Compilation of highlights from $TPAC Conference Call on July 28
Contributions from CEO Bill McKay, Mysterium, and DJknows
Posted By: Bill McKay
Posted On: 07/29/2016 1:35:49 AM
Let me add a few things to the conference call points of discussion.
1. We do need the approval of NAVAIR to sell to commercial OEMs like Boeing and Airbus. We do have that approval.
2. When Navy personnel visited our facility in August 2014 they called on and reviewed BTL operations and were quite happy, as BTL is AS9100-C approved.
3. BTL manufactures our components and does all of the machining. We install the liner and assemble the bearings. This is acceptable per AS81820 and allows us to have an environmentally friendly shop with no contaminants produced.
4. While it is true that we do not get a 24% direct tax advantage, our parts are not subject to the 24% import duty paid by other bearing manufacturers whose products are imported for production aircraft. Therefore, our parts are necessarily 24% cheaper by virtue of the fact we don't pay import tax.
5. We are in the process of soliciting quotes on behalf of BTL and TPAC Australia for various products. For BTL, these are parts that they are capable of making. For TPAC Australia, they are parts that would be made by TPAC and BTL.
6. We are still in discussions with AVIC regarding a partnership in China, but since we are partnered with BTL, we are in a different (and better) bargaining position and are selective as to what the potential partner can offer us.
On the call yesterday IR made it seem very much like part of the reconstruction was moving away from making any bearings directly, and moving towards a plan of selling raw materials to partners who will do the manufacturing through the SLAs that are being put in place.
Do you plan to do both (moving away from making any bearings directly, and moving towards a plan of selling raw materials) or is this a paradigm shift in the business plan?
We plan to do both. The sale of raw material is seen as a way to generate revenue more quickly and to meet an existing demand
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Posted By: DJknows
Posted On: 07/28/2016 1:30:13 PM
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 also believe James said for 2016 they already have $2.1M of which 20% will be set aside for 'cash on hand' and expect for 2017 $13M coming in from BTL and will net $3M.
Definitive numbers are expected to be released at the end of the 90 day reconstruction period.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Posted By: Mysterium
Posted On: 07/28/2016 1:03:45 PM
$TPAC Thoughts and feeling from and about the conference call(going by memory - no notes, no script):
While I feel that the CC was a move towards transparency, I must state clearly that despite the information given and the professional format, that it was premature in terms of its timing. One of the reasons for saying this was the lack of firm answers. How much? Give a number; right away, and on the spot - no flinching or dancing. When? Give a date or definitive range of dates.
The call was a great way to meet the IR team and to begin a dialogue, but the Q&A and overall conference time was in need of extension. I, for one, kept hearing bells dinging on my end of the line, which I had perceived to be other shareholders pressing *6. I wish I would have been alerted that that was not the case, as I had questions of my own, but did not feel they would be answered , seeing as I felt there to be a whole queue of people before me.
Also, I feel that rather than putting IR on the spot to field questions, the FR, BDG, and TPAC management team should have been the ones hosting, and doing so only after the final draft of the reconstruction is released. IR did great for being the messenger, but next time, let's have the answers straight from the source.
Aside from the feelings, as mentioned above, a bit of new information surfaced.
First, for clarity, TPAC is not a manufacturer. We are a supplier of the NAVAIR cert and of raw materials. Entities like BTL fall in the realm of manufacturer.
The 24% offset no longer applies due to the fact that we are a US company. A 10% rebate is said to have taken its place, which I believe was geared to benefit the manufacturer, and not us, the supplier.
Most, if not all, know that TPAC is in the bearing business. For those that follow IR's emails and Twitter feed, those shareholders have been alerted that TPAC has also received RFQ's for bushings and rod ends. What I was not aware of until today's CC is that TPAC will also be supplying for the manufacture of hinges. Someone on Twitter asked Bill how many bearings on a door, with the answer being thirty-two. It must now be asked: How many hinges on an aircraft, on a submarine, and on any other vehicle (or "stationary"/ floating entity) the we will be providing a service for? And if the bearing cost for each new aircraft is 500,000, how much will the translate to in hinges(and also in rod ends and bushings)?
IR mentioned a 2-3M production run. Did anyone catch if they were referring to 2-3M gross/net cash, or were they referring to 2-3M bearings produced per full capacity run? If that was 2-3M bearings per run, and each aircraft requires 3,000 bearings, when you do the math (2M/3K), that equates to 667 aircraft per production run. And 667 * $500,000(which is the cost in bearings per aircraft) is equal to $333,500,000. That alone would place us above the entire value of the 10-yr BTL SLA, so that needs some clarification.
It appears we now have access to machinery, but if I am not mistaken, it seems as if it is a bit of higher-end/higher interest rent-to-own scenario, as it was mentioned that points were to be added to the top. Provided we have sufficient capture and retention of RFQ's, with BTL et al able to handle the production load, with both TPAC and BTL offering a favorable cost and manufacture time in comparison to competition, those submitting the RFQ's should bite, and that would then make sense to engage in equipment financing in order to ramp up production and to continue to scale upwards.
Boeing is still in the works. They have just changed some of their requirements and now are requesting up to 120 days to submit payment for supplies and services rendered. This is where some of the competition has taken a hit and thus cannot service Boeing. As mentioned on the call, some of the other suppliers and manufacturers are not able to keep business afloat with payment for large business, such as Boeing, being held out for up to 120 days. And according to IR on the CC, TPAC is able to handle those terms.
NAVAIR is not our only business. NAVAIR is only required for defense. Please correct me if I am wrong and that includes other additional business. What gives TPAC the advantage outside of the defense sector, just by having NAVAIR, is that, they can offer a bearing of higher quality at an equal or lesser price to the buyer that will not need to be replaced as often due to wear and tear.
The BTL deal is set in stone, both the SLA and LA. Two more SLA's are being negotiated, and eight more companies in China are seeking to manufacture for TPAC, just as BTL is doing. Bill is handling those talks in person while in China. Revs from BTL were slated to begin in January, but are now being considered for Q4 2016.
Also, it was said that an investor base of up to 5M had eyes on TPAC.
BTL supply costs were said to cost 7-9M on our end for raw materials. I believe that IR quoted that 3M would be retained, with 10-20% set aside to assist with internal pps stabilization.
All in all, the call gave way to some new information and gave us a chance to listen to IR in a live format. My personal opinion is that we are on the right track, but this is all going to take some time. Some have mentioned 2017 being the year, and more and more I am seeing that as being correct. Very little buying going on, but very little selling either. No extreme sentiments came out of the call. Just a dialogue and some info to digest.
Thank you to the two callers who asked questions on behalf of the team and for all who listened in and attended today's CC. And thank you to IR for hosting as well. My laptop is about out of juice, so I will catch everyone later on in the day when I get a charge.
Please correct any information I added that is in error, or add to the compilation above with any information that I missed. I'm just writing from the top of my head and from one man's opinion.
And to Bill McKay: Thank you for all of your hard work and all that you have been doing behind the scenes. Your shareholders believe in you and your company, and believe it will be a success. Get some rest and get well soon!
Contributions from CEO Bill McKay, Mysterium, and DJknows
Posted By: Bill McKay
Posted On: 07/29/2016 1:35:49 AM
Let me add a few things to the conference call points of discussion.
1. We do need the approval of NAVAIR to sell to commercial OEMs like Boeing and Airbus. We do have that approval.
2. When Navy personnel visited our facility in August 2014 they called on and reviewed BTL operations and were quite happy, as BTL is AS9100-C approved.
3. BTL manufactures our components and does all of the machining. We install the liner and assemble the bearings. This is acceptable per AS81820 and allows us to have an environmentally friendly shop with no contaminants produced.
4. While it is true that we do not get a 24% direct tax advantage, our parts are not subject to the 24% import duty paid by other bearing manufacturers whose products are imported for production aircraft. Therefore, our parts are necessarily 24% cheaper by virtue of the fact we don't pay import tax.
5. We are in the process of soliciting quotes on behalf of BTL and TPAC Australia for various products. For BTL, these are parts that they are capable of making. For TPAC Australia, they are parts that would be made by TPAC and BTL.
6. We are still in discussions with AVIC regarding a partnership in China, but since we are partnered with BTL, we are in a different (and better) bargaining position and are selective as to what the potential partner can offer us.
On the call yesterday IR made it seem very much like part of the reconstruction was moving away from making any bearings directly, and moving towards a plan of selling raw materials to partners who will do the manufacturing through the SLAs that are being put in place.
Do you plan to do both (moving away from making any bearings directly, and moving towards a plan of selling raw materials) or is this a paradigm shift in the business plan?
We plan to do both. The sale of raw material is seen as a way to generate revenue more quickly and to meet an existing demand
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Posted By: DJknows
Posted On: 07/28/2016 1:30:13 PM
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 also believe James said for 2016 they already have $2.1M of which 20% will be set aside for 'cash on hand' and expect for 2017 $13M coming in from BTL and will net $3M.
Definitive numbers are expected to be released at the end of the 90 day reconstruction period.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Posted By: Mysterium
Posted On: 07/28/2016 1:03:45 PM
$TPAC Thoughts and feeling from and about the conference call(going by memory - no notes, no script):
While I feel that the CC was a move towards transparency, I must state clearly that despite the information given and the professional format, that it was premature in terms of its timing. One of the reasons for saying this was the lack of firm answers. How much? Give a number; right away, and on the spot - no flinching or dancing. When? Give a date or definitive range of dates.
The call was a great way to meet the IR team and to begin a dialogue, but the Q&A and overall conference time was in need of extension. I, for one, kept hearing bells dinging on my end of the line, which I had perceived to be other shareholders pressing *6. I wish I would have been alerted that that was not the case, as I had questions of my own, but did not feel they would be answered , seeing as I felt there to be a whole queue of people before me.
Also, I feel that rather than putting IR on the spot to field questions, the FR, BDG, and TPAC management team should have been the ones hosting, and doing so only after the final draft of the reconstruction is released. IR did great for being the messenger, but next time, let's have the answers straight from the source.
Aside from the feelings, as mentioned above, a bit of new information surfaced.
First, for clarity, TPAC is not a manufacturer. We are a supplier of the NAVAIR cert and of raw materials. Entities like BTL fall in the realm of manufacturer.
The 24% offset no longer applies due to the fact that we are a US company. A 10% rebate is said to have taken its place, which I believe was geared to benefit the manufacturer, and not us, the supplier.
Most, if not all, know that TPAC is in the bearing business. For those that follow IR's emails and Twitter feed, those shareholders have been alerted that TPAC has also received RFQ's for bushings and rod ends. What I was not aware of until today's CC is that TPAC will also be supplying for the manufacture of hinges. Someone on Twitter asked Bill how many bearings on a door, with the answer being thirty-two. It must now be asked: How many hinges on an aircraft, on a submarine, and on any other vehicle (or "stationary"/ floating entity) the we will be providing a service for? And if the bearing cost for each new aircraft is 500,000, how much will the translate to in hinges(and also in rod ends and bushings)?
IR mentioned a 2-3M production run. Did anyone catch if they were referring to 2-3M gross/net cash, or were they referring to 2-3M bearings produced per full capacity run? If that was 2-3M bearings per run, and each aircraft requires 3,000 bearings, when you do the math (2M/3K), that equates to 667 aircraft per production run. And 667 * $500,000(which is the cost in bearings per aircraft) is equal to $333,500,000. That alone would place us above the entire value of the 10-yr BTL SLA, so that needs some clarification.
It appears we now have access to machinery, but if I am not mistaken, it seems as if it is a bit of higher-end/higher interest rent-to-own scenario, as it was mentioned that points were to be added to the top. Provided we have sufficient capture and retention of RFQ's, with BTL et al able to handle the production load, with both TPAC and BTL offering a favorable cost and manufacture time in comparison to competition, those submitting the RFQ's should bite, and that would then make sense to engage in equipment financing in order to ramp up production and to continue to scale upwards.
Boeing is still in the works. They have just changed some of their requirements and now are requesting up to 120 days to submit payment for supplies and services rendered. This is where some of the competition has taken a hit and thus cannot service Boeing. As mentioned on the call, some of the other suppliers and manufacturers are not able to keep business afloat with payment for large business, such as Boeing, being held out for up to 120 days. And according to IR on the CC, TPAC is able to handle those terms.
NAVAIR is not our only business. NAVAIR is only required for defense. Please correct me if I am wrong and that includes other additional business. What gives TPAC the advantage outside of the defense sector, just by having NAVAIR, is that, they can offer a bearing of higher quality at an equal or lesser price to the buyer that will not need to be replaced as often due to wear and tear.
The BTL deal is set in stone, both the SLA and LA. Two more SLA's are being negotiated, and eight more companies in China are seeking to manufacture for TPAC, just as BTL is doing. Bill is handling those talks in person while in China. Revs from BTL were slated to begin in January, but are now being considered for Q4 2016.
Also, it was said that an investor base of up to 5M had eyes on TPAC.
BTL supply costs were said to cost 7-9M on our end for raw materials. I believe that IR quoted that 3M would be retained, with 10-20% set aside to assist with internal pps stabilization.
All in all, the call gave way to some new information and gave us a chance to listen to IR in a live format. My personal opinion is that we are on the right track, but this is all going to take some time. Some have mentioned 2017 being the year, and more and more I am seeing that as being correct. Very little buying going on, but very little selling either. No extreme sentiments came out of the call. Just a dialogue and some info to digest.
Thank you to the two callers who asked questions on behalf of the team and for all who listened in and attended today's CC. And thank you to IR for hosting as well. My laptop is about out of juice, so I will catch everyone later on in the day when I get a charge.
Please correct any information I added that is in error, or add to the compilation above with any information that I missed. I'm just writing from the top of my head and from one man's opinion.
And to Bill McKay: Thank you for all of your hard work and all that you have been doing behind the scenes. Your shareholders believe in you and your company, and believe it will be a success. Get some rest and get well soon!
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