If the market hates uncertainty, then the JBI Q3 t
Post# of 43064
Posted On: 11/15/2013 10:41:28 PM
If the market hates uncertainty, then the JBI Q3 transcript seems to have provided too much of it.
I would like to offer a few constructive examples.
Instead of saying "ideally" we want to run at 3000lbs./hr. consistently (which creates doubt), why not say something like "realistically, 3000 lbs./hr. seems achievable over the next couple of months by bringing P3 up slowly, which is underway and showing progress week by week." This sets realistic expectations.
The public was treated to uncertainty about whether that "unsuitable" load of HTF that was delivered at the beginning of Q4, and then returned to the distributor, caused another fouling problem, or was it caught in time, or was it cleaned out quickly and became a non-issue in continuing to increase feed rates? This remains unclear, despite protestations that it should not affect Q4 revenue. However, such protestations inadvertently instill doubt, after last year's fouling episodes.
We could also use more specifics about why Mr. Bordynuik is ramping P3 so slowly, except to be conservative and mitigate risk. But it would be good to know specifics, instead of guessing why early numbers have not matched the SAI Corp. throughput. Is it:
-because he doesn't want to break anything?
-because he is still compiling data for prospective buyers?
-because he is compiling heat and mass balance data?
-because he is testing different ratios of HTF to plastic?
-because he is testing different feed stock mixtures?
-because it might be another couple months before running 3K lbs./hr. can be done consistently?
In other words, what milestones or indications should investors be watching so they can track progress?
Will the company have a further update on feed rates during the AGM?
To say as much would be reassuring.
What about simply providing a more detailed context, like "we understand that running 24/7 for 30-40 days for a couple cycles is the first step in "breaking-in" or testing the new machine. We are increasing feed rates slowly and methodically as we capture data for (heat and mass balance; prospective customers), and expect this increase will take xx weeks.
What does Mr. Heddle mean when he says that changes to the entrance and exit of the plant will enable "handling several loads a week?"
Loads of outbound fuel, inbound HTF or both? What does "several" mean?
I am sure that the core team inside JBI has a very good idea of the daily prospects and challenges, but they may not be sensitive to the perspective of shareholders on the outside, who have no idea what is "really happening" and who are predisposed to think the worst when clarity is not spelled out. There appears to be a similar gap between those who report visiting the plant recently (and who remain quite optimistic) and those who are far away (and can only surmise what the collapse in share price might mean).
One easy solution might be to publish weekly production numbers of outbound fuel for an interim period of time, so that prospective investors and long-term shareholders could track progress.
There are strong indications that P2O is economically viable, but absent the sale of machines or dramatically increasing revenues, the public remains uncertain, and the share price suffers accordingly.
That said, the overriding issue in my critique here is really about providing clear, measurable and realistic communication that leaves little room for doubt or uncertainty.
I would like to offer a few constructive examples.
Instead of saying "ideally" we want to run at 3000lbs./hr. consistently (which creates doubt), why not say something like "realistically, 3000 lbs./hr. seems achievable over the next couple of months by bringing P3 up slowly, which is underway and showing progress week by week." This sets realistic expectations.
The public was treated to uncertainty about whether that "unsuitable" load of HTF that was delivered at the beginning of Q4, and then returned to the distributor, caused another fouling problem, or was it caught in time, or was it cleaned out quickly and became a non-issue in continuing to increase feed rates? This remains unclear, despite protestations that it should not affect Q4 revenue. However, such protestations inadvertently instill doubt, after last year's fouling episodes.
We could also use more specifics about why Mr. Bordynuik is ramping P3 so slowly, except to be conservative and mitigate risk. But it would be good to know specifics, instead of guessing why early numbers have not matched the SAI Corp. throughput. Is it:
-because he doesn't want to break anything?
-because he is still compiling data for prospective buyers?
-because he is compiling heat and mass balance data?
-because he is testing different ratios of HTF to plastic?
-because he is testing different feed stock mixtures?
-because it might be another couple months before running 3K lbs./hr. can be done consistently?
In other words, what milestones or indications should investors be watching so they can track progress?
Will the company have a further update on feed rates during the AGM?
To say as much would be reassuring.
What about simply providing a more detailed context, like "we understand that running 24/7 for 30-40 days for a couple cycles is the first step in "breaking-in" or testing the new machine. We are increasing feed rates slowly and methodically as we capture data for (heat and mass balance; prospective customers), and expect this increase will take xx weeks.
What does Mr. Heddle mean when he says that changes to the entrance and exit of the plant will enable "handling several loads a week?"
Loads of outbound fuel, inbound HTF or both? What does "several" mean?
I am sure that the core team inside JBI has a very good idea of the daily prospects and challenges, but they may not be sensitive to the perspective of shareholders on the outside, who have no idea what is "really happening" and who are predisposed to think the worst when clarity is not spelled out. There appears to be a similar gap between those who report visiting the plant recently (and who remain quite optimistic) and those who are far away (and can only surmise what the collapse in share price might mean).
One easy solution might be to publish weekly production numbers of outbound fuel for an interim period of time, so that prospective investors and long-term shareholders could track progress.
There are strong indications that P2O is economically viable, but absent the sale of machines or dramatically increasing revenues, the public remains uncertain, and the share price suffers accordingly.
That said, the overriding issue in my critique here is really about providing clear, measurable and realistic communication that leaves little room for doubt or uncertainty.
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