Member Info for RichieRichie

Big announcement today at 3pm!

Hidden in the year end trading update, "Regular orders are now being received for components for the Airbus A320, A330, A380 and A400M series aircraft" Getting Hardide coated parts on flying Airbus planes is a great milestone for a small company such as Hardide.

Nothing to do with Carlsberg. Interesting reading from a presentation to the Society of Petroleum Engineers on erosion resistant sand screens, "Through a combination of design and the application of a CVD based tungsten carbide coating on the filter media, the coating resistance has been increased by 4x-6x relative to conventional premium sand screens and the acid resistance has increased by 10x. Statistical sand screen failure rates of high producing wells with fines production indicate a 25% failure over a 25 year life. When a sand screen fails the impact costs hundreds of millions of dollars (Their words not mine). Over 2,000 feet of the new screen have been installed in the Gulf of Mexico. Suffice to say that in any instance where erosion is an issue, or where workover opportunities are limited the more prudent well design would be to include higher erosion resistance screens". Engineers considered 10 other coating variants. Nothing came close to the coating performance of the CVD based tungsten carbide coating. The engineers are from Chevron and Chevron provided their consent to publish. Chevron has a market cap of $313billion. I am all for outsourcing research and development but seems inequitable when Hardide has a market cap of £10million. Like many investors I long for the day when Hardide delivers for shareholders. After all Hardide is probably the best coating in the world! Bring on Airbus, gas turbine blades, wire mesh screens, Leonardo helicopters and the many applications that have been in development for so long....

Would be timely to get an update on i) revenue for 2022 ii) chairman replacement.

With respect you are missing the point I am trying to make. The Hardide Board sanctioned a capital raise in 2017 for £3.6m for the move to the new factory and increasing reactor capacity from 5 to 9 including 1 large capacity reactor. The Board could simply have sanctioned the move to the new factory, installed 1 large capacity reactor, 1 additional normal sized reactor and held back on the capex for 2 additional reactors until they were confident revenue was contracted. The Board took the risk and invested very expensive shareholder equity to increase furnace capacity to £9m. 5 years later the company is only generating £5.4m of revenue on an annualised basis and aerospace is £8,400! In addition the board then sanctioned 2 further equity raises of £2.5m and £0.8m and guess what they are now intimating more capital is required. I am not opposed to funding growth, it is that trust and confidence is extremely low given the historic track record. The share price reflects this lack of confidence at 30p. I would much prefer the board 1) deliver on the operational cashflow for which they say there is line of sight 2) raise additional capital for new furnaces against the covenant strength of contracted revenue using asset backed finance. Rob R put it much more succinctly, "Hardide needs to start producing the results - we've all had enough of hearing how bright the future looks".

The Hardide board has raised £9.4million of equity since 2017 (£2.5m in Oct 17, £3.6m in Feb 2019, £2.5m in Jan 2020, £0.8m in Feb 2021). This equity was all raised after the US factory was established in 2015. There is a familiar story to all the fund raises. Hardide needs funding for all the new capacity for all the exciting growth from aerospace, oil and gas etc. The shareholders have supported £9.4million of fund raises and there are 9 new furnaces of which 1 is large capacity and a new factory. This provides plenty of capacity for R&D, ~ £9million capacity for new business and ability to coat larger objects. I support the new factory investment but struggle with installing so much new reactor capacity so far in advance of contracted revenue. For example, Shareholders have taken massive dilution more than 5 years ago and Hardide has delivered 3% of aerospace revenue £8,400! Now the board are using the pretence of capacity restrictions for the new larger capacity reactor as a pre-cursor to yet more funding to support growth. I estimate revenue from Ansaldo in 1H 2022 was £226,000 ((£2.7 x 54% = £1,458k)- (£2.7m x 54%/1.49 = £978k x 1.26 = £1,232k)) based on disclosure in the interim results. If we assume the large capacity reactor can process £1.5m of revenue annually the reactor operated at approx 30% capacity in 1H 2022. Given the board has stated there is line of sight to positive cash flow and profitability can I suggest they do not do yet another highly dilutive equity raise. If Anasaldo want their blades coated, great, but surely it is not beyond the wit of the board to request i) prepayment ii) long term contract with sufficient covenant for asset backed financing to support the investment in new reactors. If the board of Hardide had delivered on the promised revenue growth historically I would be more supportive. Problem is they have not delivered the revenue. I would take much more confidence from asset backed financed being used to support the new reactor capacity because at least this way we can be confident the financier will have checked the revenue is contracted. It is call a win win allround - Ansaldo commit to revenue and get preferential commercial terms, Hardide gets the asset backed funding for growth, the shareholders do not have to suffer further dilution, and the Chairman is more popular.

Please no more equity issues at this low share price. How many times has Board used "funding for growth" as the pretence for supporting ongoing operating losses. Please deliver on the operational cash flow and profitability and use asset backed financing to buy the new larger size reactor. In the interim work 7 days a week to provide an extra 40% capacity. By way of example aerospace revenue for H1 was £8,100. How much very expensive equity has the board raised to deliver this over the past 14 years? To the Hardide board, please stop and think about your private investors before rushing off to dilute us poor shareholders yet further especially given the board has line of sight to operational cashflow and profitability.

On 18 May 2021, Hardide announced the following with the interim results, "Long term agreement with a major German Tier 1 supplier to Airbus is in final stages of preparation for the coating of multiple Airbus A320 and A330 components." Hardide Board's words not mine. It is almost the 1 year anniversary. With the exception of the gas turbine blades there has been very little by way of announcements of new customer conversions. The lack of any tangible progress with new customers and airbus is really disappointing given all the capital investment shareholders have supported. Drilling activity is rising strongly so macro environment positive for Hardide. Would be great to see customer conversions and revenue growing strongly.

H1 revenue in 2021 was £1.8m. A 40% increase implies revenue of £2.5m for H1 2022. Broadly, Hardide requires £3.0m of revenue per half year to cashflow breakeven (EBITDA positive). With strong oil and gas prices, recovery across all sectors and new revenue from gas turbine blades and airbus, > £3.0m of revenue for 2H 2022 looks acheivable. i.e. Hardide should be cashflow positive in 2H 2022. Management were awarded options in February 2021 linked to Gross Profit in the year ended Sept 22 (40%), Sept 23 (40%) and share price >75p by Sept 24 (20%). The Gross Profit targets broadly equate to revenue > £7m in year ended Sept 2022 and >£8.4m in Sept 2023. I don't think the options for Sept 2022 will vest but fingers crossed the options for Sept 23 will vest. At £8.4m of revenue Hardide should generate £1.2-£1.5m of EBITDA per year. In terms of reactor capacity, hopefully the new site allows 7 day working, rather than 5 day working which provides an immediate 40% increase in capacity. i.e. it is possible to go from £9m of revenue to £12m of revenue for a temporary period whilst new capacity can be bought online. I hope the board of Hardide will reflect carefully about raising equity well ahead of customer demand. I.e. As soon as Hardide has long-term agreements with Airbus, Hardide uses the covenant strength of these agreements to raise asset backed finance to purchase new reactors combined with the flexibility of working 7 days a week to satisfy customer demand in the interim. Once the share price is higher, raising equity is not so painful but too many times Hardide has raised equity well ahead of demand and it is incumbent on the board to look after shareholders. The share price is very attractive given the risks/rewards. I hope the board deliver on all the potential of this great product.

Good news is Hardide raised some asset backed finance in January and avoided the annual fund raise.

https://hardide.com/aerospace-industry-bracing-for-take-off/ Braced for take-off or is Hardide still stuck at the check-in waiting for our Covid certificate to be checked? 8 months since the announcement and not much news reported since then...

We regularly coat parts for BAE Systems’ Eurofighter Typhoon, Lockheed Martin’s F-35 Lightning II and Airbus’ A300 Beluga Super Transporter and A380, the world’s largest passenger aircraft. First orders are expected shortly for a range of Airbus A330 and A320 wing components and we are in the final stages of agreeing a long-term supply arrangement with a major European Tier 1 supplier and arrangements with key UK and European Tier 1 suppliers for coating further A320, A330 and A400M components. First production of these is expected later this year.

At the same time, we have lots of exciting development work underway for a variety of new parts including engine metering valves, reverse thrust actuators, hydraulic cylinder actuators, landing gear actuators, door stops and landing gear pintle pins.

Oil now trading above $90/bbl. Drilling activity increasing rapidly. Covid restrictions going. Hopefully a strong half year results to look forward to. A reason to party Sue Gray....

Oil prices are at $87/bbl and improving confidence led to the highest weekly increase in the Baker Hughes rig count last week. I assume this will then feed into Hardide demand from oil service companies which is great. Given oil service companies are very happy to stop orders when it suits them, I trust the pricing from Hardide will reflect a premium for this flexibility I.e. I see it is incumbent on Hardide management to ensure the oil service companies pay for the commercialisation of Hardide technology that delivers the oil service companies so many benefits and not shareholders through repeated dilution. I think this will be an easy argument at $87bbl when everyone in the oil industry is printing money

Hopefully 2022 is the year Hardide #bringshomethebacon. Great technology, impressive customer list but frustratingly slow to convert customers to revenue and hellish trading conditions for the past 18 months through no fault of anyone. I hope for the employees, management, shareholders and everyone connected with Hardide that 2022 is the year we convert Airbus, generate positive cashflow and continue rapid growth and fulfil the potential. Santa I have 2 wishes for 2022; i) rid the world of Covid and keep everyone safe and well, and ii) Bring home the bacon for Hardide.

Completely agree the Board have a lot to answer for. Lots of promise and expectation and no tangible progress (via increased revenue). I still believe Hardide has a quality product. However these delays are testing everyone's faith... As a reminder 18 May 2021 "The Long term agreement with a major German Tier 1 supplier to Airbus is in final stages of preparation for the coating of multiple Airbus A320 and A330 components". Since then nothing.

https://www.aero-mag.com/going-forward-for-growth

Orion provide equity dressed up as debt. Orion is a private equity fund, not a bank and lender of last resort trying to get 20% IRR returns from their debt packaging. Look how Orion behaved at Heron Resources and Weatherly which are now both in administration. This is the risky bit as any delay or cost overrun with the project and Orion will have their foot on the throat if shareholders through Orion's Loan to Own model. I am sure the board have done their assessments but the CEO selling down his shares hardly aligned with the rest of shareholders. Fingers crossed it all works out but seen this rodeo several times before.

Good to see the share price react to higher oil prices and recovery in demand. Would be great to hear of more contract awards, especially from the subcontractor to the subcontractor to the tier 1 airbus supplier. Just bring home the bacon... with or without jam...

Salivating like Pavlov's dogs... Hallelujah Leonardo has finished testing!

It is about time the board and company started delivering on all the potential. 7 years ago Hardide video 14 April 2014, "Hardide on the verge of some huge opportunities". 4 months ago announcement Hardide on verge of long-term agreement with a large German tier-one supplier to Airbus. Please bring home the bacon...