thanks to DJ and Mysterium for their recaps - makes the board worthwhile with this type of participation. i didnt get a chance to add notes yesterday and the two of you covered most of it well. i will add some of my own thoughts:
I was disappointed Bill wasnt on the call but as we now know - due to illness. my suggestion for the future would be this be put out ahead of time that his participation is tentative due to illness instead of leaving it vague. everything is suspect in the OTC world - nature of the beast. it happens - just be upfront. looking forward to his future participation on calls and appreciate his feedback/additional details today on this board.
i had trouble hearing some of the answers but in general, they seemed to do a sound job of answering them even if he wandered into the weeds on several of them. he seemed to struggle with a couple from the two callers but eventually got to the answer or properly deferred.
he addressed the relationship with IR group relative to $TPAC. can someone shed more light onto this for me/the board? if i understood correctly - they are a separate investment entity/group that has agreed to take on the role of IR/dissemination to increase exposure of TPAC to their group and beyond..? this would make them not a typical IR/PR firm but more of an investment house maybe branching out..? if so - that makes significantly more sense from a compensation/bias point. further, if that is correct or along the lines, why was this not further explained prior? would have eliminated significant confusion and consternation in the type of information and manner in which it was disseminated. however, might lead to some off disclosure issues internally with their group. possibly the reason they have been walking a very tight line with respect to "what's in it for them" questions.
PROS:
-he seemed to struggle with the revenue/guidance questions but it seemed like he committed to around $2.5MM of revenues on the low side for 2016 with revenues already on the books, current production commitments, and part of 2017 SLA revenues being put on the books in 2016. i missed the details on the 3MM part run but apparently DJ confirmed that was 3MM parts being currently run. is that what he was referring to with respect to "current production"?
-company committed to updated business plan/revenue guidance at end of 90 days which should come in the next 15-20 days. he wasnt sure if it would be month to month or quarterly but the takeaway for me was there is an updated, specific plan similar to prior one first laid out in 2014 and updated mid 2015. i have obviously beat the drum on the critical nature of this so it definitely stood out for me.
-$10MM seems to be guaranteed and looking if they can do better on terms for $85MM. also - if i understood correctly, this is regular paper and not dilutive. anyone understand this differently? seems they are looking to do better on points on the larger loan amount. i thought he got off into the weeds again on that answer and i had trouble following.
-confirmed SLAs are guaranteed/locked in. original announcements left a lot of wiggle room but as i understood it - the $135MM SLA is locked in for 10 years and will start in earnest 1Q17 and per the above, some of the revenue may be booked 4Q16. if so - i really believe they need to do a comprehensive PR at the end of the 90 days to show the investment world at large the transformation and locked in revenue streams of the emerging company (or as locked in as any of these agreements can be in this realm). big difference between "hope to" "expect" "may realize" etc to "agreement is locked in and will generate initial revenues 1Q17 if not before." wording is critical. remove ambiguity.
-thought he did a good job downplaying Boeing. while obviously a marquee name that garners a lot of attention - they have to get to the level where they can realistically supply/meet that level of demand. this was touched upon with second caller as well. at the same time, the relationship with Boeing and capabilities due to geography and capacity with partners seems to be strengthening for long term distribution/supply. any large manufacturer enjoys significant cost savings by issuing one PO instead of 20. big risk for both entities but will be tremendous if they pull it off. personally, i am more concerned about the ancillary POs and small OEM relationships which will drive short term revenue and demonstrate capability and the ability to scale. this is critical for cash flow and attractive financing.
-PPS. i thought they did a good job staying away from PPS discussions or direction. very difficult to do in OTC especially with the large preponderance of short term investors/traders. very easy to get caught in the weeds with these questions. thought they addressed it succinctly and got back on target/message with the ongoings that will affect PPS long term (even if they missed some key discussion points on dilution/share structure - see below).
CONS
-would liked to have heard resolute language on dilution/share structure. seems they ran out of time but he did allude that it would be covered in new plan released in 15-20 days. further, Bill tweeted several weeks ago about transformative news expected in/before September so this may coincide.
-flow of the call in general. if my understanding of their group is correct - this may address part of my concern here. normally, a call like this would have introduced the group/speakers and their respective roles, provided a summary of the Q/Year etc (in this group - I was expecting a summary of the 90 day reconstruction to date), provide pertinent numbers/guidance going forward, and THEN address presubmitted questions and finally go to Q&A. they provided an agenda (or four topics) prior. maybe i misunderstood that as a summary update and instead they were going to address questions submitted around those four topics.
-as stated above - still not really clear who/what this group is. while that may not be an issue for some (maybe most?), in my experience in the OTC realm as a long term investor and not a trader - this is very pertinent. i need to understand compensation, motivation, bias, and risk/reward so i can properly assess their long term "commitment" to the organization/shareholders. when "insiders" talk a great game and are filing Form 4s like the SEC will run out of them - that is a disconnect. maybe Bill can address that in more detail and clear up the confusion.
-timing. this CC really should have happened midway point in the reconstruction. moot point now and seems like lesson learned but the ambiguity and confusion from some of the tweets/emails prior allowed significant manipulation and price decline. while that may not matter "long term" - it is significant when convertible arrangements are in play and based on current share price. could that 70-80MM share increase since last reported have possibly only been half that? MMs have had free range to hammer away. daily FINRA short #s show a cyclic history of heavy shorting (sometimes 80-90% of daily trades on relatively high volume days) and then lightly numbers while the price retreats (covering) only to have several high shorted days again. while they cant eliminate it - some of it could have been mitigated. again - hopefully lesson learned.
-PRs. seems they took note of the lashback on the PR wording. again - if my understanding of their group is better or along the lines of what i suggested above - this may also help explain their wording in some of their responses. long story short - agreements like a $135MM SLA with locked in revenues need to be told to the investment community at large. no competitive advantage lost.
overall - i think the CC was a success. someone took a swing trying to knock the price down early on and cause a run but there was significant substance in the CC to prevent a collapse. hopefully they build upon this for future ones. finally, hopefully IR realizes that those of use that take time on here to delve into topics both pro and con are still fighting the same battle even when we are being critical.
FROM DJ:
Some highlights from this morning's CC with James of IR (own notes from what I heard):
No more 24% import tax advantage or savings because of a "Premier" status now between Boeing and TPAC. "James" said TPAC will be the "Main Distributor" or middleman managing the flow between Boeing and all suppliers (inventory going out of China = $160-200M).
Since becoming 'visible' TPAC is inundated with requests for all types of metal work and predominantly for four parts: bearings, rods, bushings and hinges.
BTL has been involved with TPAC since 2011... making part of the bearings' assembly. It made the bearings for the NAVAIR certification.
Raising funds through the USA FR is working on two areas: There's the EX-IM loan and I believe James said the China Sovereign Guaranteed Loan program. He added there's a contract set in stone to provide raw material at a pricing of $7-9M. And as part of that, USA FR is working on "Inventory Financing" whereby a company buys raw inventory from TPAC... and to me sounded like... pays up front. TPAC would rather use the EX-IM at full power to get $85M rather than just $10M with the current political situation. Needed are contracts to be able to get loans and that's what's now being worked on.
James emphasized they will always take out 20% to have as 'cash on hand'
In the past month, Boeing has changed its supply chain business asking suppliers to wait longer for payment ... up to 120 days. James said while others have issues with that, TPAC... with its new infrastructure... can accept that time table.
The new facility is operational and already producing product for the U.S. market. Expecting to produce 2-3M bearings plus other metal work. Should see revenues from production toward end of 2016.
TPAC has created a marketing division that's promoting Trans-Pacific Aerospace across seven continents. BTL is the seller.
Remember, contracts are needed to get loans.
TPAC has two SLAs with manufacturers its already working with now and a third signed. Each is worth $100-135M and is for a three year evaluation.
IR is just a reporting entity and through its initiatives would bring in a community of five million (potential shareholders?) through social media and other public relations operations during the period of reconstruction. Have to have cash on hand and raise the internal pps.
There are about 20 business days left to the 90-day reconstruction period.
Asked about getting an official press release (PR) out, James responded anything TPAC has done requires a PR but 90% of OTC companies offer PRs but almost 90% fail the shareholder. James added what they don't want to do is say something and need to retract it... "want to say something that would be absolute" ... so they want to complete the reconstruction period and have things finalized before putting out a PR... he said "there will be some PRs toward/by the end of the year."
I was disappointed Bill wasnt on the call but as we now know - due to illness. my suggestion for the future would be this be put out ahead of time that his participation is tentative due to illness instead of leaving it vague. everything is suspect in the OTC world - nature of the beast. it happens - just be upfront. looking forward to his future participation on calls and appreciate his feedback/additional details today on this board.
i had trouble hearing some of the answers but in general, they seemed to do a sound job of answering them even if he wandered into the weeds on several of them. he seemed to struggle with a couple from the two callers but eventually got to the answer or properly deferred.
he addressed the relationship with IR group relative to $TPAC. can someone shed more light onto this for me/the board? if i understood correctly - they are a separate investment entity/group that has agreed to take on the role of IR/dissemination to increase exposure of TPAC to their group and beyond..? this would make them not a typical IR/PR firm but more of an investment house maybe branching out..? if so - that makes significantly more sense from a compensation/bias point. further, if that is correct or along the lines, why was this not further explained prior? would have eliminated significant confusion and consternation in the type of information and manner in which it was disseminated. however, might lead to some off disclosure issues internally with their group. possibly the reason they have been walking a very tight line with respect to "what's in it for them" questions.
PROS:
-he seemed to struggle with the revenue/guidance questions but it seemed like he committed to around $2.5MM of revenues on the low side for 2016 with revenues already on the books, current production commitments, and part of 2017 SLA revenues being put on the books in 2016. i missed the details on the 3MM part run but apparently DJ confirmed that was 3MM parts being currently run. is that what he was referring to with respect to "current production"?
-company committed to updated business plan/revenue guidance at end of 90 days which should come in the next 15-20 days. he wasnt sure if it would be month to month or quarterly but the takeaway for me was there is an updated, specific plan similar to prior one first laid out in 2014 and updated mid 2015. i have obviously beat the drum on the critical nature of this so it definitely stood out for me.
-$10MM seems to be guaranteed and looking if they can do better on terms for $85MM. also - if i understood correctly, this is regular paper and not dilutive. anyone understand this differently? seems they are looking to do better on points on the larger loan amount. i thought he got off into the weeds again on that answer and i had trouble following.
-confirmed SLAs are guaranteed/locked in. original announcements left a lot of wiggle room but as i understood it - the $135MM SLA is locked in for 10 years and will start in earnest 1Q17 and per the above, some of the revenue may be booked 4Q16. if so - i really believe they need to do a comprehensive PR at the end of the 90 days to show the investment world at large the transformation and locked in revenue streams of the emerging company (or as locked in as any of these agreements can be in this realm). big difference between "hope to" "expect" "may realize" etc to "agreement is locked in and will generate initial revenues 1Q17 if not before." wording is critical. remove ambiguity.
-thought he did a good job downplaying Boeing. while obviously a marquee name that garners a lot of attention - they have to get to the level where they can realistically supply/meet that level of demand. this was touched upon with second caller as well. at the same time, the relationship with Boeing and capabilities due to geography and capacity with partners seems to be strengthening for long term distribution/supply. any large manufacturer enjoys significant cost savings by issuing one PO instead of 20. big risk for both entities but will be tremendous if they pull it off. personally, i am more concerned about the ancillary POs and small OEM relationships which will drive short term revenue and demonstrate capability and the ability to scale. this is critical for cash flow and attractive financing.
-PPS. i thought they did a good job staying away from PPS discussions or direction. very difficult to do in OTC especially with the large preponderance of short term investors/traders. very easy to get caught in the weeds with these questions. thought they addressed it succinctly and got back on target/message with the ongoings that will affect PPS long term (even if they missed some key discussion points on dilution/share structure - see below).
CONS
-would liked to have heard resolute language on dilution/share structure. seems they ran out of time but he did allude that it would be covered in new plan released in 15-20 days. further, Bill tweeted several weeks ago about transformative news expected in/before September so this may coincide.
-flow of the call in general. if my understanding of their group is correct - this may address part of my concern here. normally, a call like this would have introduced the group/speakers and their respective roles, provided a summary of the Q/Year etc (in this group - I was expecting a summary of the 90 day reconstruction to date), provide pertinent numbers/guidance going forward, and THEN address presubmitted questions and finally go to Q&A. they provided an agenda (or four topics) prior. maybe i misunderstood that as a summary update and instead they were going to address questions submitted around those four topics.
-as stated above - still not really clear who/what this group is. while that may not be an issue for some (maybe most?), in my experience in the OTC realm as a long term investor and not a trader - this is very pertinent. i need to understand compensation, motivation, bias, and risk/reward so i can properly assess their long term "commitment" to the organization/shareholders. when "insiders" talk a great game and are filing Form 4s like the SEC will run out of them - that is a disconnect. maybe Bill can address that in more detail and clear up the confusion.
-timing. this CC really should have happened midway point in the reconstruction. moot point now and seems like lesson learned but the ambiguity and confusion from some of the tweets/emails prior allowed significant manipulation and price decline. while that may not matter "long term" - it is significant when convertible arrangements are in play and based on current share price. could that 70-80MM share increase since last reported have possibly only been half that? MMs have had free range to hammer away. daily FINRA short #s show a cyclic history of heavy shorting (sometimes 80-90% of daily trades on relatively high volume days) and then lightly numbers while the price retreats (covering) only to have several high shorted days again. while they cant eliminate it - some of it could have been mitigated. again - hopefully lesson learned.
-PRs. seems they took note of the lashback on the PR wording. again - if my understanding of their group is better or along the lines of what i suggested above - this may also help explain their wording in some of their responses. long story short - agreements like a $135MM SLA with locked in revenues need to be told to the investment community at large. no competitive advantage lost.
overall - i think the CC was a success. someone took a swing trying to knock the price down early on and cause a run but there was significant substance in the CC to prevent a collapse. hopefully they build upon this for future ones. finally, hopefully IR realizes that those of use that take time on here to delve into topics both pro and con are still fighting the same battle even when we are being critical.
FROM DJ:
Some highlights from this morning's CC with James of IR (own notes from what I heard):
No more 24% import tax advantage or savings because of a "Premier" status now between Boeing and TPAC. "James" said TPAC will be the "Main Distributor" or middleman managing the flow between Boeing and all suppliers (inventory going out of China = $160-200M).
Since becoming 'visible' TPAC is inundated with requests for all types of metal work and predominantly for four parts: bearings, rods, bushings and hinges.
BTL has been involved with TPAC since 2011... making part of the bearings' assembly. It made the bearings for the NAVAIR certification.
Raising funds through the USA FR is working on two areas: There's the EX-IM loan and I believe James said the China Sovereign Guaranteed Loan program. He added there's a contract set in stone to provide raw material at a pricing of $7-9M. And as part of that, USA FR is working on "Inventory Financing" whereby a company buys raw inventory from TPAC... and to me sounded like... pays up front. TPAC would rather use the EX-IM at full power to get $85M rather than just $10M with the current political situation. Needed are contracts to be able to get loans and that's what's now being worked on.
James emphasized they will always take out 20% to have as 'cash on hand'
In the past month, Boeing has changed its supply chain business asking suppliers to wait longer for payment ... up to 120 days. James said while others have issues with that, TPAC... with its new infrastructure... can accept that time table.
The new facility is operational and already producing product for the U.S. market. Expecting to produce 2-3M bearings plus other metal work. Should see revenues from production toward end of 2016.
TPAC has created a marketing division that's promoting Trans-Pacific Aerospace across seven continents. BTL is the seller.
Remember, contracts are needed to get loans.
TPAC has two SLAs with manufacturers its already working with now and a third signed. Each is worth $100-135M and is for a three year evaluation.
IR is just a reporting entity and through its initiatives would bring in a community of five million (potential shareholders?) through social media and other public relations operations during the period of reconstruction. Have to have cash on hand and raise the internal pps.
There are about 20 business days left to the 90-day reconstruction period.
Asked about getting an official press release (PR) out, James responded anything TPAC has done requires a PR but 90% of OTC companies offer PRs but almost 90% fail the shareholder. James added what they don't want to do is say something and need to retract it... "want to say something that would be absolute" ... so they want to complete the reconstruction period and have things finalized before putting out a PR... he said "there will be some PRs toward/by the end of the year."
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