Q1 2022 Anterix Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the <unk> first quarter fiscal year 2022 investor update.
At this time, all participants have been placed on a listen only mode and the floor will be open for your questions and comments following the presentation.
It is now my pleasure to turn the floor over to your host Natasha Vecchiarelli director of Investor Relations and corporate Communications Island Terex Ma'am the floor is yours.
Good afternoon, everyone and welcome to the Anthrax first quarter fiscal year 2022 investor calls join.
Joining me today are Rob Schwartz, our president and CEO, Ryan Gerbrandt, our C O L. Tim Gray, our CFO and Chris Scott Mcqueen, our chief regulatory and Communications Officer.
Before we begin please note that during today's presentation. We may make forward looking statements either in our prepared remarks or in the associated question and answer session.
These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially.
Risk factors that May impact our performance are identified in our most recent S E SEC filings.
Following our prepared remarks, we will have an operator led question and answer session.
In addition at the conclusion of today's call.
Replay and transcript of our discussion will be posted to our Investor Relations website.
With that I'll turn the call over to Ann charged as President and CEO, Rob Stewart.
Thanks for the Tasha good afternoon, everyone and thanks for joining our Q1 investor call.
Just recently in June we had our Investor day, we shared our refined vision of the future of Terex and highlighted key improvements to our business model and investment thesis.
The response to that event and specifically to our refined vision of the <unk> opportunity has been quite positive not only from our customers in the utilities sector, but also from the investment community.
Since most of you heard the Investor day presentation, I'll read reiterate a few key points and then I'll provide a brief update on the continuing momentum. Since then further supporting this developing industry movement.
Our prospective customer pipeline now includes over 50 utilities with a total potential prepaid contract value of about $3 billion and with the increasing demand for prepayments that were hearing from prospective customers. We currently believe that the majority of our contracts, where we prepaid in full over the first three to five years of the.
Contract terms this evolution brings significant cash flow earlier than previously anticipated in our forecast.
It allows us the potential opportunity to begin to return value to shareholders within the next two calendar years.
In our current fiscal year, ending March 31, 2022 based on our current sales pipeline, we continue to forecast signing contracts with proceeds over $200 million.
Looking ahead through fiscal year end 'twenty four we intend to sign approximately $1.8 billion of contracted proceeds totaling about 50% of our nationwide spectrum value.
By fiscal year end 'twenty four we would expect to have collected approximately $300 million to $500 million in cash proceeds with the remaining more than $1 billion contracted due to be collected soon thereafter.
And beyond that point, we expect to continue to grow with 50% of our spectrum value is still on our balance sheet available to monetize as well as the residual value of our lease renewals plus our ability to explore and develop potential new revenue opportunities with partners.
Foundational to all of this momentum is a modern communications platform driven by the utilities need for connectivity to provide situational awareness and allow for the command and control of millions of distributed assets across a growing utility footprint.
Our 900 megahertz low band spectrum, specifically addresses these needs and is propelling the demand side for <unk> spectrum offering reflect reflected in our growing list of pilots and industry activity.
Let's now spend a few minutes discussing the significant additional signs of momentum that we've seen just since investor day.
First an additional three companies have applied for experimental licenses on our 900 megahertz spectrum. These entities include utilities, Tampa electric as well as technology leaders Ericsson and Burns <unk> Mcdonnell.
It's worth noting that utilities are no longer pursuing pilots to confirm private LTE as a technology pilots are more often being used to demonstrate use cases and to build support internally for investment business cases.
As Ryan as detailed in the past not every utility will seek an experimental license before they move forward with private LTE, but they are a good indication of continuing momentum throughout the industry.
Let's spend a few moments discussing key areas of focus for each of these three new experimental licenses.
Tampa Electric is a Florida based investor owned utility who per the FCC experimental license application is exploring use cases in support of electric and gas utility operations, including AMRI.
SCADA and other uses Tampa electric joins more than 10, other utilities, who have leveraged 900 megahertz spectrum to better understand the unique resiliency reliability and security features of a dedicated private LTE network.
It's also worth noting the Tampa electric as one of the 11 utilities, but also purchased cbre's licenses at auction and like several other cbr's licensees is working with us to explore the complementary nature of these bands, which is helping us develop our integrated solution.
Ericsson a global leader in broadband communications and Burns <unk> Mcdonnell a leading engineering construction and consulting firms utilities are each independently showcasing the value of 900 megahertz private LTE and solving multiple use cases Ericsson joins both Nokia and Motorola.
Infrastructure thought leaders working hand in hand within Terex to help drive 900 megahertz education development and ultimately adoption.
We have other major efforts underway to increase awareness and attractiveness of our spectrum to utilities, such as the <unk> active ecosystem program.
As a reminder, we announced the program in May with 37 World class technology industry leaders coming together to provide a wide range of solutions for 900 megahertz private LTE networks.
The number has now grown to over 50 technology leaders, including Cisco GE, Hitachi Qualcomm and many more.
These ecosystem members have a vested interest in supporting private LTE at 900 megahertz and are actively engaged with their team to collaborate on devices services and solutions that can support and address the current and future needs of utilities and other critical infrastructure entities.
Since the launch of this ecosystem program, we've heard from numerous utilities about the significant value. They see in this active ecosystem effort.
As I previously described we also expect the relationships in this ecosystem program to develop into commercial opportunities for <unk> and I want to highlight one example that we just announced.
This morning, we issued a press release outlining a new relationship with Federated wireless for those of you who don't know Federated. They were the leading proponent that the FCC and bringing the CBR spectrum to market and its novel shared model.
And are a key provider of the Cbr's SaaS platform service that is required for access to that mid band spectrum.
As discussed in today's press release, we're beginning we're bringing to market a combined and complementary offering of dedicated use of our 900 megahertz broadband spectrum paired with Federated wireless is shared spectrum SaaS services for use on the Cbr's band.
This is a logical relationship as we are already working with many utilities on the hybrid approach of combining low band 900 megahertz with an overlay of mid band CBR S to add capacity and coverage and incremental areas as needed.
As we identified at our Investor day, the remaining 70% to 85% of the utility spend on private LTE network deployments in operations beyond the cost of our 900 megahertz spectrum creates an opportunity for <unk> to identify low capital intensive ways to build incremental value for our shareholders. This relation.
Chip with Federated as of good initial example of the kind of opportunities we referenced and we look forward to sharing more about these options for incremental developments throughout this coming year.
We also are seeing continued significant positive momentum from policymakers, yes.
Yesterday, the Senate voted to pass the infrastructure investment and jobs Act.
Language in the act embraces the intersection between grid modernization and private broadband communications as well as the connection between utility private LTE deployments and support for rural broadband.
The Bill provides billions of dollars earmarked to support these efforts.
The legislation now moves to the house for their consideration.
As we've detailed in the past.
You do not need legislation to deliver on our business plan. However, the education of policymakers and the industry alone has already aided in heightening the awareness of the importance of our efforts.
Washington's focus on de Carbonization distributed energy and infrastructure has shined a light on our goal of helping to modernize America's electric grid.
That being said with this bill's passage, we would expect that this would be a further catalyst to securing utilities interest in our <unk> offering.
And another important milestone for <unk> in the last few weeks the FCC granted our first broadband licenses for several counties of our initial customer amarin. Those grants are the culmination of a lot of hard work by our team the utilities sector and the team at the FCC.
They also represent the formalization of our effort to deliver broadband for mission critical needs across the United States.
As we shared at our Investor day in Terex intends to become the de facto private wireless broadband solution provider to the utility and critical infrastructure sectors.
With our breakthrough achievements continued significant momentum in <unk>, we feel we are well aligned to achieve this mission and look forward to sharing more about our continued progress with you all soon thank.
Thank you very much.
With that I'll turn it over to the operator to open the call for questions.
Thank you ladies and gentlemen, the floor is now open for questions.
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Your first question is coming from Phil Cusick from J P. Morgan.
Your line is live.
Hey, guys. Thanks, maybe dig into that $200 million of contract value. I think you said by March 31.2022.
How do you count the ones that have been signed already in that and and how many should we expect between now and then.
Sure Phil.
This is rob.
As we've talked about in Investor day.
$200 million.
Incremental contracts, we intend to sign through the end of the fiscal year.
That can be all kinds of mixes given the breadth of the pipeline we have over 50 utilities.
So Brian do you want to add anything.
Color to Phil's question, yes.
Yes, I'd be happy to Hi, Phil.
Let me come back to a little bit as Rob said.
In the aggregate.
Net incremental contract proceeds of $200 million.
And we get to that we talked a lot about it in the Investor day around how we're qualifying and what we see in terms of opportunities in the pipeline.
Just reiterate rocket on a few of the very key points.
In the earlier remarks, but let me add a little bit of depth that some of it. So in addition to what we're seeing now and the growth of the over 50 accounts representing over $3 billion, we break that down into the various phases.
There's different phases of the evolutions of accounts through those phases, which are really the basis of how we think around operationalize the path towards.
The $200 million goal and.
The year end fiscal year 'twenty four goal the highlight that I take away from what we've seen in terms of that momentum that builds the capability and what we see in terms of the confidence has really been defined in terms of some of the evolution that we've seen into what we call the phase II category Phil.
With today already roughly one third of the pipeline value represented in that phase and that's important to me because that's where a lot of the opportunity pipeline growth is coming from in addition to obviously, what we have already in phase III, which as I've said at the late stage of contract negotiations.
The bottom of the funnel as we ultimately think about it.
But with that doubling in the overall growth of the pipeline and then frankly, just the diversity that we're seeing so we've now scaled.
World Class front end sales organization to be able to capture not just singular opportunities that we see in front of us, but to really lean in and capture all of the interest and demand that we're seeing across the across the whole market and that creates a powerful set of optionality.
As we think both to the near term and the long term. We now have a diversity of large medium and small sized customers that gives us a variety of paths actually here now in the $200 million goal for this year and as we look out to fiscal year 'twenty four.
Okay.
Thank you and I know, it's only been what six or eight weeks since the analyst day, but.
Any change in the phase two count or the types of customers coming in there and then movement from phase II to phase III.
Yeah no it as he said Phil it's not been a lot of time in between.
So we've not seen a dramatic set of changes in any of the overall categories that I think is worth noting.
We are continuing to see and this is playing out literally day by day week by week it.
Just the overall intersection at all I'll say with what we've been driving in terms of market education market awareness coming off the heels of some of the things like industry and customer participation in the active ecosystem program, a broadening understanding and awareness as we see across the entirety of the pipeline and that's most measurable.
I'm seeing the new customers coming into the top of the funnel year ago, most customers coming in at an interest in PLT didn't know a lot about it.
We haven't spent a lot of time and cycles really educating them on the ins and outs of what the technology is how it fits into their business cases, what do your applications either that they can support on it one very positive thing that I'm continuing to see is.
How that education has landed and it's not just us delivering it anymore, it's coming from across the entire the entire market and ecosystem.
Is that they are coming in more educated they are coming in more aware with information in hand that they've been able to source either directly from us or through others, you know either indirectly through the ecosystem or through organizations like <unk>, who have been all collectively doing just a fantastic job driving the overall education and awareness.
The broader set of customer base and that matters to me from a pipeline trajectory perspective really because it helps the process move faster earlier.
So we don't need to invest as much time in that front end and really get into the brass tacks, that's helping to work through the details of the business case and executive by it and sponsorship.
Really we can put some of our best skills to work in the World class team that we've been able to we've been able to assemble.
Okay. Thanks, guys.
Thank you Phil.
Your next question is coming from Simon Flannery with Morgan Stanley.
Your line is live.
Thank you and good evening.
Wonder.
If you could update us on the progress with Amarin and <unk>.
How are you getting on with declaring it sounds like you're making some progress with the FCC, but how do those two stand and what's the latest thoughts in terms of cash receipts.
The balance of the funds from them.
Sure when I talk about the relationship.
And Tim maybe you want to jump in on the cash receipt side, but individually ameren STG knee are both progressing tremendously from my view and that we are actively working with them I think of them, both as really sand boxes for us of the not just the deployment of our spectrum, but also better understanding how.
Utilities are using and getting value out of private LTE networks and so.
We've got teams that are working across the board with Amarin on they're planning their deployment you heard the great news about their first license is coming from the FCC that was really meant this occasion for us because it really showed that despite us talking about it and getting rules now the process works and we can apply for and get granted it on a reasonable short term.
<unk> licenses to be able to fulfill our obligations under the contract so.
STG need the same thing continue to see.
Their innovative thinking on use cases, they're active participants across the board nationwide also working with other than with other.
[noise] vendors, helping us drive the ecosystem forward they've made comments to us about how much. They appreciate the and we brought together the ecosystem. So I think overall those relationships that are really just getting started and from our standpoint, and we will continue to grow I do think the relationship with Federated wireless that we mentioned in our ability to now be able to bundle together a.
I N C. BRL 900 solution is valuable for all utilities, but specifically the first couple of customers, we have and I think we'll hopefully see some more developments there as well.
An update on the on the cash receipts.
Sure well, let me, let me talk about clearing first Robinson and I think we've made good progress in both territories on the clearing front.
And we will continue to do so with what we see in front of us.
So the FCC put out the rules for applying for broadband licenses in may.
In line with the first several bunch of counties for Ameren as soon as we could be on the day that it opened.
And the process has been rather seamless working with the FCC. So as Rob mentioned, we've started to get our first set of broadband licenses and would expect.
Our next payment from Amarin should be.
In the next few months.
Just on the timeline that we've laid out with them. So we feel like we're in really good shape with that as well.
So all things are progressing forward and the last thing I'll say Simon is on as a part of playing for broadband licenses.
Also begun to work with the FCC on anti windfall payments.
Their calculations have been right in line with where we expected which gives us even more confidence in our overall nationwide estimate.
Clearing costs.
Talked about the polygon and $30 million to $160 million. So overall clearing is progressing as we had hoped at this point.
Great.
That's helpful. Maybe one for Ryan.
I think that the CVR S thing is really interesting.
Do you think we might see the utilities active in the upcoming auction 110 to $3.45 to $3.55, and now it's sort of bigger license areas and.
Relating to that is we've talked a lot about LTE today, but I was <unk> coming into the conversations as to utilities think about.
Should I be waiting to deploy a <unk> network rather than doing LTE for now.
So some of it's Rob maybe I'll start on just the other bad and obviously, we can't share anything we know confidentially under NDA with a relationship utilities, but just broadly speaking.
Not hearing about any considerable interest from utilities, specifically in that in that band that's not to say that there arent utilities that may be thinking about it overall, but Brian maybe you want to step in on the rest of the question.
Yeah, No I would agree with you on that I'm not hearing anything specific at this time also Simon.
Simon, but let me, let me come back to the <unk> part of the conversation we.
We do encounter this question.
Obviously, there is theres a lot of hype I'll say, it's still put into the <unk> conversation coming from various stakeholders.
I find utilities, though are pretty pragmatic.
And what they're anticipating in terms of their evolution of network functionality and really the roadmap towards supporting some of these.
Next evolution networks like <unk> and a lot of it's rooted in the use case and the capabilities that really need today.
Broad understanding of kind of what they can get and the value proposition that affords the LTE network brings and it was more than sufficient what they need and we also talk a lot about risk aversion, Utah.
Utilities are known for wanting to be on what I would call the cutting edge technology.
Technology landscape and so there is there is some wariness in terms of.
Letting others through the technology and capabilities.
And being really able to capture that value.
Central time in the future and so it's not been a big focus of the.
The conversations that we're seeing in the utility buying process today, but theyre not blind to it either I think is really the point.
Looking at both the capabilities today as it's ready it can be deployed and they can put it to work very very quickly, but thinking through the long term perspective of their architecture and the various systems as they're putting together the design and the vendor choices that they're making to.
To keep open the Optionality around you know how at the right time with the right ecosystem and what the right demand and use cases in place.
Naturally evolve to that that would come when they're ready.
Great. Thanks, a lot.
Thank you Simon.
Your next question is coming from Walter Piecyk with light shed partners.
Okay.
Hold on my dogs are going nuts.
Rob can you put some.
Rob can you put some more meat on the bones of the the Federated.
The Federated deal.
Meaning.
Are you are you the one going to the utilities and saying like Hey can you package.
Package the G. A licenses in our utilities willing to use G. I a license. They I know you had that the San Diego one that they had their own licenses, but.
And you have that whole layer cake concept, but can you do that.
Our other utilities, you think willing to do that with.
With GAA licenses as opposed to the priority licenses at the San Diego utility owned.
Yep, Thanks, Walt and I'm glad to hear your dog's excited about <unk> as you are.
The look the Federated deal and you know the leadership of Federated led but you had to rajeev good friend and colleague.
Former nextel.
Are really smart and capable group of people that really were trailblazers on this idea of sharing spectrum in and were critical in getting the FCC to put that band.
In the scheme that it is which is both licensed and unlicensed.
The the agreement between.
<unk> us, which I can't really talk about the terms specifically because we're prevented from doing so but it does contemplate economic benefit for both of US right. So the idea is that where we are.
Really.
A powerful channel for them into the utility space and that's what I think they value in the relationship and what we value was there extreme expertise in CBR S and all of the elements around that you know they really helped drive the ecosystem.
And a great way they understand the deployment.
Strengths and limitations.
So it's a great relationship for us and really well, it's I would say the spending in <unk> may not be as material in the overall scheme of utilities spend for.
For us it's a good example of how we translate these ecosystem partners into win win situations, where obviously, we get the benefit of combining this product and making it more appealing to the customer Federated obviously gets access to this great group of customers, who we've invested years of building relationships and the customers getting a better solution.
What matters at the end of the day, we think it helps with the adoption I do think that we'll see more utilities well beyond we talked about Tampa electric as being a CBS licensee.
There's plenty of Pal license holders.
Licenses that were wanted auction, but the unlicensed <unk> licenses I think that that absolutely are a great additive value. Once you have the foundational element of 900 right. Then can put the building blocks on top of that of unlicensed spectrum applications devices all of the things. So we really see that.
Our job beyond 900 is helping build the value of this solution set of which CBS is an important piece. We think other bands eventually through that layer cake approach can be that's the beauty of adopting LTE as the standard.
Which is new to utilities, but they get the value of that that it's it's a it's a fee.
Forward compatibility path to add more capacity and more capabilities as the evolution occurs the era of LTE evolution.
Got it and then.
Different question, but I think I believe a Motorola solutions is in your ecosystem Greg Brown.
Just reported a very good quarter and tremendous traction with public.
Public safety and in his his camera security business is really taking off.
Is that.
Where are you I guess with them and in terms of like obviously, the electric utilities, great opportunity you know very obvious in terms of nationwide, but beyond the utilities.
Whereas motorola with perhaps.
Broadening that market too.
Other other market segments that might be interested in the spectrum.
Yeah, but rollout obviously, we've had a longstanding relationship as you know they were the key technology partner of Nextel and continue to be an important partner of ours from beginning of Terex, even ptv prior.
We're actively working with them. They are part of the ecosystem. They have a very unique set of assets and skills that we think are really valuable to utility customers and are complementary to a lot of the other ecosystem provider. So I think all of the application skills. They have that you've talked about a lot of which have been further developed through their first net experience a lot of them are <unk>.
<unk> into being applications and skills for utility network. So we think we see strong capabilities. The other thing to remember is that a lot of the incumbent licensees that were Retuning here R. R.
Two way radio customers LMR customers, a lot of which are or Motorola and so their ability to understand that understand the migration path of those two way radio systems as utilities get more comfortable with the idea of mission critical push to talk which first and that again is driving and southern company has utility has adopted already.
See that they have a very big role in helping with that migration of LMR to LTE for for mission critical push to talk and and just migrating those networks as utilities understand that the future of communications as LTE and private LTE I think there can be a great partner in doing that.
So I see that so what you described though is basically good value to them in terms of selling radios LTE radios to their existing safety or maybe to a utility base I guess the question is.
Is there an opportunity for them to integrate this LTE <unk> LTE spectrum your spectrum for sales to non utility customers to public safety customers other other industry segments that.
They do well with obviously, you're targeting to utilities and Thats a great ecosystem in.
But like if these guys. If some of these utilities want to drag their feet and someone else in that same market in a different industry sector like public safety wants to grab that spectrum.
Is that is that a realistic opportunity do you think is that something that Motorola is looking at.
Yes, I think.
Without getting specific into into Motorola objectives for us the utilities space is clear bullseye, but as we always said, we see those concentric circles of other critical infrastructure users as being complementary right. We've had lots of discussions and we do talk to a lot of the vendors in the ecosystem about how we can get.
Additional usage of these network so for us in our books.
There's substitutes of other other sectors, but I think it's where the complementary users and in a lot of ways and so as you start putting together these individual pieces of networks. Each individual service territory of utilities. An example, and starts if that becomes a network of networks and eventually a nationwide network of networks, that's a valuable asset.
Go back to the Southern Company example, through their southern link because they're further ahead and having deployed private LTE and they've taken further in saying we're going to host on our network allow other municipal utilities gas co ops.
To use that network, even if public safety customers on that network that because of the way they built their network with greater resiliency and greater reliability and greater cyber security longer battery backup things that they bring uniquely because of their needs.
They're critical infrastructure entities want that as well so I think yes, there is a opportunity for subsea.
Substitute of other critical infrastructure segments, but I think more likely its complimentary that they find ways to work together share costs share the benefit of this nationwide network of networks.
With that thank you.
Thanks, Paul.
Your next question is coming from George Sutton with Craig Hallum.
Your line is live.
Thank you along that same line of the concentric circle concept.
We as we've talked to folks in the industry, we're getting a larger carrying a larger focus on rural broadband opportunity.
And I'm wondering if that would be by your definition complementary or would that be incremental opportunity.
Hey, George Thanks for the question.
So we've talked about rural broadband and in fact, we've.
Recently out promoting what soon going to be a paper published on the topic of working work in conjunction with a number of partners.
From our view is that there's a couple of key values about rural broadband.
As utilities build their infrastructure for private LTE and already utilities have a lot of infrastructure, that's being leveraged for third party communications networks, but as they start to pull more fiber and build more towers to get private LTE coverage. Those assets are a critical piece of unlocking the opportunity to serve rural broadband.
And so we do see and we've been talking with a number of parties from from NAREIT and the National Association of state regulators.
To Edison Electric the industry Association, and then to the utilities themselves about how they individually want to facilitate that from happening to happen a lot of utilities want to enable isps to build those rural broadband capabilities leveraging their networks and so you know.
We're talking to a series of utilities about their individual models of how they want to do that I think it's less likely that utilities are gonna want to serve those end users in rural broadband, but I think that most utilities are going to want to enable those models and that could be leasing their fiber using their towers supporting.
Supporting that deployment because it's in their interest in one of these utilities said to us that they want to make sure that these communities, especially the rural communities keep their residents because they are investing in infrastructure to serve power and other things to those customers and they don't want to see a migration of those customers to cities or elsewhere. So.
It's very important I think the legislation that you heard about I'm sure and I'm sure. He wrote about it as well George.
Puts a lot of capital again into both the last mile the fibers and broadband to the end user but middle mile as a really important piece of it too is talked about in the legislation middle mile being the a lot of the investment of what utilities are putting into their fiber in their infrastructure and I think we'll see a lot of.
Support for investment in that middle mile to support rural broadband.
You mentioned near it.
<unk> conducted multiple webinars in conjunction with their commissioners can you just give us a sense of of their comfort with all of these.
Different opportunities that Youre looking at our sense is it could accelerate some of your approvals in the future.
Yeah, I could start out maybe Chris got Mccabe.
Chief regulatory officer wants to jump on that but I think overall I mean, we spend a lot of time educating about the importance of broadband wireless and completing the communications to always important assets, but also the importance of it in supporting as we just talked about.
The rural broadband as well of course, you want to elaborate yes, thanks, Rob Thanks, Robyn Hey, George.
Yeah.
I think Rob hit on the key term, which is education, we tend to when we first sort of knock on the door of a policymaker, we tend to do it in the context of trying to educate them, particularly about the intersection between grid modernization and an advanced communications platform and so that's been our.
Goal over the last couple of years at neighborhood can I think we've made great strides.
As.
Rob referenced we've seen them now begin then.
<unk> and particularly the public utility commissioners individually begin to talk about grid modernization and include communications as a component and as they also talk about closing the digital divide really focusing on on rural broadband too and broadband to Unserved. There has been a focus.
On this middle mile component, and we've had them and watch them evolved through our education process from talking only about fiber to talking about fiber and <unk> and the components of our wireless network as well. So I think we've made some great headway.
That really is mirrored in what we just saw come out of the Senate as Rob referenced in and I think that helps I think its circular in nature somewhat.
The work we did at NAIRU helped us on the federal Legislative front and the work we've done at the federal level will help will help us and perhaps more importantly, it will help our utility customers as they pursue rate cases that are at the state level.
Super and last question for me you talked about use cases.
Electric has been fairly excited.
Excited about.
One of the use cases, which is the ability to shut off a power line before it hits the ground and therefore avoid all of these fires and of course much of our country, having had a fire issues recently I would I would sense that that creates a.
Accelerated pace of discussions from many of the utilities can you just discuss that use case specifically.
Yeah, Ryan Ryan you want to talk about falling conductor a little bit of an absolutely okay.
Yeah, let me take that one so falling conductor protection Youre absolutely right.
San Diego has put a lot of focus on it as part of their proactive wildfire mitigation plans and obviously with the urgency you know again here we are in.
In the middle of a wildfire season out in the West coast.
The application supports obviously all utilities across a variety of geographies that are facing similar challenges in the essence of the technology.
And it's complementary to a lot of the other wildfires strategies that we see publicized starting from the utilities is really the proactive ability for a utility.
Grid to be able to detect a down power line.
And just as that down power line becomes a particular potential admission source for wildfires if it touches the ground. The technology is designed to be able to drop the power effectively to that phase of the transmission line or distribution line to be able to limit the potential of it causing a source of fire now obviously the requirements of it.
<unk>.
Needs, a broadband low latency kind of communications system.
The ability to communicate in near real time across the various assets technology that are necessary to enable this solution are quite critical.
And that is an important alignment actually to what we're talking about in terms of in terms of private LTE.
So I do anticipate just as we are and we're going to continue to see conversations about it and I'm sure. Other similar kinds of technologies as an industry. We continue to come together to try to find more and more innovative technology based solutions to be able to support all of the nations utilities with dealing with some of these environmental disasters like fires.
And again not to not to.
Sort of.
Reiterate the same set of issues, but the the.
Infrastructure Act in the legislation as it came out of the Senate really recognized that they need to to move funding towards.
Resiliency redundancy of the of the grid and particularly to help stimulate technologies that can that can prevent utility line caused wildfires. So.
There is there is that additional.
I don't know catalyst I guess I would say that that is out there.
Well, we absolutely love catalysts, thanks, guys.
Thanks George.
Your next question is coming from Mike Crawford with B Riley.
Your line is live.
Thank you given all the cash you're expecting that collect and then returned to shareholders in the next three years to five years.
Interacts congratulatory.
Thanks for the question Mike.
Just I mean, as we've said before obviously, we see this trend towards the prepayment as being very positive and as Tim talked about in Investor day.
Give us the opportunity to contemplate returning capital over the next couple of years, we do have our Nols in place until maybe you want to kind of detail our thinking on how we're planning for it at this point.
Yeah, Mike.
And good and good question.
Let me get that went quite often so right now we've got over $250 million in federal Nols.
That'll get us through the next several years with the proceeds that we see coming in and how they impact taxable income.
And so.
With that we have some runway to look at and fully analyze whether or not we want to be a REIT.
I would say.
We're examining that possibility with our advisors and trying to figure out if that's one possible and then to the best path forward for us so more to come on that as we move forward through the process, but.
It's something we're actively looking at.
Alright, Thanks, Tim and then.
I know that.
Spectrum lease cost itself is relatively small for us.
All investment utilities would make to deploy private broadband network, but has there been any reaction from your customers.
Following this.
Wildly successful auction of three five gigahertz spectrum in Canada that came in two to three times what people thought.
What's clear yet.
Good question Mike.
And we saw you noted the buyer was well explained and I think look our view is we always talk about the value of our spectrum.
And these conversations being fair market value and obviously any new data points that occur in between these transactions go into that discussion and calculation of fair market value. So you should assume that as we're both.
Both internally and using our external experts.
<unk> the value of spectrum, which as you know over time.
As shown historically to increase in value over.
Over a pretty significant trend line.
We're not surprised to see other good high watermarks and to continue to use those in our negotiations and discussions to continue to drive getting what we think is good strong fair market value.
Okay. So I know, it's only been a couple of weeks, but you haven't seen any like accelerated interest suggests sign on the dotted line somewhere given.
Lower prices you were talking about versus what the.
Big three carriers.
Good.
Up north.
I don't want to say anything disparaging about Canada, because our chief operating officer, Ryan Gerbrandt has from Canada, So, but I think I think it's an important data point, but it's clearly not.
In the context of all the other data points. It's just like any anything where you have comparables. It's another important one to show the positive trend in an upward trend.
Of spectrum, Brian anything you want out there.
No other than I'll confirm them from Canada, but I think you hit the nail on the head I mean, there's a lot of considerations, obviously that the utilities are going into and they are in their buying process here and there is no doubt seeing other auction transactions.
At good quality prices only helped support the conversations that we're at.
But in itself you know it doesn't change the process that that utilities have to go through there is still as you said working their way through justification and stakeholders on a deal that size is much larger than what we see is just the spectrum transaction.
That's still a necessary process, even though they are.
And in this you know seeing the urgency and scarce nature of what the spectrum offering is.
That's promoting a lot of the conversations we're seeing.
Okay, great. Thank you.
Thanks, Mike.
Your next question is coming from Chase White with Hite capital.
Your line is.
Thanks, Thanks for taking the question.
First one.
What the utilities are the ones driving the Federated agreement and just the general conversation.
Or was that more you guys and Federated coming together.
And are you in discussions with any other SaaS providers like amdocs or a Google for similar collaborations.
So oh, sorry on the <unk>.
Genesis of a relationship we've known Federated almost since they started probably again to <unk> their CEO is.
Former nextel colleague and colleague of ours and friend.
And so we've been working with them from the beginning and so thinking about the.
Complementary aspect of this arrangement that we have with them. So there is nothing so it was driven by us because we've been following CBS the beginning and see this complimentary aspect I always compare to your using Wi Fi in your home or office and you go out go outside and your cellular that's the way I see the complementary aspects of CB rest very much it's.
Mid band it works well in buildings and campuses, but as soon as you start having to cover wide service territories, you need a foundational spectrum like 900, and Federated gets that from the beginning we've got a great team of people, but theres nothing, particularly exclusive about that from the utilities standpoint, or our view as we you know we have a really strong.
Along staying related with Federated, we want to help them create a better product that's integrated with ours to ever offered to utility customers.
But as you said, there's a lot of choice on when SaaS providers. We do think Federated has a very very strong offering.
What they do solely and are very focused on how to bring that kind of shared spectrum solution to marketplace and so we're excited about the relationship.
Okay.
<unk>.
In terms of returning capital to shareholders. Once you've started to roll out more of these leases over time, assuming that they're similar to the ameren contract what it sounds like you guys are thinking that they will be.
Where the cash is received in stages pretty much upfront.
Given the creditworthiness of these utilities do you see an opportunity to take on leverage to accelerate or something about the capital returns.
Look we're always looking at optimizing our.
Financial returns for our investors, including you know our capital structure. So I.
I think it's probably premature for us to talk about what we could what we would do but clearly where we you can look at our history.
Both through the use of leverage in the early days of Nextel and through other companies at the right time, if it makes sense in the context of what Tim said earlier better financial planning.
It would be something we would consider.
Tim anything else you wanted there.
No I would only add that chase, yes, we're going to look at all the things we can put into our tool kit and see what's the best use for both at Terex and for our shareholders and so.
So more to come on our thoughts on that as we move forward with these contracts.
Perfect. Thanks, guys.
Thank you chase.
We have no further questions from the lines at this time I would now like to turn the floor back to Rob Schwartz for closing remarks.
Thanks, Catherine and thanks, everyone for the continued time and interest and we look forward to talking to you. All again soon have a good day.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day.
You for your participation.