Q4 2024 Pioneer Power Solutions Inc Earnings Call

Sure.

Yes.

Operator: Greetings and welcome to Pioneer Pwr's Q4 and full year 2024 financial results conference call. At this time, all participants are in a listen-only mode.

Speaker Change: And welcome to pioneer Power's Q4, and full year 2024 financial results Conference call.

Speaker Change: This time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: A question-and-answer session will follow the formal presentation.

Operator: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone should require operator assistance. Please press star zero and your telephone keypad as a reminder, this conference is being recorded.

Brett Maas: and now I'd like to introduce your host, Brett Maas of Hayden IR. Thank you, you may Thank you, Operator.

Speaker Change: I'd like to introduce your host Brett Maas of Hayden. They are thank you you may begin.

Nathan Mazurek: Thank you operator, the call today will be hosted by Nathan Mazurek, Chairman and Chief Executive Officer, Welcome mechanic, Chief Financial Officer, and Jill American President of Pioneer power E mobility audience discussion there will be a Q&A session.

Brett Maas: The call today will be hosted by Nathan Mazurek, Chairman and Chief Executive Officer, Walter Michalec, Chief Financial Officer, and Geo Murickan, President of Pioneer Pwr E-Mobility.

Nathan Mazurek: Following this discussion, there will be a Q&A session over to the participants on the call. We appreciate the ability, I'm sorry, we appreciate the opportunity to review the fourth quarter financial results and recent business highlights.

Nathan Mazurek: Participants on the call. We appreciate your Bill sorry, we appreciate the opportunity to review the fourth quarter financial results and recent business highlights before we get to solve them and remind you. This call is being recorded and webcast. During the call management may make forward looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially please refer to the.

Nathan Mazurek: Before we get started, let me remind you this call is being recorded and webcast. During the call, management may make forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release issued earlier today. It applies to the content of this call.

Cautionary text regarding forward looking statements contained in earnings release issued earlier today and you apply to the content of this call I'd like to now turn the call over Nathan Maverick Chairman CEO Nathan. Please go ahead.

Nathan Mazurek: I'd like to now turn the call over to Nathan Mazurek, Chairman and CEO. Nathan, please go ahead. Thank you, Brett. Good afternoon, and thank you all for joining us today.

Nathan Mazurek: Thank you Brad good afternoon, and thank you all for joining us today.

Nathan Mazurek: 2024 was a watershed year for our business.

Nathan Mazurek: 1024 was a watershed year for our business in the fourth quarter, we sold our pioneer custom electrical products unit T CEP, including the E block integrated power system to milk point capital for $50 million in cash and equity.

Nathan Mazurek: In the fourth quarter, we sold our Pioneer custom electrical products unit, PCEP, including the eBlock integrated power system to Millpoint Capital for $50 million in cash and equity. Sales consideration was comprised of a cash payment to Pioneer of $48 million and an approximately 6% stake in MillPoint's new Voltaris energy transition platform. Concurrently, MillPoint also acquired Jefferson Electric, a storied electric transformer manufacturer from ERMCO, in order to expand Voltaris into a key power solutions provider. We expect strong profitable growth for Voltaris and are pleased to hold equity in this platform.

Nathan Mazurek: Sales to consideration was comprised of a cash payment to pioneer a $48 million and approximately 6% stake in milk points Newbolt, Paris energy transition platform concurrently mill point also acquire Jefferson electric a storied electric.

Nathan Mazurek: <unk> former manufacturer from Aramco.

Nathan Mazurek: Order to expand both terrorists into a key power solutions provider, we expect strong profitable growth for both Paris and are pleased to hold equity in this platform.

Nathan Mazurek: Subsequent to the sale, our board declared a one-time special cash dividend of $1.50 a share payable on January 7, 2025, to shareholders of record as of December 17, 2024, essentially returning $16.7 million to our shareholders. Pioneer's remaining business is our critical power business, which is anchored by our eBoost mobile charging platform. Indeed, most of our remarks this afternoon, including the financial presentation, will be focused on this business. Since launching our first truck-mounted fast-charging solution prototype in November of 2021, we have grown eBoost to a multimillion-dollar business with revenue reaching $22.9 million in 2024, more than double the $11.1 million we delivered in 2023, and way more than the $1 million of eBoost product we delivered in 2022.

Nathan Mazurek: Subsequent to the sale our board declared a one time special cash dividend of $1 50, a share payable on January 720, 25 to shareholders of record as of December 17th 2024, essentially returning $16.7 million to our share.

Nathan Mazurek: Holders.

Nathan Mazurek: <unk> remaining businesses, our critical power business, which is anchored by our E boost mobile charging platform.

Nathan Mazurek: Indeed, most of our remarks this afternoon, including the financial presentation will be focused on this business.

Nathan Mazurek: Since launching our first truck mounted fast charging solution prototypes in November of 2021 we have grown our E boost to a multimillion dollar business with revenue, reaching $22 9 million in 'twenty 'twenty four more.

Nathan Mazurek: More than double the 11.1 million, we delivered in 'twenty, three and way more than the $1 million of eat boost product we delivered in 2022.

Nathan Mazurek: Through engineering enhancements and market-driven innovation, we've expanded our product lineup beyond the original truck-mounted unit to include E-Boost Mini, a skid-based DC fast charger, easily movable with a forklift, E-Boost Mobile, our flagship trailer-based, engine-powered DC fast charger, towable by a truck or tractor, E-Boost Goat, a truck-integrated DC fast charger modeled after AAA's roadside assistance, E-Boost Pod, a containerized DC fast charger including engine designed for rural extreme weather and semi-permanent applications. With each solution, we have demonstrated our ability to innovate and adapt to a rapidly evolving market, customizing our units electrically and mechanically to meet diverse user needs.

Nathan Mazurek: Through engineering enhancements in market driven innovation, we've expanded our product lineup beyond the original truck mounted unit to include E boosts many.

Skip based D C fast charger easily movable with a forklift eat boosts mobile our flagship trailer based engine powered D. C. Fast Chow Charger told we'll buy a truck or tractor E.

Nathan Mazurek: He boost goat a truck integrated D C fast charger modeled after triple A's.

Nathan Mazurek: Roadside assistance E booster part of containerized, DC fast charge or including engine designed for rural extreme weather and semi permanent applications.

Nathan Mazurek: With each solution, we have demonstrated our ability to innovate and adapt to a rapidly evolving market customizing our units electrically mechanically to meet diverse user needs to date. He boost is recognized as a leader in reliable sustainably powered off grid mobile E V Chary.

Nathan Mazurek: Today, eBoost is recognized as a leader in reliable, sustainably powered, off-grid, mobile EV charging. Indeed, eBoost is eponymous with mobile high-capacity charging in the electric truck and the electric bus market. To date, we've delivered over 22,000 charging sessions and supplied more than 700 megawatts of sustainable off-grid power. Importantly, this diverse portfolio positioned eBoost as a leader in mobile and adaptable EV charging solutions. We remain committed to innovation and expansion, continuously bringing new products to market. By diversifying revenue streams, we aim to continue to drive sustained long-term growth.

Nathan Mazurek: Indeed E boosters eponymous with mobile high capacity charging and the electric truck in the electric bus market.

Nathan Mazurek: To date, we've delivered over 22000 charging sessions and supply more than 700 megawatts of sustainable off grid power.

Nathan Mazurek: Accordingly. This divorced this diverse portfolio positioned to eat boost as a leader in mobile and adaptable EV charging solutions, we remain committed to innovation and expansion continuously bringing new products to market by.

Nathan Mazurek: By diversifying revenue streams, we aim to continue to drive sustained long term growth.

Nathan Mazurek: For the fourth quarter, this business delivered. Impressive year-over-year revenue growth of 265% and 106% for the full year of 2025. Importantly, the economics of our e-boost business are highly attractive. We narrowed the loss from continuing operations in 2024 by nearly 50% compared to 2023. And even more importantly, as Walter would detail in a few minutes, When we have a quarter with almost $10 million in revenue, as we did in 2024's fourth quarter, how profitable the critical power segment becomes, and how well the operating leverage continues to play for us. As of 2024, our critical power, I'm sorry, as of the end of 2024, our critical power segment, inclusive of eBoost, had a total backlog of $19.8 million, an increase of 19% compared to the end of 2020.

Nathan Mazurek: For the fourth quarter this business delivered.

Nathan Mazurek: Impressive year over year revenue growth of 265% and 106% for the full year of 'twenty 'twenty. Four importantly, the economics of our E book business, a highly attractive we narrowed the loss from continuing operations in 2024 by nearly 50 per.

Nathan Mazurek: <unk> compared to 'twenty to 'twenty, three and even more importantly, as Walter with detail in a few minutes when we have a quarter with almost $10 million in revenue as we did in 'twenty 'twenty four is fourth quarter, how profitable the critical power segment becomes and how well.

Nathan Mazurek: The operating leverage continues to play for us.

Nathan Mazurek: As of 'twenty 'twenty, four our critical power I'm sorry.

Nathan Mazurek: As of the end of 'twenty 'twenty four our critical power segment inclusive of the boost had a total backlog that backlog up $19.8 million, an increase of 19% compared to the end of 'twenty. Two 'twenty three this backlog provides the basis.

Nathan Mazurek: This backlog provides the basis. for our revenue guidance for 2025. and reinforces our confidence in achieving or surpassing our guidance for 2025.

Nathan Mazurek: For our revenue guidance for 2025.

Nathan Mazurek: And reinforces our confidence in achieving or surpassing our guidance for 2020 five.

Nathan Mazurek: Important to note that our revenue guidance for 2025 does not include any revenue or profit from our recently announced HomeBoost product. We announced the launch of our first residential offering, HomeBoost, last year. Building on our innovative HomeBoost residential solution, we refined our design to meet evolving market needs. In response to industry feedback, consumer demand, we are indeed expanding our product line to serve both high-end residential and light commercial segments, including medical centers and cafe-type establishments. Our enhanced offering will provide 100% whole home backup power and advanced EV charging capabilities. Essentially, a virtual power plant for the home or smaller light commercial user.

Nathan Mazurek: It's important to note that our revenue guidance for 'twenty with 25 does not include any revenue or profit from our recently announced home boost product, we announced the launch of our first residential offering home boost last year building on our innovative home.

Nathan Mazurek: Booths residential solution, we refined our designs to meet evolving market needs in response to industry feedback consumer demand. We are indeed, expanding our product line to serve both high end residential and light commercial segments, including medical centers and cafe type establishment.

Nathan Mazurek: Our enhanced offering will provide whole home, 100% whole home backup power and advanced E V chip charging capabilities.

Nathan Mazurek: Sensually, a virtual power plant for the home or smaller light commercial user we're on track to launch them to launch. The first units later this year capitalizing on a growing market need for reliable flexible power solutions.

Nathan Mazurek: We're on track to launch the first units later this year, capitalizing on a growing market need for reliable, flexible power solutions. In short, the market opportunities for our e-boost solutions are massive. Robust demand is being driven by rapid expansion, rapid EV adoption, increasing demand for mobile and off-grid charging, and for clean energy infrastructure. Markets we are most active in at this time are transit bus, school bus, electric truck, and van fleets, large government and corporate fleets. Submarkets to that that we concentrate on are sanitation, public works, construction equipment, and airport ground service equipment. With rising EV adoption, inability of users to secure ample power for their needs and infrastructure gaps, eBoost is well positioned to capitalize on the increasing need for flexible off-grid charging solutions.

Nathan Mazurek: In short the market opportunities for our E. Boosting solutions are massive robust demand is being driven by rapid expansion rapid EV adoption, increasing demand for mobile and off grid charging.

Nathan Mazurek: And for clean energy infrastructure markets, we are most active in.

Nathan Mazurek: At this time, our transit bus school bus electric truck and van sleep large government and corporate sleep.

Nathan Mazurek: Submarkets to that that we concentrate R&R sanitation public works construction equipment and airport ground service equipment.

Nathan Mazurek: With rising EV adoption inability of users to secure ample power for their needs and infrastructure gaps E. Boost is well positioned to capitalize on the increasing need for flexible off grid charging solutions.

Nathan Mazurek: Importantly, with proceeds from the sale of PSEP and zero debt, we have the capital necessary to fund our growth plans over the next several years. Following the sale of PCEP, we are a more focused business. For 2025, we are reaffirming our revenue guidance of $27 to $29 million. We expect The quarter-by-quarter cadence to be between $6 and $8 million per quarter throughout 2025. We expect this revenue will be primarily driven by eBoost product sales and rentals, along with service and maintenance revenue, specifically. Approximately $17 million from equipment sales and rentals, including approximately $2.5 million from long-term lease slash rental agreements.

Nathan Mazurek: Importantly, with proceeds from the sale of P Cert and zero debt, we have the capital necessary to fund our growth plans over the next several years.

Nathan Mazurek: Following the sale of a piece that we are more folk we are a more focused business for 2025, we are reaffirming our revenue guidance of $27 million to $29 million.

Nathan Mazurek: We expect.

Nathan Mazurek: The quarter by quarter cadence to be between six and $8 million per quarter.

Nathan Mazurek: Throughout 2025, we expect this revenue will be primarily driven by E boost product sales and rentals, along with service and maintenance revenue specifically.

Nathan Mazurek: Approximately $17 million from equipment sales and rentals, including approximately two and a half million dollars from long term lease slash rental agreements and up more than $10 million in 2025 from service and maintenance agreements.

Nathan Mazurek: and more than $10 million in 2025 from service and maintenance agreements.

Walter Michalec: With that, I will turn the call over to Walter. Thank you, Nathan, and good afternoon, everyone. As Nathan mentioned earlier, on October 29, 2024, we sold our California business, Pstep, for $50 million in a cash and equity transaction, primarily cash, as we received total gross cash proceeds of $48 million, leaving our balance sheet in a very strong position.

Walter: With that I will turn the call over to Walter.

Walter: Thank you Nathan and good afternoon, everyone.

Walter: As Nathan mentioned earlier on October 29th 2024, we sold our California business piece that for $50 million and our cash and equity transaction, primarily cash as we received total gross cash proceeds of $48 million, leaving our balance sheet.

Walter: Very strong position.

Walter Michalec: Our Critical Power Segment, which includes Pioneer E-Mobility, or E-Boost, is the sole operating business unit that remains after the SIF. Please be advised that we have included a non-GAAP financial measure of operating income from continuing operations, which excludes corporate overhead expenses, research and development expenses, and non-recurring professional Please refer to our press release issued earlier today for further information. including a reconciliation between GAAP and non-GAAP financial measures. press release can be found on our website at www.pioneerpowersolutions.com slash investors slash news. Such non-GAAP measures should not be used as a substitute or alternative to any measure of financial performance calculated and presented in accordance with U.S.

Walter: Our critical power segment, which includes pioneered E mobility or E. Boost is the sole operating business unit that remains after the ship.

Walter: Please be advised that we have included a non-GAAP financial measure of operating income from continuing operations, which is which excludes corporate overhead expenses research and development expenses.

Walter: Non reoccurring professional fees.

Walter: Please refer to our press release issued earlier today for further information, including a reconciliation between GAAP and non-GAAP financial measures. The press release can be found on our website at www Dot pioneer power solutions Dot com slash investors slash newsroom.

Walter: Such non-GAAP measures should not be used as a substitute.

Walter: <unk> or alternative to any measure of financial performance calculated and presented in accordance with U S GAAP and.

Walter Michalec: GAAP. Instead, we believe this non-GAAP measure should be used to supplement our financial measures derived in accordance with U.S. GAAP in order to provide a more complete understanding of the trends affecting the business. Fourth quarter revenue from continuing operations was $9.8 million, compared to $2.7 million in the year-ago quarter, an increase of 265%. The increase was primarily due to the significant growth in our Pioneer e-mobility business, or e-boot. Fourth quarter gross profit from continuing operations was $2.8 million, or a gross margin of 29%, compared to gross profit of $610,000, or 23% of revenue in the fourth quarter of last year.

Walter: Instead, we believe this non-GAAP measure should be used to supplement our financial measures derived in accordance with U S. GAAP.

Walter: Order to provide a more complete understanding of the trends affecting the business.

Walter: Fourth quarter revenue from continuing operations was $9 8 million compared to $2 7 million in a year ago quarter, an increase of 265%.

Walter: The increase was primarily due to the significant growth in our pioneer E mobility business where Eagles.

Walter: Fourth quarter gross profit from continuing operations was $2 8 million.

Walter: Or a gross margin of 29%.

Walter: Compared to gross profit of 610000 or 23% of revenue in the fourth quarter of last year.

Walter Michalec: The increase, once again, was primarily due to the significant growth in our e-boost During the fourth quarter of 2024, our critical power segment incurred an operating loss from continuing operations of 1.1 million, a significant improvement from a loss of 1.9 million in the fourth quarter of last year. The improvement was primarily due to the large increase in revenue from the sale of our eBoost solutions and the higher margins we are seeing from that business. During the fourth quarter of 2024, our critical power segment generated $1.6 million of non-GAAP operating income from continuing operations. which again excludes corporate overhead expenses, R&D expense, and non-recurring professional fees.

Walter: The increase once again was primarily due to the significant growth in our <unk> business.

Walter: During the fourth quarter of 2024, our critical power segment incurred an operating loss from continuing operations of $1 1 million a significant improvement from a loss of $1 9 million in the fourth quarter of last year.

Walter: <unk> was primarily due to the large increase in revenue from the sale of our <unk> solutions and the higher margins, we are seeing from that business.

Walter: During the fourth quarter of 2024, our critical power segment generated $1.6 million of non-GAAP operating income from continuing operations, which again excludes corporate overhead expenses R&D expense and nonrecurring professional fees at <unk>.

Walter Michalec: as compared to $100,000 of non-GAAP operating income from continuing operations for the same quarter in 2023, a year-over-year improvement of approximately $1.5 million. Net income from continuing operations for the fourth quarter of 2024 was $759,000 compared to a net loss from continuing operations of $1.4 million during the fourth quarter of 2023. A year-over-year improvement of approximately $2.1 million.

Walter: Paired to $100000 of non-GAAP operating income from continuing operations for the same quarter in 2023.

Walter: Year over year improvement of approximately $1 5 million.

Walter: Net income from continuing operations for the fourth quarter of 2024 was 759000.

Walter: Compare to one that loss from continuing operations of 1.4 million during the fourth quarter of 2023.

Walter: The year over year improvement of approximately $2 $1 million.

Walter Michalec: turning to our full year results. Full year 2024 revenue from continuing operations was $22.9 million. compared to $11.1 million in 2023, an increase of 106%. The increase was once again primarily due to the growth in our Pioneer e-mobility business as we recognized a large increase in shipments and rentals of our e-boost equipment. Full year 2024 gross profit from continuing operations was $5.5 million, or a gross margin of 24%, compared to gross profit of $2.2 million, or 20% of revenue in 2023. The increase to Ag World's profit and margin during 2024 was primarily due to the increase in sales of E-Boost equipment.

Walter: Turning to our full year results.

Walter: Full year 2020 for revenue from continuing operations was $22 9 million compared.

Walter: Compared to $11 1 million in 2023, an increase of 106%.

Walter: The increase was once again, primarily due to the growth in our pioneer in E mobility business as we recognize a large increase in shipments in rentals of our <unk> equipment.

Walter: Full year 2024 gross profit from continuing operations was $5 5 million.

Walter: We're a gross margin of 24% compared to gross profit of $2 2 million or 20% of revenue in 2023.

Walter: The increase to our gross profit and margin during 2024 was primarily due to the increase in sales of <unk> equipment.

Walter Michalec: from the company's Pioneer E-Mobility business. During 2024, our critical power segment incurred an operating loss from continuing operations of 5.2 million compared to 7 million in 2023, a year over year improvement of 1.8 million. During 2024, our critical power segment generated $1.7 million of non-GAAP operating income from continuing operations, which again excludes corporate overhead expenses, R&D expense, and non-recurring professional fees. As compared to a non-GAAP operating loss from continuing operations of $1.3 million for the year ended December 31, 2023, a significant year-over-year improvement of approximately $3 million. Net loss from continuing operations for 2024 was $3.3 million, compared to a net loss from continuing operations of $6.3 million in 2023.

Walter: From the company's pioneer E mobility business.

Walter: During 2024, our critical power segment incurred an operating loss from continuing operations of $5 2 million compared to $7 million in 2023, a year over year improvement of $1 8 million.

Walter: During 2024, our critical power segment generated $1 7 million of non-GAAP operating income from continuing operations, which again excludes corporate overhead expenses R&D expense and nonrecurring professional fees as compared to a non-GAAP.

Walter: Loss from continuing operations of $1 3 million for the year ended December 31, 2023, a significant year over year improvement of approximately $3 million.

Walter: Net loss from continuing operations for 2024 was $3 3 million.

Compared to a net loss from continuing operations of $6 3 million in 2023.

Walter Michalec: The year-over-year improvement of approximately $3 million.

Walter: That's a year over year improvement of approximately 3 million.

Walter Michalec: Taking a look at our balance sheet. We had cash on hand of $41.6 million and zero bank debt as of December 31st, 2024. compared to $3.6 million of cash on hand and zero bank debt as of December 31, 2023. The cash on hand as of December 31st, 2024 represents cash per share of approximately $3.74 as of December 31st, 2024. Also, as Nathan mentioned earlier, subsequent to year-end, we paid a one-time special cash dividend of $16.7 million in aggregate to shareholders of record as of December 17th. 2021 Today, we are reaffirming our guidance for revenue of $27 to $29 million for the full year of 2025.

Walter: Taking a look at our balance sheet.

We had cash on hand of $41 6 million and zero bank debt as of December 31st 2024.

Walter: Compared to $3 6 million of cash on hand, and zero bank debt as of December 31, 2023.

Walter: The cash on hand as of December 31st 2024 represents cash per share of approximately $3.74 as of December 31 2020.

Walter: As Nathan mentioned earlier subsequent to yearend, we paid a one time special cash dividend of $16 7 million in aggregate to shareholders of record as of December 17th 2024.

Walter: Today, we are reaffirming our guidance for revenue of 27 to 29 million for the full year of 2025.

Walter Michalec: This concludes my remarks.

Walter: This concludes my remarks, I will now turn the call back over to the operator for any questions.

Operator: I will now turn the call back over to the operator for any questions. Great, thank you.

Walter: Great. Thank you, we'll now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue.

Operator: We will now be conducting a question and answer session.

Operator: If you'd 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. You may press star 2 to remove your cell phone.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment please while I call for...

Walter: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Walter: One moment please poll for questions.

Rob Brown: First question here is from Rob Brown from Lake Street Capital Markets, please go ahead. Good afternoon. Hey, good afternoon, Rob. On the strong backlog and growth in eBooster or Outlook, what's sort of the driving that? Where are the customer segments you're seeing the activity and how's the visibility? Yeah, new demand is always coming in. But it's coming, really, the biggest bucket right now is some form of government, state, county, city, town. And it's usually related to transit or school buses, sometimes fleets as well. That's the biggest. Now, if you look at the more recent announcements with the city of Portland, it's going to be more government, quasi-government type groups, ports, transit authorities, people like that.

Speaker Change: First question here is from Rob Brown from Lake Street Capital markets. Please go ahead.

Rob Brown: Hi, good afternoon.

Speaker Change: Hey, good afternoon, Rob.

Speaker Change: Yeah.

Speaker Change: <unk> backlog and growth in E booster or outlook, what's sort of driving that where the customer segments youre seeing the activity and how does the visibility look at this point in the year in terms of in terms of new with new demand coming in.

Speaker Change: Yeah, new demand is always coming in but it's coming really the biggest bucket right. Now is you know some form of government State County City town.

Speaker Change: And it's it's usually related to transit or school buses, sometimes fleets as well that's the biggest segment for US now you know if you look at the more recent announcements you know it was the city of Portland, It's gonna be more government quasi government type groups.

Speaker Change: Ports transit authorities people like that.

Speaker Change: Okay, great great and.

Nathan Mazurek: Great, great. And, and you talked a little bit about the service equipment mix. How is that mix looking for 25? Are you are you seeing a fair amount of rental revenue? Yeah, so so we're we kind of budgeted two and a half million dollars in in in lease and, you know, rental type revenue for 2025. And I think that's what will will do me we might exceed it by a little but that's kind of the that's the thinking we look to continue to grow that. Obviously with quality type counterparties, but that seems to be for a lot of the large users that seems to be something that speaks more to them, and since they have the credit worthiness to make it worth our while, it's good for everybody.

Speaker Change: You talked a little bit about the service mix, how how is that mix looking for 25 or you are you seeing a fair amount of rental revenue in the 25, yeah. So so we're we're we kind of budgeted two and a half million dollars in in in lease and rental type revenue for 2025, and I think that's what we'll do.

Speaker Change: We might exceed it by a little but that's kind of the that's the thinking we look to continue to grow that.

Speaker Change: Obviously with quality quality type counterparties, but that seems to be for a lot of the large users that seems to be something that speaks more to them and since they have the credit worthiness to make it worth our while that's it's good for everybody. It's a more lucrative business, but we have to front. It so that's real.

Nathan Mazurek: It's a more lucrative business, but we have to front it. So that's really the only downside for us.

Speaker Change: That's the only downside for us.

Speaker Change: Yes, I understand okay, and then in the homeless practice I think you talked a little bit about our redesign effort. There could you kind of give us some color there and maybe how that commercial I guess, how that expands into the commercial yeah. I mean, you know how home boost.

Nathan Mazurek: And then on the Home Boost product, you talked a little bit about a redesign effort there. Could you kind of give us some clarity there and maybe how the light commercial, I guess, how that explains it? Yeah, I mean, you know, Homeboost, you know, we put together a special team, my goal was to have the team together by the end of 2024, which we did. I, it was me, it's on me, I kind of pulled it back in February. Not because the product wasn't really ready for primetime, but I, you know, the product itself is beautiful, but it didn't appear, it didn't cosmetically look as beautiful as I would have liked, you know, it's a premium product to sort of, you know, a premium user, so we went back to make it look and feel that the person's getting, not just in functionality, but they're getting aesthetically a value for the money that they're spending.

Speaker Change: Put together a special team my goal was to have the team together by the end of 'twenty 'twenty, four which we did I I thought it was me. It's on me I kind of pulled it back in February.

Speaker Change: Not because the product wasn't really ready for prime time, but I E. The product itself is beautiful, but it didnt appear it didnt cosmetically look as beautiful as I would've liked.

Speaker Change: Premium.

Speaker Change: <unk> to sort of you know Oh.

Speaker Change: Our premium user.

Speaker Change: So we went back and two to make it make it look and feel.

Speaker Change: That the person's getting not just in functionality, but theyre getting a statically a value for the money that they're spending.

Nathan Mazurek: And yeah, it's targeted to the high-end residential, somebody that's willing to spend, you know, call it $50,000, $60,000 to have full home backup, you know, you're talking about homes that, you know, will typically be 3,000 square feet plus, probably more. You know, and they want the full backup, prime-rated engines as opposed to just a backup engine, the ability to produce their own electricity off their gas line 24 hours a day if they choose to, to switch back and forth between the grid as they choose to. And initially, when we launched this, especially the generator dealers and distributors were really the ones that almost in unison.

Speaker Change: It's targeted to the high end residential somebody that's willing to spend you know call. It 50 $60000 to have full home backup you know you're talking about homes that will typically be 3000 square feet plus probably more.

Speaker Change: They want the full backup prime rated engines as opposed to just the backup engine the ability to to produce their own electricity off their gas line 24 hours a day, if they choose to switch back and forth between the grid as they choose to.

Speaker Change: And initially when we when we launched this especially the generator dealers and distributors were really the ones that almost in unison.

Nathan Mazurek: sort of designated the product for the medical center small business that really wants super resilience and to be able to integrate charging for really just spending a little bit more than they do on a backup. that gives them 24 hour, you know, 100% resilience. That's where we're going to be headed with it. Okay. Great. Thank you.

Speaker Change: Sort of designated the products for the medical center, a small business there really once super resilience and to be able to integrate charging for really just spending a little bit more than they do on a on a backup plan and that gives them 24 hours.

Speaker Change: You know 100% resilience so.

Speaker Change: That's that's where we're gonna be headed with it.

Speaker Change: Okay, great. Thank you I'll turn it off.

Operator: As a reminder, if you'd like to join the queue, it is star 1.

Speaker Change: As a reminder, if you'd like to join the queue a star one.

Sameer Joshi: Next question here is from Sameer Joshi from HC Wainwright, please go ahead. Hey, good afternoon, Nathan, Walter. Good afternoon, Sameer.

Speaker Change: Next question here is from Samir Joshi from H C. Wainwright. Please go ahead.

Nathan Mazurek: Oh, good afternoon, Nathan good afternoon Sameer.

Walter Michalec: That's a good question. On the gross margin front, I think your 4th quarter gross margins were around 29%, correct, on nice revenues. Should we expect these levels going forward or was there something one time in this 4th Yeah, I mean, you know, $9.8 million, more than 50% was eBoost product, less than 50% was service. That's a really nice mix for us. The gross margins on the product are higher than we get on service, especially for customers that are in a lot of different places. So we end up subbing some of the service and adding a surcharge so we can make something that definitely compresses gross margins on the service side.

Speaker Change: Thanks, Mike Good question.

Speaker Change: On the gross margin front I think your fourth quarter gross margins, a little longer mine lives and.

Speaker Change: Correct.

Speaker Change: Or should we expect these levels going forward or was there something one time in this fourth quicker.

Speaker Change: Gross margins.

Speaker Change: Yeah I mean.

Speaker Change: Yeah, $9 $8 million a more than 50% was was he boost product.

Speaker Change: Less than 50% was with surface, that's a really nice mix for us.

Speaker Change: The gross margins on the products that are higher than we get on service, especially for customers that are in a lot of different places. So we ended up stopping some of the service and adding a surcharge. So we can make something that that definitely compresses.

Speaker Change: Gross margins on the service side.

Speaker Change: If the you know when the product sales continued to grow.

Walter Michalec: When the product sales continue to grow, if leasing continues to grow, so the gross margins are going to, the overall gross margin picture should be there or maybe a little bit better.

Speaker Change: Leasing continues to grow so the gross margins are going on the overall gross margin picture should should be there or maybe a little bit better.

Nathan Mazurek: Understood. So then juxtaposing your fourth quarter revenues with your 2025 guidance, It seems like a run rate of 6 to 8 million versus 10 million, which you realized in fourth quarter. Is there a reason for this? Or was there, as I think you mentioned, more than 50% of revenues were from product this quarter, and you're expecting around 17%. Million From Products. Yeah, we had one, it was for the Los Angeles Department of Transportation. That's the city of Los Angeles's transit buses, the buses, the inner city buses that move humans. It was one particular project of a little bit over $5 million that needed to be delivered in November.

Speaker Change: Understood.

Speaker Change: Then juxtaposing fourth quarter revenues with your 'twenty guidance.

Speaker Change: It seems like a run rate of six to 8 million versus 10 million Oh, what you realized in the fourth quarter.

Speaker Change: The reason for this or what.

Speaker Change: The.

Speaker Change: I think he mentioned a more than 50 boes until seven newsletter from product this quarter and you are expecting their own 17 18 million from product next year.

Speaker Change: Yeah, We we had one it was for the Los Angeles Department of Transportation, That's the city of Los Angeles Transit buses the buses the inner city buses that move humans.

Speaker Change: It was one particular project is a little bit over $5 million that needed to be deliberate in November that was their window.

Nathan Mazurek: That was their window. The team did an amazing job to do it. You know, at first, maybe they weren't so happy, but I'm talking about our own people, not the Department of Transportation, but we did it in a very short period of time and successfully, you know, met the internal markers and really came in at the gross margin that we expected, so that was a nice thing to complete all in one.

Speaker Change: Team did an amazing job to do it you know at first that maybe they weren't so happy but I'm.

Speaker Change: I'm talking about our own people not the department of transportation, but.

Speaker Change: And we did it in a very short period of time and and successfully met met the internal markers and really came in at the gross margin that we expected. So that was a nice thing to complete all in one we don't have any we have a large project that's split between the first quarter and the.

Nathan Mazurek: We don't have any, we have a large project that's split between the first quarter and the second quarter of 2025, but we don't have any, we don't have any one the size of DOT yet, but the year for us, I neglected to kind of, or I think maybe Rob had asked, and I didn't answer this part of his question. We're projecting almost an even $6 to $8 million per quarter, you know, depending on a few jobs moving here and there, but more or less $6 to $8 million. Our year is, I'd say, 80% baked in already, and the strength of the pipeline and orders that, you know, we hope to be announcing soon will support really not so much, a little bit for, to finish 2025, but essentially most of the year, at least my head is already in.

Speaker Change: Quarter of 2025.

Speaker Change: But we don't have any we don't have any one the size of D O P yet but.

Speaker Change: But the year for us I neglected to kind of where I think maybe Rob had asked and I didn't answer. This part of his question, we're projecting almost didn't even six to 8 million per quarter, depending on a few jobs moving here and there, but more or less $6 million to $8 million.

Speaker Change: Our year is I'd say, 80% baked in already and the strength of the pipeline and an order is that you know we hope to be announcing soon will will support really not so much a little bit for to finish 2025, but essentially my head is already in 'twenty six.

Nathan Mazurek: Most of the efforts now are building the first half of Yeah, understood.

Speaker Change: Most of the efforts now are building the first half of 2026.

Speaker Change: Yeah understood. Thanks for because I was going to ask that our confidence in light.

Nathan Mazurek: Thanks, sir. Because I was going to ask that confidence in 2025 top line, given already strong backlog. Thanks for answering that. You're very welcome. I think now you have around 25 million or just like 41. or something like that.

Speaker Change: Our top line with an already strong backlog.

Speaker Change: So I'm, saying that.

Speaker Change: Okay very well.

Speaker Change: I think now you have around 25 million or 41 point.

Speaker Change: Seven minus 16.6.

Speaker Change: Something like that.

Speaker Change: It's something that sounds something something like that.

Nathan Mazurek: Would you be looking for some strategic opportunities or would you rather do some organic in-house product? Yeah, so we're open to all of it really, me personally I'm a serial acquirer, prices are better now than they were a year ago or even six months ago, there's a reason for that as well, one thing that we're not going to do is I can't go backwards financially, I can't take on a bleeder. Unfortunately, a lot of the businesses or enterprises that would maybe make a good fit on the charging side come with risks and built in losses that we're not, you know, even in an egomaniacal day, I don't think we could turn around in time and would not be in the best interest of the shareholders.

Speaker Change: Would you be looking for some strategic opportunities or would you rather do some organic oh got it.

Speaker Change: Yeah. So so we're we're opened yeah. We're open to all of it really we we where were see you know me personally I'm a serial acquirer or.

Speaker Change: Prices are better now than they were a year ago or even six months ago.

Speaker Change: There's a reason for that as well I mean, you know one thing that we're not going to do is I can't go backwards financially you know I can't take on up leader.

Speaker Change: Unfortunately, a lot of the businesses or enterprises that would maybe make a good fit on the charging side I come with up with with risks and built in losses that were not you know.

Speaker Change: Even in an ego Maniacal day I don't I don't think we could turn around in time.

Speaker Change: And would not be in the best interest of the shareholders. So we're kind of looking for for ancillary you know a little bit more empower a little bit more than in special forms of power, whether mobile or permanent and distributed generation.

Nathan Mazurek: So we're kind of looking for ancillary, you know, a little bit more in power, a little bit more in special forms of power, whether mobile or permanent, you know, in distributed generation, you know, the Appetite for power is endless. You know, we were able to come up with something clever where we married the charging and unitized it within a certain package and made it mobile. But the essence of what we do is deliver on-site power.

Speaker Change: The appetite for power is endless.

Speaker Change: We're able to come up with something clever when we married the charging and unitize that within a certain package and made it mobile, but but the essence of what we do is is deliver onsite power. So that would really be the way we would go.

Nathan Mazurek: So that would really be the way we would go.

Speaker Change: Understood and then just one last one like stepping back at the macro level.

Nathan Mazurek: And then just one last one like stepping back at the macro level. I do understand your backlog and engagement with the pipeline customers seems very strong. But do you think any macro economical events or tariffs or any other uncertainties could have an impact on your outlook for 2020? Yeah, I mean, it's baked into the outlook. I mean, so the change in administration, you know, was not a positive for charging, frankly. Most of the customers and clients we're dealing with, again, you know, these are city, states, whatever you want to call them, quasi governmental agencies, you know, they made certain decisions.

Speaker Change: I do understand your backlog and the engagement with the pipeline customers are seeing very strong, but do you think any macro economy.

Speaker Change: You ends or values or any other uncertainties could have an impact on your outlook when you can fly.

Speaker Change: Yeah, I mean, it's baked into the outlook I mean, so the change in administration you know it was not a positive for charging frankly.

Speaker Change: Most of the customers and clients. We are dealing with again. These are cities states wherever you want to call them quasi governmental agencies that they made certain decisions and you know, they're they've crossed that Rubicon already you know theyre going to electric and.

Nathan Mazurek: And, you know, they've crossed that Rubicon already, you know, they're going electric and that they making massive investments or have already, you know, they're already deeply pregnant, that you can't, there's not a turning back. And that's where we're spending most of our time. From a tariff, you know, I guess, chaos or uncertainty, even at worst, it wasn't going to have a major effect on us. The effect would be, you know, anybody's macro effect, you know, any receding of GDP or any slowdown in the economy is not good for anybody. So, you know, we're not immune to that, but nothing specifically or nothing of real important, you know, nothing of note from an increase that, you know, that we would expect.

Speaker Change: They are making massive investments or have already they're already deeply pregnant that you can't does not a turning back and that's where we're spending most of our time.

Speaker Change: From a tariff you know I guess chaos or uncertainty.

Speaker Change: Even at worst it wasn't going to have a major effect on us, but they the effect would be you know antibodies macro effect, you know any reseeding of of GDP or any slowdown in the economy is not good for anybody. So you know, we're not immune to that but nothing specific.

Speaker Change: Our our nothing of real important you know nothing of note.

Speaker Change: From an increased you know that we would see.

Operator: Thanks until the end. You're welcome.

Speaker Change: Makes sense thanks for that thanks.

Samir Joshi: Youre welcome Samir.

Nathan Mazurek: This concludes the question and answer session. I'd like to turn the floor back to management for any closing comments. All right, thank you all for your time and support, and we look forward to updating you again on our next call, which will hopefully be right after the time to file the Q. Thanks. This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your © BF-WATCH TV 2021 https://www.youtube.com

Speaker Change: This concludes the question and answer session I would like to turn the floor back to management for any closing comments.

Speaker Change: Alright. Thank you all for your time and support and we look forward to updating you again on our next call, which will hopefully be right. After the the time to file the queue. Thank you.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

Speaker Change: Uh-huh.

Speaker Change: Hum.

Speaker Change: [music].