Category Archives: CG Client

Wireless Infrastructure Microcap Turnaround: Not the Westell You Knew > Decade Ago

Full disclosure – wireless telecom equipment co. Westell Technologies, Inc. (Nasdaq: WSTL ) is a new client of our our parent, investor relations firm Catalyst Global, but we wouldn’t write this if we didn’t think this idea would reflect well on CG Focus List

Westell Technologies, Inc. (WSTL) is an attractively valued, well funded turnaround story in wireless telecom infrastructure solutions. With the rapid growth in mobile devices & content access – Westell seems well positioned to help infrastructure providers meet this growing demand by better leveraging their existing resources in a cost effective manner.

Catalyst Global’s charge is to raise WSTL’s profile amongst small and microcap investors and as part of that effort, Westell will be presenting at the LD Micro “Main Event” Conference on Dec. 3rd in Los Angeles and at the Benchmark Company Micro Cap Conference in Chicago on December 10th.

Further, Westell will report Q2 results on Weds. Oct. 28th and host a call Thurs., Oct 29th at 9:30 a.m. ET: Q2 Call/Webcast Details – October 29th @ 9:30 am ET

Westell is progressing through a turnaround let by a talented and wholly new senior management team most of whom joined in 2015, including:

  • CEO – Tom Gruenwald (Tellabs & AT&T) – Feb. 2015
  • CFO – Tom Minichiello (Tellabs, United Technologies & Andrew) – 2013
  • SVP WWide Sales – Brian Brouillette (HP, Juniper & Net Optics) – 2015
  • SVP WWide Sales – Chuck Bernstein (TeleCommunication, Tellabs) – 2015
  • CTO – Mike Moran (Alcatel, Netscout, MacAfee & Tellabs) – 2015

Westell’s new team put up a solid performance in the June quarter (their Q1) and are working to achieve further top line and bottom line operating improvements – moving toward a breakeven revenue range of $25-$27M.

Westell’s new team is refocusing the company on new products, new customers and additional markets. They are also making significant headway in cost reductions and margin enhancements in an effort to return to profitability.

  • 
+16% sequential sales growth to $21.6M in Q1’16 (June) with improving gross margin vs. March sales of $18.6M but down from year-ago sales of $27.8M
  • Coming launch of new distributed antenna system will expand product offerings for rapidly growing market for in-building wireless solutions. In-building solutions involve improving the efficiency and quality of wireless service in buildings and other venues to better leverage the existing wireless towers & infrastructure. In-building addresses user experience as well as operator costs – making it a win-win area of opportunity.
  • Existing intelligent cell site management, cell site optimization and rugged outside plant cabinet product lines also offer solid growth potential.

One potential demand stimulus for WSTL could be phase 2 of the Connect America Fund (CAF) The second phase of CAF provides funding for ongoing support to deploy and maintain fixed-location broadband and voice services in high-cost areas at rates comparable to those offered in urban areas. Connect America Fund Background

Valuation: Westell FY 2015 revenues were $84.5M and its enterprise value is $33M, net of $37M in cash, for an EV/sales multiple of 0.4X compared to the average telecom equipment group multiple of 1.1X EV/sales.

Westell’s market cap is $70M with 61M shares outstanding [46.9M Class A & 13.9 Class B] based on recent price of $1.15 (with $0.61 cents per share in cash). WSTL also has $39M in deferred tax assets.

Institutional Ownership: WSTL has attracted solid value-oriented institutional interest with Cove Street, Heartland and Royce owning respectively 15%, 2% and 1.4% of shares outstanding, the latter two funds reflecting well on the underlying investment value of Westell.

Coverage: Just one analyst covers the Company currently – Mike Latimore of Northland Securities in Minneapolis. His report is available on Westell’s IR website.

Changes at Westell Remain Unknown: In closing, while we have found that the Company name has good investor recognition, it’s clear that investor perceptions are generally based on old news – often a decade or older when he Company was much more wireline focused and a major provider of DSL modems.

The prior team sold off the legacy businesses – except the outdoor equipment business – and through M&A built a portfolio of products focused on wireless. And now an entirely new team is rebuilding the sales & marketing effort while also investing in R&D for in-building wireless solutions, in an effort to rekindle growth, and honing in on efficiency and cost reduction opportunities to drive bottomline. The transformation so far in 2015 seems to remain a fairly low profile development.

Now it’s up to the team to execute and like most small companies, it’s probably more of a bumpy ride forward than a linear progression – but they do seem to be focused on the right things have have a solid set of initiatives that make sense for driving improved financial performance, all with a balance sheet that provides the company with as much time as it needs.

Should you have questions or wish to speak to management, please call Tanya Kamatu at Catalyst Global at 212 924 9800 or wstl@catalyst-ir.com

Thanks for reading.

CG Focus List

October 23, 2015

 

Flux Sees 300% Growth in FY ’16 Following Nearly 100% Rise in FY ’15

Our client Flux Power just issued the following news announcement to provide some greater visibility on the ramping demand it is generating with large national & regional customers.  While we were too early in brining the stock to investors attention (at around $0.17 per share) the company’s current market cap of around $4 million seems modest given the traction they see within what is estimated to be a $600-$800M market for Class III walkie forklift batteries that is virtually all based on legacy lead acid technology.

Flux Logo with (r)

Flux Power Industrial Lithium Battery Sales Expected to Rise 300% to
$3 Million in FY 2016, Driven by Growing National Customer Demand

FY 2015 Revenue Rose Approximately 100% to $700,000;
Q4 Unit Shipments Rose to Record 81 Units vs. Q3 ’15

VISTA, Calif., Aug. 4, 2015 — Flux Power Holdings, Inc. (FLUX), a developer of advanced lithium battery technologies for industrial applications including electric forklifts, today provided an initial LiFT revenue forecast of $3 million for FY 2016 (ending June 30, 2016) in conjunction with a preliminary projection of its Q4 and full year FY 2015 results. Flux launched its LiFT Pack lithium battery line for Class III pallet jack forklifts or “walkies” in January 2014.

2016 Sales Outlook
Flux has built a nationwide network of battery distributors, forklift dealers, OEMs and national and regional customers who now recognize the performance and cost benefits of Flux’s lithium-ion storage solutions over legacy lead-acid batteries. Based on customer and distributor dialogues, LiFT Pack piloting, and initial purchases, Flux management feels confident it can achieve fiscal 2016 LiFT Pack sales of at least $3 million, representing 300% growth over fiscal 2015. The FY 2016 sales estimate excludes other product sales opportunities in development and is subject to Flux’s ability to secure sufficient working capital to fund inventories, demo units, industry certifications, receivables and expanded sales, customer support and administration expense. Flux is currently considering various options to address its working capital needs.EF3C4402

Ron Dutt, Flux CEO, said, “It’s very exciting to see the realization of our team’s strategy and efforts resonating so strongly within the material handling industry. We have developed very meaningful large account interest that supports the strong sales ramp we anticipate beginning in Q2 fiscal 2016. Based on current dialogues we expect our sales to improve significantly over the next year, reaching a $1.5 million per quarter run rate by the end of fiscal 2016. We are also planning several product design, sourcing and cost management initiatives to improve our product margins.”

Growing National/Regional Customer Base
Demand for Flux LiFT Pack solutions is centered on logistics-intensive industries including beverages, food, groceries, consumer goods and shipping and transportation. To date, 26 large national or regional companies have piloted Flux LiFT Packs for walkies and so far 15 of them have proceeded to make initial LiFT Pack purchases. This demonstrates solid progress from the 16 piloting companies, 10 of which had made initial purchases, as reported in March 2015. Flux’s revenue expectations are based primarily on advanced discussions with several companies that are planning to include Flux LiFT Packs in their monthly/quarterly battery replenishment schedules beginning in Flux’s FY 2016 second quarter.

Latest LiFT Pack Image 01-15Q4 and Full Year 2015 Preview
Flux expects to report record LiFT Pack shipments – a total of 81 LiFT Packs – for Q4 2015. The shipment record was achieved despite several customers that await the completion of additional product certifications, pushing the purchase of 65 additional packs into FY 2016.

Though its Q4 and full year 2015 financial statements are not finalized, Flux anticipates Q4 2015 revenue grew to approximately $205,000 and full year FY 2015 revenue rose to approximately $700,000, nearly doubling over FY 2014 revenue of $358,000. Flux expects its Q4 2015 net loss to range between $700,000 – $900,000 and its FY 2015 net loss to range between $2.5M – $2.7M, a significant improvement over the FY 2014 net loss of $4.3M.

About Flux Power Holdings, Inc. (www.fluxpwr.com)
Flux Power develops and markets advanced lithium-ion energy storage systems (‘batteries’) based on its proprietary battery management system (BMS) and in-house engineering and product design. Flux storage solutions deliver improved performance, extended cycle life and greater return on investment than legacy solutions. Flux sells direct and through a growing base of distribution relationships. Products include advanced battery packs for motive power in the lift equipment, tug and tow and robotics market, portable power for military applications and stationary power for grid storage.

Flux Blog:     Flux Power Currents
Facebook:    FLUXPower
Twitter         Company: @FLUXpwr Investor Relations: @FluxPowerIR
LinkedIn      Flux Power

This release contains projections and other “forward-looking statements” relating to Flux’s business, that are often identified by the use of “believes,” “expects” or similar expressions. Forward-looking statements involve a number of estimates, assumptions, risks and other uncertainties that may cause actual results to be materially different from those anticipated, believed, estimated, expected, etc. Such forward-looking statements include the development and success of new products, projected sales, Company’s ability to fund its operations, distribution partnerships and business opportunities and the uncertainties of customer acceptance of current and new products. Actual results could differ from those projected due to numerous factors and uncertainties. Although Company believes that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, Company can give no assurance that such statements will prove to be correct, and that the Company’s actual results of ‎operations, financial condition and performance will not differ materially from the ‎results of operations, financial condition and performance reflected or implied by these forward-‎looking statements. Undue reliance should not be placed on the forward-looking statements and Investors should refer to the risk factors outlined in our Form 10-K, 10-Q and other reports filed with the SEC and available at www.sec.gov/edgar. These forward-looking statements are made as of the date of this news release, and Company assumes no obligation to update these statements or the reasons why actual results could differ from those projected.

Flux, Flux Power and associated logos are trademarks of Flux Power Holdings, Inc. All other third party brands, products, trademarks, or registered marks are the property of and used to identify the products or services of their respective owners.

Clean Energy – Flux Power Holdings, Inc. OTCQB: FLUX

Flux Power is Bringing State of the Art Lithium Battery Technology to Large Untapped Industrial Markets:

Forklifts, Tug & Tow Vehicles & Portable Power for In-the-Field Use.

While Fuel Cells by PLUG, FCEL, BLDP & HYGS Garner Headlines and Trading Frenzy – Flux LiFT Packs offer a much lower cost, easier to implement forklift solution versus incumbent lead-acid storage.

PCCCC

Flux has created innovative lithium-ion batteries that deliver more storage and longer lifespan at a better price. Flux’s design transcends the traditional lead-acid battery and adapts to the modern era with a safer and more cost effective product.

Flux has scaled battery technology initially developed to power smartphones and tablets up to industrial applications like forklifts and other vehicles. Flux offers a far superior power source that performs much better, lasts far longer and is substantially more cost effective.

Flux-Battery-Model

 

 

 

 

 

 

 

Flux Investment Thesis:

  • Strong industry interest/validation
    • Tested by major dealers such as Toyota Materials Handling, global leader in forklifts
    • Growing base of distributor & dealer interest in 18 states
    • Working to expand approvals to additional top OEMS
  • Substantial interest & sales potential in large markets such as beverage makers, food & grocery chains, etc
  • Partnerships with:
    • HDT Global – portable packs for military/emergency response
    • Wesley International – electric tow vehicles
    • Penguin Automated – large robots for underground mining / civil construction
  • Proven leadership – CEO /acting CFO Ron Dutt  
    • 30-year career senior management/financial executive experienced with growth and leading through transitions at DHL, Ford, Visa, Directed Electronics, Fritz Co.’s, SOLA Int’l
    • Ron Dutt LinkedIn Profile
  • Substantial Market Opportunities

The slide below is from Flux’s investor presentation (6/19/14). It illustrates the scope of some of Flux’s targeted markets.  Provided Flux can develop industry acceptance, it’s ability to scale its business is both open ended and based on already proven and patented technology.

FLUX Market Opportunity

 

 

Initiating Sales Ramp for  New Products

Flux is developing clear sales momentum for its new product lines launched earlier in the year.  We expect that this trend can accelerate as Flux “gets through” the far longer dialogues and testing that are part of entering new markets and developing a reputation and track record.

The first three quarters of FY ‘2014 (ended June 30) were focused on launching and demonstrating Flux’s LiFT Pack forklift solutions, with initial sales really starting in Q4 ’14.  The uptick in sales during Q2 ’14 related to a specialty portable power solution utilizing solar panels and storage for military field applications.

Flux Power Sales Chart

Flux Lithium-Ion Technology Offers  Array of Advantages

  • More power than lead-acid
    • Higher operating power throughout discharge – performance starts high and stays high
    • Lasts 25% longer between recharges
    • Useful life up to 6x longer
  • Light weight – easy to maneuver
  • Advanced technology & design, salable assembly, proven performance
    • Proprietary Flux Battery Management Systems (BMS)
    • Patented, state-of-the-art technology
  • Climatic adaptability – preforms in cold, wet, dry, humid and ever-changing climates & conditions
  • Customization – can be adapted to customers needs
  • Less expensive and easier to deploy than fuel cell technology

More-Up-Timelithium savings

 

lead acid

 

 

 

 

 

 

 

 

 

 

 

 

Targeting Large, Untapped Markets

While there a wide variety of attractive market opportunities for larger lithium-ion storage solutions, Flux is targeting three primary markets, but is focusing the bulk of its efforts on motive power and portable power.

  • Industrial Motive Power – Lithium packs for lead-acid replacement & new applications:
    • Lift Equipment (forklifts) starting with Class III Lifts “Walkies” via Flux LiFT packs – once Flux has solidified the Class III opportunity, it plans to scale-up its solutions for larger, higher priced Class 1 & 2 lifts.
    • Tug & pull equipment
    • Robotics for mining & civil construction – initial prototype delivered
  • Portable power – Quiet, clean, reliable power source that replaces generators/fuel for:
    • Military field operations
    • On-location entertainment production
    • Events & other remote applications
  • Stationary Power – Solar and Wind Farm Storage for Utilities
    • Longer-term opportunities
    • Pursuing partnerships with grid integrators

Partner Comments:

q2
weley

 

 

 

toyotatoyota quote

 

 

 

Disclosures: The parent of CG Focus List, Catalyst Global LLC, is an investor relations consultancy based in New York City.  Catalyst Global was formed by an investor relations professional with over 25 years of experience serving micro-, small- and midcap public companies.  Flux Power Holdings, Inc. is a client of Catalyst Global and receives over 75% of its IR retainer compensation in the form of restricted Flux common stock that vests over a one year period. Coverage of Flux Power reflects CG Focus List/Catalyst’s belief that Flux Power offers a very attractive special situation investment opportunity based on the deployment of proprietary lithium-ion storage technologies within industrial markets that have been mired in a century-old technology with myriad flaws. The preparation of this CG Focus List report is outside the IR relationship between Catalyst Global and Flux but is intended to help expand awareness of the Flux story. Neither CG Focus list nor Catalyst Global have received compensation of any kind for the preparation and distribution of this Alert. Flux management was not involved in the preparation or review of this report.

CG Focus List and/or its affiliate Catalyst Global owns approximately 0.8% of Flux’s outstanding common stock (the shares are not registered) pursuant to IR retainer compensation and through our participation in a private placement in March 2014.  CG Focus / Catalyst have a long term investment horizon (1-5 years) for their Flux investment and have no plans to sell any Flux stock for at least the next six months (we do have to pay our bills periodically and they generally request cash!).  Further, the founder of Catalyst Global is the tallest son of Timothy Collins, Sr.,  Chairman of Flux Power Holdings. Tim Collins introduced us to Flux’s CEO last fall and later became Chairman in spring 2014. We are very willing to answer questions on the status of our relationship and ownership for anyone who asks, as we completely understand there may be questions or concerns.  Rest assured that our integrity, ethics and adherence to disclosure standards are the bedrock of who we are and what we do each day, no matter the near term financial consequences.  It’s the way it should be everywhere – but alas it is not.

Authors: Our amazing intern this summer, Kate Keller, along with Catalyst Global staffers Chris Eddy & Eric Lentini

The “New” Klondex Mines – Nevada Gold Moving to Initial Production

Feb. 19, 2013     Klondex Mines Ltd.  TSX: KDX or OTCQX: KLNDF    $1.25

High-Grade Nevada Gold Mine Transformed the Past 8 Months
by New CEO, Team, Plan & Funding; Now Targeting Initial Gold
Production by Year-End with a Team That Has Done it Before

Site View Photo

Why Klondex? – Why Now? KDX has been transformed over 8 months by a new Board & management. Key issues have been addressed, a realistic plan and budget confirmed, $30M in funding raised, impressive exploration results continue, & management is executing on its goals to reach initial bulk sampling. The “New Klondex” story is not yet well known, but the company is working to change that.

KDX Table 1

Klondex Strengths:

  • CEO led Midas mine (Newmont) & Hollister mine from start-up to production of
    over 80k gold oz/year
  • Clear plan for continued development & initial production at Fire Creek by end of 2013
  • Capital in place to fund 2013 program
  • Clear goals: new resource, drilling, vent raise, water management, milling agreement, board additions, bulk sampling
  • Recent exploration has shown high grades, Main Zone continuity and discovered new West Zone
  • Under-explored: meaningful exploration potential
  • In heart of Nevada gold country; good geologic, regulatory & infrastructure environment
  • Low-Cap-Ex path to initial production
  • Significant valuation discount on EV/Resource basis
  • “New Klondex” story not well known

KDX Table 2

About: Klondex Mines is a gold exploration & development company focused on its Fire Creek gold property in Nevada with a gold resource of 1.6M oz. indicated and 0.5M oz. inferred.
Klondex has developed an underground decline and workings to access mineralization for in-fill and exploration drilling as well as bulk sampling. Fire Creek is permitted for small scale, bulk sample gold production anticipated to commence by year-end 2013.

Recent Visible Gold Discovery at Fire Creek

Visible Gold

KDX Intercepts

www.cgfocuslist.com   ✪  212.924.9800   ✪   info@cgfocuslist.com

Disclosure: The parent of CG Focus List, Catalyst Global LLC, is currently providing and has provided investor relations services to Klondex Mines Ltd. since 2007. Coverage of Klondex Mines by CG Focus List is completely independent of Catalyst Global’s IR activities and reflects the belief of several major investors that Klondex shares represent significant value at this time. Neither CG Focus List nor Catalyst Global have received compensation of any kind for the preparation and distribution of this Alert.

CG Focus List and/or its affiliates do have long positions in Klondex shares but per our trading policy we have not bought or sold shares in the last five trading days following today’s article and will not effect any transactions in Klondex stock for five days following the distribution of today’s article.

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Thank you for visiting CG Focus List, a free service dedicated to introducing investors and media to compelling small and micro-cap investment ideas.  The ideas are sourced from a network of investment community contacts we have gotten to know, respect and trust over the past 25 years.  These are not trading calls but fundamental investment ideas that we hope to efficiently outline in just one page.  From there you should do your own due diligence and consult with your investment advisor prior to any investment.

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