16-Nov-2020:  Fluence Strategic Repositioning, Change in CEO

Fluence repositions strategy to focus on MABR and Smart Products Solutions, changes MD & CEO, and reaffirms guidance Summary

• Strategic repositioning is designed to focus primarily on three (3) key segments:
  • MABR wastewater solutions in China and Southeast Asia;
  • NIROBOXTM desalination solutions in the Middle East and Southeast Asia; and
  • the Ivory Coast water treatment project
• Continued development of strategic channel distribution partners and further improvement of operational efficiencies
• Effective immediately, Richard Irving, Chairman, will also assume the role of CEO, replacing Henry Charrabé
• 2020 guidance reaffirmed

Fluence Corporation Limited (ASX:FLC) has become a leader in the decentralized water, wastewater and reuse treatment markets through Smart Products Solutions, including MABR-based Aspiral™ and SUBRE as well as our NIROBOX™ technology. To further leverage and build on this success, Fluence is repositioning its global business to focus on these products in the most attractive market segments with the goal of achieving more rapid, consistent and profitable growth.

--- click on the link above for the full announcement ---

[I do NOT hold FLC shares.]

28-Sep-2020:  Fluence Secures Desalination Project Upgrade in Egypt

31-Aug-2020:  After Market Close:  Appendix 4D and Half Year Accounts   and   Half Yearly Report and Accounts   plus   H1 2020 Fluence Corporation Results Deck

The Fluence (FLC) Half Year (1st half of FY20) results have not yet been fully audited, so they're taking advantage of the recently announced ASIC relief titled “ASIC Corporations (Extended Reporting and Lodgement Deadlines—Listed Entities) Instrument 2020/451” dated 15 May 2020 and the corresponding ASX Class Waiver issued on 16 June 2020 titled “Extended Reporting and Lodgement Deadlines” to lodge its Half Year Accounts subject to audit review, and defer lodgement of the audit reviewed Half Year Accounts until no later than 30 September 2020.  I notice that ISX (iSignThis) did the same thing last week.

Fluence's H1 2020 unaudited numbers were:

• Revenue from ordinary activities: Up 141.3% to US$57,373,000 (US$57.373m)
• Income from ordinary activities after tax attributable to members: Up 109.9% to US$1,736,000 (US$1.736m)
• Net income after tax (from ordinary activities) for the period attributable to owners of Fluence Corporation Limited: Up 111.6% to US$2,041,000 (US$2.041m)
• Dividends (distributions): None declared, same as pcp
• Net tangible asset per security as at 30 June 2020: $0.06 (6c) (December 2019: $0.05)

Fluence by the Numbers (from page 3 of the Results Deck):

• 7,000+ Reference sites
• 70+ Countries
• 180+ MABR Installations
• 110+ NIROBOXTM Desalination Systems
• 350+ Employees
• 150+ Engineers

H1 2020 Key Highlights (from page 4 of the Results Deck):

• Keeping employees, partners and customers safe – adjusting to COVID-19 conditions
• Operating revenue up 143% to $57.4m*
• SG&A cost continued to decline, down 27% on H1 2019
• $6.2m EBITDA
• Recurring revenue up 18% to $3.9m from BOOT and O&M contracts
• Smart Products Solution (SPS) revenue up 89% vs. H1 2019 to $10.6m
• Achieved financial close of the Ivory Coast Project
• Secured debt facility of $20m from Upwell Water
• Positive NPAT of $1.7m
• Cash flow positive in Q2 2020 (June Qtr), cash balance of $20.2m as at June 30, 2020
• Backlog of $234m as at June 30, 2020

* = All numbers in presentation are USD (US$) if not otherwise stated.

--- click on the links above for more ---

[I'm not keen to hold China-facing smaller companies at this point in time, so FLC and PET (who reported last week - on the 26th) are two companies I am avoiding at the moment.]

30-7-2020:  Business Update Reaffirm Guidance   and   Appendix 4C - quarterly

29-7-2020:  Fluence secures $20M Finance Facility

28-7-2020:  Fluence Quarterly Business Update Call Details

27-7-2020:  Response to Media Speculation

[I do not hold FLC shares]

08-July-2020:  I can see why FLC might look like rediculously good value at around 20 cents per share, but their chart is truly horrible, and they are very exposed to China - who may well still be trying to punish Australia for daring to ask for an inquiry into the origins and early response to COVID-19. I have been out of FLC for a long time now, and haven't been following them very much. I also removed them from my Strawman.com scorecard some time ago because I saw little reason why their SE SP trajectory was going to suddenly change and head north again. I removed PET recently for much the same reasons. A small Australian company with too much invested in China at the wrong time.

Other issues specific to FLC, in my opinion, include:

1. Most of the board and management have exposure via options rather than direct shares. Only their Chairman has a decent holding - 37.265 million shares. Their CEO/MD, Henry Charrabe, has 12.35 million options, but no shares. Two NEDs (non-executive directors) have half a million shares (currently worth only around $100K) and three directors (half of their 6-member board) hold no shares (just options), which includes Mr Charrabe.
2. The global adoption of their water-purification tech has been less than impressive.
3. There was a lot of hype in prior years, and it seems to me that the hype was entirely unjustified.
4. They are a small microcap company with a market cap of only around $130m, and they keep raising more money - so are regularly asking their shareholders to tip in more and more money, as their profitability timeline keeps getting pushed out further and further. They had less than $17m of cash at March 31, 2020.
5. Last month they said, "Despite the delay in receiving the payments from the Ivory Coast Project, the Company expects operating cashflow for Q2 2020 to converge towards cash-flow breakeven. The expected improvement in operating cash flow in Q2 2020 compares to a US$7.9 million operating cash OUTFLOW in Q1 2020, and reflects the ongoing focus on lowering overhead costs and strong cash collections." More positive spin, but little actual real progress, in my opinion.
6. I jumped on them in prior years as a momentum play, and, unfortunately, the momentum is all going the wrong way now, so I'm not interested.
7. I don't mind these sort of beaten-down stories if I trust the management based on their prior track record, and I really like the business model, and think they've got strong tailwinds both as an industry and as a business within that industry, but I'm not sure that those conditions exist here.

Of course, 2 days later (on Friday 10th July, 2020) - they released this announcement:  Fluence Achieves Positive Quarterly Cashflow.  And rose +17.5%.

I think a number of my points do however remain valid.  On the other hand, this could be a positive inflection point for FLC.  Time will tell.

10-July-2020:  Fluence Achieves Positive Quarterly Cashflow

11-July-2020:  FLC were up +17.5% yesterday on this announcement - to close at 23.5 cps; Of course that rise was off their year low of 20 cps, set on Wednesday and maintained on Thursday, and at 23.5c, they are still down -60% from the 60 cps level they reached almost 12 months ago, on July 16th, 2019, and they did also manage to briefly go over $1 back in October 2016.  Not sure if they were in the same business (or were the same company) back in 2008, but Commsec has them as trading at over $200/share, which I imagine is allowing for a major share consolidation or two at some point (where prior share prices have to be adjusted up to reflect the lower number of shares on issue as a result of a consolidation).  It may also involve a backdoor listing or something.  I haven't followed FLC for more than a couple of years.  Anyway, point is that I was pretty negative about them in a forum post here a few days ago, and now (of course) they've popped on this positive news.  Very welcome news for you @Sunkendrailor, assuming that you've kept the shares you bought 3 days ago.  Here's some of the detail:

Fluence Achieves Positive Quarterly Cashflow

Fluence Corporation Limited (ASX: FLC) is pleased to announce that it has achieved positive operating cashflow for the quarter ended June 30 (Q2 2020) in line with previous guidance. The Company’s cash balance at the end of Q2 2020 was approximately US$20.0 million, up from US$16.9 million at the end of the first quarter.

Commenting on Fluence’s financial performance, Managing Director & CEO Henry Charrabé said: “Streamlining our operations and focusing on timely collections from customers enabled us to turn our operating cashflow positive. Despite global challenges and the economic slowdown, the Company is now in a stronger cash position with approximately US$20.0 million cash on hand at the end of June, than compared to US$16.9 million at the end of March.”

Further detail regarding the Company’s financial and operating performance will be provided in the forthcoming Q2 2020 business update at the end of this month.

--- ends ---

So this could be the inflection point that the market has been waiting for (for probably too long), but I still reckon a number of my negative points remain valid, which I'm going to put into a Bear Case straw now.  

28-Apr-2020:  Fluence Q1 2020 Business Update and Presentation  and  Appendix 4C - quarterly

Fluence achieves positive EBITDA in Q1; and expects to be cash flow positive in Q2 
 
Quarterly Activities Report for Quarter Ended 31 March 2020 (Q1 2020) 

• Positive EBITDA (unaudited) achieved in Q1 2020
• Q1 2020 revenue of US$47.3 million
• Q1 2020 gross bookings of US$12.5 million, with total contract backlog at 31 March 2020 of US$228.0 million, including US$147.0 million related to the Ivory Coast Project
• Net operating cash outflow of approximately US$7.9 million, US$2.1 million higher than previously expected due to COVID-19 delays in cash collections on some projects
• Continued reduction in overhead costs on track; already reduced SG&A (Selling, General and Administrative Expenses) by more than 10% in Q1 2020 compared to Q1 2019
• Cash balance of US$16.9 million as at 31 March 2020
• FY2020 guidance reaffirmed, with Smart Products Solutions revenue of at least US$32.0 million, recurring revenue of US$9.0 million and sustained EBITDA profitability in 2020
• Based on current contracts, and the anticipated collections from the Ivory Coast Project providing remaining conditions precedent are met, the Company expects to be cash flow positive in Q2 2020. 

--- click on link above for more ---

[Disclosure:  I have held FLC shares in the past, but do not currently hold any.  I'm interested again however - it sounds like they may be at an inflection point - moving into being a profitable company at last]

Update:  I looked into them a little further and soon lost that interest.  As explained in my forum post today (8-July-2020).