Q3 2024 Duos Technologies Group Inc Earnings Call
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Speaker Change: Good afternoon. Welcome to the Duals Technologies 3rd Quarter 2024 Earnings Conference Call.
Speaker Change: Joining us for today's call are Duo's CEO Chuck Ferry and CFO Adrian Goldfarb.
Following the remarks, we will open the call for questions.
Speaker Change: Now, I'd like to turn the call over to Duo's CEO, Chuck Ferry. Thank you. You may begin.
Chuck Ferry: Welcome everyone and thank you for joining us. Yesterday we issued our earnings press release and our 10-Q for the third quarter. This morning we released news concerning the signing of an agreement for our newly formed DuBose Energy Corporation.
Chuck Ferry: And just prior to this call, we have filed an 8K covering this matter.
Chuck Ferry: This recent material event and the expected material impact on our financial performance in the coming years are a milestone achievement for DUOS. Copies are available in the Investor Relations section of our website.
Chuck Ferry: I encourage all listeners to view the press releases, 10-Q and 8-K filings with the SEC to better understand some of the details we'll be discussing during today's call.
Chuck Ferry: We have previously discussed our strategy to diversify our business and accelerate the timeline of profitability. Today I am pleased to discuss several recent developments that will enable the company to achieve this objective in 2025.
Chuck Ferry: As you know, we incorporated dual synergy some weeks ago given the increasing demand for power driven by the data center industry.
Chuck Ferry: As a reminder, many members of the DUOS management team and I have significant experience in the power sector.
Chuck Ferry: With this, I am pleased to announce that we have signed a two-year asset management agreement worth an estimated $42 million over the next two years to manage 850 megawatts of power generation assets.
Chuck Ferry: You may have already seen the press release, and we'll talk more about this opportunity after the financial presentation.
Chuck Ferry: We have expanded our investment into our addition of three new edge data centers for a total of six now ready for immediate deployment.
Chuck Ferry: Operationally, the first EDGE data center is being installed in support of our Texas Region 16 school district customer located in Amarillo, Texas.
Chuck Ferry: We have already identified the locations and customers for the remaining five EDGE data centers that are scheduled for deployment through Q4 and into Q1 of next year. The commercial demand for these EDGE data centers, which provide co-location services to underserved areas, is considerable.
Chuck Ferry: We are making steady progress with our Railcar Inspection Portal business to include ongoing installation projects with Amtrak and the planning for a new Railcar Inspection Portal installation at a large chemical manufacturer.
Chuck Ferry: As I've reported earlier, we now have an important agreement and partnership in place with one of our long-term Class I railroad customers, currently the largest user of our WasteSide technology.
Chuck Ferry: The new agreement allows us to add subscribers to 7 of our 13 portals along with an 8th portal owned by a different customer.
Speaker Change: We'll discuss each line of business in more detail after the financial review, so at this time I will turn it over to Adrian to cover our financial results.
Adrian Goldfarb: Thanks Chuck. With today's announcement of the Asset Management Agreement, my introductory remarks will focus on the expected impact of the recent expansions of the Duos business.
Speaker Change: From a historical perspective, the company has excelled in producing leading-edge technology.
Speaker Change: And we will continue to invest in research and development for technologies that can enhance the analysis of moving vehicles, including trains as well as trucks and buses, and ultimately aviation assets.
Speaker Change: In the past four years, we have made investments in our delivery and operations capabilities to match the advanced nature of our technologies.
Speaker Change: We have built a team of professionals that have taken our core competencies and paved the way for the expansion of the markets we serve, ultimately leading to the growth in revenues and soon profitability to reward our loyal shareholders.
Speaker Change: Our three divisions, while seemingly serving disparate markets, are, in fact, quite closely related.
Speaker Change: For example, the Duis Edge AI business, with its Edge Data Center concept serving rural communities, is an outgrowth of the EDCs we supply with our railcar inspection portals, where they operate in remote and often challenging environments.
Speaker Change: And the EDC business often works in areas where power can be a challenge.
Speaker Change: Hence, all three business units are expected to provide complementary benefits and further enhance the business.
Speaker Change: I can say that Q4 will be a transition period as the various businesses prepare for material operations in 2025, and that while some variability can be expected, we believe that our quarterly financial results will become much more predictable going forward.
Speaker Change: And with that, let me discuss Q3 and the first nine months.
Speaker Change: During the third quarter, total revenue for the quarter increased 112% to 3.24 million, compared to 1.53 million in the third quarter of 2023.
Speaker Change: Total revenue for Q3 2024 represents an aggregate of approximately $1.69 million of technology systems revenue and more than $1.55 million in recurring services and consulting revenue, representing an 88% increase quarter over quarter in this important metric, which continues to grow.
Speaker Change: The increase in overall revenues is primarily attributed to a 1.4 million dollar contract modification associated with our two high-speed rail car inspection portals project.
Speaker Change: which was awarded and largely recognized as revenue during Q3 2024.
Speaker Change: The increase in recurring services and consulting revenue is the result of new AI and subscription customers that were not present in the same quarter last year, as well as increases in service contract revenue due to higher service contract prices.
Speaker Change: Company also generated $505,982 in services and consulting revenue from power consulting work, which was new to this quarter.
Speaker Change: For the nine months ending 2024, total revenue decreased slightly to $5.82 million from $5.95 million in the same period last year.
Speaker Change: Total revenue for the nine months of 2024 represents an aggregate of approximately 2.22 million of technology systems revenue.
Speaker Change: and approximately $3.6 million in recurring services and consulting revenue, which is also an increase in recurring revenues of 42% comparing to the equivalent periods.
Speaker Change: The increase in cost of revenues was driven by 548,000 of amortization expenses recorded in 2024 to offset site revenue related to a non-monetary transaction for the new services and data agreement signed during the second quarter of 2024.
Speaker Change: The $505,982 in services and consulting revenue from power consulting work, which was provided at cost, further increased the cost of revenue for services and consulting, which was also not present in the corresponding period of 2023.
Gross margin for Q3 2024 increased
Speaker Change: The increase in margin was primarily due to the award of a change order associated with our two high-speed, transit-focused railcar inspection portals that were substantially recognized in Q3 2024.
Speaker Change: This was offset by a $505,982 in services and consulting revenue from Power Consulting work.
which had a one-time dilutive effect on gross margin.
Speaker Change: These same project revenues and subsequent margin impacts were absent during the third quarter of 2023.
Speaker Change: The decrease in expenses is attributed to reductions in development and administrative costs due to the completion of certain activities and the impact of previously implemented cost reductions.
Speaker Change: Stable operating expenses are expected for the remainder of 2024, while we continue to focus on further efficiencies to support anticipated revenue growth.
Speaker Change: The decrease in operating expenses is slightly offset by additional investments in sales resources for expansion of the commercial team that was made in the latter half of 2023 and in the first half of 2024.
Speaker Change: The company implemented a 5% reduction in staff in early Q3 2024.
Speaker Change: Beginning in late Q3 2024, the company allocated personnel costs, typically recorded under operating expenses, to costs of revenue associated with power consulting efforts.
Speaker Change: allowing the company to recover costs that would not have otherwise and effectively providing contribution margin on part of the initial power consulting revenues.
Speaker Change: Operating losses were thus more than a million dollars lower than the comparative quarter of a year ago.
Speaker Change: The decrease in loss from operations was primarily the result of high revenues recorded in the quarter related to the two high-speed ribs for a passenger transit client.
Speaker Change: accompanied by a planned reduction in expenses which resulted in an overall decrease in operating loss compared to the same quarter in 2023.
Speaker Change: Net loss for Q3 2024, total of $1.4 million, compared to a net loss of $2.95 million for Q3 2023.
Speaker Change: The $1.5 million decrease in net loss represents a 53% reduction.
Speaker Change: which was mostly attributed to the increase in revenues as described above, a one-time gain from a fair value adjustment, and the extinguishment of warrant liabilities, as well as remaining successful in driving down operating costs.
Speaker Change: For the 9 months ending 2024, net loss totaled $7.36 million or a loss of $0.98 per share compared to a net loss of $8.08 million or a loss of $1.12 per share in the same period last year.
Speaker Change: The decrease in net loss was primarily the result of planned decreases in operating expenses as previously noted above, which offset the impact of slightly lower revenues in the equivalent period.
Speaker Change: With regard to the balance sheet, at September 30, 2024, cash and cash equivalents was approximately $646,000 compared to $2.44 million at December 31, 2023.
Speaker Change: In addition, the company had over $2.21 million in receivables and contract assets for a total of approximately $2.86 million in cash and expected short-term liquidity.
Speaker Change: DUOS also has more than 1 million dollars in inventory as of September 30th, 2024 consisting primarily of long lead items for future RIP installations that are expected to be deployed this year and 2025.
Speaker Change: My overall comment on the balance sheet is that it remains stable in anticipation of the expected growth in the business next year.
Turning to the backlog.
Speaker Change: At the end of the third quarter, the company's contracts in backlog and near-term renewals and extensions are now more than $18.8 million in revenue, of which approximately at least $1.6 million is expected to be recognized during the remainder of 2024.
Speaker Change: The balance of contract backlog is comprised of multi-year service and software agreements, as well as project and consulting revenues.
Speaker Change: It should be noted that $10 million of the revenue backlog is for data access to support the new subscription business and is accounted for as a non-monetary exchange that resulted from an amendment to a Master Material and Service Purchase Agreement with the Class I Railroad.
Speaker Change: The agreement gives DUOS the rights to use and resell all data acquired by seven portals owned by the Class 1 Railroad.
Speaker Change: The initial decrease in cash receivables is expected to be offset from revenues for data subscriptions to owners and lessors of railcar assets for the provision of mechanical and safety data and longer term provide an expected growing high margin revenue stream from subscribers.
Speaker Change: This concludes my financial commentary and I will now pass the call back to Chuck.
Thank you, Adrian.
Chuck Ferry: Let's talk first about our DUOS Energy Asset Management Agreement. I have previously spoken about the power industry experience that the DUOS team and I have from our time with APR Energy.
Chuck Ferry: From 2016 to 2020, about 15 members of my current DUOS team and I installed and operated more than one gigawatts of power.
Chuck Ferry: With our entry into the data center space earlier this year, the management team and I quickly determined that power and increasing demand for data center computing, both cloud and edge, are linked.
Chuck Ferry: About three months ago, we became aware that APR Energy's parent company, Atlas Corporation, wanted to exit the power business.
Chuck Ferry: With this opportunity in mind, we formed a partnership with Fortress Investment Group.
Chuck Ferry: who will acquire the assets that will then be managed by Duos.
Chuck Ferry: I don't want to get too far into the details of the deal, given that the transaction will close upon the completion of customary closing conditions and regulatory approval, which we should expect in the coming 30 to 60 days.
Chuck Ferry: I will say that I've thoroughly enjoyed working with the Fortress team and our collective financial and legal advisors, as well as the APR and Atlas team in putting the deal together.
So what does this mean for DUOS?
Chuck Ferry: First, it entails managing all aspects of 850 megawatts of power consisting of 30 gas mobile turbines, which includes 20 General Electric TM2500s and 10 Pratt & Whitney FT8 mobile packs.
Chuck Ferry: These generators can run on either diesel, fuel, or natural gas, producing anywhere from 20 to 35 megawatts each depending on the model.
Chuck Ferry: We will also manage an extensive inventory of balance of plant, which is the connective tissue needed to build a power plant. This includes transformers, fuel and water forwarding and filtration equipment, switchgear, auxiliary blackstart generators, and other key power plant equipment.
Chuck Ferry: Since this is the same equipment that was managed by my team and I a few years ago, we have significant experience in all aspects of commercial deal development, engineering, design, installation, operation, and maintenance.
Chuck Ferry: Right now, if you want this kind of power, you will likely wait 24 months or more for the local utility or new equipment from an OEM to be ready to provide it. Our equipment and our team are ready immediately after closing, and we have experience building fast power plants in 30 days or less when required.
Chuck Ferry: A second positive impact for DUOS is our commercial pipeline. Currently, we have over 35 power opportunities, of which 30 are data center developers, and five are international opportunities. I've never seen so much demand for these assets.
Chuck Ferry: What we didn't expect that during our pre-deal commercial work was to find power opportunities. It has also opened more opportunities for Edge data center line of business and our pipeline for that line of business has grown dramatically in just the last three months.
Chuck Ferry: The third positive impact for Duos is financial. Again, we reported earlier today that the estimated value of the management contract is
Chuck Ferry: 42 million of revenue over the over two years. These revenues along with the backlog we already have and expected growth of our Edge Data Center business and Railcar Inspection Portal business in the coming year allow me to confidently say we will become profitable in 2025.
Chuck Ferry: I know there will be lots of questions around this opportunity, but we want to be cautious in how much information we release during the closing period and regulatory review.
Chuck Ferry: Let's talk about our Edge Data Center business. Duos Edge AI was incorporated this last summer and already we have six Edge Data Centers ready for immediate deployment where we will own, install, operate, and maintain these co-location Edge Data Centers.
Chuck Ferry: As I mentioned earlier, we have a team on the ground right now installing the FirstEdge data center in support of our Texas Region 16 school district customer located in Amarillo, Texas.
Chuck Ferry: The next two ACE data centers will be deployed by year-end into the city of Pampa, Texas.
Chuck Ferry: We have already identified the locations and customers for the remaining EDGE data centers, also primarily in Texas, with scheduled deployments through Q1 of next year.
Chuck Ferry: The commercial demand for these edge data centers, which provides co-location services to underserved areas, is overwhelming.
Chuck Ferry: Our pipeline has grown significantly in the last few months, and in some cases includes a requirement for behind-the-meter power solutions similar to the larger cloud data centers.
Chuck Ferry: Our plan is to have at least 15 EDGE data centers deployed by the end of 2025, but Doug Recker and I are exploring options to accelerate that.
Chuck Ferry: I also wanted to mention our strategic partnership with Accutech, who is one of the largest distributors of infrastructure to the data center market.
Chuck Ferry: We have also continued our strategic partnership with FiberLite and other carriers to bring lower data latency and more robust networks into these underserved markets.
Chuck Ferry: Now let's talk about our railcar inspection portal business. We are making steady progress on our project with Amtrak.
Chuck Ferry: As I have previously reported, we have incurred delays out of our control with this installation, which have impacted us financially in previous quarters.
Chuck Ferry: However, we do continue to add financial value to this contract and we are in discussions for additional portals in the future.
Chuck Ferry: We did recently install a large edge data center into the Secaucus construction site, which you will see if you are traveling on the Northeast Corridor passenger rail line. We are also planning for the deployment of a new portal and a large chemical manufacturing plant also located in Texas.
Here's an update on our subscription offering.
Chuck Ferry: Late last year, Duos and Amtrak began a pilot program to test the subscription concept. At three of our portal locations, Amtrak's long-distance passenger trains are scanned, and the machine vision images are sent in real time to Amtrak mechanical inspectors who have used the data with excellent results during the testing period.
Chuck Ferry: In partnership with Canadian National, DUOS now offers shippers and car owners that transit the CN network the opportunity to subscribe to our cutting-edge machine vision data safety.
Chuck Ferry: This safety information can be used in various ways to include predictive maintenance, trained analytics
Chuck Ferry: and overall fleet health and maintenance. The intent is to have better maintained railcars that make the network safer and more productive for everyone.
Chuck Ferry: We are getting significant interest now with this offering, especially with several large chemical producers and shippers.
Chuck Ferry: With the diversification and expected expansion of the business, I have taken several steps over the last few months to adjust the organization of the company to accommodate and properly manage these three lines of business.
First, we have appointed Chris King.
Chuck Ferry: previously the Chief Commercial Officer to be our Chief Operating Officer at the group level. And let me just make that correction. First, we have nominated Chris King, previously the Chief Commercial Officer, to be our Chief Operating Officer at the group level and we expect him to take that position here very shortly.
Chuck Ferry: Jeff and Chai, our CTO, has assumed a broader leadership role to lead our railcar inspection portal line of business.
Chuck Ferry: Doug Recker continues to be the president and lead for our EDGE Data Center business, but in the last few months we have expanded his role to be the chief commercial officer at the group level.
Chuck Ferry: We have reorganized the staff where some of the employees are assigned into the business units permanently, but others fall into a shared services organization supervised by Chris King, Chief Operating Officer, and Adrian Goldfarb, Chief Financial Officer.
Chuck Ferry: This allows us to support the three different lines of business in a cross-functional manner.
Chuck Ferry: Again, the strength of DUOS is our management team and our employees. As we grow, it allows me to offer more responsibility and professional opportunities to high-potential leaders and employees. Building and growing highly effective teams is what I've always loved to do when serving in the Army and now in my civilian business career.
Chuck Ferry: As always, I want to thank our business partners, our board of directors, and our shareholders for their continued support. The outlook for deals looks very promising right now, and I'm excited to be able to lead it. Thank you for listening, and we'll now open the call for your questions. Operator, please provide the appropriate instructions.
Speaker Change: Great, thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 to remove yourself from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
One moment, please, while we pull for questions.
Speaker Change: Our first question here is from Michael Adamore from Northland Capital Markets. Please go ahead.
Michael Adamore: Yeah, great. Thanks. Yeah, congrats on all the recent developments here. It looks great.
Speaker Change: So just starting with the energy business, I guess, Chuck, did you say that the assets that you will be deploying and managing are the same ones you used to work with at APR?
Chuck Ferry: Yeah, that's exactly correct. Yeah, so I was the CEO for APR Energy.
Chuck Ferry: Also based here out of Jacksonville, by the way, between 2016 and 2020.
and a lot of the folks that...
Chuck Ferry: served with me at that company, have joined me over the last few years here at Duo. So yeah, so these are the exact same assets. We're very, very familiar with them and I think we'll be off to a fast start in terms of managing them.
Great, great.
Speaker Change: And then on the $42 million, I guess that's revenue over two years.
Speaker Change: Just to be clear, is that guaranteed revenue and also does that build over time as you deploy these turbines or is there some kind of normalized quarterly run rate?
Speaker Change: Yeah, I would probably characterize that as it's the estimated revenues that we...
Speaker Change: have developed from our financial models in coordination with Fortress Investment Group. Again, those revenues aren't guaranteed, they're estimated based on the business plan that we've developed jointly with Fortress Investment Group.
Speaker Change: Okay, so it would build over time as you deploy these systems, basically.
Speaker Change: Yeah, I think after the closing, it'll probably build up over the first part of 2025.
Speaker Change: and then it will probably level out a little bit as we go through. That being said, depending on the pace of deploying the assets...
if it goes very, very fast.
Speaker Change: and it might, you know, those revenues could potentially go higher, but again what we've done is we've taken and built a conservative business plan and model that we work together with Fortress Investment Group jointly, and so that's where those numbers are derived from.
Speaker Change: It's a two-year deal, but I'm guessing that customers will need power beyond two years.
That's absolutely correct, yeah, we're...
Speaker Change: Again, we have a very robust pipeline. We've been, during the last 90 days or so, we've been very active commercially developing deals as a part of putting this together. There are a lot of customers, particularly in the data center space, that want power at least three years. Some of them are calling for five years. So this is a new
Speaker Change: kind of thing for the data center space, this behind-the-meter concept. But it's, obviously, all the analysts like yourself have seen a lot of discussion about it and understand that it's gonna be in high demand for the next several years at the moment.
Speaker Change: 3.3 million of recurring revenue in 25 tied to the six you currently have is that right?
Speaker Change: That's, well, it starts with a six. So what it really means is that.
Speaker Change: to deploy 15 edge data centers that'll be put in incrementally, you know, starting now all the way through the end of 2025. So that 3.3 million really represents kind of an incremental build-up to that 15 by the end of the year, and Adrian's going to keep me straight. Did I get that correct? That is absolutely correct. Okay, thank you, sir. Okay.
Speaker Change: Got it. That makes sense. That makes sense. Great. All right. Awesome. Well, best of luck. Looks great.
All right. Thanks so much, Mike.
Speaker Change: Your next question is from Ed Wu from Ascendian Capital Markets. Please go ahead.
Speaker Change: Yeah, congratulations on all the progress. My question is, as you guys move into the power business and the data center business, who are your competitors and have you seen a big change in the competitive landscape recently?
Speaker Change: Yeah, well let's talk about the Edge Data Center business first. Look, there are there are certainly competitors out there.
Speaker Change: You know what one one potential competitor, but also a potential partner for us is is ubiquity edge
a business.
Speaker Change: That's the business that Doug Recker sold his Edge Presence business to. But to be honest, right now, we've actually been working in partnership with Ubiquity. At this point right now, the demand for...
Speaker Change: The EDGE data center is so high that there's enough work share for everybody and we just really haven't seen any direct head-to-head
Speaker Change: competition as of yet. I think we should expect that we will see some, but at this moment there's there's not too many folks out there doing this in a similar
Speaker Change: way that we're doing it, where we're basically owning, installing, and operating those edge data centers.
at this moment.
On the power side, that's a much more competitive space.
Speaker Change: Typically, we think of competitors in that space as the larger OEMs, such as General Electric, Siemens, Caterpillar, Cummins, and others.
These obviously are the manufacturers of the generation equipment itself.
Speaker Change: And then there's smaller companies that also kind of participate in the temporary power or power rental business. I won't go into those details right now, but we're very, very familiar with all of them. The challenge for everybody in that space right now is the availability of equipment.
Speaker Change: So if you want to get if you want to put a behind-the-meter solution in
Speaker Change: Some of the utilities have a similar challenge where they can't, they're not going to be able to put in new equipment, you know, for 24 to 36 months and or the transmission and distribution.
Speaker Change: infrastructure to be able to deliver that power to the site itself. So the challenge the data center space has this moment is a shortage of equipment.
Speaker Change: We're fortunate right now we had an opportunity to take down 850 megawatts. That equipment is immediately available right now as we speak and we're talking to, you know, a lot of folks that are interested in putting their names on that equipment right now.
Speaker Change: Great, well thank you for answering my questions for all the information. I wish you guys good luck. Thank you.
Okay, appreciate it. Thank you.
Speaker Change: Next question here is from Nikolai Selkov from La Chupacabra. Please go ahead.
Hello?
Can you hear me?
Speaker Change: and the guy before you also did an excellent presentation. I think you guys both did an excellent presentation. I like your company. I was interested in two things. First of all, the Amtrak situation, right?
You know, are we hoping to expand that?
Speaker Change: and quickly. Yeah so the this you know this the contract that we've had with Antrac you know for everybody that's on the line basically Antrac has unfortunately had delays
Speaker Change: with this particular project, but they've had delays with a lot of their projects.
Speaker Change: The challenge for Amtrak, as a government organization, has been that they are very well funded right this moment, and they're undertaking a lot of projects. Many of them are in very close proximity in the Northeast Corridor, and that unfortunately has had some impacts.
Speaker Change: Is it just a problem of like, okay, so let's say not the northeast quarter. Let's say
Speaker Change: Do they not want to give you guys the edge network reciprocity, I suppose, is the right word? Like, to allow you to utilize your edge network...
Speaker Change: to make it's not a big deal I mean but it's like you know it's kind of a big deal I mean why not why not why not all of Amtrak runs on duos
Speaker Change: Yeah, I think what's going on right now is, like I said, over the last year,
Speaker Change: because we see Amtrak trains in some of our other portals here in the United States. So really Amtrak's been kind of using our tool at those three other portals for the last year.
Speaker Change: This is very, very new technology to the railroads, quite frankly, and Amtrak has been very successful in kind of their initial test run, and so we are actually in discussions to build additional portals on the larger Amtrak network right now. That's great. That's great.
Also, you guys are based in Florida.
That's correct. We're here in Jacksonville, Florida. Yes.
Speaker Change: So those were all my questions. I think it's a great technology. I think you guys are building out a great network. You worked for a company that was the company and now is the company, and you're building out a technology. And I thought it was cool that you were building that out for Amtrak trains, and certainly that you got the northwest quarter down. And I hope that you get all the other quarters down.
Well, I appreciate your questions, Nikolai.
Speaker Change: Next question here is from Dan Weston from West Capital Management. Please go ahead.
Dan Weston: I just wanted to understand, is that dependent on how many megawatts are deployed?
is how you'll get calculated your revenue stream.
Speaker Change: Yeah, that's part of it. At a broad level, again, we put together this business plan, it's, you know, with, you know, and so we do that where we generate a set of operational assumptions.
So the key activities that we'll conduct in that...
One will provide some, I'll call it back office services.
Speaker Change: But more importantly, we'll provide the supervision of maintenance of the assets and preparation of those assets for deployment.
will supervise the installations.
Speaker Change: and manage the installations of those assets on certain projects. And then once the power is installed, we'll actually supervise and manage the operations and maintenance of those assets, you know, when they're actually producing power. So, you know, depending on when some of those key activities happen, in particular the installations.
Speaker Change: that can kind of cause the needle to kind of go up or down in that. And we know that based on our experience from running the assets before with APR.
Speaker Change: Okay, okay, fair. I think I get the gist of it. I'll wait until the deal closes and we can get more detail. You mentioned that you have a pipeline that's building in that business already. I think you said you have 35 potential opportunities.
Speaker Change: Is there a way you can translate that into potential megawatts for those potential 35 opportunities?
Speaker Change: Yeah, I mean if we were to address, well first off, we would be sold out. You know, just, you know, if we were able to, let's just say, pull down
Let's just say five.
Speaker Change: on the high side, maybe 10 of those opportunities, we would be sold out.
Speaker Change: So I think, you know, the way we want to think about this is, you know, look, we're starting off with this first tranche of 850 megawatts.
Speaker Change: But I think, you know, Duos with Fortress Investment Group will look for other opportunities to, you know, expand, you know, expand that, you know, expand that business, expand the amount of those assets, you know, and the overall value of the deal.
Speaker Change: okay yeah that's exactly where I was going it seemed like you don't have enough megawatts if you were going to calculate
Speaker Change: Is there anything that you can share with us relating to what kind of margins you expect to generate from this particular agreement?
Speaker Change: You know, I'd rather not talk about that right now. That's something that we've been kind of advised by counsel just to hold off until we get to the deal closing. And that'll be in the next 30 days. And we'll talk more about it in more detail about this whole thing here when we do that.
Speaker Change: Okay, great stuff. A couple more, if I may. On the data center business...
Speaker Change: I wrote down I thought you said something to the effect of you expect to have 15 EDCs fully deployed by year-end next year and that you thought you and Doug were coming up with ways that you may be able to accelerate that.
Speaker Change: Could you expound on that a little bit and what you have planned to accelerate that potential program?
Speaker Change: that are very, very interested in using the experience that Doug has and the capabilities that we have.
Speaker Change: you know, to maybe, you know, accelerate the deployment of those edge data centers. So it would be probably in some sort of a partnership.
Speaker Change: with some of the big hyperscalers out there. You know, again, those are, I would say, in discussions and really not able to kind of talk to them publicly, at least not right now.
Speaker Change: Okay, okay, we'll follow up with you on that one. Also, relating to one of the previous questions...
The...
Speaker Change: The company that Doug sold Edge Presence to, Ubiquiti, I'd previously thought them to be a potential competitor to you. Now you mentioned that they could be a potential partner for you. Can you expand a little on that potential partnership and why somebody like a Ubiquiti would need a partner like Duos Edge AI?
Speaker Change: Yeah, we talked about the three, yes, yeah, so what, yeah, recently we
Speaker Change: So we acquired three additional edge data centers that had already been manufactured and that was actually a deal that we did with with Ubiquiti. So Ubiquiti's
Speaker Change: Edge data center business had some additional undeployed edge data centers.
Speaker Change: You know, we got into a commercial discussion, and so, you know, we kind of cut a deal where we took those three edge data centers and we'll deploy them.
Speaker Change: you know, in return for some, you know, longer term, you know, consideration on those Edge data centers with Ubiquity. So it was kind of a win-win in this situation.
again.
Speaker Change: We view them as a partner. At the same time, you know, they could be a competitor. That's no different than in the power industry. You know, you could potentially consider General Electric or Siemens or Pratt & Whitney as a partner. And then on other days, you know, depending on the opportunity, they're competing against you. So it's not really a whole lot different.
Speaker Change: Yeah, so my CFO is telling me probably about two to three million is what we currently have forecast right now for that.
Speaker Change: Just subscriptions. Yeah, just for the railcar subscription business, about 2 to 3 million, yeah.
Speaker Change: Got it. Okay, I'll follow up with you in a little while. Thanks and congrats again. That looks like a wonderful deal.
Okay, we appreciate it and thanks for
Speaker Change: This concludes the question and answer session. I'd like to turn it forward back to Mr. Ferry for any closing comments.
Chuck Ferry: Okay, well again, we really appreciate everybody joining and again, always appreciate the support from our board of directors and shareholders and everybody else that partners with us. So thank you again for joining us on today's call.
Speaker Change: Before we conclude today's call, I'd like to provide Duo's Safe Harbor Statement that includes important cautions regarding forward-looking statements made during this call.
Speaker Change: This written call contains forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995, forward-looking terminology such as beliefs, expects, may, will,
should anticipate plans and their opposites or similar expressions.
were intended to identify forward-looking statements.
Speaker Change: We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties and risks and other influences many of which are beyond our control which may influence the accuracy of the statements and the projections upon which the statements are based and could cause dealers technologies group actual results to differ materially from those anticipated by future forward-looking statements.
Speaker Change: These risks and uncertainties include, but are not limited to, those described in Item 1A of DUO's Annual Report on Form 10-K, which is expressed incorporated herein by reference and other factors, as may periodically be described in DUO's filings with the SEC.
Speaker Change: Thank you for joining us today for Duos Technology's second quarter 2024, I'm sorry, third quarter 2024 conference call. You may disconnect your lines at this time. Thank you again and have a great day.
Speaker Change: Luxembourg District Fair 2015 For more information visit www.fbcs.ca 2-888-987-888-34 shedding umbrella www.fbs.ca for more information visit www.cab.gov
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