Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fluence Corp Ltd (EMFGF, Financial) has seen strong growth in its core business units, particularly in industrial water and reuse, and industrial wastewater and biogas, with revenue growth of 17% and 15% respectively.
- The company's shift in focus to SPS and recurring revenue products and services has resulted in improved gross margins, increasing to 31.8%, up 5.5% from the same period in 2023.
- Fluence Corp Ltd (EMFGF) has significantly reduced SG&A and R&D costs, realizing $3.1 million in cost savings year-to-date, which is 20% lower than the same period last year.
- The company has repaid $17.7 million of debt year-to-date and replaced the Upwell facility with a more favorable revolving facility, providing considerable interest savings and operating flexibility.
- Fluence Corp Ltd (EMFGF) has a strong sales pipeline, now 88% higher than a year ago, and a backlog expected to convert to revenue in the next 12 months sitting at over $70 million, 39% higher than at the beginning of the year.
Negative Points
- The company's financial performance has been negatively impacted by project delays, particularly the Ivory Coast addendum, which has pushed expected 2024 revenue into 2025.
- Revenue through Q3 of 2024 was $30.3 million, 28% lower than the same period in 2023, primarily due to the reduction in revenue from the Ivory Coast project.
- Fluence Corp Ltd (EMFGF) has experienced a year-to-date EBITDA loss of $5.1 million, largely due to delays in the Ivory Coast project and ongoing softness in the China market.
- Operating cash flow in Q3 was negative $3.5 million, underperforming compared to forecasts due to delays in the Ivory Coast project and collection delays in other regions.
- The company has revised its guidance downward to $50 million to $60 million of revenue and an EBITDA loss of $3.5 million to $4.5 million, reflecting the impact of project delays and challenges in the China market.
Q & A Highlights
Q: What is the amount of Ivory Coast that is included in the backlog, and are you satisfied with the traction in other business segments?
A: Approximately EUR 45 million of the backlog is related to the Ivory Coast addendum. Yes, net of the Ivory Coast, we are satisfied with the traction in other segments, as discussed in detail during the presentation. - Ben Fash, CFO
Q: BOO pipelines have been looking large, but we haven't seen much announced. How close are we to gaining some mentionable success?
A: We hope to announce a significant BOO success before the end of the year. Some smaller projects have transitioned from BOO to leases, resulting in product sales and operating contracts. Larger projects take time to develop, and improving our cash position will help us pursue them more aggressively. - Thomas Pokorsky, CEO
Q: How much longer will we allow the Ivory Coast customer to delay before renegotiating the contract price?
A: We have clauses in the contract allowing for pricing increases tied to indexes. A recent review shows a slightly higher margin than initially projected. We have about nine months to a year before considering not proceeding, but we are currently well-covered. - Thomas Pokorsky, CEO
Q: Do we need a cash raising now that we only have $4.7 million in cash?
A: No, we have sufficient liquidity to operate. We expect Q4 to be a strong cash-flowing quarter, with additional working capital from the expanded revolving credit facility. - Ben Fash, CFO
Q: Are you engaging institutional investors to support the share price?
A: Yes, we have an active investor relations program and have added research coverage. We engage with institutional investors and educate them on our transition, which will become easier as operating performance improves. - Ben Fash, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
