is... a buy and hold investor of dividend US and Canadian stocks
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What JBI needs to do is to make a lot more fuel and $$. I put together a spreadsheet that performs a profitability (ROI) calculation over a 3-year time period. It is applicable to a potential customer planning to buy a processor from JBI.
If you assume an up-front capital cost of $2 Million and a Cost of Capital of 4%, JBI would have to make on average $170k/ month from P2O production in order to break even. That is, to repay the 2 million over 3 years. To achieve an ROI of 20%, they have to do $205k/ month in production. They are nowhere near that right now. last quarter they did a measly $15k.
The 20% figure is based on my experience in Capital Projects. Money is tight in companies, and there are lots of competing projects and "entities" (oops) looking for funding...
These machines are just test pieces that do not achvee anywhere near the production required to make P2O a viable business.
It's easy. 174 = 302 - 128. Your math is incorrect. 135% increase.
Correct. The math:
(302-129)/ 128 = 1.359375 or 135%.
You are wrong. It is about 150%.
That does not describe the job of an Operator in any industrial environment. The job is to operate the machine safely within prescribed limits and to respond to any Alarms or emergency conditions. The production levels are predefined and predetermined and have nothing to do with their jobs.
A nuclear plant is a good example. I know that JBI is not a nuke plant, but it is a good analogy. Nuclear operators could care less about production. They have 3 priorities (from memory):
- keep the reactor cool
- ..
- ..
It has been a long time since I did the nuclear thing... I can't remember. None of the 3 priorities have anything to do with maintaining production levels.
That is ridiculous. This is just another way to find a reason why the production targets cannot be met. Blame it on the experience level of the operators.
I don't think that staff ability would be the bottleneck in a manufacturing system of this sort. They are there to maintain certain minimum feed rates, and to safely operate the processor. I don't think there is any skill that would be involved in maintaining a certain feed rate.
That would be a violation of the Matching principle, which took me about 5 seconds to realize and is one of the principles of GAAP that could not possibly be violated. Better luck next time...
You know they only made $10k from fuel sales last quarter? It is going to take a lot of sales to ever make any money...
What kind of financing did they expect to get?
This??
"
We have also decreased any type of spending that is not relevant to our goal of making fuel. This includes a significant curtailment of any spending related to facility upgrades or improvements to the property and buildings here in Niagara Falls.
Although SG&A costs were approximately $2.73M during the third quarter of 2013, a portion of this expense, approximately $1M, was related to non-cash stock-based compensation charges for employees, and also the one-time immediate vesting of options of prior executives. Additionally, costs related to severances paid in cash were approximately $180k. We are continuously working to keep spending at a minimum, and believe we are executing in that regard successfully."
Not much of a breakout. If I were an investor I would not be happy with that. 1 Million of compensation for employees? Sounds like a stock-selling scam to me. What kind of employees? Related to production? Not? Why? What were they doing? Pretty weak.
And this has gone on for 4 years. Sounds like a stock-selling scam where these "employees" are being given stock to sell on the open market. This is no explanation of massive overspending on non-product-related cost.
If that is the case, then why is their Selling, General & Administrative cost so high? DId enyone ask? That is alotta (100) admin people!
There is a budget for R&D that is reasonable. ALl I am saying is that at present, andf or the last 4 years, the SG&A has been at a level that makes them not a Going Concern. It is unexplained, unreakl, and they do nto have a hope in Hades if they spend like this. It makes no sense and is worth a question to Heddle.
that is all
another excellent post. I have posted twice a link where you can looka t typical Income statements for various business types. I figured that JBI was closest to a efinery, and if y ou look at it, SG&A for a refinery is no more than 2 to 10%. Sure, JBI is not in full production, but that argument only goes so far. I would believe 50%, but not 800%... from memory, 350k in Revenues... 2.7 Million in SG&A?
excellent response. I don't know. I was being dramatic for effect. You are the first Long who has acknowledged that there is a serious problem in this area.
well, what is your take on the massive SG&A? Without radical changes in that area they are bound to go bankrupt. they only made a whopping 10k last quarter from making fuel. Quite frankly, it really does not matter what happens with Processor #3. So no I don't agree that there is really any chance of JBI becoming a success at all. The most they might do is arrange some financing, struggle on a bit longer, but the end is sure to come.
Unless there are radical changes, which Heddle, for all his talk, has not been able to make. Like massive, like simply firing everybody not connected with production. By my calcs, there must be over 100 Salesman (2.7 Mllion * 4/ 100k) and Administrative people that are totally unnecessary that Heddle, if he was worth any bit of his entrepreneurial reputation.. should simply FIRE. Cash flow problem solved.
If that were the case, wouldn't they have had to cover or buy back their shares? Seems like a long steady decline in stock price... Not likely.
From which they made a whopping 10k. They would have to do 300 times the production to break even, given the massive SG&A. Someone talk to Heddle at the AGM! Ask him for an explanation! Tell him to simply fire the over 100 Salesmen and Admininstrative people that must be working there! (derived fropm the figure for last quarter for SG&A - 2.7 Million!!)
You know that is impossible given the amount of money they are spending on SG&A. They actually made money on P2O last quarter, to the tune of a whopping 10k. If they multiply their production by 300 times, they may get somewhere. Is that a realistic possibility do you think? Do you maybe think their financials overall are a little suspect? Have you asked Heddle about the SG&A? If you haven't, there is not much point in worrying about profitability, because it will not happen.
Bcoming CF positive should be easy!! All they have to do is lay off their Administrative and Sales staff of over 100 people!! Someone hould speak to Heddle abotu that. I suspect he has trouble getting around the office with all of these people wearing suits and not adding any value.
It is obvious from the financials. Last quarter they spent 2.7 Million on SG&A. If we make an assumption that an Admin or Salesman is at a cost to the company of $100k, and if you annualize that SG&A figure, you have an Administrative and Sales Force of over 100 peeps.
Either that, or they really need to get a Green office policy. At least double-sided printing. Man, Heddle must have to fight through all of the waste paper to get to his office every day.
Or it is just one big Offfie Party all the time.
Someone needs to speak to Heddle about all of this. Who is up for it??
True. last quarter they made a whopping $10k from P2O. Not quite the impressive margins gained by the tape business, but all they have to do is increase P2O production by 300 times, and they are at break-even!
let alone the *expense* involved? They are spending 2.7 Mllion per quarter in SG&A, and you are saying that filing with the SEC is too expensive? I don't think so, they can afford it.
I heard from my contacts in the area that many of his close family and friends were pressured not to sell at $7 because it was intended to go to $20. And apparently a securities firm was involved in applying that pressure.
Actually, I think if you do the calcs, that claim may not be far off. What is misleading is the entire picture. You have got to look at the SG&A. I think that there may be some product costs in there, it is hard to tell, such that they are misrepresenting the true costs of P2O. However you look at it, the SG&A has killed this company over time. Where has it gone?
The other thing, what about the selling for $70/barrel claim, if the $10/barrel cost claim is true. Something does not add up.
Zardiw may be correct (I have not done the math) in posting that revenues are up by almost 300%). Makes little difference. They made a whopping $10k on P2O. And incurred 2.7 Million in SG&A in the quarter.
I care deeply about the fortunes of all JBI investors.
LOL... Well, I must admit I have to give JBI shareholders credit for one thing, and that is patience. Belief, and patience.
Actually, patience is an important quality in investing. Only thing is... it is waiting for things to fall, not buying, then watching them fall...
and, there is a point where it is unrecoverable.
I have focussed on shipping in this last recovery. Generally for the best. I avoided any companies which may go bankrupt. So far so good... Several I looked at did go bankrupt..
Many are one time only costs? I took a look at the Financial Statements, and I saw very little explanation of these costs. If I were a shareholder, I would have been asking questions a long time ago. When they had 10 Milllion in the bank and they blew 2 on whatever ina quarter, no one cared... well.. now you do, or you should.
"One time" costs are the mark of a shaky company making excuses. Nortel had tons of one time costs, from the time they made money in 1998 tot he time they went bankrupt a few years ago. Just this ONE TIME.....
I saw no evidence of one time SG&A costs when I looked. Actually, no explanation at all. In any event, it has been a strong of ONE TIME costs for 4 years, hasn't it?
Do you have any idea what is in the SG&A? Why don't you ask Rick next time you see him, or at the AGM?
why will it go down? By definition, these costs have nothing to do with Production. They don't really need Salesman anyway, as a manufacturing operation. I wold have thought that Hessle would just have dot SG&A down to 10% of sales. Aren't you surprised that that didt not happen? After all, it should not matter..
hmmm... ok. Will they make money then? I men offset that Whale of an SG&A line item?
what does "proof of concept" mean to you?
You know that they have to do about 300 times the production from P2O to break even? Look at 3 numbers:
sales
CGS
SG&A...
do the math. Did you know that they made more t-from the tape business than P2O last quarter? Tape margins were actually pretty good.
Good luck with it.
how? Have you approached IR about the ridiculous and as of yet unexplained SG&A? Have you visited the company? Is there a secretary to greet you? If there is, there is something wrong. It is a simple thing. Walk in, if someone says Hello.... ask IR why she has not been fired.
well... what can one say... you are prepared to lose it all? Not many people can LOL about that.
Do you know how long (years) it takes your money to double at 5% and 10%? Just askin'. If you don't, you should find out. Next thing to learn is Fixed Income vs Equities...
Then... head down to the casino. Compare your options over 10 years.
Good luck with your JBI investment.
So the recent price drop from the low .30`s to where it is now is due to some kind of orchestrated Reset? As opposed to simply the last quarterly report showing that they were on the brink of bankruptcy?
They cannot survive another quarter in their current form... simple.
They cannot last until May 2014, when you predict the next *cycle* ending. Where do they get the money to blow on their SG&A.?
You would think they would just get rid of the SG&A. I would simply fire all the secretaries, admin types. If I were the CEO, I would just call a meeting and say.. give me a list of all your administrative people. Then I would sit with HR and just fire èm all.
Then I would ask if there are any Salesman around. Call HR. Fire èm.
Then, immediately stop all purchases of office supplies. No Xmas party.
2.7 Million a quarter saved. Company profitable...
I am a Genius!!!!
.
.
.
of course, if the company's financial statements can be believed.
Oh BS. First of all, even if that were true, 2.7 Million dollars on a quarter is way too big a number. What do they have, 50 employees? Secondly, wasn't their uptime half decent? Wasn't it 50% or higher? 2 full months of production? No, they are almost at full production now.
Any number you hypothesize for full production, will not make a difference. They will go bankrupt, and the SGA is way out of alignment, and shareholders should be focussed on that. The processors are just a sideshow. Just to keep you interested. And as far that goes, they are doing a great job. Have been for 4 years.
Do you think they are on the verge of getting rid of the 2.7 Million dollars of SG&A costs per quarter? Frankly, it does not matter what the processors do, revolutionary or not.
It really all does not matter, Steady, if the SG&A does not come down. The next time you speak with IR, why don't you ask them about that. Ask them to break down the SG&A. It is a ridiculous number, usually a refinery only has maybe 5% of Sales = SG&A.
So how do you think that the coming multi-year period of losses is going to be financed? Who is going to pay for all that SG&A at $900k/month? Just askin'.