I am surprised that point is not obvious. Has it not struck you that all of this talk about processors and productivity, throughput, feedstock, etc, is a bit of a waste of time? It really does not matter what Processor #3 does. Production would have to increase tenfold in order to offset the massive SG&A expenses.
Do investors simply look at the SG&A and accept it without question? Don't you think that is a bit narrow minded? Do you assume it is not a controllable cost? just askin'.
Have you looked at similar companies to see what their SG&A is? Go to investing,businessweek.com and take a quick look. Look at a refiner, which is closest to what JBI is. You will see that SG&A varies from 2 to 10% of Sales. Max.
JBI's SG&A costs are completely unexplained and way out of line. Investors should be up in arms about it, demanding an explanation. I did not see it in the financials... took a look. All it says is See Note 2. Looked at Note 2. Nada.
Have you ever been in a company that went through a downsizing?
First thing that happens (as happened at the industrial gases company I worked at in 2008 when everything crashed) is that all of the receptionists and secretaries get let go. That, and Customer Service people. That is the "A". A = Administrative. Response time is a bit slower in Customer Service, there is no smiling face in the morning and maybe no one answering the phone personally, but no real impact on Production or Operations.
Then, professionals start getting let go in all areas The second round were various people, mostly weak players (varying levels of incompetence), but what you might call "good cuts". A stronger team resulted... lean and mean....
The third round was painful. All good people. Really hurt.
Point is, SG&A was gone in the first round. First thing you cut. what is JBI doing with SGA that is about 1000% of Sales?? Get rid of it. Fire 'em all. If the financials are accurate... JBI would be profitable tomorrow.
S = Salesman. The Sales force and all support staff for sales. That is really a strategic decision. Software companies rely on Salesman. Manufacturing companies don't for the most part.
G = general. everything not related to product. Xmas parties? Nada. Stationary. I have seen both of those cut.
How big is the SG&A for JBI? Should it be 2.7 Million a quarter?
What is wrong with this picture?
I think perhaps that some product cost is being misreported in SG&A to make the machines look profitable.
How big are the SGA components for JBI? Not very big. They do not have a large sales force. A few secretaries... Not much G.
Have I made my points?
Lookout Below!!!!!!!!!!
