"Matt Whiting" wrote in message
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Mike Rapoport wrote:

"Brian Sponcil" wrote in message
...

"Matt Whiting" wrote in message
...

I don't think Cirrus has come even close to making money yet, on a total
investment basis. I haven't keep track of the total amount of venture
capital they've secured, but I think it was north of $200MM. That will
take a long time to recoup. They may well be profitable at the
operations level, but that isn't the same thing as "making money"
overall.

I'm sure you're right but a quick look at the numbers makes me wonder how
they AREN'T going to recoup that $$. Cirrus is selling something like 50
planes a month. You'd think their profit margin on a 300k airplane would
be at least 20k. If so, that's roughly 10Mil in profit every year and a
20 year break even on the initial 200Mil investment.


The gross margin on aircraft is much higher than 6.7%, it is more like
35-40%. Of course they have SG&A and R&D to cover but they are making an
incremental $100K+ on every plane.

Where did you find Cirrus' financial statements? Last I knew they were
privately held and I've been unable to find any financial statements,
audited or otherwise.


Matt


Acutally I got it from a different, publicly traded company but you can
probably approximate it from Textron's 10K if you spend long enough at it.
Looking at it another way, I get at least one invitation a month from jet
manufactures to fly their products. I have never taken them up on it but
this portion of their selling cost would eat up the entire gross margin if
that gross margin was 7%. High gross margins are required to recover high
development and certification costs on small volume of airplanes.

I heard a story (from the president of the bank that eventually financed the
airplane) of a prospective buyer being given a two week trip to Europe from
the US by the manufacturer of the airplane and then he bought it for over
15% off the official price. This was in 2001 when the bottom fell out of
the turbine airplane market. Planes have high gross margins. Keep in mind
that the cost of developement is not in the COGS.

Mike
MU-2

Mike
MU-2