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PDEX I'll post the Q&A section below.
To me, the nice thing about this report is not really the $0.01 EPS but the less restrained tone by Hal Hurwitz about the future, in particular 2 big projects that have had some degree of may-not-happen to them. Hurwitz was way less cautious in talking about them this time versus prior calls. At least, that is how I heard him. They seem to be all but a done deal now, and what that means to me is that PRO-DEX WILL SUCCESSFULLY "TURNAROUND" (and the stock will boom from present levels) -- they have cut costs so much that all they need is some new revenue streams. These projects I believe are it.
The only problem I guess is that investors might have to wait until Q3 (ends Mar 31) earnings are out. So that is an 8-month wait. Seems like forever these days. He indicated a small probability that some revenues could show up in December. But really I think we are looking at May being the likely time when investors will finally SEE that the whole turnaround started a few years ago has finally borne fruit.
I see a very slim chance that these 2 big projects won't happen. Somewhat more likely but not probable is that they will be delayed -- that is the more likely worse case scenario but I don't think it is actually likely.
Between now and then, we could go back to losing money. So I would keep that in mind that you may have to endure 2 money-losing quarters and investors maybe losing patience in the meantime.
Another positive which is in the CC below is a $3.5M order from PDEX's biggest customer for 2015. Hurwitz described himself as "happy" with this. It has just been my impression from past CCs that Hurwitz is always cautious in talking about PDEX's prospects and he seemed to be less so this CC, so I take that to mean he is quite confident that results are on the up and up, this thing is really working out.
CONF CALL:
Operator
(Operator Instructions) Our first question comes from the line of Matthew Mcclane [ph], a private investor.
Unidentified Participant
Hi, thanks for taking my question. Congratulations on finishing the year strong. I am just wondering I have a few questions. First one about, can we consider this quarter to be as somewhat of a run rate to the operations now, is it kind of stabilized revenue [inaudible] similar without the production contract coming through and is the cost base about where you want it to be?
Hal Hurwitz - Chief Executive Officer
Matt, first, thanks for your comments on this quarter. Because we are very much still a project based entity, and if I mention, we don’t look for manufacturing to start on our two large development projects until later in the calendar year I don’t know that I can say that we can yet call this a run rate for future quarters. But we’re definitely getting there.
Unidentified Participant
All right, thanks. And then just quickly on the purchase order from the largest customer, are you happy with the volume that’s going through in that contract and how does it look compared to prior year?
Hal Hurwitz - Chief Executive Officer
We are happy with it. Our customer has actually now run short of project -- products, that’s what we have been told, so that’s a good news. And we are very pleased with the PO.
Unidentified Participant
And then just lastly a bit, could you speak any more about how the product development projects are going and what are you looking at for the quarter, is there going to be hopefully some sort of the tooth [ph] on this by the end of the quarter, will revenue then follow in the following quarters, so how should we approach it as investors?
Hal Hurwitz - Chief Executive Officer
The product development projects are going nicely. We emerged substantially through the development phase. We are into a testing phase now. So we are not completely through the development phase. But it is an accomplishment to say that we are into the test phase now. And the answer to the latter part of your question is yes. We expect that we will be through the development phase of those projects late in this calendar year which would be our second fiscal quarter, so that our expectation is that meaningful manufacturing revenues likely would be on the other side of New Year. There is some chance that some manufacturing revenues would occur in December but I think that is a more realistic and reasonable expectation to say that it would occur in the quarter beginning January 1.
Unidentified Participant
All right. I appreciate that. And then I just have one last question about the 8-K filing and [inaudible] considering a possible manufacturing company acquisition, just wondering how potentially [inaudible] make sense with Pro-Dex, will it provide additional manufacturing capacity, does it align well with new product development contracts, just if you could provide any color, I understand that you are doing due diligence now, it may not be anything you can see through but if you could provide some additional information.
Hal Hurwitz - Chief Executive Officer
Sure. I will be happy to. The particular transaction that we are looking at as well as some others provides us with near term and shorter sales cycle revenues. As I have commented on and as my predecessors just commented on for many years now, the sale cycle in a medical device space is a very long one. Until we have a two-tiered approach with respect to business development, as we go after the larger tickets, higher margin revenues represented by the medical device projects, those need to be supported by a solid foundation of shorter sale cycle recurring on a regular basis revenues, which I think will make my answer to your first question about run rate an easier one in future quarters. That’s really our objective with this small acquisition.
Unidentified Participant
That’s good to hear. So this isn’t just simply buying [inaudible] assets, you’re actually looking to have reasonable operational revenue coming out of this as well?
Hal Hurwitz - Chief Executive Officer
That’s correct. I would remind you that this particular acquisition, as an example, is a small one, at $225,000 of purchase price, you can appreciate that it’s a small entity. But it does have a good run rate, a good positive cash flow and a good customer list which is our primary interest.
Operator
(Operator Instructions) Thank you. We have no further questions in queue at this time. I would like to hand the floor back to our host for closing remarks.
Hurwitz the CEO was less cautious IMO when talking about those future revenues from 2 big customers, and in talking about PDEX's prospects in general. That was my major takeaway form the CC.
Of course I wish I had sold in the upper $3s and bought back in the upper $2s, so that is ruining what should be a good day for me. In the longer run, I am quite comfortable holding and letting this company work for me.
I think that mgmt and board are very competent.
Yes you can have your cake OR eat it too!
Thanks Swamp. Yesterday's conference call deepened my conviction that the turnaround will be successful - CEO sounded much less conservative in his talk about the future. We will have to wait until May probably to get confirmation of the big, new customers' revenues. In a year, I think we will be closer to $10 than $3 on the price. Who doesn't like a triple in a year?
Even the longs are annoying: repeatedly posting the same things throughout the day. Using.periods.between.their.words AND.USING.ALL.CAPS.
HHSE that is the sloppiest iHub board - the board alone is probably causing a major discount on the stock.
NGHT to expand into SoCal and Vegas? from NGHT board http://investorshub.advfn.com/boards/read_msg.aspx?message_id=106374131
Mikey I can't respond to private messages. I'm not here to pump OR dump; just trying to size up the company.
I wouldn't think HHSE is paying for the promo, but in the linked page it says
Yeah if you have all you want, then you're good to go:
Here's a link to a page purporting to describe a promotional campaign for Hannover House, which also towards the bottom claims that Hannover paid $1,500 for the promotion.
Can anyone offer any further insight on this?
https://www.otcdynamics.com/hhse-hannover-house-inc-promotional-campaign-starting-sep-16-2014-357-pm-cst/
I'm not even worried about this one. Worst case scenario we have to wait until next earnings.
If this share issuance was done because the company needs money, then I imagine the officers will pay with actual cash rather than canceling out some of their salaries, otherwise the goal of raising money would not be accomplished.
Does anyone have a link to the site doing the pumping?
How do you know the company paid for a pump today?
Why was yesterday's announcement bad, beyond the dilution? Do people expect them to have trouble gaining new financing?
Mikey what caused the stock to come down so much over the past quarter?
HHSE - What caused the sell-off on Monday?
Anyone see the new product Arcoceramics.,, saw it on Facebook.
What caused the fall in price, if anything?
Thanks for that link. I got rid of my shares at $14.25 a couple weeks ago. Missed a lot of upside but also missed the treacherous downfall! I treated it like I WAS playing with fire.
It is probably a nice buy here in the $11s (although I have not bought back in). If it gets into the $10s and I can free up some money, then I may re-enter, although still trying to gauge quite how much more damage shorts can do. The lower the price, the more attractive it is! Maybe we can hit $8.
I believe GeoInvesting's thesis is weak and doesn't represent anything fundamentally new and also ignores important points. Yes it is risky, everyone knows that. China + MLM, of course. I'd say it's riskier to short here in the $11s, though.
Company put out PR this morning:
http://www.nasdaq.com/press-release/natural-health-trends-comments-on-unusual-trading-activity-20140910-00555
Thanks for posting Dan. AB update very encouraging, to see that the process continues. All of it very interesting.
GLGI CFO answers some questions:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=106059719
Yeah I do think it is possible that the slowdown is not affecting AYSI that much. $6M+ sales really ain't bad.
And I think my logic in "normalizing" earnings is solid, too. We'll see..
I'm here!
My just published article on Seeking Alpha:
Alloy Steel International: Weak Hands Sell The Headline To Their Detriment
Does anyone have any insight into what has caused the stock price to decline over the past year or so? Thanks
T - I do think there is a legitimate probability for an acquisition but I can't buy into your conspiracy :D
It would be nice if they were front loading those volume rebates though.
From reading the results more, I did get the sense that they weren't as affected by poor mining conditions as I initially thought from reading their brief commentary.
Change the tax rate from 55% to 32%, get an extra 1.1 cents/share.
Remove the currency hedge, add another 1.0 cents.
= 4.3 cents, essentially double the reported number.
Does anyone have any insight into these volume rebates, and how they might apply going forward?
Sales were more or less where they have been over the past year, as Swick noted: in the $6M range. But the volume rebate seems to be coming and going quarter by quarter, affecting margins.
GLGI - The problem in Q4 was gross margin. SGA was flat, sales were up a healthy amount, but cost of sales more than ate up any gain.
GLGI's quarter to quarter gross margin is historically volatile, so hopefully this is just the company hitting the low end of that ebb and flow.
Q4 2014 and 2013 broken out: https://twitter.com/eltruth/status/508375789327642626
The problem in Q4 was gross margin. SGA was flat, sales were up a healthy amount, but cost of sales more than ate up any gain.
GLGI's quarter to quarter gross margin is historically volatile, so hopefully this is just the company hitting the low end of that ebb and flow.
Q4 2014 and 2013 broken out: https://twitter.com/eltruth/status/508375789327642626
I think both companies will pay off some debt before a possible merger. I still predict an eventual merger.
Lola, what do you think are the probabilities that we see another big quarter in the next release? It doesn't have to be $1.5M, but let's say $0.5M or more?
Maybe I'm misunderstanding you, but the ask moved from $0.045 to $0.05
That's just not true.
162,000 shares have changed hands today. At $0.05/share that's a whopping $8,100. I don't know if that's "endless".
The company has made repeated statements that growth will continue. I think it will go up, and we have seen some progress in that direction in a short amount of time already.
Kimberley Kates tweet:
We're on the move Big Screen Entertainment Holds Board Meeting - Class B Stock 35,000,000 to Return to BSEG Treasury http://www.marketwired.com/press-release/-1944174.htm
We're on the move Big Screen Entertainment Holds Board Meeting - Class B Stock 35,000,000 to Return to BSEG Treasury http://t.co/P1jyQXbEd6
— Kimberley Kates (@KimberleyKates) September 4, 2014
This is very promising. The company clearly has its eyes on boosting share price and appears to believe growth is immanent.
"These resolutions are intended to help orient the company for greater growth in the coming months and bring in new investors."
"BSEG is primed for growth with management overseeing all the exciting, upcoming activities."