RE:RE:RE:Lets see what happens Monday morning???To:
AlbertaBLE I will attempt to answer the great questions you bring up, as best I can.
Do they publish their rental fleet stats: I really wish they would, but they are probably too embarrassed currently to do so? In the good times, we heard about their super high utilization rates and the need to expand the rental fleet. Remember,
this was their largest source of income and PROFITS that elevated the stock price in previous years. Over the last two years, nothing given about rental sales utilization or progress, as if it was not over 50% approximately of the total company assets. The profits from these rental units gave them the big piggy bank today, to be able to do what they want now … but QST management (Audrey) seems to conveniently forget about this. In my opinion, she is not putting enough effort into properly exploiting and taking advantage of these great assets they already have in place. I have been complaining about this for over two years on deaf QST ears!!!
Number of units: The last published number was 120 units in the sales rental fleet in their different storage yards, but they had previously announced they were going to spend about another $6,000,000 building another 24 units @ approximately $250,000 cost per unit. Not sure if any or all of that got built out under this plan. Of course, they don’t acknowledge or report on this. I am assuming the number is closer to their original target of 144 rental units now. This would give them a replacement value of over $36,000,000 for their entire rental fleet. This is a 20% premium more than the total market capital of the whole company. Do you see why I have been very concerned for so long?
Number of units rented: To determine this we must make some assumptions. A fair rent for a $250K incinerator would be a 25% annual return of its cost base. That would provide an annual rent of approximately $62,500 for each rental unit. There would be extra costs associated with this like delivery, set up, service and maintenance. We won’t count those revenues in our calculations as they are reported under different categories. It looks like they are currently averaging around $600K per quarter in rental unit income. Therefore, if you divide $2,400,000 (the annual total sales rental income) by the annual rent per unit, I come up with about a rate of about 26 units out in the field, making QST great money. That would leave about 118 units in their storage yards rusting away. Or a utilization rate of only 18%. A very poor job in my opinion and in this current marketplace. Or lost potential revenue of $7,375,000!!! That lost mismanaged revenue of $7.4 million is more than they are likely going to do in total sales this year AND at a far less profit percentage than the sale of new ones.
While I liked what they said in the current news release of today, I have grave concerns about these huge amounts of OUR assets tied up in the rental units and that we are no where close to taking any kind of advantage or opportunity about it. I think we need to super pressure Audrey and her team to focus more on this existing great opportunity to raise profits sustainably. OR get someone who can??? Hello Audrey!!!
Everything quoted and stated above is as best as I know it and in my own humble opinion.
Angles