RE:Looking for positives.Looks like the company spent about $1.95mm in "restructuring costs" associated with site relocation, severence expenses all due to staff changes and move of the office. All this appears to have been spent in the quarter and buried in the G&A line, hence the big jump in that particular line item. These would be one time costs and uses of cash that won't be repeated in future quarters so while cash declined about $4mm in Q4 the going burn rate is more like $2-$2.5mm a quarter (they tend to build inventories up in the earlier part of the year and then collect on those as they sell in the second half of the year).
For me the really pleseant surprise this quarter was the gross margin figures. Even at this low revenue rate 46% is a good number that we haven't seen in a lot of years and it gives me some confidence that as sales grow we'll be hitting the 50% mark. Sales to EMEA region were non-existent this quarter (has been our largest region). I'm guessing post BPO Claas has more than enough inventory as farm sales continue to slump for the industry (see Deere, Agco, CNH comments as of late. It's tough times for the OEMs). NA sales were up $800K which is likely some mix of Royalty revenue and Wheelman (not big numbers). Royalty revenue for the year was just over $1mm. Gross profit was $1.5mm and adjusting operating costs to back out the one-time restructuring expenses would have meant operating profit of -$1.3mm, or -$0.01 per share. R&D expenses were around 13.4% of sales and I would expect that number to remain around 13%-15% going forward. Sales and marketing has droped completely given the more focused strategy (loss of Outback and Satlac largely responsible for this + it would appear that Wheelman is no longer being advertised in a big way).
It's great that 3 new OEM/VAR agreements in APAC have signed but the scale of these opportunities is not likely huge (these appear to be smaller players generally). What is encouraging is the Rice Transplanter is back and that gives me confidence as well. I would rather see that deal with Kubotal, and maybe we'll get there, but for now that's a positive. BUT we need NUMBERS for this call, particularly 2021 and possibly 2022 since investors have been told that 10+ OEM/VAR clients are coming on and that's the big year of transition. It's especially important now that Claas contract will be likely substantially renegotiated (think steering parts being sold to them vs. terminal and steering kit. I suspect the new contract will be half the size of the current one, so $5-$7mm in revenue per year vs. $14mm. These numbers do not include the BPO.
Questions:
1. The BIG concern will remain cash burn and achieving profitability. When will this happen?
2. What is the magnitude of sales/revenue lift anticipated for 2021 and 2022 (and lets just assume Claas goes away entirely or is cut in half)? IF MANAGEMENT WANTS THIS STOCK TO TRADE MUCH HIGHER THEY MUST DISCLOSE A REVENUE/PROFITABILTY TARGET NUMBER!!!!! Otherwise treading water will continue.
3. Does a sharebuyback make sense and if not what do you intend to do with excess cash (probably safe to say they could comfortably spend $3-5mm on a buy back program)
4. MANAGEMENT MUST COMMENT ON THE SHARE PRICE!!! WHY DIDN'T WE SELL THE COMPANY? WHAT ARE YOU GOING TO DO ABOUT THE BIG SELLING AND NO BUYERS? CONVINCE US!
5. Is Wheelman dead or more a pet project for now that just won't recieve any marketing dollars? It's nice to see that the Wheelman tech. is what's behind the Rice Transplanter, could synergies. Maybe a Wheelman indirect sales strategy would be better? Still self install but if it's available at dealers that might be good.