Clear Blue Technologies International Inc.

Good morning, everyone, and thank you for joining TerraBlue's Q2 financial results call. The company filed its Q2 results on CDAR last night. Management will walk you through the business and financial updates on the quarter in a little bit. At the end of that presentation, we will be taking some questions via the Q&A box. If you do have any questions, and I see there's one already that's come in, please use the Q&A box, and we'll read them out for management to answer at the end of the call. With that, over to yourself, Miriam.

Thanks so much, Nikhil. And, of course, everyone, thank you so much for taking time out of your busy day and the last of our summer season to join us on this call today. We've been working very hard, and I think we're pretty proud of the progress that we're making as a company and showing a strong upswing as a result of all the work that we've done through the downturn in 2022 and coming out of it last year. I've got the recording on. First of all, I just want to remind you that anything that we provide to you should be taken into consideration with a forward-looking statement. We do the best that we can, but please be advised and take the time to read this information. I'm going to spend a few minutes talking about Clear Blue, what our business is, and what we're currently working on. Then Farouk's going to go through our 2020, our Q2 results. And at the end of it, we'll talk about what we see coming up for the rest of 2024 and into 2025. So, Clearblue is a really unique company. We do two or three things that anybody else in the industry, you would have to go and get three different companies to do. So, the first thing is that we manufacture... leading-edge power electronics. We make solar chargers and AC grid conversion to DC power and inverters, which inverted back from DC power to AC power. All of the different brains of a power system, you need power electronics inside. The reason we do that is because in order to deliver smart, power management and control and all of the benefits that you want to deliver to the customer. For example, taking all of Africa's 270,000 towers and getting them off of diesel and operating autonomously only on solar. To achieve that objective, you need to have edge computing and indeed you need to have certain parts of the power circuit with certain capabilities. So unlike other companies who make power electronics and then a separate company who's got a cloud computing software company and then a separate company that actually operates systems in the field, we are a combination of all three of those things. We manufacture leading-edge power electronics. We make our power systems smart by managing them through our smart power cloud service. We use big data, predictive analytics. to provide energy and uptime performance management so that we can deliver the lowest cost system with the highest uptime availability and the best performance in the marketplace. We make them fully remote control. Don't have to send a guy out to the field to do anything. We've got unparalleled remote troubleshooting and remote remediation capabilities. And in order to deliver an operational value proposition to our customer, we actually get into the boat with them. We manage and operate all of the systems in 55 countries around the world that we sell and deploy in partnership and on behalf of our customers so that when we talk about how we can make it more reliable or we talk about how we can eliminate OPEX for diesel or we talk about how you can run it on less solar panels and less batteries than anybody else in the marketplace, We put our money where our mouth is and we actually deliver that. Clearblue has a broad product line that basically supports mission critical technical infrastructure, telecommunications, smart city infrastructure. Internet of Things, satellite Wi-Fi systems, those are the technologies, the markets that we're going after because they're mission critical, they've got to run, and they need reliable off-grid power or hybrid off-grid and grid diesel power. Every system we sell, we manage from our Illumion's core cloud technology. We have lots of patents and IP around that. And by doing that, we deliver the best operational and upfront CapEx value proposition of any company in the marketplace. So we're pretty proud of the customer base that we have and the markets that we're selling into. Whether it's northern Saskatchewan in Canada or the middle of Tanzania or Nigeria in Africa, We have customers who depend upon us to make sure that their systems deliver revenue, security, and operational efficiency. With more than 400 customers, we've deployed more than 15,000 units. Our cloud platform, which I'm going to talk about a little bit later because everybody's all excited about AI, we are also excited. But we started that journey from day one of the company by gathering all of the data and maintaining it in a common area. And so we've processed more than a trillion cloud transactions and have more than 15 million days of operational data in our repository to allow us to perform better than anybody else. Over the last two years, Clearblue has fundamentally changed who we are as a company. Two years ago, We had our NanoGrid product and we had our Lumion Streetlight product. We have expanded that portfolio both up market into the microgrid marketplace with the acquisition of eSight early last year. So we acquired that company with really great in-class hardware power electronics. We added the smart software at the local device in addition to what they already had. And then we connected and integrated it with our cloud software to bring a full end-to-end solution to the marketplace. That was delivered in Q1 of this year. And then at the low end of the marketplace, as you will know, all of our technology that we use has become digital, and it draws a very small amount of power. But even though it draws a very small amount of power, It's mission critical. I need my Wi-Fi up and running in order to do this earnings call, so I better make sure that I've got power connected to it. So we've also taken all of the smarts that we would use for a large nanogrid or microgrid system and put it in an itty-bitty system called a PicoGrid. And that product is getting a fair amount of traction both in the smart city lighting industry. You can see our Senti Light, which is the light version of our PicoGrid product. as well as for satellite, IoT, and other things. So from 2022 to 2024, we went from being a two-product company to a four-product company. And when Farouk talks to you about our revenue breakdown by product, you're going to start to see the impact that that has had on the company. So a couple of things that are happening in the various different areas that we're working on. First of all, just to give people an understanding, if you look at Africa alone, which is our primary telecom market, although we are spending in other markets in North America, we've got a lot of telecommunications activity going on as well as in Southeast Asia and other markets in South America, Latin America. But in Africa alone, by 2029, there's going to be 260,000 telecommunications towers. almost all of them run on diesel only or diesel and the grid. Now, it's important to understand that in emerging markets, they only have partial grid. In other words, only so many hours a day of grid. You don't have 24 hours a day of grid availability, especially in remote areas. And so they're hybrid. And A big problem started to occur in 2021, 2022, in that diesel costs went through the roof. And now there is a big movement to convert those diesel systems to solar operations. So, for example, IHS Towers, which is the largest tower operator in Africa, one of our most favorite, tough and demanding, but favorite customers that we operate more than 420 systems for them directly and indirectly a number of other systems. They announced in 2022 their carbon reduction roadmap, investing hundreds of millions of dollars to reduce their emissions. Why? Because these tower sites went from being cash flow positive and profitable to... cash flow negative. So not just losing money, but the diesel run operations costs were costing them more than what their monthly run rate was going forward, just ignoring the upfront capital. And so this is a big market opportunity for us. And in order to address it, you needed Clear Blue's solar smart capabilities and really fantastic power converter units that can operate in that range, and that was eSights Technology, which is a Swedish-based company. The satellite marketplace is also growing significantly. I was at my cottage last week, and a friend of mine said, hey, let's look up and see if we can see the Starlink satellites or some of the other satellites. The small satellite market is expected to expand to $7.1 billion by next year, which is a 21% CAGR. And really what's happening is bringing to commercial, industrial, and also to residential customers satellite services to run things like retail banking, ATM, infrastructure and construction services, government, healthcare, community centers, education, energy and utilities, and agriculture. And so this deployment of getting Internet access to power all these mission-critical devices is really a big focus in the satellite industry. And what a number of satellite players have learned very quickly is is that the power is too unreliable, and when power is left to local operators, for example, in Kenya or Tanzania or Nigeria, to go and figure it out, they end up with an unreliable service, and all of a sudden, they don't get the revenue. So one of the biggest opportunities that we are working on this fall, we're hoping to have an announcement of a strong OEM partnership with one of the global leading satellite vendors, We're currently in the detailed design, testing, you know, weekly project engineering software development phase with them. All yet to be concluded but underway is for every one of those satellite systems that they're going to deploy to an ATM machine all across Africa for construction, for agriculture, energy, you know, schools, health care, banks, you know, government offices. But every one of those small satellite dishes would then also have a clear blue PicoGrid system beside it to deliver strong, reliable power that's either solar only or grid solar in the case of partial grid areas. On the lighting side, for those of you who've spent any time with me, you'll know that I'm a great lover of Jeffrey Moore. I believe very much in his Crossing the Chasm series. early adopter and how do you get to the early majority where everybody makes a lot of money and there's a real benefit to the marketplace. We've been in the lighting business for quite a while. And if we were to show you the projects that we were doing five, six years ago, really beautiful parks and walkways, et cetera, et cetera, which is really still a very early adopter. It's a small percentage of all of the street lights in North America and But we've now hit grid parity. And that together with how do I avoid my power lines causing forest fires and we want to deal with climate change, but cost, cost, cost, grid parity has us now doing roads and highways. So I think you've heard me talk about Interstate Highway 80 in Nevada. This was our first interchange. We're doing our second project in Q3. It's a nice chunk of revenue. Allentown, Pennsylvania, you can't talk any better than the American Parkway in Allentown, Pennsylvania, which previously didn't have any lights and having to retrofit the construction impact. Those types of projects are the ones where you start to get to scale. And what's most interesting from my perspective is when I look at the sales funnel that we have in the company, I'm starting to see Department of Transport state number one, Ministry of Transport, Province No. 2. I'm starting to see power utilities, hydro companies as customers who are now looking at deploying solar off-grid and hybrid systems. And so those discussions are really expanding. We're investing a lot in our sales activity there and seeing a lot of really great success. And I believe that when we look back two years from now, we're going to see that this was the inflection point where we started to hit the early majority, where the volumes, the revenue and the profitability go up quite a bit. So we quite like our nice Illumiant business. Now that almost every CEO of a telecom, tower cooperator, phone company, MNO, city department is being asked about what they're doing with artificial intelligence. Artificial intelligence, of course, is all based upon the data that's fed into it and the predictive analytics. And as you know, we've been on that roadmap since day one of the company. We continue to invest and our latest releases of the product as a result of strong funding from an R&D perspective that we've gotten from the Canadian government in both loans that sits on our balance sheet, 10-year 0% interest loans, but they still sit on the balance sheet, as well as government grants. We're quite thrilled and honored for our SDTC and IRAP support. We're using all of that to get smarter and smarter. And I think, of course, it's important to remember that no other vendor in the world can deliver what we're delivering because nobody else has the number of systems and the amount of data coming into the system. When I sit in front of a new customer in Canada and he asks me how I make it through the winter in southern Ontario, I'm able to pull up a city of Mississauga six-year performance history with where our uptime was actually 99.9875% uptime. And with that data, we're able to know when you will have problems, when you won't, what it takes to manage through. And so we can deliver for the customer the uptime that they need. And in cases where it's like, you know what, if it goes off a little bit here and there, but you can manage through without killing the system, but I've got a really tight budget, The second part of it is Clear Blue has proven that we can deliver the same amount of power and uptime energy with 40% less solar panels and 40% less batteries. And it's only because of our smart technology that we're able to do that. So power flow management, being able to diagnose and troubleshoot what's happening and how it's evolving and where things are going and what are all these little blips. Our technicians would use this to try to understand, hey, there's something wrong here. It's not performing the way it should be. How do I figure out what happened over time? And then when you're trying to do a global dashboard to see how things are working, where there's problems, how to manage them – All of those 15,000 devices are managed by our team of five people globally. And as our volumes of units that we're supporting, especially when we start talking about the tens of thousands of Pico grids that we expect to ramp up over the next few years, being able to scale that without having to scale the team from a resource perspective is part of what our software is continuing to do. So we're pretty able to absorb more and more and more services, more and more recurring revenue without having to increase our cost base on the operations side. So we have some AI, a little bit of AI built into our product today. We have a lot under development. But in order to get to machine learning and AI, you have to start on the data side first. the big data side? How do I get all these networks connected? How do I make them secure? How do I make sure they're not hacked? How do I compress the data? And how do I manage the 30, 40, 50 terabytes of data that we already have in our system? How do I start to get analytics? And how do I get smart about how I'm doing? We, in the last two years, started to get to a point where our operations center was like, I got too much data. I'm being overwhelmed. How do you make it smarter so I know exactly where I do and don't? How do you automate different services? This is the value that we're bringing with our analytics and predictive analytics. And we're overlaying on top the machine learning and AI aspect. One of the things that I'm really excited about, I'm leaving on Tuesday for five weeks in Africa and in Europe. and have been asked, Clearblue has been asked to lead the AI predictive analytics panel at a leading conference. We'll be announcing more details about that next week. But to have us be invited to sit at the table and talk about what we're doing with the largest leading players in the marketplace is an honor and a thrill, and it's really just a reflection. I had a customer say to me last week, Off the record, of course, if I asked him for a quote, he probably wouldn't give it to me. But just anecdotally, we were asking him for a new project, and he said we'd be happy to work on developing that project plan because Clearblue provides the best service of any company we have as our vendor, and you have the best network management software in the world. That was just a great thing off the cuff to be told and to motivate the team. So now I'm going to turn it over to Farouk, who's going to talk about our Q2 results. Farouk, are you there?

Yes, I am. Thank you, Miriam. Welcome, everyone. So let's start with our Q2 revenues. So revenue for our Q2 2024 were $1.01 million, which yielded a trailing four-quarter result of $6.2 million, which is a very strong trailing four-quarter increase of around 278%. Q2's revenue were the strongest since 2021. You can see on the graph on the top, our revenues in Q2 were significantly high compared to in the past. The competitive TFQ was negatively impacted by the economic downturn triggered by the macroeconomic events of 2022. The current TFQ showed a return of strong revenues, margins, and growth. Next slide, Maria. Okay, so if we dive down further into our segments, so the 2024 vertical results really began to show the impact of Clear Blue's new expanded four-product offering. The lightning vertical is seeing strong growth as a result of our new CAMI and Senti product offerings. Together with two products, significantly increased performance at a much lower price point, making solar off-grid lighting very cost-competitive with traditional grid connect lighting. On the telecom vertical, the integration of the Eastside hardware product together with the Clear Blue's smart power management platform is yielding strong sales growth. This together with the recovery from the 2022 downturn is what underlines the 278% TFQ top line increase in our revenue. Next slide. Okay. So now, When we look at our revenue by product, so we are looking at our four products. One can see growth across the entire portfolio. We saw a 48% increase in Illumion's solar lighting revenue due to the increased market adoption, better price performance, and solar grid parity in Canada and the U.S. Nano grid revenues were up by 208%. It is experiencing growth as a number of key long-term Clearblue partners ramped up their expansion and growth of systems. Also, new customers who previously only knew about eSight are now choosing NanoGrid for certain applications. eSight, now integrated fully with our smart power management platform, is now gaining strong traction in the market. And we also see further cross sales in many clear blue nano grid customers who are choosing eSight for larger systems and retrofit projects. And for PicoSenti, while still small revenues, it's beginning of its adoption curve. So we can see that the adoption curve across solar lighting, IoT and satellite telecom markets, it's on the increase. If we talk about Illumion's and EAS recurring revenue, so first we have to see what our recurring revenue is. Our recurring revenue is the revenue that the company earns from its energy as a service and Illumion's ongoing management services and cloud software. Every single system Clearblue has ever sold includes an ongoing service component. Clearblue manages and operates the power systems on an ongoing basis and provides support to our customers. This is at the heart of our business and value proposition. As telecom customers increase wireless telecommunication bandwidth to support their ever-growing customer base, so too do our power needs of those sites. This ongoing growth of telecom systems and ongoing operations and maintenance of the power needs to keep the systems functioning is what drives the growth of our recurring revenue. As you can see, adoption of our telecom customer rollouts over the years is having a nice impact upon the growth of our recurring revenue. Trailing four-quarter revenue was 779,000, a 21% increase from 646,000 in the corresponding previous period. We are seeing strong growth in the telecom site, a power consumption for our customers in Africa. For example, for one of our customers in Cameroon, we have seen a 43% growth in power consumption of those sites. This drives strong revenue growth for our customers and also system expansion and upgrades for our power systems for Clearblue. The recurring revenue comprised of $169,000 of quarters revenue compared to $139,000 in Q2 2023, which is a 22% increase. Mariam, do you want to talk about bookings for a bit?