--- the subscriber area has no ads and those above are not selected or endorsed by this site ---
new CUI Global order and follow-up +3
06:48 08-May-18
CUI Global has announced
another North American order for a proprietary gas monitoring
system from "a leading North American petrochemical company and
natural gas major". The device will be placed in the Upper Gulf
Coast region of Texas, and Cheniere comes to mind. The order was
placed following Orbital's inclusion on the customer's preferred
suppliers' list following deployment of 15 of Orbital's other
probes. The order is not major in terms of revenue but it does
consolidate much talk of ramping business from the earnings call,
as does the following quote:
Having secured preferred supplier status, we can now bid on this customer's large dollar-value Houston Gulf Coast analytical integration projects, as well as its global sample probe and conditioning systems opportunities. We are moving to secure similar status with other large energy producers to create a path for additional sales from the sampling and integration sector in North America.Other interesting points from the call were:
- management echoed my thoughts about the Italian government
impasse coming to a head in the next week or two.
- a comment that Japan is contemplating producing biomethane.
- I had previously noted low margin on the initial ICE orders. It turns out that those included a non-recurring royalty payment for some of the incorporated technology. So future orders should contribute more to the bottom line.
Management predicts that the company will not be cash flow
positive this year, but expects it will be in the second half. It
also projected gross margins in the high thirties, which is above
my initial modeling. All of this is positive and supports my buy
the dip opinion. Just keep in mind that expectation is par for
the course with development-stage companies. This order is a nice
baby-step, but we will need to see continued progress to make
gains sustainable.