RE:SG&A@Ciao, I agree with your overall assessment of the situation.
Yes, XBC has tripped in its recent execution but that's because they've had the balls to take on risk, while it may have been easier to do the same thing everyone else does.... The nature of risk is that it can go both ways - in the past couple of quarters it just so happens that it's gone in the wrong direction - but over the medium to long term I'd assess the risk as being worth while, especially at the current sp.
Those having taken positions at higher sp have reason to feel the pain. Not meeting short term money-making targets can be (very) painful, if funds are/were needed short term.
Management has not fully delivered on expectations but Kurt has been through such periods before (if not worse). I remain confident that XBC will right the ship and make it through the storm in good time. If management was all easy going, businesses wouldn't need managers. Only auto-pilots.
This said, those having lost faith in management, may be best to cut their losses and move on. There are countless other businesses to invest in the market. Perhaps some better and others worst than XBC - reason why people need to set realistic targets and balance their portfolio to reflect their risk tolerance. It's not good enough to be all hyped up and optimistic when all goes well and then to lament during downturns - as an example simply look at how Tesla's sp has been over the past year alone, ranging between $313 and $900 - currently at $717 - or closer to home with Ballard having ranged between $15 and $54 - currently at $19.
With high risk comes high reward but also the risk of going bankrupt (often repeated throughout history) but in XBc's case I remain confident management has adopted the right long term strategy and that 3 years from now, the current situation will be long behind us and forgotten.
My two cents for the weekend.
Ciao wrote: Lots of concern about SG&A. They have gone up when compared year over year as a %age of revenues and were really ugly in Q1. In Q1 SG&A were 54% (10.8/20.6) of revenues. In Q2 There was an improvement to 38% (12.4/32.7). It's still higher than the 27% in the 6 months in 2020 but it's a significant improvement over Q1.
This company is in a major growth phase, they are planning for a doubling of rev at Inmatec over 3 years and ramping up BGX Biostream units to 30 - 40 at Blainville and looking for a US facility to get to over 100 units / year, compressor mfg is moving down to Nortec, newly acquired service centers are being integrated into the XEBEC family etc.
They are getting guidance from a seasoned BOD tthat know what it takes to grown a company. Kurt said he wanted to be a big player in the RNG space. He said they can't be one if they are building 30 - 40 units a year with delivery in 6 months plus. The 18 unti order tells you the sense of urgency. The potential of 8,000 + exists. Even at a rate of 100 units a year, that won't wet the appetite for the growth that they anticipate.
Customers will go to who can serve them, they will not wait for suppliers who do not have the capacity to turnaround their orders in a few months. They've done their market research and they know they need to have capacity yesterday. This is a much stronger and different company than it was a year ago. A few years ago XBC may have looked a bit like a mom and pop shop selling compressors, dryers, and with a desire to sell biogas upgraders. The addition of talent on the operations side and the BOD tells you thery want to be a serious player in the RNG space. The SG&A expenses have been painful, but that's the capital investment needed in this critical growth phase of the company. It was tough for them to revise guidance and take the slack from analysts and investors but the SG&A was higher because of much higher demand for their products.Did they know previously they would double capacity at Inmatec? Or that a 18 unit BGX order would give a sense of immediate urgency to ramp up capacity and to look for capactiy in the US? or there were higher costs than expected for the integration of the new service centers or movement of mfg to Nortec due to accelerated timellines?
If you look at how BLDP and ANRG numbers were disappoiniting but called out as mixed or neutral, you wonder if XBC is getting the short end of the stick.