Question-and-Answer Session
Operator
[Operator instructions] The first question comes from the line of Mr. Robert Felix with Gabelli and Company, please proceed, sir.
Robert Felix - Gabelli and Company
Hi, guys, just a couple of quick questions. I was hoping you could elaborate a little more on the decision to suspend CAPEX on Envision. In the release that you’re still seeing strong customer interest, yet you’re suspending further investment just a couple of weeks ago. You were pretty gung-ho about continuing with it. Is the demand not ramping up as quickly as you had hoped?
Joe Gingo
Let me clarify where I stand on Envision. I believe it’s a fantastic product, I think it has a fantastic future. I’m very comfortable that the process is in very good shape for manufacturing the product. If I look at what we’ve done in Envision, it’s a 100% automotive focus up to now. Automotive is an unbelievably difficult market. There’s a long approval process, many specifications along the way. In addition, it’s very capital intensive due to volume requirements.
As we all well know, it’s really right now probably one of the worst markets that we’ve ever seen 14.9 million units. When is this market going to recover? One other concern I have is what do Envision’s competitors do to cover their fixed costs in this environment? Traditionally in most automotive businesses, what they do is cut their cost and even in some cases go down to variable. I believe that non-automotive, which I mentioned Sherman was looking at, but maybe not in the depth that I would like, you have an advantage to mix up. The specifications are much easier to meet. The process is very flexible and very good on short runs which also is very good for non-automotive and margins are higher.
I do think in light of the automotive focus, a further investment in light of a declining market was the best opportunity – we still have a huge amount of customer interest and we hope to be announcing within the next two to three months further approvals and further sales. I hope that answered your question.
Robert Felix - Gabelli and Company
Just to follow-up on it, a couple of months back Paul and Terry expected that Envision would narrow its loss, I want to say by about $5 million this year. Yet the loss on Envision picked up year-over-year in the first quarter. Given the weak automotive market, do you still think you can narrow that loss by 5 million, and then perhaps you can also delve into why it increased on a year-over-year basis.
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