Hi TP, maybe its too much to hope others might follow up - I don't have any feedback from any banks.
"I've done some research and here is my bit ..... "
"would be great if someone else now picked up the baton and became an active shareholder."
My point wasn't about how big the profits should be (obviously the bigger the better). My point is that even at low production volumes (maybe 35%), HYR still seem to be cash positive (working capital etc) and my hope is that these low volumes could be even lower to help in difficult times. I'm very confused as to why this has been a problem for so long without management resolving it.
Good luck with your efforts FT. Did any of the banks you listed give a response to your enquiry?
Whatever the loan terms the business is going nowhere unless it can sort out its feedstock problems. Whatever interest payments it has to make in t(e short term it needs more throughput to enhance earnings. That way it might be Ina position to repay the loans and start making money for the shareholders and not just Mr Black.
TM, nice to see you get the point - I've suggested HYR look elsewhere for loans, rather than to Mr. Black. Don't get me wrong, its great to have such a shareholder to provide loans on a very short term/urgent basis, however I don't believe this is good for the other shareholders on a long term basis. Would you (or anyone else) like to give HSBC or NatWest or Barclays or some other bank a call and see if they would potentially give interest rates lower than 10% for a 10million loan? If they did, feel free to put the bank and HYR in touch. I've done some research and here is my bit.
HSBC Large Corporate Lending
0345 585 1004 (I just got voicemail - hope someone has better luck)
(77, 10th Tower, Station Road, Reading, RG1 1LX - i.e. the relevant area)
Barclays Corporate Business Team
0333 202 7441 (introducer team)
0800 015 4242
I guess if neither of these 3 lenders can do less than 10%, then there isn't much point looking further. However, if any of them did less than 10%, then it may be worth checking further banks for the best rate. As Mortgage Rates are currently around 3.7%, I'm hoping that Business Loans would be somewhere between 4% and 10%. Does that seem reasonable? Of course I may be totally wrong - Ideally this is the job of a CFO, however after many years of Mr. Black loans, it doesn't appear our CFO's are looking for the best/cheapest capital (I'm very concerned about conflict of interest). By the way "Hydrodec Group Plc" company registration number from Companies House is 05188355 (Banks will surely ask for that to make sure there is no mix-up with Hydrodec UK which Mr. Black bought from us for £1). By the way, may I be so bold as to suggest anyone calling a bank should make their intentions clear eg. that you are/not working for the company and just looking to introduce the Bank to HYR and give the bank new business - they always like to think you're giving them new business, especially if its big numbers like 10mil . Of course if anyone has the direct number for Moynihan, I believe providing that may be very useful. I for one don't like people who just complain and knock people down all the time - would be great if someone else now picked up the baton and became an active shareholder.
Even on low volumes, they have a positive EBITDA (thats Earnings Before Interest, Tax, Dividends and Amortisation). From a cash flow perspective the only one of those four that is important is Interest ... the interest due to Black.
At the end of the day, a company with debt has to be able to service the debt.
Otherwise it is not really profitable.
Not sure why Andrew Black should be accepting lower interest for our benefit.
you are wrong there. Even on low volumes, they have a positive EBITDA (thats Earnings Before Interest, Tax, Dividends and Amortisation). From a cash flow perspective the only one of those four that is important is Interest ... the interest due to Black. Maybe you're clever and already read in the report and are just having a laugh.
Cant see any bank lending HYR money on this latest set of figures which give the impression of terminal decline.
Lets face it, if they cant sort the supply problems the company is finished despite its superior IP!!
Do I understand this right? We've just had a bigger positive Earnings (EBITDA) this year Q1, than last year Q1, but we still need an additional loan of 500k form Mr. Black, in order to pay back Mr. Black for the interest that HYR owes him?
Why are HYR not reducing the interest rate payments due, by going to a bank or anywhere, where its cheaper than 10% from Mr. Black? 10% of 10m loans is about USD 1m per year in interest 250k per Q. Thats huge. Clearly the business is profitable even at very low production volumes and the issue is mainly due to Mr. Blacks debt.
Loans and interest rates are a CFO matter. CFO, please sort this out immediately and please don't let your conflict of interest with Mr. Black get in the way.
Yes, but..... the weather disruption in the US was always likely to cause problems while at the Australian end, there has been a delay to a decommissioning contract till the next quarter.
I do agree the question that needs answering is, is there a viable business model here, but I do not think predicted weather disruption during a quarter that is always challenging really helps us with an answer.
Agreed Callun. It is a matter of great concern that the supply problem is not improving, in fact its much worse and there are no signs of any turn around. Some hopeful buyers have raised the sp from its early 30%+ drop but they are brave souls indeed to put more investment in at this stage of the game.
Im looking for some workable forward planning before I put any more in.
Well. if HYR had been making a profit, these results would have amounted to a profit warning, and as these tend to come in threes, the future does not look bright.
This business model is not working. Here we have a product supposedly in high demand, but HYR can't produce it because it can't source the raw materials needed to make it. This has been a known problem for some time, and the company has failed to rectify it. If it can be fixed, then why have they not fixed it? If it cannot be fixed, then they should declare that and run the business accordingly, or just shut up shop.
With the SP heading down once again I suspect that it will gently slide into Mr Black's ownership, where it will miraculously be discovered that there is a stockpile of raw material just waiting to be processed and turned into a large profit. Meanwhile, the management will be handsomely rewarded for their sterling services and we PIs will be left with nothing.
Can anyone offer a more upbeat interpretation of the Q1 statement just to cheer me up?
I'm sure we all send our best wishes to Chris Ellis and his family and that whoever in his family is ill, gets well soon.
Now, lets see - we were told that we would get the Q1 "by the end of April" - so thats tomorrow/Monday, so expect the usual increase in share price before the news and a sell-off thereafter (old traders adage "buy on the rumour and sell on the news").
So Mr. Black is a very large shareholder. He also owns the majority of the debt it seems. Recently his own personal CFO became CEO of HYR when Chris Ellis left. Its really great news that someone with such a good knowledge of HYR's business and finances could fill in at short notice for Chris. Lucky man might get two salaries now - hope he can manage the workload. While Mr. Black has provided a further GBP 500k recently at 0%, this dwarfs his large loans which pay a hefty interest rate - these high 10% interest rate loans have been squeezing the company for some time now (despite independent advisors saying they are "fair and reasonable") - I wonder how many independent advisors actually say something is not fair and reasonable. In my book, 5% would also have been "fair and reasonable" and the company would be hugely cash positive by now and would actually be in a position to start paying back its loans instead of needing further loans. (https://moneyfacts.co.uk/business/business-loans). I wonder if our new CEOs/CFO's can negotiate cheaper loans? I'm getting increasingly worried about the increasing need for more and more loans. This screams of cash flow problems ... only due to high interest loans.
I'm just wondering what will happen if HYR, for whatever reason, is not able to meet its very large interest payments to Mr. Black? Does Mr. Black get the whole company all for himself at a nominal price and all the other shareholders get nothing? I've seen this happen more than once with companies. Then miraculously, once in the private hands of its new owner, those unprofitable companies manage to survive - does anyone remember Hydrodec UK? If that was such a bad business and had to be sold for £1 to Mr. Black with all its Mr. Black debt, how come its still in business today? I hope I'm overly sceptical. I'd be interested if our new CEO (CFO of Mr. Black) could explain how this business (old HYR UK) is surviving? http://www.slickerrecycling.com/fragmentation-services-drop.html .
Anyway, back to our own HYR (ours at least for the moment) - does anyone on this BB have any idea about the deal that was struck with G&S - isn't the whole reason they were brought in as "partners" and even shareholders, so that they would supply a lot of oil? Why are G&S not supplying a lot of oil to HYR? I would certainly not want to see G&S being able to increase their share capital of HYR NA further (they still have options I believe to increase their shareholding to 50% for a very small capital investment - I wonder if these options can be terminated based on G&S not supplying eneough oil?
Generally, why is the supply of dirty oil such a constraint? Do HYR management know and are not telling us? Are G&S selling oil to Mexico for more than HYR are prepared to pay? If G&S don't have the oil, are other big companies like Safety Kleen increasing market share and deliberately "starving" HYR? Hmm. Something doesn't quiet sit right with me, considering the margins. How could the Mexicans pay more, including transport. I understand there are also other fundamental issues at play, like the demand for transformer oil generally is dropping due to newer/efficient/"dry" transformers. Is this the main issue? If so, then we should also be told about that. I wonder if Mr. Black and our new CEO know the answer to the feedstock constraint? Maybe they already know the answer. Well, at least issuance of debt is not insider trading and I believe converting debt to equity also isn't insider trading and a buyout in insolvency also isn't insider trading. I rea
The SP has been ticking up for a few days.
We must be due a Q1 statement soon. Either some good news has leaked out, or there is speculation that there will be some.
Previous statements have tended to be positive and produced a short term lift to the SP. Hoping for a repeat I have made a modest top up today with a view to taking a short term gain. I still don't trust this lot; too much promise, too little progress.
I was sorry to hear that Chris Ellis had to leave for reasons of close family ill health, and wish him and his family well.
Yet more disappointment for Hydrodec. It is probably a sensible decision to bring Moynihan into the role of interim CEO to provide a breathing space while a new board can be assembled.
However, in the short term at least, this will create uncertainty, and I do not expect any positive price movement to arise from this.
Despite the crowing about its first positive annual EBITDA, the company still finds itself short of cash and has had to run to Andrew Black for more funds.
I am still concerned that this is leading up to a backdoor takeover. Mr Black is the largest share holder, largest creditor, a non executive director and now has his buddy, David Alan Dunwoodie also on the board. It's getting a little incestuous.
I don't expect much positive news in the Q1 udate at the end of April.
Interesting development on the make up of the board. Andrew Blacks continued support and involvement is, I believe, helpful at this stage of the companys development.
Looking forward to the next trading update in a few weeks.
Just to show I'm not totally negative on HYR, here's a more positive thought.
According to the Hydrodec website Canton has a capacity to re-fine up to 20,000 gallons per day and can treat PCB levels up to 49ppm. EPA permit for up to 2,000 ppm pending approval.
Australia, on the other hand, has a capacity to re-refine up to 20,000 litres per day
and can receive PCB oil of any level.
This US pcb limitation seems to be a severe restraint on Hydrodec's ability to improve the overall sales mix between higher margin transformer oil and lower margin base oil, as highly contaminated oils would continue to be burnt rather than entering the recycle chain.
The recent trading update highlights reauthorisation of the PCB treatment permit from the US EPA for a further 5 years with enhanced operating capabilities including unlimited PCB treatment (previously limited to 2,000 parts per million) and the ability to store PCB containers onsite. (note the discrepancy with the website here as the update indicates they were already operating to 2000ppm).
So perhaps we will see some good news regarding supply of feedstock going forwards as the incineration process for highly contaminated oils should incentivise recycling.
First off I think the glass half full etc analogy isn't appropriate for investing. I prefer the optimist, pessimist, realist version, and try to stay firmly in the latter camp. And I have to agree with Callun that the major points of the highlights are revenue growth of a miserable 6% and a Canton utilisation rate of 61%, which is reflected in the fact that volume sold was 4 million litres less than last year. This isn't a company going forward in leaps and bounds, it's a company that's making slow progress, which isn't enough with the debts it's got. So we'd all better pray for something transformational to come through, whether it's feedstock solutions, third party licensing deals or something else entirely (license in Japan to treat PCB contaminated oil?).
Thanks, one4all, for the blog link, it was worth reading but again ignored the problems with feedstock, implying that ramping up production would be straightforward. The blogger also makes the point that the lease debt is paying only circa 4% interest, but fails to mention the 10% interest rate (plus 1% one-off extension fee) that Andrew Black's loan is incurring, although a link to the announcement is provided. The explanation re Aviva's holding was interesting, if true it might account for why we've had no new declarations, but overall I think the blog lacked a bit of balance. The job link suggests HYR have ambition but as this Group Process Engineer is expected to take a leading role in licensing and expansion plans it suggests to me that nothing's likely to happen in the short term as (s)he hasn't even been appointed yet.
Talking of treating PCB contaminated oil, that was originally the USP of this company, and how it was going to make money, cos this was oil that the traditional users couldn't touch. That focus seems to have gone, just the last bullet point of the announcement mentioning an enhanced reauthorisation of the US PCB treatment permit. Now the focus seems to be on recycling any old oil. But still, they seem to do that better than the competition, turning it back into a premium product, so there should be ways of making a profitable business out of it.
There are some positives from this update. The $450k EBITDA has been almost entirely generated in the second half (first 6 months: $26k), so even before any hoped for progress, if the 2nd half performance is duplicated this year it should mean maybe $1m EBITDA for 2018. And the continued improvement in oil sales mix towards the higher margin transformer oil is another plus. However it seems that profit is a long way off yet as all Chris Ellis talks about is, ability to deliver an improved positive EBITDA in the coming years. The loss for the first 6m was $2.5m on a basically break-even EBITDA, so on those figures it's going to need an EBITDA of $5m plus to show a yearly profit.
So I'm certainly less confident about my investment than I was a month ago, and I definitely don't see any significant short term gains any more. Is that a glass half empty attitude? I don't think so.
Again, yes, your comments are, of course, an accurate reflection of the past performance of HYR.
I would ask you to forgive our enthusiasm because, I for one, am more recently arrrived and have not endured the pain and disappointment of the past.
There is something fortuitous in being a newbie, able to get in at the bottom of the cycle (hopefully) and therefore being in a position to profit from a rising sp (if it happens) rather than trying to recoup losses.
Pardon me if I can't join your enthusiasm for these points you mention. I have been a shareholder for many years and grown cynical after reading similar enthusiastic reports year after year that have still to improve the share price.
For instance, in 2013 EBITDA was highlighted as $0.2M profitable.
Revenue was up 54% to $40M, against today's reported $17.8M
Total oil sales were reported as 37 M litres, against today's 29.3M.
Canton utilisation 78% (before the fire).
Ok, so I've cherry picked a few figures, but check other reports and you will find a tale of positive growth in just about everything they measure, but we seem no closer to seeing a profitable company.
By 2014 the company was debt free and "on the cusp of profitability" according to proactive Investors. Four years on, and the SP is struggling to remain above 2p?
Whatever happened to the exciting development opportunities promised in 2012? The visions of earlier years disappeared with Ian Smale, it seems.
I can see calluns point, there is an ongoing problem with feedstock which is undoubtedly slowing progress. But tk also has a point worth noting about margins, revenue and profitability, all of which are valid.
So, the basic difference here is between glass half full and glass half empty.
There are some remaining challenges but Im a glass half full type. Still holding and watching.
You have conveniently left off the second half of the sentence. They may have sales orders but without the feedstock they will be unable to fill them. This is not a new problem but so far they have failed to deal with it satisfactorily. If they don't, I can't see the SP doing much better than bumbling along the floor.
Good results as predicted with positive EBITDA, already confirmed sales further improving already this year.....2018 has begun strongly in terms of sales orders in the US and Australia. Onwards and upwards........
Very disappointing if you were expecting evidence of strong growth to come.
Revenues up an uninspiring 6%.
Whoopee, positive EBITDA. There was a time, long ago, when they talked of actually making a real profit.
Canton utilisation a miserable 61%. Not much use having "robust demand for superfine products" if you can't produce them. With a strong demand to use what would be feedstock for fuel suggests that this will be an ongoing problem for some time. Have we already seen the peak practical Superfine production rate?
Predictably SP knocked back by this update.
All this in an improving environment for oil related businesses.
Again II failing its customers. Todays trading update does not appear in the news section.
Good progress reported by the company (HYR that is) with a really positive outlook for 2018.
Fall back in sp possibly due to the expected licensing news being absent.
But, hey, a good chance to topup.
Come on II. Time to get your systems sorted, it is almost 2 months since you introduced the new platform!!
In anticipation of next update, due soon.
BUY (posted in absence of the availability of the recommendation buttons above: I thought this problem may have been addressed in yesterdays shutdown, but, no !)
I think the story about the technology has been out in the wider world for a long time, the question has always been, can this company actually use it to make money, and the answer so far has always been a resounding, No. Maybe this time it will be different (but maybe not).
I was half expecting this rise when I noticed the 50-day moving average had crossed above the 200-day one, a bullish sign for chartists. Could well be just traders looking to make a quick profit.
But, whatever our views, I think we're all hoping it might be sustainable this time.
I was referring to the whole HYR story, Callum. The patented process, the carbon credits, the green credentials created by recycling, the huge implication for the whole oil industry (unless youre burning it to heat your house or make electricity, etc, you can recycle). The sooner this message gets out into the wider world the better.
And then shareholders will see some action :-)))
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