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I'm hoping for some pr before earnings otherwise it may be a long slog till then. I still think there has to be a reason that they expanded manufacturing & went to Japan and were able to get engines direct wholesale. Speaking of engines.....
Margins: Purchases from Yanmar (for the engines) represented 20% and 24% of the Company’s total cost of sales for the three months ended June 30, 2018 and 2017, respectively, and 23% and 25% for the six months ended June 30, 2018 and 2017, respectively.
What it means: They lowered their engine costs down quite a bit in 2Q vs even 1rst Q. They said in Q1 cc call that the first shipment would be in June direct, as such, 3 months of that could mean even more improvement.
Also, the big Africa tower exchange meeting for towers is Oct 9th and 10th. I'm sure they are gearing up to make a presence there.
https://polarpower.com/about-us/events-calendar/
POLA posting on Linkedin that their Nimibia team is getting built fast. They must expect good things in the future.
https://www.linkedin.com/company/polar-power-inc/
Latest Short interest # since earnings:
8/15/2018 147,978
7/31/2018 130,299
7/13/2018 160,943
6/29/2018 167,593
6/15/2018 172,922
5/31/2018 187,146
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
10Q----thoughts:
https://www.sec.gov/Archives/edgar/data/1622345/000161577418008083/0001615774-18-008083-index.htm
AT&T was $4.4M. If they can keep that level for awhile & T-mobile adds to it at a similar level (assuming so since they are doing an order for $1.9M for October alone) & Nimibia adds a follow up order for tower builds and/or hybrid power systems, then 4th Q should be the breakout quarter we are hoping for.
It said the demo with Axios for the 5 units in Sri Lanka is for 3 months. That bodes well for 2019 orders. Axios is owned by Malaysia Telecom which is huge.
One thing we all need to remember/be aware of......hybrid systems (with solar and batteries) are approx 2X what a generator only sale is. As such, orders there add up faster.
I didn't see anything surprising. They do talk about expected growth in multiple places.
Good closing price & volume. There is definitely a large seller. The ask had bulk orders of 10K at 6.55, then 10K at 6.60, then, after chewing threw them, 20K at $6.60. Took them out. Now 10K sits at 6.65.
They need to get to 8+ cents/share soon. Imo:
$8.0M revenue x 39% margins (assuming the new equipment helps them there + more buying power on volume reduces costs) = $3.12M gross.
Quarterly expenses go from $1.8M to $2.0M as they build for more growth for the future.
Taxes are 25% (20% federal + Calif)
So.... ($3.12-$2.0)x 0.75 = $840K net income. Divide by approx 10.3M shares = 8.1 cents/share.
So how long till they get to $8M/qtr in revenue??
One one hand the stock trades for $6.40+ based on one quarter of 2 cents/share net income. That's a wee bit expensive.
On the other hand, the company could be up to 10 cents/share+ by 4th Q and building from there for 2019. That starts to make it cheap.
I think we will get our rewards. We just need more patience and the company to prove that things are going good.
The fact that T-mobile put in a $1.9M contract just for the month of October is nice. Can they do that for Nov & Dec? We have to figure that Verizon has done close to $30M in deals from this company over the last few years. Could AT&T and T-mobile do that over the next 1 1/2 years?? You get international on top of that (plus Verizon and military) and life will be good.
ebase22. I doubt many small investors jump in, but if institutions do (figuring they will get in now while they can and hold for 2 years as things ramp up more)then it might squeeze the last of the 130K shorts and force them to come in. We'll see tomorrow. It'd be nice to see it break above $7 and form a new base there at least. I'm not sure the report itself will do that, but the backlog (June 30th level + level as of today) mentioned in the cc call and the amount of it that will ship in 3Q might. The analyst will definitely be boosting his numbers for Q3 (currently $7M and 3 cents/share). They will beat that for sure just based on what is expected and the new margin level.
Latest Short #s---30K covered in last 2 weeks
Imo the earnings & cc call were strong enough (showing that growth is coming for sure) that shorts won't be able to cover lower.
7/31/2018 130,299
7/13/2018 160,943
6/29/2018 167,593
6/15/2018 172,922
5/31/2018 187,146
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
The fact that backlog, as of today (said in cc call), is approx $6M-7M is good to see. It shows that momentum keeps building each month.
Worthy.....true, but you have to figure that AT&T really isn't a large order. It's an ongoing weekly thing. I'm hoping those orders jump to the level that Verizon was (say late half of 2018) and then Verizon and T-mobile build up on it. You figure backlog went from $1.5M on March 31rst to $4.5M on earnings on May 15th and there weren't any pr's in that time on contracts. I have my fingers crossed that AT&T makes a strong push such that it carries the growth for 2Q and 3Q while the other two U.S. Tier 1 carriers ramp up in 3Q and help build the overall picture nicely in Q4.
I will admit that if they won the RFP for a Verizon national contract that there should be a pr on that. However, it's probably still early for it to be awarded.
On the other hand, I'm not sure there is much going on internationally without pr's.
Worthylion....I think the story for 2018 is how much does AT&T utilize POLA for FirstNet going forward?---namely how many of the towers they use for FirstNet will they harden with backup power?!?. None of this is really going to show up in news. It will show up in revenue and backlog. From AT&T recently:
July 30th: Overseen by the First Responders Network Authority, Donovan said the company plans to add FirstNet support to between 12,000 and 15,000 sites by the end of the year. “Our FirstNet network build is accelerating…and we’re ahead of our contractual commitment.
Wadirum1.....I'm not worried that the growth story continues to ramp up. Imo, it will show in revenue or backlog or cc call comments enough to hold the price. My worry is it happening at a pace/story/backlog enough to move the stock up after the results or are we stuck in the low $6s for another 3 months waiting until 3Q results. My biggest concern is international isn't really moving along, but I'm hoping that U.S. sales are such that it makes up for it.
Earnings August 9th:
Polar Power to Host Second Quarter 2018 Financial Results Conference Call on Thursday, August 9, 2018 at 4:30 p.m. ET
GlobeNewswire•July 25, 2018
GARDENA, Calif., July 25, 2018 (GLOBE NEWSWIRE) -- Polar Power, Inc. (POLA), a global provider of prime, backup and solar hybrid DC power solutions, will hold a conference call on Thursday, August 9, 2018 at 4:30 p.m. Eastern time to discuss its results for the three and six months ended June 30, 2018. Financial results will be issued in a press release prior to the call.
Polar Power CEO Arthur Sams, CFO Luis Zavala and COO Raj Masina will host the conference call, followed by a question and answer period.
To access the call, please use the following information:
Date: Thursday, August 9, 2018
Time: 4:30 p.m. ET, 1:30 p.m. PT
Toll-free dial-in number: 1-800-458-4148
International dial-in number: 1-323-794-2597
Conference ID: 4449854
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235 or Integra Investor Relations at 1-415-233-7094.
Latest Short #s updated today:
7/13/2018 160,943
6/29/2018 167,593
6/15/2018 172,922
5/31/2018 187,146
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
Industry news:
Back in Nov 2017, Verizon & AT&T signed a deal to work with Tillman partners on creating new towers in the U.S. for the two of them combined:
https://www.nasdaq.com/article/verizon-att-team-up-with-tillman-to-construct-cell-towers-cm878903
Today Tillman partners just got $1B in finance to roll out their towers across the U.S:
https://markets.businessinsider.com/news/stocks/cdpq-and-amp-capital-agree-to-provide-up-to-us-1-0-billion-to-finance-tillman-s-u-s-tower-rollout-1027390325
Worthy.....both the guys POLA has running their new operation in Africa--- Andre Herbst and Michael Mullen---are former Camusat Africa employees. Camusat is a large European player that does everything for cell towers (build, infrastructure, monitor). I'm sure their experience is part of the reason for this new approach. I'm also sure POLA is trying to get something going before the big Africa Tower Exchange show on Oct 9th and 10th to then drum up more contracts on the continent.
Worthylion.....I wonder how much of the increase is even "real". I say that because I watched the end of trading today. The bid moved to $6.40 from $6.39 3 seconds before the close. 1 second before the close it dropped to $6.26 and traded exactly on the closing there. It's obvious computers are playing a bit of a game here. There isn't anything wrong with that. What matters is earnings (revenue, net income & esp backlog) and the response to that with volume.
Their move into the area of tower construction could be a real bonus if they can pull it off with big contracts in time worldwide. It opens the door to them being a full service provider vs just a generator supplier.
There was an article in the Nimibia newspaper/website where they discussed the 500+ tower build has been delayed so far in 2018 and only 80 sites have received approval. I'm assuming since Polar has a purchase order in hand (plus cash up front) that their 8 sites they have an order for are part of this??
I am a bit concerned about the p.r. and the comments on international needing a combo of tower building + power supply to be effective. It opens up more growth potential possibly in the future, but it also may mean international growth progress may not be moving along as quickly right now.
There is so little volume that you could get one person "needing" to sell and does it on the bid. He then drives the price down on himself, panics, and sells more. We'll know if this is the case if next week this person is done and the stock bumps back up on the first person who buys on the ask and does the opposite.
Right now we have so few shares traded and such a spread at times that 1 person can move the stock quite a ways.
We need news and info.
New short #s. They went down a little:
6/12/2018 172,922
5/31/2018 187,146
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
1/31/2018 224,654
1/12/2018 229,708
I wondered if the short number would change much since it traded 223K shares on June 7th. It only went down 15K, as such, the majority are hanging in there.
Summer doldrums on POLA trading?!? approx 91K shares total traded in the last 12 days combined.
I saw that today too. It kind of kills how the chart was setting up after the few days closing above $6.30+. It doesn't really matter in the long run (if the company performs), but it is annoying in the short term.
New short #s. They crept up just a bit more:
5/31/2018 187,146
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
1/31/2018 224,654
1/12/2018 229,708
It will be interesting to see the next one in two weeks. This is because of the 223K shares (and push to $6.80 for a moment) that traded on June 7th.
Revenue vs Cost vs Margins....
I don't expect much for Q2, but Q3 has to be a tremendous quarter if we all want to start to make serious money here. Potential is meaningless if it doesn't start to become obvious it's showing up soon. Imo, sales need to go from $4.9M in Q1 to close to $10.0M by then. It's not impossible:
Say AT&T does $3M, T-mobile does $2M (they will expand off this initial order for sure and ramp up more), we need VZ to come back stronger and start doing $2M, they do $500K in U.S military. That's $7.5M. All of this is reasonable. However, imo, the company wouldn't be opening up a new facility if they were projecting $7.5M in Q3. I think international will start to ramp up quickly. Perhaps they get the RFP for Verizon on that national contract they were invited to and VZ comes in stronger. Perhaps they get decent FEMA orders. There are possibilities for positive surprises. $10M isn't impossible. Imo they can't have gone to Japan for direct orders of engines + go for 29K feet of more manufacturing space without thinking the same thing.
The next thing is margins. Buying the engines direct will help. Bringing the painting in house will help. Being more efficient will help. Let's say 36% margins are made. They haven't shown the ability for this, but it's needed.
The next thing is expenses. How much can they ramp up without hiring more and more people? They are at $1.8M in expenses now. They already have hired people for expected growth in that. Can they do $10M with expenses of $2.1M?
$10M x .36 = $3.6M gross. Minus 2.1M expenses = $1.5M. Taxes are 25% for Fed + Calif now. =$1.125M net income or 11 cents/share.
Projected out that's $40M in revenue and 44 cents/share net income over 12 months with no more growth. I fully expect revenue a year from now to be higher than $10M/qtr. International isn't going to take years and years to build up. Look how fast U.S. companies have switched over.
Overall, I think Q3 needs to come in at $10.0M and 11 cents/share. I think that helps us finish the year at $8-9 as it becomes obvious that 2019 could do $50+M and they turn 50+ cents/share. The stock goes higher in time as it's proven.
For now, I think Q2 needs to come in at $6.5M and a slight profit at least, but at least show a big jump in backlog + international contracts to show that Q3 will be when the real potential finally emerges.
Right now the stock is overpriced for Q1 results. On the other hand, hopefully it is underpriced for what comes by Q3.
Here is an interesting link to a video showing the 4 candidates for the Army's Squad Multi-purpose Equipment Transport (SMET) contract. POLA is teamed up with one of them, but they haven't said who (two of the candidates are listed as current/past customers on their IR presentation). I believe it's the 4th one shown in the video, HDT Global's Hunter Wolf system.
https://www.militarytimes.com/newsletters/tv-next-episode/2018/06/04/robotic-infantry-vehicle-shows-up-at-the-pentagon/#.Wxa83hW_7RQ.linkedin
I say that because here is the specs on the vehicle. It includes a 20kW onboard generator for power production to recharge batteries:
http://www.hdtglobal.com/2017/10/09/hdt-global-unveils-the-hdt-hunter-wolf-the-ultimate-smet-solution-at-ausa/
It's a worthwhile contract to watch because the winner will get a monster of a contract----thousands of units. It will be announced sometime in 2019. They are being tested now and will eventually get whittled down to 2 systems for the next phase.
Lots of churning today. I'm surprised by the selling, however, I also see that the yahoo analyst (Roth Capital?!?) has dropped his net income numbers recently. Perhaps people are worried that the increasing revenue doesn't necessarily mean increasing net income. It's a valid concern and one the company needs to prove is unjust.
Imo, net income will matter in 2019. In 2018 they need to keep adding keeping adding in more and more customers and showing that revenue can ramp up tremendously as it all builds.
New short #s. They crept up just a bit right before earnings.
5/15/2018 180,312
4/30/2018 170,570
4/13/2018 141,059
3/29/2018 191,644
3/15/2018 189,171
2/28/2018 205,368
2/15/2018 215,808
1/31/2018 224,654
1/12/2018 229,708
I'm sure a few covered after earnings on that swing up in price, but it feels like a few more came back after that.
Job position listed 3 days ago----This itself isn't that unique. What is is the highlighted part.....
"Polar is seeking full-time TIG Welders and Aluminum MIG Welders who can fabricate precision metal assemblies and metal cabinets/enclosures.
Available positions for both First Shift (6:00 AM to 2:30 PM) and Night Shift operations (3:00 PM to 11:30 PM or other schedules totaling 40 hours)"
What we could easily be getting is a different game of buy vs sell:
----one group of shorts are panicking and are buying trying to lock in their profit (those that shorted last spring)
----one group of shorts are panicking and buying and trying to limit losses (those that shorted since Q4 earnings report)
----that's two buyers. You could then be getting a new group of shorts selling at a new level and putting up sell volume.
None of this may even be that many buyers going long. Just the shorts playing games on themselves plus some computers stepping in for the action because of the move/volume change.
If so, I'm fine with this. It's always amusing when it goes against shorts.
It's not just HOD, today's closing price is the highest close in 52 weeks.
Who'd of thunk it after they reported a loss, eh?!? This has to be making shorts nervous. Obviously someone is buying in with the long term view that the ramp in revenue is coming.
You have to admit-----how many stocks do you own where you should expect sequential growth in revenue every quarter for the next year or more? I'm not saying y.o.y, but from one quarter to the next.
The longer it can hold above $6, imo the more of a concern it will become for shorts. There is no doubt Q2 revenue will be higher than Q1, Q3 higher still, Q4 higher still----assuming there is a reason for the expanded facilities. As such, when do shorts cover? They are paying interest (not sure what the rate is) on just holding now. At what point do you start to unwind your position completely and look for more fertile grounds?
All POLA needs is one news event in the next two months to confirm their growth.
Eventually they need to show that growth is converted into net income.
10Q is out. I read through it quickly and didn't find anything we don't already know.
https://www.sec.gov/Archives/edgar/data/1622345/000161577418003829/s110190_10q.htm
I don't think the shorts are panicking. However, 2nd Q should definitely show more growth. 3rd more. 4Q even more. And 2019 a strong year. The question is at what rate? How long till they are doing $10M per quarter?
As far as net income----maybe we will be like Amazon and no one cares :)
CC call transcript is available at https://seekingalpha.com/article/4173995-polar-powers-pola-ceo-arthur-sams-q1-2018-results-earnings-call-transcript
I listened to part of cc call again. I missed the part before where they said Verizon is letting them bid on a national RFP program. I'm sure it's because they have their new low cost 15K horizontal unit started being marketed in Q1. It'd be nice to get Verizon back above $3M per quarter.
I agree the expansion of opportunities is growing. No doubt. But ebase makes a good point---their margins need to reverse asap to get money to the bottom line.
The key is the new leased facility. They say in their IR slides (for whatever that is worth) that the current facilities can handle $50M in annual revenue (slide 23 of April presentation). Will the new area add to it? Or is this just planning/hoping, but not sure? I was on cc call and was going to ask it on the Q&A, but they didn't bring me on. Maybe it was because they ran out of time or because I was late in hitting *1.
For me anyways, doubts about management will continue until they prove themselves in revenue and net income.
I'm not selling. I just don't know if I'd be buying at this point. Maybe institutions will see the big longer picture. Maybe Roth Capital will upgrade them on potential. Glad to see him back on the cc call.
The opportunities just keep growing, but the results keep disappointing. Not sure what to make of it. When does it come together or is this one of those companies that bungle it up forever? The plus is they obviously have a quality product that large telecom companies like.
I was hoping for an upside surprise for once.
Worthylion....I will feel better if on Monday they announce that AT&T Q1 revenue received was actually 3x Q4 as they said in their IR report= $1.8M (45% of $4.0M) x 3 = $5.4M. I'm positive on the company/potential, but I'm still unsure on management's ability to actually do what they say. Them actually showing there was a need to open a second production line would be a relief too. I'd love to just relax, settle into my chair, and patiently wait for double digits.
Shorts sticking around makes me wonder if they are hoping/expecting something different. We will know soon either way.
I thought the same thing. Also, it's interesting that shorts are staying active in a stock that has such a low float. I will confess it makes me nervous. I think the future is good with POLA, but there is a part of me that doesn't trust management---not till they prove themselves with a solid quarter.