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spk03: Good morning. My name is Celine and I will be your conference operator today. At this time, I would like to welcome everyone to the Legend Power System Q4 2021 Financial Results Release and Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. Mr. Vannery, you may begin your conference.
spk06: Thank you, and good morning, everyone, and welcome to Legend Power Systems Fiscal Year 2021 Investor Call. I'm Steve Vannery, Legend's Chief Financial Officer. We're pleased to have you join us on the call today to discuss our corporate progress and financial results for the fourth quarter and year-end of September 30th, 2021. Please note that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For more information about Legends' forward-looking statements and risk factors, please see our year-end management discussion and analysis, which was filed on CDAR today, under our company profile at the website cdar.com. I will now pass the call over to Legend's CEO, Randy Buckemer, for an overview of our fourth quarter. Randy?
spk05: Thank you, Steve. Welcome, everyone, to our Q4 2021 Fiscal Investor Call. Appreciate your support. Pleased to have everyone on the call. We want to update you on how things have gone over the last quarter, some updates for recent business, et cetera. And obviously, you've heard that Steve Annery, our CFO, is on the call today. We also have Mike Cioci, our VP Sales and Marketing. Steve will answer any financial questions, et cetera, and get over to you later on. Mike will give you the update on a lot of the significant sales activity progress that's being made with his team. And, you know, really to set up the call, I thought I would just mention that obviously we all know there's various macro challenges that we continue to face, but we are experiencing growth in all aspects of our business. We believe at this time that The opportunity that we see to become that leading energy platform solution we all want has never been better, and we're seeing signs that the opportunity will only continue to grow. We have been achieving our internal business activity growth targets, which ultimately drive the strong revenue growth over the next few quarters. GeoFlow pipeline are expanding significantly. Gen3 platform is finally being shipped as of the end of September. Backorder is growing, insights service deployments continue to grow, reseller ESCO channels are embracing both insights and smart gate solutions and basically our target markets and reseller channels continue to respond very positively to legend solutions and combined opportunities. Stepping back during the last quarter we completed a little over 10 million dollar raise to support our growth plans And we raised the capital for certain initiatives, which I just thought we'd step back and understand what we raised the money for and where we're at during Q4 2021. We said that we would complete our Generation 3 platform development and launch our Generation 3 product by the end of September. This has been accomplished. As of today, we are in the process of shipping well over 20 Gen 3 platforms. Address one of our biggest needs, which was a proven sales leader with channel sales experience and contacts. As the company sent the direction earlier in the year that we would be transferring more and more business over to channels. So we were delighted when Wanda Adams joined Ledger in mid-September. She is leading our channel development efforts and brings over 25 years of proven channel development success. Wanda also asked to personally choose two reps that she could bring on to the team from her background. And quite simply, she said, I want the bass to work with me, and I'm going to go get them. And she brought on Mike and Brian that Mike Sciosi will add some more color on. But we've now got a team that has 20-plus years' experience with each person and all kinds of relationships, all kinds of contacts in our target markets. We also said that we would engage and develop the ESCO markets. and we would participate in a major ESCO show. And we are engaged with many of the top ESCOs. And we were the platinum sponsor at R3, which is the annual ESCO conference that was held in Houston. And Mike will talk about that. We also said we would need to build out our operations and our corporate resource capabilities to support our business growth. And this was really a continuation of our overall corporate strengthening and performance improvement initiatives, which began over a year ago with our building a very professional engineering team and improving the capabilities of our finance and corporate services team that we started. At the end of Q3, we added a veteran production, assembly and inventory professional, Ben Sun, to improve our production capabilities. And Ben has just done a great job, a lot of experience, just a lot of moxie that he has, and he's been really making a difference over the last 90 days. We are in the final interviews with a couple of candidates for the COO role. And we're adding a COO to provide operational leadership to support our growth and value chain growth opportunities. And we're quite excited about that. And we believe that as we continue to grow as an operating company, we really need that leadership. And we are constantly interviewing to find people who make a difference. And we're tracking aid players. We are also growing to meet the opportunities in multiple markets and channels. And Mike and his team has opened up large deals and some federal program access, which will drive some strong revenue growth as we go forward. We also continue to experience supply chain challenges. Spoken to many on the phone about that, about securing components to meet the Gen 3 demand. You know, quite simply, Gen 3 delivery was later than we wanted, but if you don't have the components to make the product, it's hard to ship it out. We know that most companies experience the same challenges and pricing spikes. So I think really adding Ben is a big difference because he's really someone that's full-time, 100% thinking about sourcing and securing parts, et cetera, and doing a great job, as we said. We have not and will not lose any business due to part shortages and delays, and we work with our customers very collaboratively. But component shortages, cost increases, and extended lead times will negatively impact our ability to build and ship Gen 3 platforms. Until late September, that was really the case. And it will negatively affect margins, but we're taking all the necessary steps we can to manage this challenge. You know, it's hard to really put a number on it, but I expect the current component challenges could last 12 to 18 months. But we'll update on a quarterly basis as we have more information. And, you know, I've said to several people on calls, the positive side of supply chain dilemma is that we have source better, more strategic, long-term partners. There will be better business partners for Legend as we grow. So there is some good news out of it. And clearly, we continue to see the world looking for products like Legends, Smartgate, and we continue to see demand and interest there. Combining our new platform with exciting sales progress with Mike and his team that he'll speak to, we look really forward to really building over 2022 and subsequent years. And we expect to see continued confirmation that the time is now for Legend in our solutions. Just a couple other points, and I'll turn it over to Steve, is that during these uneasy financial market times, it's comforting to know that Legend has a sufficient balance sheet and we've got the resources to fuel our planned growth. We've invested to grow by improving our sales team and processes and building a strong engineering team. And we'll continue to release leading-edge energy management solutions. We'll continue to improve and expand our sales team and team members to ensure we can achieve our growth targets. And generally, we continue to earn the respect of our target markets and their ecosystems, and we make them comfortable that Legend is an innovative company to work with. We continue to build our brand by working with key ecosystem players to ensure they are aware of and ultimately support Legend, powering their client buildings and opportunities. Again, the leadership team is very positive about Legend's future. We're each committed to making Legend a leading energy company, and we're very excited about where we're going. Turn the call over to the other fellows to provide updates in their respective areas, and then I'll circle back and tidy up. Steve?
spk06: Thanks, Randy. I think to keep this call and its timing as efficient as possible, I'll break with tradition and not put forth the notes that I typically have and reserve that time for the Q&A to see if anybody has any specifics they'd like to dig into a little bit. So I'll pass it right over to Mike Cioci, our VP of Sales and Marketing.
spk01: Thanks, Steve. Appreciate that. And thanks, Randy, as well. As Randy mentioned, we have a lot of continued progress and success in our sales and marketing efforts and want to give you some more color and commentary on those. Again, Randy mentioned that earlier this This year, during September, we hired Wanda and her team with Brian Hashimoto and Mike Summers. They bring a tremendous amount of experience, not only in the ESCO market, but also in channel sales. Again, just a top-notch A-player-based team that we're building out there. And that's really manifesting itself into a lot of results. For example, we attended the NAESCO R3 conference in Austin, Texas during November. During that conference, we had conversations with 41 separate companies. And after the conference, we are engaged in active conversations with 24 of those organizations. And these discussions put us engaging with virtually all of the larger ESCOs in the U.S. So, when we look at the progress that was made during that event, very powerful for sure. We also, during the month of November, conducted a training event for the NASCO partners, and this was very well received. It really talked about the growing problem of stability in the electric grid and what drives that and how active power management solutions like the Legend Power Smartgate make a massive difference for building owners and operators. And we had almost 100 attendees register for that event. So we're very pleased with the reception from that. And we've actually had a number of new companies reach out to us as a result of that training event as well. So when we look at our channel efforts in general, we are in active discussions with over 50 potential distribution partners today. So the team is already off to a fantastic start to make sure that we're really putting forth the growth engine for Legend's future. To support that, what we're also doing during our first quarter of calendar 2022 is we are launching our partner portal. And this partner portal is going to be a key resource to support our channel sales partners. This is going to address not only their training needs, but the marketing support, the sales support, the technical support, and the service support that they need and expect in order for the SmartGate platform and the Legend Power solutions to become a key part of their growth strategies going forward. So we're very excited to put that forth during the first quarter of calendar 2022. If we look at our direct sales efforts, again, as Randy mentioned, we're getting great uptick and deployments on our insights. And the data from those insights are providing high levels of customer engagement. When customers are seeing what's actually happening inside of their buildings and the risk that exists inside of them, it's moving them to action. And that's the exact point of what we hope to do with the insights. When we look at our 12-month conversion sales, we are on track to slightly ahead of our expectations. So we're very pleased with the way the change in the business going to the insights-led sale is really generating some great responses. So again, we've got lots of sales. We've got very, very few no's. And we have a lot of deals that are in progress. To that end, one of the things to keep in mind is that virtually all of the deals that are in progress for multiple systems you know if you go back a couple of years we were averaging one deal was one system today we're averaging one deal is is six systems six platforms so that does a tremendous amount to accelerate our sales and we're seeing that turn into some tremendous results for us yes we have had some some recent price increases that That does require some different approvals for the deals that are in progress. But for the new deals, we're not seeing any negative impacts from that recent price increase because of the significant value that our Gen 3 product brings. And again, when we look at some of the deployments that we're getting with our Gen 3 systems being deployed, as Randy mentioned, we have over 20 being installed in the very near term. And the real world results from the data from these installations will only continue to add fuel to all of our sales efforts, not only on the direct side, but also on the channel side as well, because that's the information that the channels are really looking to build their business up. So again, when we look at all of the data from the insights and the forthcoming data from the systems, it's just going to continue to position Legend Power as a leader in active power management and active power management as a critical part to large building electrification and decarbonization efforts. So we're very excited about where we're headed. To give you some ideas of some of the compelling results and activity that's driving our company forward, you know, we were working with one company that we announced earlier this year who purchased one system from us a number of years ago and then purchased another system and then decided they wanted to go ahead and look at another eight buildings. to figure out which one or two that they were going to move forward with. And they obviously decided to move forward with all eight buildings as we talked about earlier. And that does put us at a strong position at a very high penetration rate of their regional multifamily portfolio. But again, these types of results are driving engagements. For example, we are at the early stages of working with them on more geographic areas and more vertical markets for them. And these are the types of results that the results that we are getting continue to drive. So we're very excited about the growth opportunities. And again, the future of legend remains brighter than ever. So there's a quick overview of what's going on in sales and marketing. Randy, I'll throw it back to you.
spk05: Thanks, Mike. Maybe just take a second to discuss our outlook, and then we can open it up to questions. You know, the systemic changes that are occurring to address climate change and energy efficiencies are clearly mainstream. We're hearing about it every day. They're long-term, and they're tremendously positive for legend. It seems that everyone is or has developed strategies to address climate change, ESG opportunities, etc., The target markets we're working with are looking for innovative entrepreneurial technology companies like Legend, and our message is clearly resonating well. We're securing business with many of the most successful organizations in our target markets, and we'll continue to do so. We're well-capitalized, supporting our aggressive growth plans. We continue to build our team out with experienced, proven talent that will be the key to our success. Through seller and escrow channels, we continue to accept and adopt legend smart gate solution as a core reseller and esco offering for their markets we've opened relationships with the best resellers and esco's in north america and writing business with many of them and as we mentioned last quarter the esco market alone is a 15 billion dollar industry and we developed up to date with three sales reps we've now doubled our sales game our multi-year and Multi-million dollar investments in people and building relationships over the last four or five years in New York and Eastern U.S. is clearly now bearing fruit. We are an accepted energy solution, but most of the agencies are both state and civic that make technology decisions. We've also established a presence with Insight deployments in other major Eastern U.S. cities, and it continues to be a big year for our U.S. expansion. The next generation of our SmartGate platform is now delivered to the market We will continue to enhance our smart gate platform to address additional power-related challenges and cement our position as a solution for managing power and commercial building. So basically, government, free enterprise, resellers, ESCOs, senior SD leaders, and businesses throughout North America need solutions like Legends to achieve their goals, and we intend to work closely with them. At this point, I would be happy to open to particular questions you may have.
spk03: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Again, that is star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Again, in order to ask a question, press star and then the number one on your telephone keypad. We have a question coming from the line of Kevin Shee. Wood Stiffel, your line is open.
spk02: Good morning, gentlemen. I just wanted to circle back on your comment on the 20 Gen 3 platform that's been shipped in the past few months. Would you be able to provide a little bit more color on the progress on the on those units?
spk05: Sure. First of all, thank you for your question. What you're asking is that with the Gen 3 introduction and launch, a little more color on the installations of Gen 3. Is that correct?
spk00: Yes.
spk05: So we are just, we started shipping right at the end of September Gen 3 systems. Gen 3 systems are now in some electrical rooms beginning or end the process of being installed. We don't really have a base of installations to drop them. That's one of the key things that... We lost you there, Randy.
spk03: Sorry, I might be having... Excuse me, Randy has disconnected his line.
spk06: Okay, well, look, Kevin, I... Okay, we can wait for him to come in. Sorry about that, Kevin. Was Randy... Did Randy get to the heart of your question?
spk02: Yeah, yeah, I... Yeah, I think I got most of his answers.
spk06: Yeah, so to be clear, these... We haven't shipped all of the units. We're in the process of getting them out the door, and they're... The installation is underway with the first of those units that are now in the field, but it's a process that's still underway.
spk01: Okay. And just to add a little color onto that as well, keep in mind that when we're looking at doing the installations, it's in tight coordination with our customers. So we have to work within their timeframe for their windows as well. When we look at some of the potential installation windows, a lot of that's being driven by customers.
spk05: Sorry I dropped off. I'll be quiet and let Mike answer the rest of the question. I apologize for that.
spk01: Hopefully that wraps up that answer. Anything else? Any other questions on that?
spk02: Just one quick one from me. Maybe I missed it in the reports, but can you guys provide a little bit more color on the progress on Insights? I know that you previously commented in the past quarter that it has a target of 90. Just wanted to see how the progress is on that and whether there's a change in the target of 90 Insights per quarter.
spk05: Yeah, thank you. So the question is really update on the Insights in the quarter and where what that number will be going forward. So what we've done is we originally set a target of 40. Interesting enough, in this quarter, September, October, November, a year ago when we launched, and we had always said that we were looking for a 50% conversion to sales within 12 months of producing and reviewing a power impact report with executives. And we're actually hitting that percentage, which is great. And we continue doing near hitting the 90. The last quarter, we found that the commitments of the 90 is there. It's between last quarter and this quarter, we're actually almost looking at combining the two from the perspective of installing enough systems to get the numbers and things that we need. So direct answer to your question on is that we had commitments for the quarter for the insights, and some of them had to be installed for recording the data, et cetera, into this quarter. And I think we're going to start seeing that a bit because we do have some samples of larger deals. We have examples where we're actually going outside of the continental U.S. on some deals and shipping insights to perform the assessments. And some of those things may affect the timing of the deployment, but the request and demand for the insights is being met or exceeded.
spk02: Thank you.
spk05: Are there other questions?
spk03: Again, in order to ask a question, simply press star, then the number one on your telephone keypad. We have our next question coming from the line of Tony Cruz. Your line is open.
spk04: Hi, Randy. Just wanted to ask you a question. I didn't really understand, but in the last answer, whether are you meeting the expected number of insights employed that were originally set as a goal, which was 90? It sounds like you are, but it just hasn't been deployed. But the other question that I have, so that's the first question. The second question is, you did say that expectations of how these goes from insights to orders isn't moving up to your expectations at least that's what i read from the press release um is can you elaborate on that what exactly you mean by that i know that there were some a lot of issues in this past quarter um but um can you just elaborate what you mean by that and what what are the major hurdles that you're finding yeah so the two questions are really about clarity on the insights and then about the uh
spk05: Gen 3, meaning the demand order flow and conversion. Firstly, good examples are where commitments are met on insights. We have a commitment for out of continental US, a large number of insights are being shipped. For example, those aren't installed, but they're committed during this quarter as an example. We meet our demand targets, whether we can perform all the assessments. I think that's going to happen. The We have a set number of Insight units that we rotate to different client offices. Sometimes we might have to leave an Insight in a little longer or ship it, et cetera. So it just depends. It's more of a timing issue. But if you look at the last year, we're very pleased with our ability to get Insights products in to be deployed, get the data points, and convert them into sales. And what I mentioned was if you take the – only completed quarter we've had where we've looked at hitting the original 40 in September, October, and November, we have converted, um, over 50% of those original quarter insight deployments to gen three sales. And really, you know, gen three has been, um, uh, delayed. I mean, the larger real answer to your question is, um, The order demand is there. The interest has been there. We haven't been able to deliver the product until the end of September. We couldn't get the components. The components we did get were higher in price and quite late. We secured enough components to complete a little over 20 units, and then we are now in process of getting additional components for additional units. It's just going to be a challenge, I think, as I said, for the next 12 to 18 months. We have increased our inventory. Inventory is about 1.2 million as of today. It's a little more than I would like, but we have to allow for the longer lead times to ensure that we can make deliveries. We're doing some quarterly deals with suppliers to quarterly minimum commitments to get certain pricing and certain availability. We've also, in the past, when we switched from Gen 2 to Gen 3, I mean, there isn't one single component in Gen 2 that went into Gen 3. It's a completely new platform. And what's interesting with that is that the platform wasn't really signed off by the people that have to approve the product before it officially can be sold, whether it's UL or CSA approvals, et cetera. It wasn't done until near the end of September when the product then was shipped. So we couldn't secure down exactly some of the component and products because there was alterations. The product wasn't locked down. So I've been asked that too, Tony, is, you know, why didn't you just buy a bunch of stock a year ago? Well, we would have had about several hundred thousand dollars of write downs of product that was obsolete. So, Hopefully that gives a little bit more color. You know, Gen 3 demand is a lot of interest. We're happy with where we're going. Being a platform, it gives us data that we didn't have before. It gives us like the Tesla remote capabilities of downloading increased capabilities. It's giving stability for some recurring revenue streams, et cetera, and some maintenance program. We're really excited about it. And we'll get through some of the challenges that we have with the supply chain. But I think overall, at the end of it, we'll be stronger. And I think that our costs will continue to go down during the year. And I think in some cases, we'll end up with partnerships that will be much stronger and secure a better future for Legend with the partnerships too. Is that answering your question? Yeah, thanks, Randy. That's great. Thank you. You're welcome. Thank you.
spk03: Again, in order to ask a question, simply press star, then the number 1 on your telephone keypad. Thank you. There are no further questions on queue. I will now turn the call back over to Randy at Buccaneer for any closing remarks.
spk05: Well, thanks everyone again for your time. And just to wrap up, we know that the pandemic has affected most business revenue streams and we're seeing significant sales activity growth despite that. And we will continue to build a business despite some of the challenges put forth. We have today demonstrated have the most committed and talented team we've ever had. We're getting stronger with each new hire. We have an outstanding energy savings platform. We've got strong working capital, markets with a high energy cost and power challenges. And what we're continuing to see, whether it comes to ESG or climate change objectives or decarbonization, et cetera, is that people are trying to find solutions and innovative ways to reduce their energy costs and improve the quality of their buildings energy profile and meet the reduction targets that many jurisdictions are demanding. So we believe the future continues. We have quarter by quarter to look better for legend. We're getting better and we believe that the opportunity will continue to grow for us and the time for legend is now and for many years to come. I want to thank everyone for their participation. I wish everyone a Happy holidays and a fantastic 2022. And otherwise, have a great legendary holiday. Thanks very much.
spk03: This concludes today's conference call. Thank you for participating. You may now disconnect.
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