Q1 Financial Performance EstimateI've put together a long term model by quarter of my financial projections for FUT. Based on my assumptions the company will start making a profit in Q4 2012 with tremendous growth after that. I don't want to share it until I see Q1 numbers so I can further refine my targets, but I'd thought I'd share my Q1 estimates with some important trends seen in the 2010 numbers.
The first 5 columns is each quarter's financial performance and full year for 2010. This excludes about $100K or so of non-recurring items. The last column is purely my guess. We should see earnings sometime this month so it'll be fun to see how close I come to reality.
| Q1 | Q2 | Q3 | Q4 | FY10 | | Q1 2011 My Estimate |
| Revenue | 292,437 | 474,453 | 373,604 | 513,833 | 1,654,326 | | 414,801 |
| Aeroplan Loyalty Revenue | 201,408 | 323,936 | 273,820 | 461,687 | 1,260,851 | | 364,801 |
| Breakage | 54,500 | 111,600 | 59,400 | 59,200 | 284,700 | | 50,000 |
| Other | 36,529 | 38,917 | 40,384 | -7,054 | 108,775 | | 0 |
| | | | | | | |
| Cost of Sales | 130,281 | 200,837 | 169,632 | 244,667 | 745,417 | | 222,061 |
| Aeroplan COS | 132,880 | 196,821 | 150,481 | 244,667 | 724,849 | | 222,061 |
| Aeroplan Gross Margin % | 34.0% | 39.2% | 45.0% | 47.0% | 42.5% | | 39.1% |
| | | | | | | |
| Expenses | 741,370 | 809,014 | 659,551 | 731,234 | 2,941,169 | | 747,377 |
| General and Admin | 502,557 | 543,778 | 454,919 | 464,377 | 1,965,631 | | 492,506 |
| IT | 43,725 | 54,954 | 42,896 | 29,689 | 171,264 | | 41,539 |
| Sales and Marketing | 32,968 | 54,626 | -5,582 | 23,069 | 105,081 | | 35,000 |
| Other | 162,120 | 155,656 | 167,318 | 214,099 | 699,193 | | 178,332 |
| | | | | | | |
| Normalized Net Income | -579,214 | -535,398 | -455,579 | -462,068 | -2,032,260 | | -554,637 |
My key assumptions/thoughts:
The Aeroplan revenue is the key here. I assumed around an 80% growth from Q1 2010 but is still lower than where they landed for Q4 2010. Q4 2009 was also a lot higher than Q1 2010. If CARP picked up significant traction then we could see revenue a lot higher than this. I'm a little confused as to why FUT revenue has been seasonally skewed towards Q4. Of course, retail in general has this issue, but FUT really isn't in seasonal industries with the exception of the tire stores that sell winter tires in Q4. But pets need to eat and cars need to get fixed all year round.
Cost of Sales - Note the Aeroplan Gross Margin % (Aero COS/Aero Rev) has been steadily increasing from 34% to 47% each quarter. If FUT is able to make nearly 50% as a reseller that is really good. Last year one of the deals my team worked on was a private company that sold for $30M. All they were was a reseller of certain utilities in Canada, using the infrastructure of the incumbents to market niche their services. They made around 20% gross margin. I think FUT can keep these 40-50% margins because they are a market leader/monopolist in the industries they serve. Despite all that, i kept the margin rather conservative at less than 40% for Q1 2011 just because I'm still trying to determine if this is seasonal or not.
G&A - I have this decreasing by 2% based on trends from 2009 to 2010. This is the last quarter I expect them to decrease because with all the dealers coming on I expect them to be hiring soon. The workload of this company must have increased a lot over the last 6 months.
IT is coming down based on the trending, Sales and Marketing and other going up.