Legacy Projects Impact on FY24 I may be wrong but did management confirm in the Q&A that Legacy projects will not have an impact on the company's earnings moving forward?
if you look at slide 16 in the conference call presentation you can see revenue recognized for the legacy projects in the quarter but no impact on operating profits or adjusted EBITDA. I'm pretty sure an analyst asked them to confirm and the new CFO said something like gross margins would be 0% for these projects moving forward.
My first question is how does that work? Are they truly breaking even now due to the contracts being renegotiated to cover cost or did they over allocate expenses in the past? Maybe this captures future anticipated claims against current costs but I'm certain that's not allowed under any accounting standard so it's probably not that.
It's weird accounting but the impact is likely to be highly positive. As shareholders we don't have to wait until 2025 to see the true underlying earnings of the business. Margins will be depressed a bit as they work off the 0 contribution legacy revenue but EBITDA and net income would pop immediately.