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Bobwins et al, thanks for your responses. I had planned to put something in about Seitz keeping the company afloat during the downturn but my post was already getting pretty long so I decided not to add it in.
It was a bit disappointing to hear that this first well is taking a little longer than planned, since it probably also means that it is going over budget.
As evidenced by the trading action last week there is still a lot of cheap stock trying to get blown out before there is any announcement on the Canoe drilling. Can't say I blame someone for blowing out some of their position if they bought at, say, $.02 a share and are looking at a sure quadruple or more at this point.
I was thinking/hoping that the Enercom presentation would bring in buying to offset the dumping of the cheap stock but it looks like most of the folks who may have interest in the stock would like to see them make a discovery before buying the stock.
Hello GSPE fans, I thought you might appreciate the post I just did on GSPE on the Energy Investing board at the InvestorVillage. Would appreciate any comments/corrections:
Gulfslope Energy (GSPE) -- Massive Upside in GOM Subsalt (Miocene) Plays
This company is a throwback to the days gone by -- it is a penny stock that is shooting for the moon by generating prospects with massive upside and promoting them to larger companies.
The company is run by John Seitz, of Anadarko fame, who, apparently getting bored in retirement, put together a superstar team of GOM geologists and other geo guys several years ago with the idea of applying current seismic analysis techniques to find subsalt plays in the very southern edge of the outer continental shelf of the GOM. Starting in the 90's, companies started finding subsalt plays in the deepwater, but not much work had been done to find these in the shallower water as far as I understand.
Gulfslope has partnered with Delek Group, the Israeli E&P company that found those huge gas fields offshore Israel, to drill up to 9 of the prospects that they have identified. For the first 2 prospects, GSPE is getting $1.1M per prospect when they get the permit, and then GSPE pays just 8% of the drilling costs of the exploratory well, and retains a 20% working interest in the project.
The first well is being drilled as we speak, called the Canoe Prospect, and should be pretty close to hitting total depth. This first well is actually not a subsalt test, but a shallow 6,000 ft. target that they basically found by accident.
The real upside to GSPE is the second well, which is going to be drilled immediately after this first well. This deep Miocene target, called the Tau Prospect, is thought to contain as much as 300 million BOE (75% oil), which at current oil prices would work out to a PV10 value net to GSPE of $672M. Not too shabby considering GSPE's current market cap is a mere $82M, plus these are only the first 2 of 9 identified and leased prospects.
Looking at the upside another way, GSPE's share of the costs of drilling the Tau well are expected to be $3.1M, yet its share of the PV10 value, if its estimates of both potential reserves and drilling costs are accurate, would be about 217 times its risk capital for this project.
The company is at Enercom and is scheduled to present after market close tomorrow. There is also a chance that they will have finished drilling and logging the Canoe well tomorrow, since they spudded that well about 2 weeks ago and it is only 6,000 ft. deep.
The stock has taken a big hit over the last month, due to some deeply in-the-money convertible notes getting converted, but with the stock price popping back up by 9% in today's trading, it seems that most if not all of this cheap stock has been blown out at this point.
This first prospect they are drilling now is not a barnburner, it is projected to contain 18 mmboe and GSPE's share of the PV10 value would be $33M. But a discovery would have a big impact to GSPE's stock price since they would then have an asset that they could either sell or borrow against, to fund their share of future drilling with Delek.
I believe this stock has a legitimate shot at being a 10-bagger in a year. It is obviously not something to bet the ranch on, but I believe it deserves your review for potential inclusion in your portfolio, to spice things up a bit.
RiskyBusiness, I know you like these sorts of high-potential plays, and I respect your thoughts, so if you look at it I would appreciate your thoughts. Norm, you are involved in GOM offshore exploration for a living, so I would appreciate your thoughts too. Petroeng, you are at Enercom so if you end up watching GSPE's presentation tomorrow I would appreciate your thoughts also.
The company's most recent presentation (from May) is at https://content.equisolve.net/_e13fb0c14a525f7dadc1b73b45d67d5c/gulfslope/db/184/952/pdf/GSPE+-+LA+Energy+Conference+-+May+30+2018_Final.pdf
See particularly slides #7 & 8.
Hopefully they get the one they are doing for Enercom up on the web site shortly.
Great to see Roth Capital initiate coverage of FTE today with a PT of $35.
I had blown out most of my position in this when I saw in the 10Q that they sold 807K shares privately last quarter at a price of just $6.73 per share. That just didn't sit right with me, that's about a 15% increase of shares outstanding, at a massive discount to the publicly traded stock price. I guess Roth either didn't pick up on that or did but chose to ignore it.
I'll stick with my remaining small FTE position at this point, now that they got some analyst coverage. Hopefully they refrain from issuing any more shares at huge discounts. Most of the funds from the sale of this stock went into an intriguing microcap medical device company called Milestone Scientific (MLSS), you should check them out.
Great to see these guys finally get some traction on their epidural instrument. It would have been better if they got a single distributor for the whole country but we'll take what we can get at this point.
It would not take that much epidural sales to support the current stock valuation. I've recently started buying back some of this stock after having gotten completely out of it quite awhile ago, shortly after they got their epidural instrument approved by the FDA. The next few months should be pretty interesting here.
Has anyone seen or heard any projection of what this collection of regional distributors might be able to do for sales of this instrument?
Juan, why don't you think that the SEC filing on 1/8 constitutes shareholder notification of the increase to AS that went through on 4/11?
Interestingly, the stock price nearly doubled in the month following that filing on 1/8. It doesn't seem the news of the impending increase to # of authorized shares spooked too many folks.
Mike, this news was out many moons ago -- the company made a filing with the SEC about it on 1/8. See excerpt from that filing below:
Its unfortunate that they couldn't have gotten the earnings out by tomorrow's conference. I wonder what caused the delay -- maybe it was just a follow-on from the year-end earnings being delayed so much, which prevented them from working on these earnings.
Fortunately the market seems to be taking this delay in stride. Its encouraging to see that they are putting the earnings out on a Monday -- usually if a company had a good quarter they try to put the earnings out early in the week so the stock has several straight trading days to rally.
big o, if they don't put something out by Tuesday morning I would tend to agree with you. Since this is not a year-end they are not having to wait for their auditors to complete their audit before putting out numbers.
I believe its likely that the company will get some analyst coverage once they issue 1Q earnings. It is a great story and some analyst is likely to pick it up at that point.
big o, that's the same question I plan to ask their IR guy when(if) he returns my call. Maybe he's hiding under his desk at this point.
Hopefully they get something out by Tuesday, or otherwise they will look pretty stupid showing up to an investment conference without having reported earnings yet.
FTE Networks (FTNW) Set to Announce Earnings on Wednesday
Posted by Joyce Ramirez on May 7th, 2018 // No Comments
FTE Networks (NYSEAMERICAN:FTNW) will be posting its quarterly earnings results after the market closes on Wednesday, May 9th.
NYSEAMERICAN:FTNW opened at $14.51 on Monday. FTE Networks has a twelve month low of $5.90 and a twelve month high of $26.25.
FTE Networks Company Profile
FTE Networks, Inc, together with its subsidiaries, operates as an international networking infrastructure solutions company in the United States and internationally. The company operates through Telecommunications and Staffing segments. It designs, builds, and supports telecommunications and technology systems, and provides infrastructure services.
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Hopefully they have another CC and this time offer the chance to ask questions. They need to show that they have the guts to run the gauntlet if they want the stock to move up.
If they raised a material amount of cash via an equity raise it would probably be via a public offering at this point, so as to avoid the haircut that you typically need to take when you do a private offering. To do a public offering you first need to file an S1 or S3 with the SEC.
Great to see them getting back out on the investment conference circuit. This story will resonate well in those venues I believe. Hopefully their 1Q was devoid of any material "special charges" as what happened in the prior quarter. It will be interesting to see if they increase 2018 guidance now that they have gone through a third of the year and they got a bunch of new contracts.
zoomlik, FTE can do whatever it wants with its cash as long as it keeps up with its obligations. Working capital as of the end of last year was not that high but then shortly after the year ended they issued stock to pay off about $5.5M of debt. Assuming that debt was short term debt then working capital would have gone up by that amount. Also they will be generating a lot more EBITDA this year, which should further increase working capital as the year goes on.
Their 1Q 10Q is due a little over a week from now. Hopefully that will show a healthy increase to working capital.
zoomlik, not sure what is going on behind the scenes but nothing has been filed with the SEC to this point. There is no immediate need for funds (they ended last year with about $15M in cash) but it would be in their best interests to raise some money fairly soon, to pay off their senior debt, which is costing them a lot of money interest.
I'm thinking they are waiting until 1Q numbers come out at this point since the numbers will probably be very good and will cause them to raise 2018 guidance.
I still think there is a chance they could get some analyst coverage pretty soon, the only question is whether it will be before 1Q gets announced or right after it.
Michael Palleschi, Chief Executive Officer
Thanks, Steve. It is my pleasure to address FTE Networks’ loyal shareholders and, hopefully, many potential new shareholders as well. We are pleased to share our progress executing against the Company’s market position and business objectives.
2017 was truly a transformational year for FTE Networks, and a year that positioned the Company for what we expect will be a dynamic future for growth and value creation. During 2017, FTE acquired and integrated Benchmark Builders, a tier one general contractor with a powerful industry brand and strong presence in the coveted New York City market. Later this week, on April 20, we will mark the one-year anniversary of the closing of the Benchmark acquisition. In addition to enhancing our top-and-bottom lines, Benchmark also provides an ideal sales channel for our first to market compute-to-the-edge technology powered by CrossLayer, which we officially launched in the fourth quarter of 2017.
We enter 2018 with three synergistic entities that will enable FTE to meet the markets demands for innovative buildings designed with superior technology that brings faster high tech, low cost connectivity. Through Benchmark, we have a robust sales channel for the CrossLayer platform as part of a multi-prong sales strategy. Third, our legacy Jus-Com subsidiary, which provides end-to-end network infrastructure and data center solutions, provides the installation and operations channels for CrossLayer. So, as you can see, these complementary businesses position FTE in the market as a technology and infrastructure services company.
These accomplishments were instrumental in the achievement of a key corporate milestone of uplisting to the NYSE-American in December 2017. This distinction allows for the potential of greater liquidity and access to capital, and a larger platform for us to communicate our progress to a broader audience. As a result, we believe we are now better positioned to attract a broader range of institutional investors.
So, as you can see, the Company has accomplished a great deal over a short period of time. Over the past 12 months, we have successfully integrated a $300 million revenue generating business into a GAAP compliant, public entity; began the launch of the innovative CrossLayer technology platform into Benchmark’s installed sales channel; and uplisted to a prominent stock exchange. These accomplishments fuel our optimism in our ability to capitalize on the growth opportunity that lies before us.
The FTE Strategy
As a result of these strategic initiatives and our successful execution, FTE today is a technology company that is leveraging its market presence in the network infrastructure and general contracting verticals as sales and operations channels for its advanced edge computing technology, powered by CrossLayer. This business model is notable in that it spans multiple growth market segments.
In addition to enabling adaptive and efficient smart network connectivity platforms, infrastructure, and buildings, FTE provides end-to-end design, build, and support solutions for state-of-the-art networks, data centers, and residential and commercial properties.
Our business is now comprised of three complementary businesses whose combined operating benefits provide cutting-edge technology solutions to our rapidly expanding client base, and, in turn, contribute to improved margins and enhanced profitability.
Operations
As of December 31, 2017, our backlog stood at $434 million, which we believe underscores the underlying strength of our business and further validates the market’s adoption of FTE’s product and service suite. Earlier this month, we announced that FTE has been awarded approximately $133 million in new project contracts to date. Additionally, the Company continues to be awarded re-occurring infrastructure projects in strategic markets across the United States under existing master service agreements, through which FTE helps create intelligent workplaces by providing state-of-the-art technology, infrastructure and fit-out services.
These awards are bolstering our footprint in existing markets, led by the New York City metropolitan area, but are also providing opportunities to establish a presence in new markets, given our access to more than 200 REITS and an impressive reoccurring Fortune 100/500 customer portfolio with a national footprint.
One primary example of the model we are seeking to replicate broadly is our recently awarded contract to build a gigabit fiber-optic network across the 35-acre development at Industry City, a historic shipping and warehouse complex, located on the Brooklyn, New York waterfront. Industry City is a preeminent and progressive creative hub for local businesses, manufacturing, media, artists, and retailers that has more than 450 commercial tenants, including ABC Carpet, Brooklyn Kitchen, and Conde Nast. The complex has been cited as an innovation ecosystem that benefits its tenants and the wider community, and we are proud to have been selected to be a part of this project.
FTE’s CrossLayer will bring carrier-like functionality across Industry City’s multiple buildings and campus, and to its tenants, many of whom are in the media, design, creative arts, production, and technology sectors, essentially building an ultra-fast, highly secure data network with unlimited connections that Industry City will own, with CrossLayer then managing the carrier-neutral network across the entire development, from sign-up to service.
The expansion of the integrated FTE operating model nationwide, in multi-use real estate settings, is a primary objective, and one we believe we are well equipped to achieve.
CrossLayer
Thus far, we have mentioned CrossLayer quite a bit, which is understandable, given it is the foundation of our technology service offering. But, I want to briefly highlight some of the platform’s key features and characteristics that have driven its market acceptance since launch that has us excited about our future.
FTE developed CrossLayer to fill a need in the marketplace, enabling building owners to implement a cost-effective intelligent building and network infrastructure. Today, businesses are becoming more data-driven and are looking for lease space that is highly innovative and supports on-going high-tech demands for their always connected workforce.
CrossLayer addresses these demands by delivering open source technologies and processes deployed in a software-driven, mobile edge compute platform that is scalable.
Additionally, the platform features multi-layer security with built-in redundancy that prevents service disruption an offers new revenue streams for building owners. We look forward to sharing more details on CrossLayer’s potential applications and opportunities as its rollout continues.
FTE will continue to invest in its technology solutions and to protect these technologies by building a robust patent estate around their key features. In addition, FTE has made additional investments in CrossLayer to increase its sales force and establish partnerships with globally recognized firms to support and expand its pipeline throughout the United States, and to ensure its sustained momentum.
High-Level Financial Results
David Lethem, our CFO, will provide a review of our financials shortly, but I want to point out that the operational achievements just highlighted, have already produced exceptional results for FTE, and we believe, will continue to provide sustainable value to our shareholders. In the fourth quarter of 2017, FTE generated record revenues of $110.5 million and a record backlog of $434 million at year-end. In just a moment, David will provide additional insight into the investments we have made into CrossLayer as well as the non-recurring transaction fees incurred in 2017 that, when placed in their proper context, further underscore the momentum in the FTE business.
We remain confident that FTE’s integrated model, through which we equip our clients with innovative, technology-oriented solutions to offer their commercial tenants with a cutting-edge networking experience, will provide the Company with enhanced efficiencies and margins, driving sustainable profitability.
With that, I will now turn the call over to David Lethem, our CFO, who will review our financial results for the fourth quarter and full year 2017.
David Lethem, Chief Financial Officer
Thank you, Michael, and good morning everyone. I will now provide you with a summary of our full-year 2017 results. For the more detailed results, please refer to the Company’s earnings release we issued this morning, along with our annual report on form 10-K filed with the Securities and Exchange Commission.
Q4 2017 Results
For the quarter ended December 31, 2017, revenues totaled $110.5 million, compared with $3.3 million in 2016. This represents year-over-year growth of approximately 97%, and was driven by the acquisition of Benchmark and steady growth in our legacy business Jus-Com.
In the fourth quarter of 2017, cost of sales was $97 million, representing a gross margin of 13%. This compares with $3.2 million and a gross margin of 1% in the same period in 2016. The increase in costs were primarily related to the revenue generated by Benchmark Builders expense.
General and administrative expenses for the fourth quarter of 2017 were $4.8 million, from $1 million in the corresponding 2016 period. The increase in expenses was largely attributable to costs related to increase in G&A as a result of the acquisition of Benchmark Builders.
Total operating expense for the fourth quarter of 2017 were $14.8 million over $1.4 in the same period in 2016.
Other expenses increased in 2017 to $9.9 million, from other expense of $1.6 million in 2016.
As a result, we generated a net loss in 2017 of $13.5 million compared to a net loss of $3.0 million in 2016.
Full-Year 2017 Results
Total revenue for the full year 2017 was $243.4 million, which includes the revenue contribution of Benchmark Builders from April 21, 2017, following the closing of its acquisition by FTE. On a pro-forma basis, full-year revenues including Benchmark from January 1, 2017 would have been $285 million. In 2016, total revenue was $12.3 million, solely from the legacy Jus-Com business.
Consolidated gross margin for 2017 was 15%, compared with 28% in 2016, as Benchmark Builders’ margin is lower than FTE’s legacy Jus-Com network unit.
Operating expenses for the full-year 2017 were $38.6 million, compared with $5.8 million in 2016. The increase in expenses is attributable to several factors related to the acquisition of Benchmark Builders, including higher stock compensation expense, increased selling, general and administrative expense, transaction-related expenses and amortization expense of intangible assets.
Operating loss for 2017 was $1.6 million for the full year 2017, compared to a loss of $2.4 million in 2016.
Other expense for the full-year 2017 was $17.8 million, compared with $3.8 million in 2016. The increase is primarily attributable additional interest expense, amortization of deferred financing costs, and higher financing costs all related to the acquisition of Benchmark Builders.
Net loss for 2017 totaled $20.1 million, or $4.23 per share, compared with a loss of $6.2 million, or $0.10 per share, in 2016.
Adjusted EBITDA was approximately $21.2 million for the year ended December 31, 2017, compared with $(1.9) million in 2016.*
As of December 31, 2017, FTE had $15.5 million in cash, working capital of $1.9 million.
2018 Guidance
Lastly, I’d like to provide select financial guidance for the full year 2018.
First, FTE expects revenues of approximately $350 million for the year, primarily driven by Benchmark Builders. We launched CrossLayer in the fourth quarter of 2017 and, while we are expect Crosslayer to be a vital contributor to FTE’s future growth, we plan to conservatively model its near-term revenue forecast until we are further into the year.
Next, Adjusted EBITDA of $30 million for the year, which is expected to be primarily driven by:
Revenue increases across all three operating entities;
The addition of CrossLayer revenues driving higher margins;
Expense consolidation across all 3 entities, and;
Realizing additional operating efficiencies across the business.
Next, FTE expects Operating Income of $30 miilion for the year, primarily driven by the same factors as just mentioned for adjusted EBITDA.
Lastly, buildings on-Net. In 2018, CrossLayer is focused on expanding the number of buildings on-net and increasing its monthly recurring revenue base. We anticipate having 30 buildings on-net in 2018.
We are laser focused on execution in 2018, and believe we are off to a strong start to the year, as evidenced by the $133 million in announced new contracts in the first quarter, into early April. In 2017, our financial results reflect the costs related to the acquisition of Benchmark, its integration into FTE, the launch of CrossLayer and the investments that made launch possible. As a result of these investments, we believe that the reported expenses in the fourth quarter do not accurately capture the underlying momentum of the business, and we look forward to retiring these non-recurring expenses. So, while 2017 was a year of investment and integration, setting the stage for 2018, where we expect to begin realizing the return on these investments.
Michael Palleschi, CEO – Closing Remarks
Thank you to everyone who has joined us on our call today. We look forward to updating you all on our progress moving forward.
FTE’s accomplishments in 2017 established a strong foundation that will enable the Company to capitalize on a multi-prong and multi-year growth opportunity. For 2018, FTE is focused on driving revenue growth by leveraging its three complementary business units to realize operating efficiencies, and to enhance margins, and profitability, as part of its long-term strategy.
Thank you for your ongoing support and we look forward to keeping you updated on our progress.
Tailwinds' Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit http://tailwindsresearch.com/disclaimer/.
"Tailwinds’ Take: Lots of heavy lifting to get this first K done after a major acquisition. Guidance of $30M in adjusted EBITDA is conservative. Stock is incredibly cheap and poised for a big run as CrossLayer starts to gain significant traction. It’s easy to see CrossLayer adding over $50M in high margin revenues within three years. NPV on that alone could be $200M in market cap."
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Above from Tailwinds Research. They are probably right to be focusing on the long term but I also believe we should start to see some good growth i the short term. They announced a lot of new contracts last quarter and several of these were for CrossLayer which has high margins so we should start to see some pretty good numbers starting 1Q. That quarter's results should come out in about 4 weeks or so. Hopefully they see fit to allow questions in the 1Q CC, as opposed to just recording little speeches. When a company doesn't allow questions, it begs the question, what are they hiding from? For anyone who may have missed the call, I will post a transcript of it in next post.
From the 10K, the company paid off about $5.5M of debt after last year-end by issuing shares at a price of around $20. This is looking like a good move at this point. If the stock gets a little over $20 and they could do a public offering at $20 I would hope they raise some money in the near terms. Their senior debt ($29M) becomes short-term debt in 1Q so they will need to do something on that pretty soon.
Accretive acquisition pays off
Tiny float, Substantial Revenue Growth with New Contracts being Announced
Over $20M EBITDA at a 10x is $200M and current market cap only $100M, while they are sitting on a $400M backlog? Can you say undervalued?
Good day everyone,
Welcome to our many new members!
Initiating coverage on FTE Networks, Inc. (NYSE MKT: FTNW) for round two.We initiated coverage on FTNW on the 15th of February 2018 and the company’s shares moved from $17.90 to $25.43 for a potential gain of 40% for our members. The company recently released H2 2017 operating results and they were impressive. We believe FTNW shares could have significant gains ahead based on the H2 2017 numbers.
Estimated share structure: 5.6M outstanding, 1.17M in float. 55% of the outstanding shares are held by insiders.
In Q2 2017, FTNW acquired Benchmark Builders and in December 2017, the company up-listed to the NYSE.
FTNW has only been NYSE listed for four months, they are still gaining investor awareness.
Why all the buzz about FTE Networks? Benchmark Builders is one of the top construction companies in New York and FTNW has introduced its Crosslayer Technology Platform. This means the company can now provide their Fortune 100/500 and top-ranking REIT customers with adaptive and efficient smart network connectivity platforms, infrastructure and buildings.
The company is in a high growth mode
FTE Networks operates eight lines of business, including Data Center Infrastructure, Fiber Optics, Wireless Integration, Network Engineering, Internet Service Provider, General Contracting Management, and General Contracting.
Backlog at December 31, 2017 was $433M. FTNW has booked an additional $133M in contracts during 2018. The newly acquired customer project portfolio includes companies in the communications, technology, REIT, and hedge fund industries.
Some FTNW Customers (there are many more):
NYSE – Morgan Stanley – Fox Studios – FINRA – Bloomberg – AIG
Dow Jones – Credit Suisse – Ralph Lauren – ESPN – McGraw Hill
Highlights for H2 2017 (after the Benchmark acquisition):
Revenue $190M
Net Income (adjusted) $9.6M
Adjusted diluted earnings per share $1.73
Value analysis: (Why FTE Networks shares may still be undervalued)
Current price - $19.30 / share
Price to sales ratio:
FTNW reported revenue of $190M in H2 2017 (annualized at $380M).
Considering these revenue and backlog data, it should be reasonable to estimate 2018 FTNW revenues at $300-$400 million. Remember, FTNW only has 5.6 million shares outstanding. If we apply the conservative side of the price/sales ratio (analysts consider 1-2 as a favorable range) we can see a share price around $67. If we look at the higher end of the range, we can see a share price in the range of $134.
Price to earnings ratio
FTNW had H2, 2017 income of $1.73 (annualized at $3.46)
Based upon the industries that FTNW participates in, we find an average price/earnings ratio of about 28 and the major indices run about 24. If we apply a P/E of 24 we arrive at a share price of $83.
We believe FTNW shares may show significant gains in the near to mid-term. This is a rapidly growing company that is being awarded multi-million-dollar projects by multi-billion-dollar enterprises.
FTNW shares are slightly below their 50 DMA of $20.54 and over their 200 DMA of $13.69. The trend line and share volumes are both indicating growth.
Stay tuned for our follow-up report coming soon,
The Team
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Above is from an email I got today from SmallCapTraders. Thanks to whoever mentioned these guys here previously.
CC, its good to see them trying to keep us updated on their business but its a bit weird to see PRs about such small bits of business. In 4Q they generated revenue at a rate that makes this last bit of business represent quite a bit less then a month's worth of sales.
I'm looking forward to their conference call, I think that will go a long way toward helping people understand this business and its growth prospects.
It will be interesting to see whether they decide to put anything in the earnings release for '18 guidance, or maybe at least an estimate of 1Q '18 results. By this point they should have a reasonably good idea of how they did last quarter and I'm sure they realize folks will be asking how they did in the conference call.
CC, thanks for sharing that, I had meant to check in on that website but forgot to. After reading that I have some concerns about this company, and its apparent poor performance by its CFO.
The excerpt below is of particular concern:
So, EBITDA was already going to be a little lower. But, now you’ve got a situation where there were substantial expenses and one-time charges related to the closing of the Benchmark acquisition. How big were these expenses? There were around $10M in one-time expenses during the quarter. Let’s list a few of them.
Legal fees
Accounting/auditing expenses
Tax related work
Due diligence expenses
Year-end employee expenses
I’m sure there were more. These were one-time, non-recurring (except annual bonuses) expenses and they ate up EBITDA rapidly in the Q.
On a side note, someone might ask (I certainly did) why these expenses weren’t amortized over several quarters? They could have been. However, by the time Q4 came along, it would have required restating prior quarters, so they elected to take a hit on Q4 numbers. This is another reason they presented 6 month numbers, not just Q4, this week. Would I have preferred they amortize? Sure. Do I care that they aren’t worried about massaging numbers, but are more focused on the big picture and driving this business? Much more important to me, so I’m over the charges being levied all at once.
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All of the items he lists as being reasons for the $10M of one-time costs are things that should have been fully or partially accounted for in previous quarters, or should not be that large. If they are that large then we got a problem here.
The CFO gets paid big bucks to keep accounting surprises down to a minimum. He is supposed to recognize issues ahead of time, and address them in time so that he doesn't have a Chinese fire drill going when its time to file the 10K. If he's got a complicated tax situation, call in the heavy artillery before the year even ends and have them work out a template for the tax provision that could be filled in quickly once the books are closed for the year. For expenses, he is supposed to think ahead and accrue for them during the year vs. having them all hit at 4Q as what happened here. Either this CFO dropped the ball here or he brought up all this stuff in prior quarters but his CEO overruled him and the company just pushed this stuff under the rug until 4Q. In either event this is not a good situation. Hopefully we will learn a little more about what happened in the earnings release and the ensuing conference call.
FTE Networks (FTNW) Stock: Announces Preliminary Results
Joshua Rodriguez 21 hours ago
FTE Networks Inc (NYSEAMERICAN: FTNW) released some pretty big news today. In a press release issued early this morning, the company released its preliminary financial results for the second half of the year 2017, showing strong growth and laying the foundation for a great 2018 year. Today, we’ll talk about:
What we saw from FTNW earnings;
why the results are a big win for the company;
and what we’ll be watching for ahead.
FTNW Announces Financial Results
As mentioned above, FTE Networks announced its earnings for the second half of 2017. The report covers the dates ranging from July 1, 2017 to December 31, 2017. In the report we saw some pretty impressive figures. Here’s what we saw from the preliminary financial data.
Revenue – FTNW said that it expects for revenue for the period to come in at approximately $189.6 million.
Gross Margin – In the release, the company said its gross margin came in at approximately 16%.
Loss – FTE Networks expects that the net loss attributable to shareholders is approximately $6.7 million for the quarter.
Adjusted Net Income – Adjusted net income came in at approximately $9.6 million.
Adjusted EBITDA – FTNW said adjusted EBITDA for the six month period came in at approximately $15.1 million.
Earnings Per Share – Adjusted diluted earnings per share came in at approximately $1.73.
In a statement, Michael Palleschi, CEO at FTNW, had the following to offer:
Our initial six months as a consolidated operation have produced strong results, including our highest quarter of revenue generation since inception, which underscores our confidence in the business as we enter 2018… During the fourth quarter, we successfully launched our CrossLayer technology platform as a foundational service offering to our Benchmark Builders client base, which drove a record backlog of $434 million at year-end, which includes several Master Services Agreements. With our strategically structured and integrated organization that provides both technology and infrastructure services, we have secured both new customers and re-occurring projects with Fortune 100/500 companies and top-ranking REITs.
During 2017, FTE acquired and integrated Benchmark Builders, a tier one firm in the coveted New York City market, which both enhanced our top-and-bottom lines and created an ideal sales channel for our first to market compute-to-the-edge technology powered by CrossLayer. These accomplishments were instrumental in the achievement of a key corporate milestone of uplisting to the New York Stock Exchange (American) in December 2017. This distinction allows for the potential of greater liquidity and access to capital, as well as expanded communications to our investor base.
Why This Was Such A Big Quarter
At the end of the day, the news released surrounding preliminary financial results by FTNW is very big news. After all, it shows that the company is seeing some pretty impressive growth. In fact, the revenue that was seen in this period is the highest amount of revenue that the company has seen since its creation. This, in combination with impressive growth of the company’s contractual revenue backlog shows that the second half of 2017 was a great time for the company!
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on FTNW. In particular, we’re interested in watching the continued growth in the company’s contractual revenue backlog as this is obviously leading to strong growth in revenue. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
zoomlik, it was great to see them put something out even though the numbers are still not final. By now you would think that the numbers should be pretty far along to being something you can rely on.
My hunch about margins going down is as follows:
1) I believe part of Benchmark's business is that they can act as general contractor. That activity has very low margins I believe. Maybe a higher mix of Benchmark's business this quarter was from acting as general contractor.
2) I suspect that the auditors may have found some expenses that were not being accrued for but should have been, and that has dragged down the margins. Margins were down pretty significantly in 4Q last year also, and I believe that was also due to unrecorded accrued expenses being identified by the auditors.
3) I believe the first contract for CrossLayer was done in this quarter. It would not be a big surprise if they had to accept razor thin margins to get that contract, just to get the first one under their belt.
CC, good to hear that the earnings announcement is imminent. They never bothered to file the extension form with the SEC so they are now subject to getting the dredded "E" appended to their ticker since they are not in compliance with SEC filings. Hopefully the NYSE American exchange will continue to look the other way while FTE gets its act together.
big o, this was just something I dreamed up, it could be the results of an overactive imagination. It should not be very long before we get to find out what really happened last quarter.
In fact they could announce 4Q just before the market opens on Monday. The reason I say this is that, even though they didn't file the 10K yet, neither did they file the form for the automatic 2 week extension. I believe that extension form, to be valid, needs to be filed prior to the due date of the 10K. Contrary to the way the IRS works, I believe the SEC does not have a "weekend due date" rule.
The fact that the stock rallied into the close yesterday would be consistent with the above thought, if the fact that they were filing the 10K on Monday morning got leaked.
In any event, even if they file on Monday morning, it is just not good "corporate citizenship" to be disrespecting the SEC reporting rules this way. They knew about this deadline long ago and if there was something that was going to be found to be contentious by their auditors they either knew that or should have known that, and should have dealt with that sometime before the last minute. I wonder whether its time FTE started looking for a new CFO?
big orange, given that they have so many satellite offices throughout the country, as shown by the map on their web site, one would think that a significant amount of their business comes from outside NYC. If this is not the case then I hope they are considering shutting some of these offices down to save on G&A.
Its disappointing that FTE management has not gotten its act together on the 10K yet. It seems likely that there is something negative that the auditors are proposing, that FTE management is not yet agreeing to. My hunch is that it is not about the P&L per se but rather something to do with the number of outstanding shares.
With all this increase in business activity its likely that FTE needed more money last quarter and went back to Lateral, their senior lender, for those funds. In the past, FTE has had to issue a lot of stock in order to get Lateral to lend more money.
Let me ask folks this as a hypothetical. Let's say that -- horror or horrors -- they put out the 10K and it turns out that the number of outstanding shares is not 5.6M but rather is 6.6M because they had to issue 1M shares to Lateral to get more loans last quarter. Once that got announced would that make you want to blow out your position @ $17?
big orange, given that they have so many satellite offices throughout the country, as shown by the map on their web site, one would think that a significant amount of their business comes from outside NYC. If this is not the case then I hope they are considering shutting some of these offices down to save on G&A.
Its disappointing that FTE management has not gotten its act together on the 10K yet. It seems likely that there is something negative that the auditors are proposing, that FTE management is not yet agreeing to. My hunch is that it is not about the P&L per se but rather something to do with the number of outstanding shares.
With all this increase in business activity its likely that FTE needed more money last quarter and went back to Lateral, their senior lender, for those funds. In the past, FTE has had to issue a lot of stock in order to get Lateral to lend more money.
Let me ask folks this as a hypothetical. Let's say that -- horror or horrors -- they put out the 10K and it turns out that the number of outstanding shares is not 5.6M but rather is 6.6M because they had to issue 1M shares to Lateral to get more loans last quarter. Once that got announced would that make you want to blow out your position @ $17?
txhockey, I believe the pullback in price has to do with the fact that we are getting down to the last week for putting out the 10K without having to extend it, but the company has not indicated when it expects to announce earnings yet. Having to extend the 10K would be unfortunate and would probably be interpreted by some to mean that there must be some contentious accounting issue(s) that are being debated between company management and its auditors. By this point you would think that they would have had enough time to get the actual numbers themselves put together and audited. If there are some issues out there, I hope FTE management just decides to bite the bullet and agree with whatever their auditors are saying, and get the 10K issued. Most folks buying the stock at the current price are not buying it based on what its EPS may have been for 4Q, but rather are buying it for its growth prospects going forward.
I don't think the company is having to low-ball bids to get business. As far as I understand it, while there are obviously other ways to get internet service to a building, there are not too many ways to do it with as fast and reliable service as what CrossLayer is offering. So to this extent they really don't have any competitors, unless the building owner is willing to compromise on the quality of internet service he is going to offer.
FTE put out a great new presentation for their Roth appearance, see it on their website. This one is very well done and a big improvement over the last one. It better shows how all 3 FTE businesses fit together and how they complement each other. As shown in slide 6, they are referring to the third business as Jus Com now, which I believe has always been its name in the trade. As also shown there, Benchmark serves as a sales channel for CrossLayer, and Jus Com serves as the installation and operations channel for CrossLayer.
As shown on slide 12, there are about 20 buildings in the 35 acres that make up Industry City. That is going to be gold mine for these guys.
zagdad, given that a lot of what an IR firm does is behind the scenes, its hard to judge these guys on their performance for FTE so far. The announcement of their hiring came out in early January but then in February the company put out a series of PRs announcing big contract wins. FTE is a small company so its most likely that its upper management was highly involved in getting those contracts, and would have had little time to devote to promoting the stock during the time they were working on getting those contracts. The sales cycle for those contracts was likely a pretty long one -- well over 2 months. The key focus for FTE management, at the time the company was competing for those contracts, was working on getting those contracts, not promoting the stock.
So until the last few weeks there was probably not a whole lot that the IR firm could do since most of what they would want to do would require the participation of upper FTE management.
CC, we have actually already exceeded the closing high, which I consider more meaningful. Not that it matters much since next week this is likely to march up higher anyway, with the Roth presentation, etc.
The stock has skyrocketed > 50% over this past month so its actually good to see that it is spending the last week or 2 consolidating its massive gains. Hopefully this pause in the action is causing the mo-mo guys who jumped onboard recently to now jump off, so they will not be "selling on the news" in the coming weeks and raining on our parade.
They don't present at Roth until after the markets close on Monday but they will probably start the one-on-one meetings earlier that day so we may start to see some buying come in that afternoon.
Thanks for sharing that zagdad, its great to see that the stock is getting noticed and that folks are starting to consider the blue sky on it finally. I know SeethroughEquity had put a big target price up on the stock way back, but no one really takes them too seriously. Now they are looking like superstars on this one.
Could you share who the firm was that wrote that piece that you pasted up? If its a paid service and you don't want to get in trouble, that's fine, I'd understand if you would rather not.
Here is the latest that Tradewinds Research had to say on FTE in their February newsletter:
"FTE Networks (FTNW): was up 45% in February. Investors are treading cautiously here as this stock has come a long ways. I would only say that I’m not being cautious; I bought aggressively and think this is still by far the cheapest (on a EV to EBITDA basis and on a PEG ratio) stock in my universe. Growth on their high-margin CrossLayer business is astronomical and it trades at about 4X EV/EBITDA. I see great things in the future."
Great to see them still being so bullish even with the stock at these prices.
It was great to see FTE management finally start to get FTE on to the investment conference circuit. I think the Roth conference would be a good one to start at. Since they are going to be out in CA for that anyway, hopefully their IR firm has lined up a full week of meetings with investment managers in the major financial centers in CA, so they can start to get this story known to those guys. The CA guys love tech plays obviously and the CrossLayer "better tech mousetrap" story should resonate well with those guys.
It would be great if they could somehow get the audit done so they could announce 4Q earnings the week after they present at Roth. At that point the company will still be on the minds of the Roth attendees. Hopefully they are planning to do a conference call in conjunction with the earnings release. That should go a long way in helping the stock (not that it needs a lot of help at this point!).
common_cents, I agree that at this point its probably best for them to hang in there until they announce 4Q. Maybe they can put some pressure on the auditors to wrap things up at this point and sign off on the numbers in a couple of weeks. Usually once you get within a week of sign-off on the audit, you know when that will be, at which point FTE could then start planning the secondary offering.
Yesterday's news was significant in several respects. First, the footprint being 35 acres, most of which have big office buildings on them, is absolutely massive. Put that together with the comment in the Tradewinds piece that the amount CrossLayer gets for a 100K square foot building is "well under $1M", and the numbers get large when you extrapolate that over 35 acres of buildings. By them saying "well under $1M" and not, say, "well under $0.5M", this would infer that the amount CrossLayer gets is somewhere between $5-8 per square foot. There's a helluva lotta square feet of buildings in those 35 acres I would suspect.
The second big positive is that this project appears to be the first one that CrossLayer got that was not just a tag-along project of Benchmark's. The ability of CrossLayer to get its own projects is huge, and opens the door to them getting a lot more business than they would otherwise.
With the stock now approaching the mid $20's, is it too soon to start thinking about a forward split? If it stays above $20 for a week after they announce 4Q, maybe they should announce a 2:1 split. The stock desperately needs more float obviously.
common_cents, IMO they need to get rid of the Lateral debt ASAP, it is at too high an interest rate to warrant being kept outstanding (16% including the 4% PIK provision). As of the end of 3Q they had $27M outstanding on that line.
Most of the other debt they have is at reasonable, or even below-market, interest rates, so there is no urgency to pay that debt down right now. Although, the loans they granted to the Benchmark shareholders have some pretty hefty principal payments due over this year due to provisions that provide for accelerated principal payments when the company is making a lot of money. So there will be a need to come up with funds one way or the other for that stuff pretty soon anyway.
Right now I would focus on taking out the Lateral debt. The question is, do they do a raise now or just wait another month and do it after they have announced 4Q. I had been thinking that they would be better off waiting until they announce 4Q but with the stock going idiotic I'm wondering whether they should just pull the trigger on a quick little private placement now, and then maybe do a larger public secondary offering in the spring.
FTNW: Reconfiguring the 4th Utility
By Daniel Carlson -
February 13, 2018
The internet, and access thereto, is often referred to as The 4th Utility. This is because, like water, gas, and electricity, it has become a must have for everyday life.
Unlike the other three utilities, however, the internet is not a monopoly with significant infrastructure investments and no realistic way to offer consumers choice. Instead, it is a construct with open access. This should mean that there are potentially multiple avenues of gaining internet access, and, therefore, many options for choice among internet service providers. Sadly, however, the reality has been that options are limited. Generally speaking, users typically only have the one option of choosing between a phone company and a cable company for their internet service. This is akin to selecting the lesser of two evils.
This virtual duopoly of internet service providers in any given location has resulted in service that is disappointingly slow (and likely slower with the end of net neutrality) coupled with expensive prices for rather limited services. Corporations, in particular, are paying lots of money for access to the internet, then having to staff an IT department to keep their networks running and secure. These expenses are too high and the services can be better provided through outsourcing.
FTE Networks, with their CrossLayer service, is looking to reconfigure the traditional means of connecting to the internet by providing direct access, edge computing and bundled services directly to corporations. In doing so, they are disrupting the traditional cable/telephone duopoly of connectivity, while enabling the “smart buildings” of the future. The new model is one of providing faster customer access and functionality, along with a shared revenue model that allows building owners to benefit from the provisioning of services.
Through their disruptive CrossLayer product offering, FTE Networks bypasses traditional ISPs, provides faster, better connectivity, and shares access revenues with building owners. In doing so, CrossLayer is creating compelling incentives for rapid adoption of their services.
FTE Networks & Benchmark Builders…A Smart Combination
In the age of the millennial, the workplace is changing. Customer are demanding increased services from their landlords and, at the same time, technology is enabling owners to reduce costs while benefiting financially from providing additional services to their tenants.
In an article titled “The Future is Now: Five Smart Building Features Transforming Today’s Workplace,” Forbes speaks about these changes.
“To say that building owners are getting creative with the workplace would be an understatement. In the quest to create the coolest or most unique office buildings, we’ve seen a host of ostentatious building amenities…but the savviest building owners are making strategic investments in upgrades that more broadly and consistently benefit both the owner and the tenant.”
This is the trend that is just beginning with companies like WeWork, that are rapidly changing the traditional tenant/landlord relationship. In many cases, these changes revolve around more traditional services such as HVAC, lighting, common spaces, etc. The next round of smart buildings, however, will incorporate even more shared services offered by the landlords. Edge computing, complete WIFI coverage, and faster internet all play into this theme.
Enabling this next wave of smart buildings is what brought FTE Network Services and Benchmark Builders together. In FTE, you have a company that offers leading-edge end-to-end network infrastructure and data center solutions. Meanwhile, Benchmark is a leading general contractor when it comes to building out office space in the NY metropolitan area, touching over 100 buildings per annum.
When FTE acquired Benchmark in 2017, they had the smart building of the future in mind. By having leading technology, along with a robust high-tech general contracting team with a large backlog of projects, they could start bringing the smart building model directly to landowners through existing relationships.
It works like this…when Benchmark, which receives 90% of their business through repeat customers, bids out an RFP, they include the design for a smart building in the project. The additional expense to the building owner is rather minimal; well under $1 million for a 100K square foot building. At the same time, their benefits are quite large; they can offer highly desired services to tenants and receive an ongoing revenue stream from the services. For the landlord, it’s truly a no-brainer.
We’re only in the first inning here, but the attractiveness of the CrossLayer offering is being proven out in the early results of the combination; in situations where Benchmark has bid out CrossLayer in addition to their construction work, it has been adopted in 100% of the RFPs.
Going forward, it’s very reasonable to expect CrossLayer to be installed in a large percentage of the buildings where Benchmark is engaged for construction. Simultaneously, Benchmark is able to market themselves as a premier builder of smart buildings.
A Growth Engine…
Crosslayer is going to be a great growth engine for FTNW. Over time, one can expect to see large revenues generated by buildings enabled with their services. These revenues are going to be very sticky as changing service providers will mean a retrofit of hardware in a building, and to what gain. As long as CrossLayer is priced competitively with the duopoly of traditional access providers, they are a preferred offering for buildings.
To understand what the economics behind CrossLayer could approximate, you need to look at competitive services, which are generally priced about $1 per square foot. Thus, for every 250,000 sq. ft. building that is CrossLayer enabled, assuming competitively priced services, the incremental revenues would be $250,000, to be split between FTE and the building owner.
This is recurring revenue and Benchmark touches 100 buildings per year, so the numbers can become very big very quickly. And, it’s high margin business as FTE projects software-type profits on the CrossLayer services.
At this time, CrossLayer is in its infancy and only generating projects through Benchmark. It makes sense to consider that, likely within a year, FTE will have brought in a sales team specifically for CrossLayer and will be looking to enable projects where there doesn’t need to be an associated construction project; CrossLayer can be installed in any building easily enough, without requiring major work. If CrossLayer takes off beyond Benchmark related installations, the number of buildings could easily be in the hundreds per annum.
This scenario is more easily foreseen when you consider the first project for CrossLayer. It is currently being installed in Industry City in Brooklyn, a 25 building project owned by Angelo Gordon. With the benefits to landlords, it makes sense that the larger the landlord, the more excited they would be about CrossLayer. Major real estate owners like REITs, hotel chains, hospitals, etc. are all prime candidates for CrossLayer services. The incremental revenue to the landlords could run in the millions of dollar
…With a Large and Profitable Existing Business
Based on the compelling nature of the CrossLayer product and its early success, it is easy to envision a future, about 5 years from now, where CrossLayer could be generating well over $50-100 million in high margin revenue for FTNW. This kind of growth potential, especially when being proven out in real time, should demand a high valuation in the market.
This is not the case at all; FTNW, even at its $100 million current market cap, doesn’t trade near a growth multiple, due to the large and profitable businesses that enable the CrossLayer service; Benchmark and FTE Networks.
These two units generated revenues of $79.1 million and EBITDA of $11.6 million in Q3. Benchmark in particular, has a very strong stable of customers and a large, and growing, backlog of over $400M. To be in Benchmark’s backlog, projects need to be currently under way. Therefore, the core businesses can easily project to 2018 revenues and EBITDA that exceed last quarters’ run rate.
I believe that FTNW will have EBITDA in excess of the $45 million Q3 run-rate in 2018, a pace that should be sustainable going forward assuming no macro-economic blips that affect the construction market. This means that FTNW, even with the exciting growth of CrossLayer coming down the pipe, is trading around 2x 2018’s EBITDA.
Compelling Product, Compelling Risk/Reward
What makes for a compelling product offering? It’s a combination of several things.
First off, the product or service provided must be better than existing competition. In the case of CrossLayer, customers receive faster internet service, more functionality and features, a much shorter provisioning time, consolidated billing, and more. It is dramatically better for the users than cable or phone access.
Secondly, there needs to be compelling economics behind the product. From the CrossLayer user standpoint, they are going to be indifferent as it’s priced equally to other options. However, for the building owners, CrossLayer has an incredible economic advantage over other connection services. This advantage is found not only in the shared revenues, which are a complete bonus for landlords, but are tangentially found in increased building cache. Keeping your office space current by making it a smart building will reap significant long term rewards for owners.
Hopefully, by now, the upside potential in FTNW is evident. To be a great risk/reward scenario, however, the downside must be limited. This is the case here as the strong EBITDA forecasted for 2018 in excess of Q3’s $45M run-rate provides a great value for investors.
It is this combination of a compelling, disruptive product offering and a great value that has led Tailwinds to believe that FTNW is a very mispriced security and one that should be considered by investors looking for exciting small-cap growth companies.
Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit: www.tailwindsresearch.com/disclaimer/
Link to above:
[url][/url][tag]http://tailwindsresearch.com/2018/02/ftnw-reconfiguring-the-4th-utility/
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This is a tremendous piece and answers a key question that was bugging me about this company. That is, why did they acquire a low-margin construction management business such as Benchmark? The answer is that they are using it to get an entre for their high-margin CrossLayer business. It is great to see how well this has been working -- as stated in the piece, every time that they have bid out CrossLayer in the Benchmark bids, it has been included in the RFPs.
I never realized the massive potential of CrossLayer, as described in this piece. And now they have a mechanism by which to get CrossLayer more business, i.e. by being included in the Benchmark bids. Now it makes a lot of sense as to why they acquired Benchmark.
zoomlik, we need to keep in mind that FTE is really in 3 very different businesses, 2 of which have very different gross margins than the other. The Benchmark business, being essentially a general contractor, is a low margin business -- I believe its margins are around 15%. The CrossLayer and the rest of FTE is a higher margin business -- something in the 20's I believe. So the margin they are reporting is a conglomeration of these very different businesses.
In the quarterly reports since they acquired Benchmark they have not provided any segment reporting, taking the position that all of their businesses are in a single "segment" I guess. Maybe in connection with their year-end audit we may see some segment reporting in the 10K.
Given how low the Benchmark margins are, one may be wondering, why did they acquire Benchmark anyway? The answer is provided in my next post.
Roger, I'd projected previously that they would report 4Q earnings in late March and I still believe that is going to be the timing. This is the first audit that includes the Benchmark business so its going to take awhile to get through the audit.
Great to see the new contracts. Its good to see that they are making an attempt to keep shareholders updated on the business.
From this untrained eye the stock chart looks pretty good right around now. After doubling since the end of tax-loss selling season (i.e. from 12/28/17 to 1/18/18), we had a correction in the price but it was on low volume and lasted less than 3 weeks. Then BAM, they put out some news and its right back up to $18, on big volume.
Imagine where this stock is going to go once they get their promotion campaign going full tilt. I'm pretty sure they are just waiting for 4Q numbers to come out before getting the trumpets blaring. IMO the best thing to do is to keep this on your radar screen and keep buying it on dips over the next month or so.
CNA Finance Initiates Research Coverage Of FTE Networks
January 17, 2018 9:31am
CNA Finance initiates coverage of FTE Networks, a company that Kenny Soulstring sees as an undervalued opportunity in the making!
CORAL SPRINGS, Fla. (PRWEB) January 17, 2018
CNA Finance announced today that it has initiated research coverage of FTE Networks. FTE Networks is a network infrastructure company that is currently experiencing explosive gains in revenue as well as a growing backlog of projects.
FTE Networks is an emerging leader in the market of innovative network connectivity infrastructure solutions. Through these solutions, their customers experience latency reduced, end-to-end solutions, giving building owners the ability to provide their clients with a connection to digital content that is fast and reliable.
By providing specialized solutions in industries including commercial construction, data center buildout, network infrastructure and fiber installation, smart buildings, and in-building wireless technology, FTE Networks has access to an industry with a massive $576 billion in potential revenues by the year 2021.
In a statement, Kenny Soulstring, senior strategic analyst at CNA Finance had the following to offer:
"If the explosive increase in revenue and growing backlog of projects serves as an indication about the potential and demand for FTNW services, then consider them to be the emerging leader in a small and competitively constrained networking industry."
Soulstring went onto explain that "With FTNW trading at only $16.75 a share, and with a price to sales ratio far lower than industry peers, investors would be wise to consider the investment opportunity presented by FTNW. And, after accounting for the expected revenue generated from recent and accretive acquisitions, the record-breaking revenue growth and lucrative backlog of products, the case for investor attention and action is made that much greater."
For more information on FTE Networks, read Mr. Soulstring's full analysis by clicking here!
For the original version on PRWeb visit: http://www.prweb.com/releases/2018/01/prweb15092148.htm
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Maybe this is why the stock is bottoming around the $16.60 mark. The other reason may be that that is around where it closed when it had that massive volume day several weeks ago.
I have a hunch that FTE had a very good quarter for 4Q and is planning some fanfare in conjunction with issuing those results. They hopefully will hold a conference call to discuss the results. I can see them getting analyst coverage finally. I can see them getting featured on CNBC or Bloomberg. All good stuff -- the big question in my mind is whether we will have suckers to sell into the ensuing massive rally to keep the stock price chart from getting all outta shape.
FTE Networks (FTNW) Stock: Connects For Explosive Growth In 2018
Jan 17, 2018
As we enter the final two years of this technologically powered decade, it is more evident than ever that high-quality wireless connectivity and its accompanying infrastructure solutions are a competitive necessity for profit-minded and service-oriented companies. And, at the risk of sounding overly simplistic, a fast and reliable networking infrastructure can significantly augment a company's productivity by allowing for quick transfers of data and seamless connectivity of company branches worldwide. Perhaps that's why industry giants such as Google (NASDAQ: GOOGL) and ESPN, majority owned by Walt Disney Co. (NYSE: DIS), find it essential that the wireless connectivity and infrastructure provided to them is lightning fast, always functional, and tightly secured. Therein, enter FTE Networks, Inc. (NYSE: FTNW) - a company dedicated to providing state-of-the-art data-focused infrastructure to the businesses that need it most. And, if the explosive increase in revenue and growing backlog of projects serves as an indication about the potential and demand for FTNW services, then consider them to be the emerging leader in a small and competitively constrained networking industry.
Innovative Platform Distinguishes FTNW
Founded in 2007, FTE Networks, Inc. is an emerging leader as a provider of innovative network connectivity infrastructure solutions to the IT and telecommunications industries. Reduced to simplest terms, FTNW provides latency reduced, end-to-end solutions that enable their clients to connect with their customers, utilizing cutting-edge technology to allow a fast and reliable connection for digital content. However, from a logistical perspective, the technology used and solutions provided are far from simple, making the field of able competitors to FTNW quite small. With offices throughout the United States and Europe, FTNW has amassed valuable industry experience while building strong relationships with their customers, and as FTE's name continues to gain recognition, the company has been able to expand their industry presence while improving product performance and streamlining costs. Taking advantage of their niche expertise, FTNW has cultivated strong business relationships with its clients through its unique ability to act as a "one-stop shop" for connectivity solutions, with a mission dedicated to build, manage, and maintain the infrastructure provided. Additionally, unlike most of their competitors, the FTNW business model is designed to ensure the speedy delivery of a custom-tailored and durable solution to the client, facilitating reduced cost and increasing performance and efficiency standards. Through several accretive acquisitions, FTE Networks is uniquely positioned to provide an all-in-one solution for telecommunications, data and general contracting projects.
FTNW Provides Total Infrastructure Solutions
FTE Networks, Inc. is unique to the sector, taking advantage of their expansive portfolio of services that allow the company to target a significant number of high-value markets. Specifically, the company's expertise centers around providing specialized service in the industries of commercial construction, data center buildout, network infrastructure and fiber installation, developing global smart-buildings, and in-building wireless technology. When combined, these five markets are estimated to offer a staggering $576 billion in potential revenues by 2021 - and by benefitting from the strategic acquisitions made by FTNW, the company is expecting to generate substantial revenue streams from each of these markets. Broadening their scope of market opportunity, FTNW will take advantage of three company's that now reside under the FTNW umbrella, with each providing a unique and valuable service. First and foremost is FTE Network Services, which offers end-to-end network infrastructure and telecommunications solutions to Tier 1 carriers, Fortune 1000 cable companies, and data-centric government agencies. FTE Network Services provides state-of-the-art fiber optic installation, which allows for best-in-class internet connectivity and speeds, along with the setup of data centers and company-wide wireless integration. The company also offers digital security and surveillance services, taking advantage of a growing demand which is becoming a necessity for businesses to protect the integrity of their IP and general operations. Before the acquisitions that set the combined FTNW into motion, FTE Network Services was already generating approximately $14 million in annual revenues, and this number is consistently increasing as FTE Networks continues to expand the company's breadth of services.
CrossLayer Provides Long-Range Functionality
CrossLayer is a second company under the FTNW umbrella. CrossLayer is a single integrated communications platform, providing business owners with an ultra-fast and reliable network for their building or campus. The company is equipped with the latest in networking technology and works toward a primary goal to eliminate redundancy problems that exist within many of their more antiquated competitor's networks. Whether it's at home or work, most everyone has experienced the frustration of slow connection speeds or spotty service range - but at CrossLayer, providing seamless, latency-reduced connectivity is the number one priority. Knowing that today's top businesses have no time for technical difficulties, CrossLayer has built their platform upon some of the most recent breakthroughs in networking technology, which allow for noticeably faster speeds at a much lower cost - astoundingly offering 1G of service for the same price as a typical 20MB connection. Along with faster transmission speeds, the company works to ensure that their client's network can get accessed by a multitude of customer devices from virtually anywhere in the building or campus. For those who attend or work on a college campus, for instance, experience shows that a campus-wide Wi-Fi solution can often struggle with reception and bandwidth issues. To address these limitations, CrossLayer's DataGrid Campus Connect engages itself in providing the same secure and high-quality connection to anywhere on campus, facilitating a similar user experience as compared to more traditional hot-spot locations. In addition to overcoming limitations from traditional connectivity placements, CrossLayer also enjoys the distinction of delivering exceptional service and installation for their clients in industry-leading fashion. Many of the company's competitors can take up to ten weeks to finalize the setup of their network and are often just as slow to respond to service requests. CrossLayer, however, substantially reduces implementation time by working directly with the building owner through the entire process to quickly set up and manage their new network connection. Additionally, through the cooperative relationship, the company can efficiently set up industry-leading network infrastructure and ultimately provide the owner the ability to tailor their network to fit their specific needs. Business and property owners that depend on an omnipresent network connection have much to gain from CrossLayer's targeted services, and for those that are turning to FTNW to integrate those services will benefit from increased speed, functionality, and long-range connectivity advantages.
Benchmark Builders Provides The Foundation
The most recent addition to the FTE label is Benchmark Builders, Inc. Acquired by FTNW in April 2017, Benchmark Builders is a full-service general contracting company that designs and builds innovative and architecturally striking facilities. The company currently serves Fortune 1000, top-tier clients in the NYC Metro Area. Expected to become a significant revenue generating asset, Benchmark Builders offers a full suite of services to meet the needs of their client, including construction management, general contracting, and pre-construction services. From corporate interiors to broadcast studios, Benchmark Builders is committed to delivering top quality results through each step of the construction process. The company is also dedicated to fully complying with OSHA safety regulations, which maximizes the safety of workers and contributes to reduced insurance costs for both BenchMark Builders and their clients. As an all-inclusive asset, Benchmark Builders has the resources, experience, and knowledge to ensure a successful construction process. More importantly, Benchmark will provide the opportunity for a fully customized and integrated communications framework that can allow the project owner to save millions of dollars, while at the same time benefitting from a well-designed and efficient data transmission infrastructure.
Setting Up To Crush 2018
With the combined services provided by FTE Network Services, CrossLayer, and Benchmark Builders, Inc., FTE Networks, Inc. is deserving of its reputation as a "one-stop shop" for construction and networking solutions. The company is positioned to maximize profitability through their ability to offer a complete host of networking, construction and maintenance solutions, which also results in a seamless and expedited process for their clients. Entering the first quarter of 2018, FTNW has strategic plans to take full advantage of their three complementary businesses and is actively working toward obtaining patents to protect their technology and service offerings that differentiate themselves from their competitors. Also, by providing scalable and upgradeable solutions to their clients, the FTNW business model allows for long-term relationships that can generate sustainable growth and increase revenue opportunity. Additionally, FTE already has the advantage of a strong market presence and reputation in the lucrative New York City market. This enviable position, coupled with the recent investments to expand the sales channels, will likely open numerous profitable opportunities for the company. And, by offering a better, faster, and less expensive service, FTNW is proving that their strategy works.
FTE Networks Looks Way Undervalued
FTE Networks generated roughly $177.9 million in revenues in 2017, and the company's recent acquisitions will undoubtedly increase this number by significantly expanding the reach of services offered by FTNW. The company's share price is sitting at $16.75 as of January 13, 2018, with 5.4 million shares outstanding and a market cap of only $70.5 million. Also important to note, the company has just recently been uplisted to the NYSE, which provides an immediate boost to their credibility and serves up an extensive list of institutional investors to diversify and broaden their shareholder base. These benefits, along with a recent deal with KCSA Strategic Communications for Public and Investor Relations, will leave FTE Networks fully equipped to attract a broader investment audience as they continue to take advantage of growth opportunities. The uplisting may already be proving its worth, likely prompting the share price increase of roughly 30% since the first week in January. Overall, FTE Networks, Inc. has positioned themselves to take full advantage of a lucrative and expanding market. Through building a diverse portfolio on an already solid foundation, the company can provide total solutions to some of the most common and essential corporate telecom needs. Since inception, FTE has generated over $387 million in total revenues, and their unique and all-encompassing business model should work to keep their Fortune 1000 clients loyal to their services. Investors should also keep in mind that the company's intent to secure development and process patents on their technology distinguishes FTNW further and will strengthen the company's ability to protect its enviable position and market-leading technology for years to come. With FTNW trading at only $16.75 a share, and with a price to sales ratio far lower than industry peers, investors would be wise to consider the investment opportunity presented by FTNW. And, after accounting for the expected revenue generated from recent and accretive acquisitions, the record-breaking revenue growth and the lucrative backlog of projects, the case for investor attention and action is made that much greater.
Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under discovered stocks to the attention to investors to assist in making smart decisions in the market. CNA Finance is a for profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works in which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. Invictus Resources paid CNA Finance $3,000 for research and writing services as well as other digital investor relations tasks provided to FTE Networks. Therefore, while we do everything in our power to provide true, well-researched, and well-thought out opinions, in some instances, a potential conflict of interest may exist. CNA Finance encourages all investors to seek professional advice before making any investment decision.
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Above was posted on the CNA Finance website yesterday. I thought they did a good job, particularly with the description of CrossLayer. Maybe that had something to do with yesterday's move.
Non-Deal Roadshows: Speed Dating for Companies and Investors
Posted by Phil Carlson on September 16th, 2015
Now that Labor Day is over and summer is coming to a close, investors are back in the office catching up from their end of summer vacations. That also means investor conferences are back in full swing, with management teams looking to maximize their time while attending/presenting at these events. One recommendation we typically make to clients is to go on a non-deal roadshow in the city where they are presenting. Non-deal roadshows are an essential part of every IR program as they help management teams build a rapport with investors and sell-side analysts.
To make life easier for you and your client, it is imperative that the appropriate due diligence is done on each investor you are calling prior to scheduling a meeting. Why waste your time calling value investors on a growth story? Doesn’t make sense. You should start by reaching out to current investors to maintain or improve the current relationship. Expanding the shareholder base is definitely a goal, and looking to schedule meetings with investors outside your current holders should absolutely be part of the strategy as well.
Each management team should prepare to “hit the road” to meet with investors for a minimum of 2-4 days per quarter. Depending on management’s schedule, increasing the number of days or going to new cities should be discussed; however, be warned that adding too many days might have investors asking who is home minding the store.
Once the roadshow is completed, it is important to follow up with every investor/analyst with whom management met. The feedback you receive will go a long way toward helping make appropriate changes to the investor deck and can also offer insight into certain changes a management team may need to incorporate into their presenting style.
The sooner you get your clients out on the road, the better. It will allow you to get a firmer handle on the story and help you in pitching to investors going forward.
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Above is from the KCSA website and was written by one of the guys on the FTE account, Phil C. (his name is at the bottom of our PRs now). It looks like we have some real IR pros on our side at this point.
Also, don't be shocked to see our favorite company featured on Bloomberg or CNBC at some point -- see this statement from the KCSA website:
"With strong TV relationships, KCSA regularly secures opportunities for its clients to appear on major business networks."
Grab some popcorn, pop open a beer and take a seat and watch these superstars do their thing.....
This week FTE made a very clear statement -- that it's story resonates very well when presented to institutional investors hearing it for the first time (presumption being that FTE management spent the week walking the streets of NYC going to meetings set up by the FSCA guys).
This display of trading bodes well for the company getting invited to invitation-only investment conferences going forward. Those conferences are always looking for "new blood" -- undiscovered gems whose stock gets a big push after they present at the conference. When an investment conference gets a company like that to present, they stand a better chance of getting more attendees on the next one. With the trading last week, FTE demonstrated it would be an excellent candidate for presenting at these investment conferences. Hopefully the FSCA guys are now going to get on the phone and let this be known to the sponsors of these conferences at this point, so FTE can get a full slate of conference appearances lined up when the conference season gets going in the next month or so.
Now that the trading volume has picked up as much as it has, I believe we can start to think about TA for this stock. I like the fact that it seems to be making a series of step-changes, where it makes about a 30% move up and then consolidates at that level for about a week or so, before making the next move up. Hopefully we continue to see this sort of pattern leading up to the 4Q earnings announcement.
Each day is more amazing than the last. I'm actually happy that someone started blowing out a bunch of stock once it got over 19, that was too much of a move, too soon. We all know the stock is worth that price but I'd rather see it get there a bit more steadily, to give a chance for the momo guys to jump out of the stock so as not to impede future price improvement.
By this point FTE management should have a pretty good clue about how their 4Q went, and that may impact their timing for any upcoming equity raise. If they had a really great quarter, the thought might be to wait until they can announce those results before doing the raise. If it wasn't so hot, do the raise now. The ducks are quacking and want to be fed.
Another record volume day, pretty amazing. I imagine that KSCA has lined up a full slate of fund managers for the FTE execs and board members to go visit while they are in NYC this week for tomorrow's bell-ringing. If so it looks like KCSA is already starting to earn their keep.
This is probably a "non-deal road show" we are seeing the effects of. If the stock price keeps marching up much more it might become a road show for a secondary offering. I would love to see FTE get rid of their current senior lender, they are getting ripped off by those guys. As of the end of last quarter they owed Lateral $27M. Maybe if they raise half of that in equity they can get a more traditional lender to lend them the other half on a much more reasonable basis than what Lateral has been charging them.
Not sure what to expect for timing of 4Q numbers. Last year they didn't get them out until early May, but I suspect that a big reason for that was because they were trying to get the Benchmark deal closed.
My best guess at this point is that they will put something out around the end of March. This audit will be the first one that includes Benchmark so it will take a little longer to get this audit and 10K done than when they were just FTE. But I think they will try very hard to avoid having to get an extension for the 10K (the original due date of which is 3/31).
Last year they announced "preliminary" numbers on 1/25, which, upon audit, turned out to be just plain wrong, so I'm not sure that they will try that again this time. That debacle, coupled with the delay in getting the 10K out plus the fact that both 1Q and 2Q numbers were less than stellar, were the biggest reasons for the stock tanking last spring and summer. I believe that 1/25 PR was the last time that they tried to provide forward guidance.
Its great to see them getting a new IR firm, and even better to see them also get some help on the public relations end. Their Cross Layer business desperately needs help in getting its story out. What they are trying to do there is not something that a building owner is going to automatically think that they need or want. That business would benefit tremendously from a good PR campaign.