FormerXBC Inc XEBEQ

More details needed on impact of legacy projects

[Motownwing]

Considering their technical leadership position and comparable benchmarks, their GM% should at a minimum in the 27-30% range (20-25% on systems and 40-50% on aftermarket activities incl spare parts). That level of GM will be required for them to reach their strat plan goal of adjusted EBITDA of 8-10% by fiscal year 2024. For the last quarter, the gap is huge between a GM of 11% and let's say 28% on sales of 41 M$ =  gap of 7 M$.
IMO, they would need to detail the loss provision they had to take on the legacy projects versus GM performance on the rest of their sales of non-legacy stuff. It is fairly obvious that the operational performance issues run deeper than just the 'legacy' projects.
I suspect that they also have a sales pricing issue. Knowing that they have good technology, it is fairly easy to book orders and build backlog if your pricing is too low considering market conditions with crazy inflation. It takes discipline and leadership to sell at a price that will allow you to make money despite the challenging conditions. A huge backlog booked on bad pricing is a recipe for disaster. Hopefully, management will provide enough detailed information today to reassure the market. JIMO GLTA

[Gann999]

Honestly you have very valid concerns raise your prices xebec if the customers don't like it they can pi ss off and find someone else

[kulewater]

The legacy BGX expenses stem from start-up and commissioning of custom systems. As the company has progressed to containerized and uniform Biostream units the margins will improve moving forward. Until they completely shed the go-live of legacy units it will hamper margins. The good news is that once the units are commissioned it will drive additional service revenues. From my perspective it

[GARP17]

Was there still no indication as to when these legacy projects are finished?

[kulewater]

Legacy BGX drag will be increasingly diminished and completely offloaded by end of year.

[tony08]

Beside the Legacy drag that will be offloaded by end of year,  the results of the $143M contract will only be recognized from mid-year and will continue into 2023. These two events combined should help for the near future. With these poor results, it seems we really need this help....