RE:RE:KRC report update, as of June 2M13: If you are asking if I think FLY will get to $2.50, I think that is inevitable. Higher, in fact. It is the timeline that is harder to predict.
The delay in acquiring the STCs for the Edge is having the most affect on company advancement. Much is predicated on Edge sales. I believe everything will fall into place once these sales commence.
The KRC report is thorough in scope and reasonable in its assumptions. I did pull a couple more things from it.
KRC: "We believe that that (2022's) large order (of licensing) was a function of FLYHT’s OEM partner mitigating supply chain risk. In any event, these License orders have been historically lumpy. As they are a function of the recovering A320, A330 and A220 production rates and the partner’s own inventory management process, it is difficult to determine when/if follow-on orders will occur."
I have tried several times in the past to correlate license sales to Airbus production numbers, but this has proved to be impossible. Yes, I can see how the overbuying of licenses in 2022 could ease a temporary supply chain issue, but if the issue is long-term, this only helps L3H going forward if there is a resumption of typical annual license purchasing. To me, this means we might see licensing sales materialize in the second half of 2023. If we do, their high margin would significantly help mitigate the year end loss KRC anticipates for 2023. (KRC does forecast a profitable Q4.)
And I believe that there is a retrofit component to the orders that disrupts correlation. If L3H was to sell licensed product to an airline for existing aircraft, for example, the number of licenses purchased in a given year could vary widely from Airbus production percentages.
KRC: "Given the delays in receiving the Edge device STCs, we forecast flat revenues for F2023E over F2022 and believe that F2024 will be the transformational year for FLYHT as both the Edge device sales start to ramp and additional weather contracts are signed."
The delays are definitely having an affect on revenues, forecast and actual.
KRC: "Familiarization occurs when one regulatory airline body (e.g. Transport Canada) who issued the STC, submits its documentation supporting the STC to its equivalent authority in another country (e.g. the US Federal Aviation Authority) for approval in that country (i.e. via existing bilateral agreements). That country relies on the work performed by the country issuing the STC, and once it has determined that the STC complies with local aviation laws, it will issue its STC relevant to that country."
This comment speaks to how quickly STCs from other aviation authoritative bodies can follow on the heels of Transport Canada approvals.
KRC: "FLYHT’s significantly expanded sales channels (ex-Teledyne sales employees, SITA, AWS and MBS) is actively adding to the sales pipeline by marketing the Edge and AI suite of products to potential clients".
Sales in the pipeline should become firm once the STCs for the Edge are announced. The sales force is broad, experienced and far-reaching, and we should see results quickly.