GuruFocus -
- Revenue: $705,000 in Q4 fiscal '23 compared to $159,000 in Q4 fiscal '22.
- Gross Margin: 21% for Q4 fiscal '23, down from 23% in the previous quarter; 38% for the fiscal year ending September 30, compared to 18% in fiscal 2022.
- Deferred Revenue: $364,607 as of September 30, 2023, compared to $524,127 at the end of the prior quarter.
- Cash Position: $236,000 in cash at the end of the quarter.
- Working Capital: $743,000 at the end of the quarter.
- Backlog: 14 units in progress, with parts on hand and shipping planned between now and March.
- Net Cash from Backlog: Expected $1.6 million beyond deposits already received.
- Factory Capacity: Redesigned to deliver 8 units per month per shift, 16 with two shifts.
- EBITDA Projection: Positioned to be EBITDA positive in operations by 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Legend Power Systems Inc (LPSIF) has made significant progress in reducing costs and improving margins, with gross margins doubling over the prior year to approach 40%.
- The company is transitioning from dozens to hundreds of SmartGATE installations annually, indicating strong growth potential.
- Legend Power Systems Inc (LPSIF) has secured strategic partnerships with major entities like the US General Services Administration and the Department of Defense, which are expected to drive substantial future growth.
- The company has a robust backlog and is positioned to be EBITDA positive in 2025, supported by a strong pipeline of orders and strategic partnerships.
- Legend Power Systems Inc (LPSIF) has achieved record-breaking sales and diversified into new geographies and verticals, enhancing its market presence and growth prospects.
- The company operates in a tight cash environment, which could limit its ability to invest in growth opportunities.
- Gross margins for the quarter decreased from prior quarters due to an inventory provision, indicating potential challenges in inventory management.
- The timing of contracts with ESCOs and other partners can be unpredictable, which may affect revenue recognition and cash flow.
- There are delays in the ordering of SmartGATE units for certain proposals, which could impact short-term revenue.
- The company faces challenges in navigating complex procurement processes, particularly with large entities like the Department of Defense, which may delay project execution.
A: The number of SmartGATE units depends on the building size and the number of electrical feeds. For example, a large building like the Federal Triangle with over a million square feet has more than 30 electrical feeds, each a potential SmartGATE opportunity. Smaller facilities may need one to two units, while larger ones could require dozens.
Q: What is delaying the ordering of SmartGATE units for the remaining 24 proposals from DCAS?
A: There are ongoing discussions with several companies, and some large deals are expected to be announced soon. The delay is not due to smaller partners but rather the need for partners with strong relationships and brand presence in new markets.
Q: Can you update us on the activity with large ESCOs?
A: Yes, there is significant activity with large ESCOs. We are in discussions with top ESCOs, submitting bids, and working on various projects, including the DOD deals. The GSA approval is seen as a badge of approval, enhancing our credibility and leading to more opportunities.
Q: When can we expect the results from the Oakridge Labs analysis of the SmartGATE systems?
A: The systems need to be installed and operational before Oakridge Labs can start their analysis. We expect monthly and quarterly updates, with a final report possibly in 12 months. These updates will be shared with the market and customers.
Q: What happened to the four $1 million deals mentioned in the last webinar? Are they still in progress?
A: Yes, all four deals are still in progress. They are moving forward, although some are experiencing slight delays due to funding approvals. We remain optimistic about our bookings forecast.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.