Q1 2024 Crown ElectroKinetics Corp Earnings Call
Operator: Good afternoon, everyone, and welcome to the Crown Electrokinetics first quarter 2024 conference call. At this time, participants are in a listen only mode. A question and answer session will not follow the management's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of the Crown's website. I'll now hand the call over to Jason Assad, Director of Corporate Communication, for introductions and the reading of the Safe Harbor Statement. Please go ahead.
Good afternoon, everyone and welcome to the Crown elect Electrokinetics first quarter of 2020 for a conference call. At this time participants are in a listen only mode. A question and answer session will not be following the management's remarks. This conference call is being recorded a replay of today's call will be available on the Investor Relations section of the crowds website.
Jason Assad: I'll now hand, the call over to Jason Assad director of corporate communications for introductions and the reading of the Safe Harbor statement.
Jason Assad: Please go ahead.
Jason Assad: Thank you, operator. Good afternoon, and welcome to Crown's first quarter 2024 call. With us today on the call are Doug Croxall, Crown's Chief Executive Officer and Chairman, and Joel Krutz, Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains certain forward-looking statements from management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21A of the Securities and Exchange Act of 1934 as amended.
Jason Assad: Thank you operator, good afternoon, and welcome to <unk> first quarter 2024 call with US today on the call are Doug Crocs at Brown, <unk>, Chief Executive Officer, and Chairman and John <unk>, Chief Financial Officer before we begin I'd like to remind you that today's call contains certain forward looking statements for management made within the meaning of section.
Jason Assad: Words such as should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factor section of the company's quarterly report on Form 10-Q for the first quarter ended 2024. Copies of these documents are available on the SEC's website at sec.gov.
Jason Assad: 27.
Jason Assad: <unk> 933, as amended and section 20, <unk> of the Securities and Exchange Act of 1934 as amended words, such as should projects expects intends plans believes anticipates hopes estimates and variations of such words and similar expressions are intended to identify forward looking statements. These statements are.
Jason Assad: Subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factors section of the company's quarterly report on Form 10-Q for the first quarter ended 2024 copies of these documents are available on the Sec's website at SEC Gov. Actual results may differ materially from those expressed or implied by such forward looking.
Jason Assad: The company undertakes no obligation to update these statements for revisions or changes after the date of this call except as required by law.
Jason Assad: Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now, at this time, it's my pleasure to introduce Doug Croxall, CEO and Chairman of Crown.
Speaker Change: Now at this time, it's my pleasure to introduce Doug <unk>, CEO and chairman of ground Doug.
Douglas B. Croxall: Thanks Jason. Welcome everybody to our first quarter 2024 earnings call. As most of you know, Crown is comprised of two divisions, a film division and a fiber division. We're going to start with our discussion of the film division today.
Doug: Thanks, Jason.
Doug: Welcome everybody to our first quarter 2024 earnings call as most of you know Crown is comprised of two divisions, a film Division and a fiber division, we're gonna start with our discussion of the film Division today.
Douglas B. Croxall: In late February of this year, we announced that Crown's electrokinetic film team had solved the 12 inch mastering challenge for its gen one alpha smart window. We remain in a great position to start shipping our first product in small quantities later this summer. With this technical milestone behind us, Crown recently announced that Sheldon Davis, who was previously a consultant to the company, was named president of our ElectroConnect film division. Davis's work history makes him the ideal person for Crown's exact stage of growth.
Doug: In late February of this year, we announced the Crown Electrokinetic film team had solved the 12 inch mastering challenge.
Speaker Change: Gen One alpha smart window Windsor.
Speaker Change: We remain in a great position to start shipping first product in small quantities later this summer with.
Speaker Change: With this technical milestone behind US Crown recently announced that Sheldon Davis, who was previously a consultant to the company was named President and President of our electric and at film Division.
Speaker Change: Sheldon work history makes him the ideal person for crowds exact stage of growth Sheldon and I've known each other since 2016, while he was working at Guardian industries of Koch Industries Company.
Douglas B. Croxall: Sheldon and I have known each other since 2016 while he was working at Guardian Industries, a Coke Industries company. His knowledge of our ink formations and window glass manufacturing and different glazing technologies like electrochromic SPD and liquid crystal make him the perfect person for the job.
Speaker Change: His knowledge of our ink formations.
Speaker Change: Window glass manufacturing in different glazing technologies, like electrochromic, SPD and liquid crystal make him the perfect person for the job.
Douglas B. Croxall: We're excited to have them take a leadership role at this important time. Crown feels very fortunate. I'm sorry, going forward, Crown expects to provide more details on product capabilities, timing, customer wins, as well as pricing and expected revenue in March. Now, what I want to talk about is how we're going to roll out what we call our Gen 1 Alpha, Gen 1 Beta, and Gen 1 Charlie. Gen 1 Alpha, as we stated earlier, is a smart window insert that should be hitting the market in the August-September time frame in very small quantities.
Speaker Change: We're excited to have them take a leadership role at this important time crown feels very fortunate.
Speaker Change:
Speaker Change: I'm, sorry, going forward Crown expects to provide more details on product capabilities timing customer wins, as well as pricing and expected revenue and margins.
Douglas B. Croxall: Our goal is to roll out 4 to 10 inserts per building, approximately 10 to 20 buildings, covering large cities within the United States. The objective for the Gen 1 Alpha is to get customer feedback. As we gather that feedback, we'll run a parallel path creating Gen 1 Beta, which we expect to roll out sometime towards the end of the calendar year. Doing the same thing, generating customer feedback, and customer direction, we will launch Gen 1 Charlie early next year.
Speaker Change: What I want to talk about is how we're going to roll out what we call. Our gen. One alpha one beta and Gen. One Charlie Gen. One alpha as we stated earlier is smart window insert which should be hitting the market in the August September timeframe very small quantities. Our goal is to roll four to 10.
Speaker Change: In search.
Speaker Change: Per building approximately 10 to 20 buildings covering large cities within the United States the objective in.
Speaker Change: The Gen. One alpha is to get customer feedback.
Speaker Change: As we gather that feedback back we'll run a parallel path, creating gen. One beta.
Speaker Change: Which we expect to rollout sometime towards the end of the calendar year.
Speaker Change: Doing the same thing generating customer feedback customer direction will launch Gen. One Charlie early next year.
Douglas B. Croxall: Gen 1 Alpha, Gen 1 Beta, and Gen 1 Charlie will help us build what we believe will be the first mass-produced smart window insert sometime in the spring to summer of next year. Moving to fiber optics. As you know, a little over a year ago, Crown made its first investment in fiber optic construction markets. The last 19 to 20 months have taught us some pretty hard lessons and taught us a great deal about the market, how to operate in it, and how not to operate within it.
Gen. One alpha Gen. One beta and Gen. One Charlie will help us build what we believe will be the first mass produce smart window insert.
Speaker Change: Sometime in the spring to summer of next year.
Moving to the fiber optics division.
Speaker Change: As you know a little over a year ago Crown made its first investment in fiber optic construction market.
Speaker Change: Last 19% to 20 months approved some pretty hard lessons.
Speaker Change: Taught us a great deal about the market how to operate and how not to operate within it.
Douglas B. Croxall: Fibers Generating Revenue in Multiple Markets Under the leadership of Corey Boas, who we've named President of Construction in early February, we have current projects in Idaho, Nevada, and soon to start in California and Mexico. Borey's not only added revenue and customers to the company but helped us change our operating model that allows Crown to be cash flow positive on a project from day one. As opposed to hiring hundreds of employees, we now partner with other subcontractors. This allows Crown to control costs on a project by project basis, as well as lock in our margins.
Speaker Change: Brown fiber is generating revenue in multiple markets under the leadership of Corrigo as we've named President of construction in early February.
Corrigo: We have current projects in Idaho, Nevada soon to start in California, and Mexico.
Corrigo: Or he's not only added revenue and customers to the company, but helped US change our operating model that allows crown to be cash flow positive on a project from day one.
Corrigo: As opposed to hiring hundreds of employees, we now partner with other subcontractors.
Corrigo: <unk> crowd to control costs on a project by project basis, as well as lock in our margin.
Douglas B. Croxall: Corey has market credibility and connections that have allowed him to build a significant pipeline of revenue-generating projects. The pipeline, leveraged with this proven business model, will allow Crown to generate revenue and soon net positive income. Most recently, Crown announced that it had secured a large backbone project in Nevada that includes horizontal drilling and plowing. The Long Haul Fiber Project recently commenced, with completion slated for the company's third quarter. Currently, Crown has received two clusters of the project, which will generate approximately $5.7 million in gross revenue.
Cory: Cory has market credibility and connections that has allowed him to build a significant pipeline of revenue generating projects. The pipeline leverage with this proven business model will allow brown to generate revenue and soon net positive income.
Cory: Most recently Crown announced that hits cared a large backbone project in Nevada that includes horizontal drilling and plywood.
Cory: The long haul fiber project recently commenced with completion slated for the company's third quarter. Currently Brown has received two clusters of the project, which will generate approximately $5 7 million and gross revenues, we anticipate being awarded additional stages of the project as that continues into the state of <unk>.
Douglas B. Croxall: We anticipate being awarded additional stages of the project as it continues into the state of California. We also recently announced that we secured a project in Idaho for horizontal drilling as a prime contract. The large fiber-to-home project has commenced, and it is expected to continue throughout the calendar year, likely resulting in additional work in California, Arizona, and Oregon with the same customers. On March 6, Crown announced that it had executed an agreement with Twin Dolphin Club, located in Los Cabos, Mexico.
Cory: If warranted.
Cory: We also recently announced that we.
Cory: We secured a project in Idaho.
Cory: For horizontal drilling as a prime contractor.
Cory: The large fiber to home project has come in where it is expected to continue throughout the calendar year likely resulting in additional work in California, Arizona, and Oregon with the same customer.
Douglas B. Croxall: The Twin Dolphin Club is a 1,400 resort master plan development; the fiber optic division will construct slant wells for the desalination plant that provides fresh water from ocean water to the hotel and surrounding planned residential development. The project is expected to start later this spring and conclude in the early fall. The project is expected to generate about three and a half million in revenue. The opportunity was generated and managed by Corey. The new approach to building slant wells should lead to new revenue opportunities in Mexico, Central America, and the Caribbean. Importantly, the agreement generates upfront cash and is anticipated to lead to other opportunities. Okay, with that, I'm going to turn it over to Joel, and he will handle the closing remarks. Okay, Joel?
Cory: On March 6th crowd announced that we had executed an agreement with twin Dolphin club located in Los Cabos Mexico.
Cory: The twin Dolphin club is a 1400 resort master planned development Brown fiber optic crown fiber optic division will construct slant wells for the desalinization plant that provides freshwater promotional water to the hotel and surrounding planned residential development the.
Speaker Change: The project is expected to start later this spring and conclude in the early fall time.
Speaker Change: The project is expected to generate about $3 5 million in revenue the opportunity was generated and managed by Corey.
Speaker Change: The new approach to building Slant wells should lead to new revenue opportunities in Mexico Central America and the Caribbean.
Speaker Change: Importantly, the agreement generates upfront cash and is anticipated to lead to other opportunities.
Speaker Change: Okay.
Joel: With that I'm going to turn it over to Joel and I will handle the closing remarks Joel.
Joel Krutz: Thanks, Doug. Good afternoon, everyone.
Joel: Thanks, Doug good afternoon, everyone.
Joel: Today, I will walk through crowned 2024.
Joel: First quarter financial results are ahead of that just a quick update on our current NASDAQ bid price noncompliance.
Joel Krutz: Today, we'll walk through Crown 2024 and first quarter financial results. But ahead of that, though, just a quick update on our current NASDAQ bid price non-compliance. As you are aware, we received notification from NASDAQ on October 19th, which initially gave Crown 180 days to trade by $1 for 10 consecutive days. We recently met with NASDAQ's hearing panel to request an extension for a further 180 days and are awaiting the panel's
As Youre aware, we received notification from NASDAQ on October the 19th which initially gave crowd of 180 days trade above $1 for 10 consecutive days.
Joel: We recently met with NASDAQ hearing panel to request an extension for a further 180 days and are waiting the panels guidance on next steps.
Joel Krutz: As we discussed with the panel, the company's growing production levels and improving financials and overall fundamentals should contribute to enhancing Crown's market value, but we will also ensure the company has other options necessary to retain its NASDAQ listing.
Joel: As we discussed with the Pan the Companys growing production levels, and improving financials, and overall fundamentals should contribute to enhancing crowds market value.
Joel: We will also ensure the company has other options necessary to retain our NASDAQ listing.
Joel Krutz: On to the Q1 financials, and for the quarter ended March 31, 2024, Crown's net loss was $4.6 million. This included $0.9 million of non-cash other expenses, primarily related to the final amortization of Adelante Credit, which expired in Q1. Net losses from operations were $3.7 million compared to Q1 2023's $4.1 million, and the company recorded $0.7 million of revenue in its five divisions for the quarter, with the majority of those backhanded. The company also booked $1.2 million of deferred revenue for work due to begin in late Q2, primarily Q3.
Joel: On to the Q1 financials and for the quarter ended March 31, 2020 full crowds net loss was $4 6 million. This included <unk> 9 million of noncash other expense primarily related to the final amortization of that line of credit which expired in Q1.
Joel: Net losses from operations were $3 7 million compared to Q1, 2020, Three's $4 1 million.
Speaker Change: Crown recorded $7 million of revenue and its fiber division for the quarter with the majority of those back ended.
Speaker Change: The company also booked $1 2 million of deferred revenue would begin to do to begin in late Q2.
Speaker Change: Primarily Q3.
Joel Krutz: Total operating expenses for the quarter were $4.7 million, with cost of revenue of $1.6 million. This is primarily driven by operations in Arizona, which the company is now fully scaling back. There was $0.8 million of film R&D and $2 million of depreciation and SG&A in the quarter. For the quarter ended March 31st, net cash decreased 0.8 million as the company deployed 2.7 million of cash for operations. Raid, $2 million from its financing activities, primarily, and its ELOC.
Speaker Change: Total operating expenses for the quarter were $4 7 million cost of revenue $1 6 million. This was primarily driven by the operations in Arizona, which the company is now fully scaled back.
Speaker Change: It was $8 million of film R&D, and 2 million of depreciation animal in SG&A in the quarter.
Speaker Change: For the quarter ended March 31st net cash decreased <unk> 8 million as the company deployed $2 7 million of cash but.
Speaker Change: Operations.
Speaker Change: Crown raised $2 million from its financing activities.
Speaker Change: Primarily it's ila.
Joel Krutz: And as of March 31, 2024, cash and cash equivalents were $0.3 million. In terms of access to finance, the company still has $42 million available on its e-lot and also has access to a revolving line of credit, which will support working capital needs in the final business year, which is critical as we are looking to operate and scale our production across multiple markets.
Speaker Change: And as of March 31, 2024, cash and cash equivalents were $3 million.
Speaker Change: In terms of access to finance the company still has $42 million available on its E S.
Speaker Change: And also as the access to a revolving line of credit, which will support working capital needs in the fiber business.
Speaker Change: Critical as we are looking to.
Speaker Change: Operate and scale up production across multiple markets.
Joel Krutz: In terms of looking forward, we still expect second quarter revenues to be in line with guidance, but we're going to provide an update and first look at Q3 in the near future. Finally, we're all set to file our T&Q after market today. However, our auditors have advised us of a backlog in their quality control process, which may mean we have to file for a brief non-timely submission today. We're obviously working very closely with our auditors, and we'll do all we can to avoid that situation. That concludes the financial update. Doug, back to you.
In terms of looking forward, we still expect second quarter revenues to be in line with guidance, but we are going to provide an update and a first look at Q3 in the near future.
Speaker Change: Finally, we are all set to file our 10-Q after market. Today. However, our orders have advised us that the backlog and the quality control process, which may mean, we have to file for brief normal non timely submission today.
Speaker Change: Obviously, working very closely with our orders and we'll do all we can to avoid that situation.
Doug: That concludes the financial update Doug back to you.
Douglas B. Croxall: All right. Thanks, Joel. So, as the great Chicago Bears coach Mike Dickler once said, only losers and cowards live in the past.
Doug: Alright, Thanks, Joel so.
Doug: Great Chicago Bears coach Mike <expletive> the one said only lose losers and cowards live in the past.
Douglas B. Croxall: But I would, with all due respect to him, point out one thing. If you look at where this company was one year ago compared to where we are today. We've added great leadership in the film division with Sheldon and in the fiber division with Corey. We've got customer contracts, both in the film division and, obviously, as well in the fiber. We're generating significant revenue, certainly compared to the quarter before and to the non-existent revenue in the same quarter last year.
Speaker Change: But I would like with all due respect to him I would like to point out one thing if you look at where this company was one year ago.
Speaker Change: Compared to where we are today.
Speaker Change: We've added great leadership in the film Division with Sheldon We've added great leadership in the fiber division with Corey.
Speaker Change: We've got customer contracts, both in the film Division and obviously as well in the fiber division, we're generating significant revenues certainly compared and this quarter certainly compared to the quarter before and so the nonexistent revenue the same quarter last year were.
Douglas B. Croxall: We're on track to be net positive, and net income positive, before the end of the year. So the company is in a great position. We're growing. We've got good capital sources to allow for non-dilutive growth in the fiber division, and we're really excited for our Q2 results and look forward to talking to everybody in mid-August. Thank you. I'll turn it back to the operator.
Speaker Change: We're on track to be net positive.
Speaker Change: Net income positive before the end of the year. So the company is in a great position.
Speaker Change: We're growing we've got good capital sources to allow for non dilutive growth in the fiber division and we're really excited for our Q2 results and look forward to talking to everybody in mid August. Thank you I'll turn it back to the operator.
Operator: Thank you. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
This conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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