FormerXBC Inc XEBEQ

Margins

[Gann999]

I think margin guidance is weighing this down sitting currently way below the target I think there is a lot of doubt on wether they can bridge that gap over the next 2 quarters. It's a stretch to make it happen they have to exceed the original stated margin goal of 3 to 4 percent that's going to be hard to do.

[Gann999]

If they were to do q3 38 million and q4 41 million both at 4 percent ebitda they would still miss margin guidance.

[Ciao]

Q3 EBITDA will be challenged but will be recovered later on; From the webinar yesterday; 1) cost to purchase raw material / components for 30 BGX units to counteract supply chain concerns 2) cost for initial building out of these units They can't recognize rev until delivery in Q1 2022, that's just GAAP. That's a smart business move to make with locking up parts for the BGX units

[Gann999]

Will be interesting to see how the market will react if say end of year margins come in around say -6 percent.

[Ciao]

Irrational reaction: sp down (myopic view) Rational reaction: sp up (dependent on top line rev being maintained)

[Gann999]

true I'm not worried about topline at all. I even think there is a chance at breaking 130 which in my opinion will drastically help margins.

[kulewater]

Note: Although revs cant be recognized until product is delivered, the expenses can be front-loaded which will then be reflected on bottom line. Looking forward to the most monumental Q in the companies history.

[Gann999]

Excellent point especially since we were just told they bought all the parts in advance.

[Ciao]

Kulewater,  How does that work? It won't have a positive effect on this quarter but the next as they are taking up expenses that won't be required in subsequent quarter(s). 

[kulewater]

Really depends on when they assumed the expenses.. if they committed to purchasing the raw materials in Q2 they could have already been absorbed - leaning on the margins asymetrically.  Moving forward those expenses wouldnt weigh on the bottom line in future Qs. Its a very shrewd and smart move if thats indeed what happened.. and based on what I know of Mr. Bombardier its very likely

[Ciao]

OK, you're thinking expenses taken in Q2, so now they will reap the benefits in Q3 and onward

[gwalker]

Accounting does not work this way. Paying the expenses now will have no effect on the margins (they could buy the materials for the next 3 years and it would just go to inventory and would not effect margins)....unless XBC recognizes revenue on a percentage of completion basis which i am pretty sure they don't.

[kulewater]

It doesnt affect overall product margins but does affect Q operating margins.

[Mick67]

With all due respect Kulewater -gwalker is correct. When you purchase materials they get put in inventory not expensed. As you build the BGX unit, items such as direct labour and overhead associated with the unit get put in inventory.  When you sell the unit they all flow through cost of sales and are expensed.  Sorry if i misinterpreted what yor saying but understand that buying

[kulewater]

Just so I understand your position. How do you account for the added inventory without assigning a value? With all due respect Kulewater -gwalker is correct. When you purchase materials they get put in inventory not expensed. As you build the BGX unit, items such as direct labour and overhead associated with the unit get put in inventory.  When you sell the unit they all flow through

[kulewater]

Okay.. I understand what you are saying. Effecitevely balance sheet item vs income statement item. I do agree the supplies are on hand. Thanks for the civil discourse. :)

[Mick67]

I agree with your updated comment.  And if correct that those supplies are on hand as the webinar stated I am encouraged the team is moving in the right direction. Shorter lead times relative to competition is real advantage with inflation and supply chain issues globally. And believe if you are planning a massive ramp in production that your handle on costs must be improving. Must be path to