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"Commentary here is neg neg neg".
Really? I would say it's the opposite.
Commentary here is neg neg neg and for many they've been wriggling on the gibbet for 36 months !!well they have Survived despite their mistakes and all the black bull of late ain't gonna change it !!! Think it's time to look at recovery and opportunity as now looks like the glass is filling up
I wouldn’t be too surprised if the facility, having been designed to knock out 4,000 units per day, is looking pretty forlorn at the moment, especially with extensive furloughing of staff (63 in total, presumably many of them in manufacturing).
But as dc2 says, they can’t win.
The problem is, Trak’s fortunes are mainly tied to large customers like the AA.
Trak could sub-contract production, but that risks overstocking and having to write off unsold stock.
By having its own facility, it can at least react quickly to sudden increases in demand.
In either case, it’s a gamble, but a calculated one that may still come off, with cars now getting back on the road as Covid-19 subsides (hopefully).
If it doesn’t come off, it will just take longer to get to £1+, but there is no reason to think the company will not survive in the meantime.
The expansion was a pure gamble and an expensive one. If I recall correctly it was going to cost on the region of 1.5 million to turn it into a state of the art manufacturing facility. That's a a lot of money to spend when you havent got the signed orders to keep it busy.
In terms of customer losses 10% attrition is high (circa 25k per year). You only have to look at the fleet connections 76,000 - 2019 and 77,000 in 2020. They are pretty much standing still ?
They can't win with that facility. Whilst I tend to think they should not manufacture they do. They took the lease on as a result of work coming in from things like the Iranian deal. They are damned if they do, damned if they don't. I am sure people would be complaining that they didn't have the capability if those deals came through and they did not have the extra place. As it happens it did not pan out and they have an empty (I have no proof) building.
Where is your evidence that they are losing customers hand over fist? They state that attrition rates are usually 10% and they are projected 20% this year as a precaution.
Pianists - All fingers and thumbs but it comes to something when you have to point a typo ?
There is no way Trak are going to get anywhere near 500.000 units by 2021.
Putting Covid and a recession to one side Trak are losing customers hand over fist.
The expansion of their manufacturing facility still lies dormant and empty.
Last RNS said there was a modest return to growth. Hang on last year was a disaster and a 2% increase in sales is still a disaster.
Based on the last 2 years what makes you think Trak are going to hit 500,000 units by 2021
I was just making some assumptions, which appear to have been wrong.
Very happy to be corrected, so thanks for that.
I think Pianista's comments add a lot of flesh on the bones what is was I tried rather clumsily to communicate.
"If you think the customer and Trak dont know the value of the work being committed to and carried out then your delusional. "
Not sure insults were required to make your point.
What I was saying is that the value of the contract isn't precise enough to spell out to the market.
You're right, I don't know a huge amount about optimisation contracts. Telematics isn't my specialty at all.
justaquickone - to be fair, JW said it was an "ambition" - I think that was the word he used - to have 1m connected units by 2021, stressing that it was not a forecast.
Even if we get half way there, it'll be a shot in the arm.
By the way, love the word you invented ("pubically")!
Another possible reason for not mentioning the contract value is the likelihood it would put Icelands nose out of joint.
Iceland paid a premium for their software so if all of a sudden Trak win a similar contract at a knock down bargain price I cant imagine this would go down too well with existing customers.
I agree the customer may not have given consent to be named pubically but i still stand by what I said if this was a significant contract you can guarantee Trak would be shouting it from the roof tops (as they have done previously).
In terms ignoring debt - This is most likely because software only contracts are derisked as there is generally no capital expenditure i.e hardware / installations etc.
Likewise you also have to consider the fact the ex CEO of Routemonkey is now offering optimisation on pay as you go.
If Trak are also offering a pay as you go option it might explain why this particular customer decided to take the risk ?
All assumptions of course but my views on Trak iare based on their inability to be upfront and straight over many years.
People seem to forget only 3 years ago JW filmed himself saying they would have 1 million connected units within the next 5 years.
Leopards and spots spring to mind !!
My two penn’orth on the RNS….
Of course, Trak and the customer have some sort of handle on the numbers, but Trak is constrained in what it could, and what it would be wise to, announce to the world.
It’s walking a tightrope. It needs to balance the desire/imperative:
- to keep the market informed
- not to divulge too much market sensitive information to the competition
- not to upset the customer (it doesn’t even mention its name)
- to comply with any wording of the contract that may place limits on disclosure by the parties (for Trak’s protection as much as much as that of the customer).
So even if Trak knows enough to make a meaningful statement of likely revenues and profits, it must despite its excitement at landing the contract, not get carried away, and on balance, I think the wording of the RNS was well-judged.
To partner with a major food company is a feather in its cap, and the RNS is telling the world “we’ve arrived, we’re being taken seriously as a major player in the large fleet market”. For me, that’s the main message from the RNS.
So I think the RNS went far enough to inform and reassure the market, without going too far.
Personally, I would not want to be tempting fate either, and come out with some amazing numbers for revenues/profits. Numbers will be forthcoming soon enough in the form of - with Covid-19 behind us hopefully - a forecast for the year, when the half year accounts are presented.
I'm sure JW has cited client confidentiality in the past so the RNS does not need to have the exact details. We are not even told who the client is. However, we do know it is a large food retailer and that somewhat refutes the argument that companies will not work with Trakm8 because of debt.
Knowbody - For someone who has been invested in this share as long as you have you clearly dont know anything about optimisation contracts.
Optimisation contracts are no different to any other type of contract. Yes fleet sizes change and yes future development outside of the original scope may or may not be required but ultimately there will always be a starting point I.e minimum term commitment, number of R&D days required to deliver spec, project timelines which are probably linked to payments and volume commitment etc.
If you think the customer and Trak dont know the value of the work being committed to and carried out then your delusional.
"The recent retail contract is more smoke and mirrors as no mention of contract value which would indicate it wasn't significant despite Trak giving the impression it was."
It's rare for the value of these contracts to be precisely stated in an RNS.
It also it's likely to be very difficult to predict over a number of years, as it will be dependent on the size of the fleet (which may change), the length of the contract, which may change, the spec of the optimization, which may change. None of this is particularly helpful to the market or the share price.
Smoke and mirrors is a claim with about as much substance as the metaphor itself.
aa will survive they might need to raise a bit of cash at some point.
anyway a pretty steady week considering and looking like staying above 20p which is good. expected no news for the next six weeks or so.
anyway have a good weekend all.
Net debt is not an issue for TRAK, unless all its contracts dry up of course, as for any company.
Even with a 50% reduction in free cash flow, its amended loan covenants would still be met.
Its recent accounts contain no "going concern qualification" by the auditors. If there were one, that would be a red flag.
I just hope that TRAK is doing its own due diligence and not selling to anyone with mountains of debt - hold on, there's the AA, with its £2,700,000,000 of debt!!
Don't think the Cowleys have any clout in the way the business is run.
Its the Watkins pulling all the strings and the rest of the BOD are lemmings.
The Cowleys authority was removed years ago when JW started employing his oppo's from his Omitec days including his son.
Clearly didn't work out to well as the share price has done nothing but drop since, R&D spend v's output is ridiculous, reliability of tech questionable and all bar MW the rest of the Omitec team have all disappeared.
Shame they didn't take MW with them !
** =didn't sell out
I would add the Cowley's to that statement BUT if any of them do move on then you could expect one or more of them to start dumping their shares. TBH, I am surprised the former FD has sold out. Whilst it is wishful thinking I think the only way to square that circle is for Trakm8 to be taken out.
Debt and cash are certainly an issue as any potential customer doing their due diligence would take one look at Trakm8's position and avoid them like the plague.
Contract wins are what is going to move this share price up but due to the above I can't see this happening (not good ones anyway).
The recent retail contract is more smoke and mirrors as no mention of contract value which would indicate it wasn't significant despite Trak giving the impression it was.
Only way this share price is going to hit £1+ again is if the Watkins move on.
the debt and the cash are clear issues
debt = risk for shareholders which is priced into the trakm8 shareprice
aa have high level of debt hence the aa sp.
what is trakm8 market cap vs qtx??
Just for clarification (which I did not think I made clear), my post was to suggest that in terms of revenue Trakm8 is 80% of QTX and so you could assume that a like for like fair share price would be £2.40. However, sometimes it is not as simple as scaling all things that way and there will be economies of scale that QTX would have. Now I am more confused by my own posts!?
"QTX appear to spend a lot of money on client acquisition and this appears to be working".
Presumably, "client acquisition" is the new trendy name for Sales & Marketing.
TRAK have 80 Sales & Marketing employees - which must cost £4 or £5m pa I would think - compared to QTX's 60.
So no shortage of this resource within Trak.