Why do I have cold sweats when I think about Q4-23?
2023 Sales Guidance = 8,700T - 10,700T or mid range = 9,700T (excluding sales of purchased material)
Q1 Sales = 2,604T (excl 245T of purchased material)
Q2 Sales = 2,557T
Q3 Sales = 2,129T (excl 256T of purchased material)
Q1+Q2+Q3 = 7,290T (excl 501T of purchased material)
Q4-23 Revenue Estimation
Let’s assume that:
EQ4 Sales = 2,500T for an annual total of 9,790T (= 7,290T + 2,500 = similar to mid range Sales Guidance).
Let’s also assume a sale of 250T of purchased material in Q4-23
EQ4 total sales = 2,500T + 250T = 2,750T = 6.06M lbs
Let’s assume Q4 sales price = US$7.30/lb
EQ4 Revenue = US$7.30 x 6.06M lbs = US$44.3M
So Q4-23 revenue can be estimated to be similar to Q3-23 actual revenue of US$44M.
Q4-23 Earnings Estimation
The following table gives different Earnings (Loss) estimation based on various costs scenarios:
US$
| Scenario | Costs Estimation | Net Income (Loss) before tax | Comments |
| Same costs level as Q3-23 | $58.7M | ($14.4M) | Possible EPS = ($0.22) depending on tax amounts |
| 10% costs reduction | $52.8M | ($8.5M) | Possible EPS = ($0.13) depending on tax amounts |
| 20% costs reduction | $47.0M | ($2.7M) | Possible EPS = ($0.04) depending on tax amounts |
| 24.5% costs reduction | $44.3M | Nil | Possible EPS = $0.0 depending on tax amounts |
So what is the most likely cost reduction scenario that management can deliver in Q4-23? Why do I have cold sweats when I think about it?
DYODD