Clipper2 wrote:
The average price of V2O5 for Q3 was $9.20 which is approx. $1.00 more than Q2.
The key variable = Revenue per pound sold.
The Q1 average price per pound of Euro V2O5 = US$7.09/lb
while the average Q1 Revenue per pound of equivalent V2O5 = US$6.49
The Q2 average price per pound of Euro V2O5 = US$8.19/lb
while the average Q1 Revenue per pound of equivalent V2O5 = US$8.14
So it’s not easy to have a good forecast of the Revenue per pound however, for the sake of argument, let’s assume that the Q3 Revenue per pound = the Q3 average price per pound V2O5 = US$9.20/lb
Q3-21 Back-of-the-envelope
Assuming Production = ~6.8M pound (same as Q2-21)
Assuming Sales = ~6.7M pounds (same as Q2-21)
Assuming average per pound of “equivalent V2O5” = ~US$9.20
Estimated Revenue = US$9.20 x 6.7M pounds = US$61.6M (= US$7.3M higher than Q2’s)
In this scenario, we assume that Q3 production remains the same as Q2’s therefore Q3 costs should not be higher than Q2’s considering the fact that there were some one-time expenses in Q2 (as per Cleave). So in this scenario, I expect Q3 total costs = Q2 total costs = US$40.1M.
Therefore I expect the Estimated Q3 Net Income Before Tax = US$61.6 - 40.1M = US$21.1M (providing that we will have the same FX gain of 3M as in Q2-21)
The current analysts Mean EPS estimate for Q3-21 = C$0.31 = ~US$0.25 or an estimated Net Income After Tax of (C$0.31 x 64,686,178 o/s shares) = C$20.1M = US$15.9M
The question is: “Can we go from US$21.1M in Net Income Before Tax to US$15.9M in Net Income After Tax to meet the analysts consensus? “
Note: Largo booked
US$5.7M in Income Tax Expense/Deferred out of a Total Revenue of US$54.3M in Q2-21
and
US$303K in Income Tax Expense/Deferred out of a Total Revenue of US$38.8M in Q3-21
Will we book US$5M in Income Tax Expense/Deferred in Q3-21? Very unlikely imho. In other words, Largo will likely meet Q3 EPS expectation, imho.
DYODD