producing reserves (assuming current market rates of $2.31 million dollars per flowing billion cubic feet) - $15 million dollars in just the KY field. Assuming continued drilling success, each subsequent year should show massive increases in proven producing reserves.
They also own 30 additional wells that should each have 100-250 MMCF of reserves associated with them. Once they have re-drilled those wells to the deeper zones, they may yield reserves at a comparable rate to the 30 newer wells. That should lift the Kentucky fields to at least 10 BCF in proven producing reserves just from the 60 wells currently in production.
They should be able to book about 4 BCF in Kansas by year end, with a new well to be spudded in the first week or so of the new year. That is worth $9.25 million in flowing reserve value currently, with additional reserves to be developed as the field drilling schedule expands next year.
The above are new reserves generated this year. So, based on current market conditions, the value added to their reserve bottom line this year alone nearly equals their market cap. There is also every reason to believe that next year's drilling should blow the lid off these reserves and easily make these numbers seem small once multiple fields are developed at the same time.
FINANCIAL PROJECTIONS
Not only does this company have a very impressive base of assets by which to grow production, it also has a low-risk, high return on capital drilling plan in place that will provide the company with an impressive level of cash flow in coming years. The Kentucky fields will be the main driver of production and cash flows. In 2004 the company has drilled 33 new wells on these properties with a success rate of nearly 100%. Current KY land holdings (or lease rights) are estimated to be enough property to drill nearly 500 wells in total, so let's start by illustrating the return on capital provided by just one shallow well in KY:
The cost of each well is around $40K to $50K, but let’s say $50K CAPEX per well to be conservative. I estimate, based on press releases and management's comments, that each well will come online at approximately 100 MCFPD on average after stimulation. I assume well production drops off at 15 MCFPD each year and stabilizes at 30 MCFPD indefinitely (traditional gas pockets won't last forever, but the residual shale production has an extremely long life- pure shale production generally lasts over 100 years).
Average commercial production of 100 MCFPD leads to a 100% return on invested capital in about 90 days of production for each well. The net present value of the first three years of cash flow for each well, discounted at 10%, is approximately $460K based on $6 gas prices.
Yes, you read that right...the present value of cash flows for only the first three years of the well's production is worth $460K after having invested $50K per well. Each well will pay for itself 10 times over within approximately 4 years. And each well, after being on production for just a very short time period, also will provide enough cash flow to fund additional wells with internally generated cash flows. Accordingly, while the cost of each well is certainly a big factor, I do not believe that the company will have to go to the capital markets to fund the cost of the actual wells.
Total CAPEX to build the gas pipeline and collection system to fully develop the KY field is estimated at $2.5 to $3 million (this doesn't include the cost of individual wells, only the pipeline and collection infrastructure). The company has warrants outstanding from the early 2004 private placement that was used to originally fund the initial development of the KY properties.
When EGSR's stock trades at or above $.85 for a period of at least 5 days, the company can require the warrant holders to exercise these $.50 per share warrants. This will allow Energas to raise roughly $2.5 million. Therefore, I don't anticipate that the company will access the capital markets for anything that would make a material difference to the current capital structure (until such time as they decide to pursue production expansion opportunities outside of current land holdings). I believe that there will be no more than 50 million shares outstanding even when the KY field is fully developed, and the company should be essentially debt free considering that today's balance sheet is mostly debt free.
I also took my modeling one step further and tried to do a rough estimate of what this company will look like once they fully develop the KY property with 500+ wells. The following assumptions were used to build long term cash flow projections:
1) Starting very soon (likely within the next month), an average of 5 wells per month are drilled in KY (they have at least one drilling rig secured full time for the next year). In December 2005 they will have the resources to add a second rig and drill 10 wells per month. In December 2006 they will have the resources to add a third rig and drill 15 wells per month.
2) Starting in the quarter beginning Feb 2005, one well per quarter will be added to the Kansas property (this will be funded mainly by partners).
3) I estimate that Kansas wells will come online initially at 150 BOEPD (20 net to EGSR) and total well production will decline 15 BOEPD each year.
4) Kansas land holdings allow for 11 total wells in time.
5) The company will maintain EBITD margins of 65%. This ratio appears appropriate based on EBITD margins of others in the sector (with heavy NG interests) including APA, APC, BR, DVN, EOG, and EPEX as examples. The simple average EBITD margin for these six companies in the trailing 12 months, as reported by Reuters, is 67%.
6) Operating expenses (35% of revenue) were calculated using total revenue with $35 oil and $5 gas commodity price assumptions. This should be closer to the commodity price average TTM and allows for commodity price changes in the model (different commodity prices should not materially affect operating expenses).
Using these assumptions I modeled both the monthly and the quarterly results for the company. I determined that it will take approximately 3.5 years to fully develop the Kentucky and Kansas properties. More importantly, the projected operating cash flow from these properties, once fully developed, is what we want to know.
Assuming $40 oil prices and $6 gas prices (slightly lower than today's commodity prices), this model shows that the company will have a run rate of roughly $88 million in revenues and $62 million in annual EBITD approximately 3.5 years from today. With only 50 million shares outstanding, a multiple of just 5 times EBITD suggests that the stock could have a fair value of nearly $6 per share in as little as 3-4 years. Here is our projected run rate for revenue / EBITD for the following time periods without the company adding additional land assets:
Annual revenue run rate (millions):
1-31-06 $ 19.3
1-31-07 $ 45.0
1-31-08 $ 77.6
Annual EBITD run rate (millions):
1-31-06 $ 13.6
1-31-07 $ 31.9
1-31-08 $ 55.0
While I believe that we are in an energy bull market, sustained high oil and gas prices are not necessary for EGSR to be a successful investment. I modified the model to determine how $30 oil and $4.50 gas prices affected the projections. This scenario still yields an annual operating cash flow run rate of $40.5 million once Kentucky and Kansas are fully developed. Again at just 5 times EBITD, this suggests a fair value for the stock of nearly $4 per share in 3-4 years even if oil and gas commodity prices revert to relatively cheap levels. I will let you make your own decisions as to where you see oil and gas prices going in the future. But, for reference, in 2003 NYMEX natural gas prices averaged a record $5.50 per MCF and have averaged $5.84 per MCF to date in 2004 according to FirstEnergy Capital Corp. And short-term contracts have recently been trading hands well north of $7 per MCF.
Essentially, I am saying that higher gas prices would merely be icing on the cake, and not a factor crucial to the investment thesis here. The main risk I see with this company would be complications with building out the gas collection and pipeline infrastructure and availability or increasing costs of drilling rigs. Of course, when drilling for oil and gas wells you are never guaranteed of 100% success. However, the type of shallow drilling EGSR is pursuing in KY along with a 2004 drilling success rate of nearly 100% on 33 new wells leads me to conclude that this is a low risk, high reward long-term investment.
Catalysts
1) Eye-catching operational improvement is expected in every successive quarter for at least the next 3 to 4 years. The company (having mostly resolved its many production issues) should ramp production impressively, and become increasingly profitable and cash flow positive.
2) Additional reporting of production rates, both in total and on individual new wells now that Kansas and Kentucky drilling is set to begin again.
3) Releasing reserve estimates for the KY field, which should be somewhere between very impressive and astounding due to the Devonian Shale deposits the company owns. Once those reserves estimates are calculated and released (sometime in February, most likely), it will be obvious that EGSR is trading at a fraction of its true value.
4) Moving to AMEX, which will bring EGSR into the mainstream and allow it to follow in the footsteps of other quality small cap O&G stocks (TGA/ TMXN/ MSSN/CNR/ FPPC/TRGL/ EGY/ASPN, etc) that have blown up over the last year. EGSR is one of the few small cap O&G "sleepers" left, and the stock should be bid up aggressively as the EGSR story becomes better known and institutions/hedge funds get into the action. AMEX listing requirements are met (pursuant to rule three) at a stock price just above one dollar.
5) Possible acquisition of additional acreage
Bobwins, look at my post on new DD board
Is this the kind of post you want to see?
Kipp
SWTX Intro DD
SWTX - Southwall Technologies
Company Website: http://www.southwall.com
Link to recent CC: http://biz.yahoo.com/cc/4/49044.html
Link to most recent 10Q: http://www.sec.gov/Archives/edgar/data/813619/000101540204004669/main-body.htm
SWTX Ihub board link: http://www.investorshub.com/boards/board.asp?board_id=3262
(judicialrestraint posted this on RB, great work!)
2004 implied current annual revenue run rate: 16 million in Q3, 16 million in Q4, implies 4x16=64 million run rate.
2004 display segment revenues = 3.4, 5.8, 6.5, and 6.5 for Q1-4, equals 22.2 million.
2005 increase in display segment revenues: Mgmt guided to 30-80% growth. 22.2 x 30% =7: 22.2 x 80% = 18. Guidance for three other segments is basically flat.
2005 Revenue Guidance: Annual 2004 run rate of 64 + 7 = 71 lower range: 64+18=82 upper range. 2004 revenue guidance is 58 million (11.1+14.5+15.9+16. Q1-Q4). Implies 2005 growth rate in total revenues of (71-58)/58= 22% to (82-58)/58 = 41%
2004 net margin run rate: Q3 NI equals 2.1M on revs of 15.9M. Extraordinary items: 491K of warrant expense, the last quarter for such according to management on CC; tax benefit of 298. Net 200K pick-up going forward. Equals adjusted NI of 2.3/15.9 in revs = 14.5% net margins.
Shares outstanding are 31 million. Also filed an S-8 for 5 million additional shares issuable under stock option plans. Worst-case scenario is they issue all immediately, which is highly unlikely. Nonetheless, the expected EPS based upon current and worst case diluted shares outstanding is as follows:
2005 Revs, NI at 14.5%, EPS at 31M, EPS at 36M
71, 10.27, 0.33, 0.29
82, 11.86, 0.38, 0.33
This gives a range for 2005 EPS of .29-.38. To boil it down to one number, assuming all scenarios are equally likely, best guess expectations would be for an average of those two, or .34 EPS.
Most recent news:
Southwall to Present at Needham & Company's Seventh Annual Growth Conference
PALO ALTO, Calif.--(BUSINESS WIRE)--Dec. 16, 2004--Southwall Technologies Inc. (OTCBB:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the electronic display, automotive glass and architectural markets, announced today that it will present at Needham & Company's Seventh Annual Growth Conference. Thomas Hood, President and Chief Executive Officer, and Maury Austin, Chief Financial Officer, are scheduled to present to leading institutional investors on Thursday, January 13, 2005.
Where: The New York Palace Hotel in New York City
Date: Thursday, January 13, 2005
Time: 4:30 p.m. Eastern Time
SWTX - email response to questions I posed 2 weeks ago:
I emailed 3 questions to Dr. Sicco W.T. Westra, VP Business Development,Southwall Technologies
I felt that my fellow investors would be interested in this information so I am posting it word for word.
SWTX Question #1
First, it seems that the trouble that lead to the hard times was the change
from CRT technology to flat panel and plasma. Southwall had trouble with the
R&D and production of products for these new products. The company then had
to fall back, re-group R&D, re-tool plants, and now you are back on track.
(This is my simple interpretation) With this in mind I ran across an article
on a new technology called "SED's" (Surface-conduction Electron-emitter
Displays). Do you see SED's on the horizon. Do SED's use thin film coatings,
and if so, are Southwall R&D personnel working on film products for them? (I
will try to send you a link to the article in a separate email)
Sicco's response (word for word copy from email)
To answer your specific questions/comments:
1. SED - This technology has been around for some time (10 years or so) and
initially was called FED (Field Emission Displays). Sony and other Japanese
companies invested heavily into because it had many attractive
characteristics (light weight, brightness, redundancy, inexpensive, etc.).
The big problem with the technology is that it requires a very high vacuum
inside the display for the emitters to work. This can be done for a brand
new device, but as the phosphors (the little blue, green and red dots)
light-up and slowly decompose, the vacuum degrades and the display dies. A
short lifetime was the main drawback of this device and it disappeared from
the world technology stage about four years ago. Apparently Canon and
Toshiba continued to invest in it and renamed the displays "SED", partly in
the hope people would give this technology a second chance. Many of us
remain skeptical because the vacuum degradation is fundamental to this
design, but we keep a close watch on the demonstrated performance.
As far as coatings are concerned, it doesn't require any thin film coatings
within the device itself such as in LCDs or PDPs. But just like any other
display device, it could use an anti-reflective coating on the most outer
surface to enhance the visibility of the picture. As you may know, this
anti-reflective (AR) coating is the one we produced for many years for use
on computer CRTs. Consumers were well aware of the advantages of an AR
coating on their computer monitor, but when watching TV the reflections off
the glass surface didn't seem to bother them and people were not willing to
pay extra for AR coatings on TVs (Sony and Philips tried it with only
limited success on the very high-end TVs). Over the past few years, we have
tried to sell our AR coatings to the makers of LCD and PDP TVs, assuming
that for these higher quality displays, the use of an AR coating would be
less of a cost problem. Although we have been able to demonstrate that AR
coatings improve the picture quality significantly, the LCD & PDP makers
don't feel they can charge the consumers extra for this. (The price
competition in this market is extremely competitive as prices continue to
come down month by month.) Some LCD/PDP makers use a cheap, solvent based
AR coating to reduce the reflections a little bit, but think our sputter
deposited coatings are too expensive (even though these coatings perform 3 ~
4 times better than the solvent based coatings). So for now, we focus on
other coatings in the LCDs and PDPs, where the manufacturers see the value
of our films (ultra high reflective films for back lighting in LCDs and
infrared cutting coatings in PDPs). If the consumer awareness increases and
consumers are willing to pay for better picture quality, we have the
coatings ready to go.
SWTX Question #2
Secondly, are commercial building designers concerned about high energy
costs, thus inquiring more about your film products, and incorporating them
into new construction?
Sicco's answer:
2. Architectural applications of our films - In general, designers of
commercial buildings are concerned with the heat management in their
building. Most often the concern is to keep the heat out, so less
air-conditioning is needed. Our products are often selected because of
their unique performance. But since the process of making our coatings is
fairly expensive we see that our films are most often used in those cases
where the builder also is the owner. Spending more up-front and saving (on
AC cost) over time is more important to a builder/owner than to a builder
who just want to make money on the construction (and reduces cost whenever
possible). Our sales in the architectural area have been steady, but could
increase with further increases in energy cost.
SWTX Question #3
Last, and best of all, I am in the market for a new flat TV and a 17 inch
flat monitor for a computer. What brand could I buy that uses Southwall
product? I feel like I should support the company as I own some!
Sicco's answer:
3. New TV and computer monitor.
Our film is used a lot in PDPs (Plasma Display Panels), but the vast
majority is in public displays (airports, train stations, etc). Since
earlier this year our film is used in certain consumer PDP models, made by
Philips, NEC and Matsushita. The largest adaptation is by Philips, but not
all models use it. If you look at a PDP up close (within a few inches) you
can see the individual pixels (red, green and blue). With the right focus
of your eye, you can sometimes see a very fine wire running at an angle
across these pixels. If you can see it, the display uses a copper wire mesh
(that is the competing technology). Once you know how to spot wire mesh, it
is easy to see which displays don't; have a wire mesh - those units use our
film!!
You will typically not find our high reflecting film in LCD computer
stand-alone monitors, only in laptops. The backlight in a stand-alone
monitor is fairly simple in design and not very efficient (there is enough
power from the wall plug). In laptops that are running off of a battery,
the light source is super efficient and our film is typically use there
(about 70% of all laptops have a bit of Southwall coating.
SWTX - Management's Plan
Remember when reading this, the #1 Xmas gift was the Plasma TV!
From most recent 10Q:
Management’s Plan
Cumulative operating losses, negative working capital, negative cash flows, and our limited current cash balance have raise substantial doubt about our ability to continue as a going concern. In response to these trends, we implemented several cost cutting and business restructuring activities during 2003. These activities, which included employee layoffs and the closure of and reduction of operations at several facilities (including the closure of our Tempe manufacturing facility in the fourth quarter of 2003), were designed to improve our cash flow from operations to allow us to continue as a going concern. As a result of migrating most of our manufacturing production to our Dresden facility, we have reduced our headcount in the U.S. by approximately 89, thereby lowering our labor costs by approximately $0.9 million per fiscal quarter. Our Dresden plant generally has had lower manufacturing costs than our United States facilities as a result of lower payroll costs, lower operating expenses, and lower depreciation charges. Our cost of sales decreased $7.3 million, from $34.8 million in the first nine months of 2003 to $27.6 million in the same period of 2004, due in large part to these actions.
While we have been in the process of instituting these cost-cutting measures, the demand for our products has grown in certain areas. We continue to build market share in the electronic display market as our plasma display filter and flat panel display products continue to gain customer acceptance. In addition, sales of our silver reflector product, used primarily in laptop computers, increased by $0.3 million as a result of the addition of a new display customer and an improvement in the worldwide personal computer market. We hope that these areas will provide long-term revenue growth for the company. Our actions to reduce costs as well as the restructuring of our payment terms with our major creditors and vendors have led to our company earning $5.2 million of income from operations in the first nine months of 2004 as compared to incurring a loss from operations of $25.3 million in the first nine months of 2003. Likewise, our gross profit increased from $7.6 million in the first nine months of 2003 to $14.0 million in the same period in 2004.
During the fourth quarter of 2003 and the first quarter of 2004, we agreed to new payment terms with most of our major creditors and vendors, which reduced our payment obligations over the next 12 months by approximately $5.0 million. We also entered into the investment agreement described above pursuant to which we issued $4.5 million of convertible promissory notes and warrants to investors. We believe that this investment, along with the cost-cutting measures and our revenue improvements outlined above, should provide our company with sufficient cash to continue operations for the next 12 months.
If the Company is unable to deliver existing or new plasma filter products to Misui which allow them to maintain their market share with our technology, a reductin in demand for our plasma films would significantly impact our revenues and profitability. Additionally, if Saint-Gobain were to reduce the amount of film they require from the Company for automotive windshields, this would negatively impact our revenues and profitability. Finally, a lessening in demand or problem with third party converters would negatively affect our window film business impact the Company’s revenues and profitability
Managements Plan - Please Read This.
From most reent 10Q:
Management’s Plan
Cumulative operating losses, negative working capital, negative cash flows, and our limited current cash balance have raise substantial doubt about our ability to continue as a going concern. In response to these trends, we implemented several cost cutting and business restructuring activities during 2003. These activities, which included employee layoffs and the closure of and reduction of operations at several facilities (including the closure of our Tempe manufacturing facility in the fourth quarter of 2003), were designed to improve our cash flow from operations to allow us to continue as a going concern. As a result of migrating most of our manufacturing production to our Dresden facility, we have reduced our headcount in the U.S. by approximately 89, thereby lowering our labor costs by approximately $0.9 million per fiscal quarter. Our Dresden plant generally has had lower manufacturing costs than our United States facilities as a result of lower payroll costs, lower operating expenses, and lower depreciation charges. Our cost of sales decreased $7.3 million, from $34.8 million in the first nine months of 2003 to $27.6 million in the same period of 2004, due in large part to these actions.
While we have been in the process of instituting these cost-cutting measures, the demand for our products has grown in certain areas. We continue to build market share in the electronic display market as our plasma display filter and flat panel display products continue to gain customer acceptance. In addition, sales of our silver reflector product, used primarily in laptop computers, increased by $0.3 million as a result of the addition of a new display customer and an improvement in the worldwide personal computer market. We hope that these areas will provide long-term revenue growth for the company. Our actions to reduce costs as well as the restructuring of our payment terms with our major creditors and vendors have led to our company earning $5.2 million of income from operations in the first nine months of 2004 as compared to incurring a loss from operations of $25.3 million in the first nine months of 2003. Likewise, our gross profit increased from $7.6 million in the first nine months of 2003 to $14.0 million in the same period in 2004.
During the fourth quarter of 2003 and the first quarter of 2004, we agreed to new payment terms with most of our major creditors and vendors, which reduced our payment obligations over the next 12 months by approximately $5.0 million. We also entered into the investment agreement described above pursuant to which we issued $4.5 million of convertible promissory notes and warrants to investors. We believe that this investment, along with the cost-cutting measures and our revenue improvements outlined above, should provide our company with sufficient cash to continue operations for the next 12 months.
If the Company is unable to deliver existing or new plasma filter products to Misui which allow them to maintain their market share with our technology, a reductin in demand for our plasma films would significantly impact our revenues and profitability. Additionally, if Saint-Gobain were to reduce the amount of film they require from the Company for automotive windshields, this would negatively impact our revenues and profitability. Finally, a lessening in demand or problem with third party converters would negatively affect our window film business impact the Company’s revenues and profitability.
Everyone should read 10K's & Q's
Here is a link to Southwall 10k. These docs are long and complicated but I can't imagine investing in any company without reading them.
http://www.sec.gov/Archives/edgar/data/813619/000081361904000019/form10k.htm
Kipp
SWTX benefits big time from weak dollar!
From 10K:
We expect to be subject to increased foreign currency risk in our international operations.
In 2003, approximately 34% of our revenues were denominated in euros, primarily related to sales from our Dresden operation, including sales to one of our largest customers, a European automotive glass manufacturer. In addition, other customers may request to make payments in foreign currencies. Also, certain transactions with foreign suppliers are denominated in foreign currencies, primarily Japanese Yen.
A strengthening in the dollar relative to the currencies of those countries in which we do business would increase the prices of our products as stated in those currencies and could hurt our sales in those countries. Significant fluctuations in the exchange rates between the U.S. dollar and foreign currencies could cause us to lower our prices and thus reduce our profitability and cash flows. These fluctuations could also cause prospective customers to cancel or delay orders because of the increased relative cost of our products.
SWTX benefits big time from weak dollar!
From 10K:
We expect to be subject to increased foreign currency risk in our international operations.
In 2003, approximately 34% of our revenues were denominated in euros, primarily related to sales from our Dresden operation, including sales to one of our largest customers, a European automotive glass manufacturer. In addition, other customers may request to make payments in foreign currencies. Also, certain transactions with foreign suppliers are denominated in foreign currencies, primarily Japanese Yen.
A strengthening in the dollar relative to the currencies of those countries in which we do business would increase the prices of our products as stated in those currencies and could hurt our sales in those countries. Significant fluctuations in the exchange rates between the U.S. dollar and foreign currencies could cause us to lower our prices and thus reduce our profitability and cash flows. These fluctuations could also cause prospective customers to cancel or delay orders because of the increased relative cost of our products.
SWTX - R&D from 10K
This backs up what I said about Southwall committment to increased R&D.
Research and Development
Our research and development activities are focused upon the development of new proprietary products, thin film materials science, and deposition process optimization and automation and applied engineering. Our research and development expenditures totaled $5.5 million, $7.7 million and $6.7 million, or approximately 6.6%, 11.2% and 12.4% of total net revenues, during 2001, 2002 and 2003, respectively.
Historically, our research and development efforts have been driven by customer requests for the development of new applications for thin film coated substrates. To meet the future needs of our customers, we continually seek to improve the quality and functionality of our current products and enhance our core technology. For example, in 2002 we began shipping production quantities and sizes of an anti-reflective film specifically designed for the liquid crystal display and plasma display panel markets that maintain optical clarity while reducing the reflection of ambient light to improve image quality. In 2003, we developed a new conductive film to satisfy Class B infrared shielding requirements for plasma display panels. We cannot guarantee that we will be successful in developing or marketing these applications.
Although our production systems are built by outside vendors, we work closely with our vendors on the detailed implementation of the production machine designs. Our experience with designing production systems is critical for the proper construction of these machines. Once a new machine is installed and accepted by us, our engineers are responsible for transitioning the system into commercial production to help ensure stable manufacturing yields.
SWTX - Q3 Conference Call 4your listening pleasure!
Click the "Listen to the archived event audio" link.
http://biz.yahoo.com/cc/4/49044.html
Southwall paid a dear price for letting their R&D slip after they made a bunch of money on all the CRT monitors that were sold in Y2K frenzy. They got fat, dumb, and happy, and then got their arss handed to them. I have talked to them and posted one email exchange on the Ihub board, they aren't going to make that mistake again! I will post more from the 10K and 10Q's soon.
This management team is going to get this company back on a major exchange. It may take a while, but it is going to happen.
Happy NEW Year!
Kipp
Listen to this Q3 Conference Call!
Please listen to this call if you haven't already.
http://biz.yahoo.com/cc/4/49044.html
Happy NEW Year!
BWLRF - Zinc has been lagging copper
Breakwater Resources - Canadian Miner
Web Site: http://www.breakwater.ca/
Look at this slide show:
http://www.breakwater.ca/ir/040929/index.html
LME inventories in steady draw down mode after mutiple head fakes. Zinc price touched 5 year high.
http://www.kitcometals.com/charts/zinc_historical_large.html#lmestocks_6months
Kipp
I CAN'T BELIEVE YOU GUYS ARE SOOO CHEAP!
This is less than $.25 per day. I never go on a rant but you gotta be kiddin' me. This was a no brainer for me the first 10 minutes. What is "our" time worth??? More than screwing around with "Raging Bull Sheet" these past 4 days! Why does everyone have to be so hung up on free. Free means B.S. advertisers, pop-ups, spam, and all of that great FREE stuff.
OK, I will pay the first 3 months for anyone on this list that can't come up with the $.25/day.
Bobwins
Hweb
Kozuh
Otcbargains
WadeGarret
Lentinman
Researcher59
NilesCrane3
YieldDude
Stockpeeker
MSGI_Dude
Guy_019
Gilead12
LarryBaz
Zenvesting
Black_n_Gold
RRainman
Nutsaboutgolf
MRothaus
TBone 58x
Mike056
2Morrowsgains
Cudawuda
CHEAPCHEAPCHEAPCHEAP.
HAPPY NEW YEAR.
Kipp
I started SWTX Board here on IH!
Thanks to Bobwins for inspiration!
HAPPY NEW YEAR!
Kipp
Welcome to the SWTX board!
I hope we can share information hear as Southwall rebuilds its business and adds to sharehoder value!
Thanks and HAPPY NEW YEAR!
Kipp
SWTX - Southwall Technologies Pop
SWTX looks like it could run here. I have put together some info for anyone interested:
Company Website: http://www.southwall.com
(judicialrestraint posted this on RB, great work!)
2004 implied current annual revenue run rate: 16 million in Q3, 16 million in Q4, implies 4x16=64 million run rate.
2004 display segment revenues = 3.4, 5.8, 6.5, and 6.5 for Q1-4, equals 22.2 million.
2005 increase in display segment revenues: Mgmt guided to 30-80% growth. 22.2 x 30% =7: 22.2 x 80% = 18. Guidance for three other segments is basically flat.
2005 Revenue Guidance: Annual 2004 run rate of 64 + 7 = 71 lower range: 64+18=82 upper range. 2004 revenue guidance is 58 million (11.1+14.5+15.9+16. Q1-Q4). Implies 2005 growth rate in total revenues of (71-58)/58= 22% to (82-58)/58 = 41%
2004 net margin run rate: Q3 NI equals 2.1M on revs of 15.9M. Extraordinary items: 491K of warrant expense, the last quarter for such according to management on CC; tax benefit of 298. Net 200K pick-up going forward. Equals adjusted NI of 2.3/15.9 in revs = 14.5% net margins.
Shares outstanding are 31 million. Also filed an S-8 for 5 million additional shares issuable under stock option plans. Worst-case scenario is they issue all immediately, which is highly unlikely. Nonetheless, the expected EPS based upon current and worst case diluted shares outstanding is as follows:
2005 Revs, NI at 14.5%, EPS at 31M, EPS at 36M
71, 10.27, 0.33, 0.29
82, 11.86, 0.38, 0.33
This gives a range for 2005 EPS of .29-.38. To boil it down to one number, assuming all scenarios are equally likely, best guess expectations would be for an average of those two, or .34 EPS.
Most recent news:
Southwall to Present at Needham & Company's Seventh Annual Growth Conference
PALO ALTO, Calif.--(BUSINESS WIRE)--Dec. 16, 2004--Southwall Technologies Inc. (OTCBB:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the electronic display, automotive glass and architectural markets, announced today that it will present at Needham & Company's Seventh Annual Growth Conference. Thomas Hood, President and Chief Executive Officer, and Maury Austin, Chief Financial Officer, are scheduled to present to leading institutional investors on Thursday, January 13, 2005.
Where: The New York Palace Hotel in New York City
Date: Thursday, January 13, 2005
Time: 4:30 p.m. Eastern Time
SWTX - email response to questions I posed 2 weeks ago:
I emailed 3 questions to Dr. Sicco W.T. Westra, VP Business Development,Southwall Technologies
I felt that my fellow investors would be interested in this information so I am posting it word for word.
SWTX Question #1
First, it seems that the trouble that lead to the hard times was the change
from CRT technology to flat panel and plasma. Southwall had trouble with the
R&D and production of products for these new products. The company then had
to fall back, re-group R&D, re-tool plants, and now you are back on track.
(This is my simple interpretation) With this in mind I ran across an article
on a new technology called "SED's" (Surface-conduction Electron-emitter
Displays). Do you see SED's on the horizon. Do SED's use thin film coatings,
and if so, are Southwall R&D personnel working on film products for them? (I
will try to send you a link to the article in a separate email)
Sicco's response (word for word copy from email)
To answer your specific questions/comments:
1. SED - This technology has been around for some time (10 years or so) and
initially was called FED (Field Emission Displays). Sony and other Japanese
companies invested heavily into because it had many attractive
characteristics (light weight, brightness, redundancy, inexpensive, etc.).
The big problem with the technology is that it requires a very high vacuum
inside the display for the emitters to work. This can be done for a brand
new device, but as the phosphors (the little blue, green and red dots)
light-up and slowly decompose, the vacuum degrades and the display dies. A
short lifetime was the main drawback of this device and it disappeared from
the world technology stage about four years ago. Apparently Canon and
Toshiba continued to invest in it and renamed the displays "SED", partly in
the hope people would give this technology a second chance. Many of us
remain skeptical because the vacuum degradation is fundamental to this
design, but we keep a close watch on the demonstrated performance.
As far as coatings are concerned, it doesn't require any thin film coatings
within the device itself such as in LCDs or PDPs. But just like any other
display device, it could use an anti-reflective coating on the most outer
surface to enhance the visibility of the picture. As you may know, this
anti-reflective (AR) coating is the one we produced for many years for use
on computer CRTs. Consumers were well aware of the advantages of an AR
coating on their computer monitor, but when watching TV the reflections off
the glass surface didn't seem to bother them and people were not willing to
pay extra for AR coatings on TVs (Sony and Philips tried it with only
limited success on the very high-end TVs). Over the past few years, we have
tried to sell our AR coatings to the makers of LCD and PDP TVs, assuming
that for these higher quality displays, the use of an AR coating would be
less of a cost problem. Although we have been able to demonstrate that AR
coatings improve the picture quality significantly, the LCD & PDP makers
don't feel they can charge the consumers extra for this. (The price
competition in this market is extremely competitive as prices continue to
come down month by month.) Some LCD/PDP makers use a cheap, solvent based
AR coating to reduce the reflections a little bit, but think our sputter
deposited coatings are too expensive (even though these coatings perform 3 ~
4 times better than the solvent based coatings). So for now, we focus on
other coatings in the LCDs and PDPs, where the manufacturers see the value
of our films (ultra high reflective films for back lighting in LCDs and
infrared cutting coatings in PDPs). If the consumer awareness increases and
consumers are willing to pay for better picture quality, we have the
coatings ready to go.
SWTX Question #2
Secondly, are commercial building designers concerned about high energy
costs, thus inquiring more about your film products, and incorporating them
into new construction?
Sicco's answer:
2. Architectural applications of our films - In general, designers of
commercial buildings are concerned with the heat management in their
building. Most often the concern is to keep the heat out, so less
air-conditioning is needed. Our products are often selected because of
their unique performance. But since the process of making our coatings is
fairly expensive we see that our films are most often used in those cases
where the builder also is the owner. Spending more up-front and saving (on
AC cost) over time is more important to a builder/owner than to a builder
who just want to make money on the construction (and reduces cost whenever
possible). Our sales in the architectural area have been steady, but could
increase with further increases in energy cost.
SWTX Question #3
Last, and best of all, I am in the market for a new flat TV and a 17 inch
flat monitor for a computer. What brand could I buy that uses Southwall
product? I feel like I should support the company as I own some!
Sicco's answer:
3. New TV and computer monitor.
Our film is used a lot in PDPs (Plasma Display Panels), but the vast
majority is in public displays (airports, train stations, etc). Since
earlier this year our film is used in certain consumer PDP models, made by
Philips, NEC and Matsushita. The largest adaptation is by Philips, but not
all models use it. If you look at a PDP up close (within a few inches) you
can see the individual pixels (red, green and blue). With the right focus
of your eye, you can sometimes see a very fine wire running at an angle
across these pixels. If you can see it, the display uses a copper wire mesh
(that is the competing technology). Once you know how to spot wire mesh, it
is easy to see which displays don't; have a wire mesh - those units use our
film!!
You will typically not find our high reflecting film in LCD computer
stand-alone monitors, only in laptops. The backlight in a stand-alone
monitor is fairly simple in design and not very efficient (there is enough
power from the wall plug). In laptops that are running off of a battery,
the light source is super efficient and our film is typically use there
(about 70% of all laptops have a bit of Southwall coating.
Happy NEW YEAR!
Kipp
otcbargains - HOFF
Not so bad. I got a ton of PDGE instead. I sleep good at night!
May take a while but PDG Enviromental is a good long term hold!
Kipp
Hoff - Coulda, shoulda, Woulda
Didn,t buy any at $.34
My post on RB in November.
By: kipp440
23 Nov 2004, 09:04 AM EST
Msg. 19338 of 22568
Jump to msg. #
Bobwins sort of OT - HOFF $.34pps
Not a value microcap but $230,000,000 revenue and $9,000,000 market cap. Off shore oil industry construction company. If they don't go BK could be a great turnaround potential. Warning: It's a mess!
Comments?
Kipp