GREY:XEBEQ - Post by User
Post by
Motownwingon May 12, 2022 9:45am
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Post# 34677323
More details needed on impact of legacy projects
More details needed on impact of legacy projectsConsidering 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