Member Info for Brockwl

Aaron,

Problem is with the figures you have used.

You say Total units in FY2024 = 22138 + 208231 + 313662 + 381215 = 925246

I make it 1,125,246. The reason yours is wrong, is the first figure it has a digit missing (simple typo), It should be 222,138 not 22,138.

You then get Avg cost per unit FY2024 = 10.632/ 1.125246 = $9.4486.

That's a big difference to 2023 of $11.86 per unit.

Someone needs to explain why the price has dropped , because that's a significant drop (20%), especially when I'm expecting the price to increase with customers taking the extra features that have been developed.

How could Auto total units sold last year increase by 76%, but Auto revenue only increase 40%?

That resulted in a revenue hit on Auto of $2.7m.

Should have been $13.35m, but was only $10.6m.

Until the management provide an answer to this it's uninvestable for me. No point selling more and more if we keep reducing price to achieve it. That's not proper growth, and how can you value the company if that continues to happen?

Anyone any answers?

Webstrik,

Your figures assume that buying a G2 or G3 connection has the same cost. That's not the case.

The company has made it clear that not only is the margin 500% better, but the unit is significantly cheaper.

They did this when explaining that receivables for G2 units would massively reduce going forward, and therefore reduce cash needed for capex, and free up more cash available to the business, until break even..

If you sell 1000 units a month at $2000 and it costs $1800 to buy you have at least $1,800,000 cash tied up waiting for payment. However they probably needed to order stock early and have 6 months supply available.

So best part of over $10m tied up in G2 stock.

They used moving to G3 and it being significantly cheaper, as a reason why they wouldn't run out of cash because a large amount of this cash would become available again.

I'm guessing G3 is $500, which might be wrong. But what I do know for sure is that it isn't anywhere near your $2100, otherwise the extra cash wouldn't have become available.

Chutz,

I don't disagree that Fleet/Aftermarket has amazing potential. However after at least 10 years in the market with the best product by far, they are still only predicting 13 to 15K units next year.

This is with significant early mover advantage, and full on regulation support.

I don't understand why take up is so poor, but after 10 years you just have to accept that it is. Even the company isn't expecting this to change this year, Even with a G3 product which is significantly cheaper for customers.

Good luck with your expectations

Webstrik,

I accept these numbers are best guesses, as the company fail to provide this info. I taken numbers I heard bandied about on these boards previously.

The numbers don't matter that much, what I was trying to show was that the margin change from G2 to G3 doesn't make an enormous difference. I could use different numbers and take them to extremes that advantage what the company are trying to say. However I can still only get it up to $150k a month.

I was hoping that S2020 could make it all clearer as he is the one who has told us where this $1.5m a month margin improvement is coming from - minus any figures that actually show this.

Sorry ignore previous as bits missing when entered.

S2020,

Care to explain how margin improvements mentioned equate to $1.5m per month bottom line improvement.

Because my math ain't bad and I’m struggling.

Fleet = Gen3 higher margin than Gen2

- auto = split of revenue moves towards license revenue (95% margin) from NRE (low margin)

Take the first above ie Fleet.

I don't know exact cost of units, but can have a fair guess. So, let’s say G2 was $2000, and G3 $500.

I'm sure they said margin would go from 10% to 50% from G2 to G3 today. ie 5 fold increase.

So previously they made $200 from G2 at 10%and now they will make $250 from G3 at $500.

So, although margin is now 500% greater, we now make only $50 more per unit.

They are targeting 13 to 15K units next year, so let’s say 14K. Divide by 12 = 1166 per month.

1166 * $50 = $58,300 extra revenue per month from margin improvement.

That’s a long way short of 1.5m

S2020,

Care to explain how margin improvements you mentioned equate to $1.5m per month bottom line improvement.

Because my math ain't bad and I'm struggling. I don't think they can do it.

Fleet = Gen3 higher margin than Gen2

- auto = split of revenue moves towards license revenue (95% margin) from NRE (low margin)

Take the first above ie Fleet.

I don't know exact cost of units, but can have a fair guess. So Lets say G2 was $2000, and G3 $500.

I'm sure they said margin would go from 10% to 50% from G2 to G3 today. ie 5 fold increase.

So previously they made $200 from G2 at 10%and now they will make $250 from G3 at $500.

So although margin is now 500% greater, we now make only $50 more per unit.

They are targeting 13 to 15K units next year, so lets say 14K. Divide by 12 = 1166 per month.

Having had a deeper dive into the results today I decided to sell out.

Unfortunately, I was only able to sell 70% before I took the price down to a level, I wasn’t prepared to sell the rest at. However, it may come back later today and I can sell out the rest then,

So why have I sold a share I’ve been in for 10 years, and which I had great hopes for.

Clearly this morning’s results and the presentation were both extremely disappointing, which contained another string of broken promises and missed targets.

4 years ago, I produced a financial model which showed a company that would go on to seriously multi-bag if only half of what was possible had occurred.

Each year since then I have had to adjust the numbers and future potential downwards based on the actual results.

Today’s adjustments were the final straw, and until I see them deliver on stuff they promise, I’ll sit on the sidelines.

The way I see it I can always buy back in if and when things change, and until they do (which is at least 1 year away), I can only see the price drift further down.

The 3 biggies for me were:-

1. Costs not being reduced to a level they said they would.

To still be at $2.5m overspend a month, when we were supposed to be at £1m is a big miss. It’s the one thing they can control, and they have failed miserably. In addition, they don’t even try to explain why this has happened.

Even 3 months into FY 2025, it’s still at $2m.

2. Auto revenue.

Initially I assumed this was ok because Auto sales were already flagged and were OK. However, on digging deeper in results, revenue was below my expectations.

It appears that while in 2022 we charged $12.10 on average per unit, and 2023 was $11.86.

This year we have charged $9.45 per unit. This is despite spending millions on R+D to develop extra features, which Paul said would be charged at around $1 per feature.

If for every increase volume, we have to bring the unit price down, we are going to take much longer to reach profitability.

In addition, the potential future revenue has just dropped another 20%, so future muti-bag potential has once again diminished further.

3. Monitoring Revenue

Digging deeper, monitoring revenue also went down very slightly from H1’s figures.

So, despite increasing numbers by over 5000 monitored trucks in H2, our monitoring revenue failed to increase. How could that be? The only way I can see that this could be possible, is if we again reduced prices slightly.

In any business costs will generally go up, inflation tends to guarantee that. Good businesses usually overcome those issues, by having pricing power that allows them to increase prices as needed. Based on the above, See doesn’t seem to have the pricing power needed to do that, as a result there is a very real risk that margins will continue to erode, and the full potential of the business will never truly be achieved.

I'm no longer prepared to believe the hype and potential here, I'll come

Pretty disappointing overall.

Problem is 2 fold. Revenue not increasing quick enough, and costs still way above target.

Knowing revenue isn't going where you need it to be, you have to deliver on costs. Getting down to 2.5m a month cash burn today, when you said it would be at 1m now, is very poor. In additional they gave no reason for that.

KPIs will be 400k which is about 5% growth. Very disappointing given BMW are supposed to be ramping up significantly.

I'm surprised this hasn't sold off more.

I'm not forgetting them just haven't included anything, as they have been very conspicuous by their absence.

I hope they did start in March, as that should boast numbers further, and make my numbers even more conservative.

Its interesting that you mention Blue Cruise, as Ford seem to have changed what they announce in their last update. Previously they announced Blue Cruise subscribers, which didn’t tell us much as they were clearly installing our chip in many more cars than those that subscribed.

But now they are announcing number of cars that are Blue Cruise capable.

As a result, we can now tell how many chips we have sold to Ford, each quarter going forward.

We are currently selling 84K units a quarter to Ford, (using Fords published numbers).

I was looking at what we can expect for the next KPIs, when this became apparent.

In addition, GM have announced how many chips they will install next year, by virtue of their announcement of how many cars will be Super Cruise capable next year.

Another figure we have previously been lacking.

The below is at quick stab at the next Autp KPI’s, based on a lot of guesses, and a number of knows stats.

Last quarter we did 381k.

Ford accounted for 84k, leaving 297k.

I’m assuming that GM is good for 30K a quarter, based on the fact that they have announced that in CY 2025 they will do 380K, ie averaging 96k a quarter. Total guess but the 380k next year is the only figure I have from the company itself. So you would assume they must be doing at least 30k a quarter currently, if they are going to reach that figure..

So that leaves 267k.

I’m assuming that is predominately BMW, with a bit of others, ie 250k BMW 17K others.

Given BMW are predicted (Colin Barden) to likely have reached 500k by end of year, you’d expect them to do at least 300k next quarter. That's pretty convserative

Which would suggest next quarter:-

BMW 300k

Ford 93k

GM 30k

Other 17k

Total 440k

The above is pretty conservative, in that I’ve only assumed growth for Ford and BMW, and includes no new OEM programs if there are any.

If anyone thinks I’ve missed anything significant, here please let me know As I’ve got a reasonable handle on BMW, Ford and GM, but pretty clueless about others, currently

So, it’s my base line expectation, which if they miss suggests something has gone wrong again.

I’m actually hoping for something nearer 500k, as a 20% growth rate would be 357k, and that’s the minimum we have been led to expect.

Ford are announcing their quarterly on the 28th October, so we should get a Blue Cruise sales number before our results.,

which I can plug into the above figures. Whether its before the KPIs I don’t know.

Seize,

We already knew that we were going to see an increase in aftermarket from wrightbus of about 1200 a year, when our RNS was announced. Because thats how many buses they make and sell a year. This doesn't really change that, it's just telling us who's buying the buses.

Unlikely they will increase production numbers, and if they do it will likely be a small number initially.

So whilst it's interesting to know, it's nothing to get excited about, and certainty not worth an RNS.

Assuming I've done the math correctly, that works out at 27.75m for the privilege of being able to borrow 150m for 12 months.

With terms like that I'd be very worried if I was a shareholder. The lender clearly knows they are desperate, at those rates.

They will also almost certainly be ahead of shareholders in the queue, if the company gets into trouble, re recovering any cash.

This has all the warning signs of a company in real trouble, trying to buy time in the hope revenue improves in the next 18 months. Everything I see or read about this company screams RED flag,

I have not seen the estimated market for this product?

Recent presentations did cover this for aftermarket and management did quote a figure.

This was based on Europe, where legislation enforced fitment.

I think it was 300k new trucks per year, and they were hoping for 10%.

That's from memory, so might be wrong.

Webstrik,

My estimates used to be similar to yours, but after years of those figures not being met I lowered them.

What I meant to say previously, but didn't, is that the yearly unit figures I now use , equates to 360m revenue, since first sales to 2028. Which is basically what we are supposed to have won.

So that revenue figure should be in the bag.

Be careful with the 100% year on year figure, which is cars on road, not cars per year. Although in truth when you do the math they should be the same thing.

I suspect that will continue to be true for the early years leading up to 2028, but will be dropped later as that becomes harder to maintain.

Still even on my lower figures share price should do well, and lots of additional potential.

Webstrik,

You say "After reading a lot of CB’s analyses, I have no doubts that See will take a (very) large proportion of the market, but the difficult questions are for me: 1 would they be able to satisfy this demand? and 2 how much financial gain can they distract from this?"

I actually think they are the easier questions, and the one you seem to be more sure of is the much harder question.

However, in terms of the questions you pose here's my take.

2. How much can they make? There are a number of ways of looking at this and sometimes it’s useful to look at it in different ways as a sanity checker. If 2 differing ways produce similar results, then one can be more confident of the result.

They say they are contracted to receive $392m revenue from existing Auto wins, and that the majority of that will be received by FY 2028.

Let’s assume majority means about $360m.

If we use a unit price of $11.86 (2023’s figure), and we assume roughly 100% Auto growth per year.

We reach a peak in 2028 of $142m from Auto sales of 12m units a year.

Another method would be to Look at various presentation graphs such as the most recent results H1 2024 from Investormeet,

They expect to be doing well in excess of that, ie something like 16 to 20m in 2028. So, the previous estimate is both sanity checked and conservative.

Also DMS market is predicted to be 60m units by 2028, 40% of that would be 24m. So 12m units isn’t that demanding.

If we assume Fleet does $40m, (Again I’m being extremely conservative, as it’s not far off that now, but the bringing forward of the caterpillar deal, and the unknowns of aftermarket makes it more difficult to predict).

That’s $182m of revenue, which assuming costs are $80m, gives over $100m profit in 2028.

Pretty good for a £200m market cap company.

On top of that there are lots of potential ways for the company to easily beat that, with:-

Reducing costs which they suggest is coming this year

Fleet and Aftermarket adding additional revenue

Auto outperforming the 12m units in 2028.

Revenue from Aviation.

1. Can they satisfy demand?

Well with Auto it’s just a chip or software, so little chance of not being able to satisfy demand.

Fleet is a different situation as hardware is involved, so could become an issue if demand becomes strong.

However, I’ve assumed no Fleet growth in the above figures, so would love to see growth that tests our ability to supply.

Lots of scope to outperform my base case, and the base case is pretty good.

If true would be a decent add on for fleet.

With Wrightbus doing 1200 a year and Dennis doing 2500 ( only figure I can find from 2019), that's a very decent increase to fleet yearly installs.

Fleet currently does about 12000 a year, so an extra 3700 would be a 30% increase.

I'd also guess the bigger customers of Dennis etc which have fleets would be very likely to take monitoring.

I'd always assumed that Magna could ask for their money back If share price below 11p when maturity date occurs.

However now I'm not so sure.

I'd assumed this was a convertible BOND, in which case that would be true.

However looking closer at the RNS this is a convertible NOTE, which is not the same thing.

Having done a quick google 're Notes, they appear materially different.

It appears to me they have to covert.

However there will be certain standard covenants in the small print which we not privy to, so still not 100%.

Be interested in someone's view who is more familiar.

It was 27m last year and will increase as revenue continues to grow.

So with revenues increasing by over 10% 31m doesn't seem out of place.

I guess he felt he had to respond, but would have been better to not bother as this isn't convincing anyone.

Interesting figures he quotes for what he expects to be the DMS market in what would be our FY 2027.

He thinks Global DMS sales will be 28m units per year.

Assuming SEE achieve 50% ie 14m, that would equate to at least $140m revenue.

Based on that and modest growth in Fleet, my model suggests that would equate to at least a 20p share price, with further growth to come.

Sort of confirms why I am still holding.