Legend Power Systems Inc.

My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Legend Power Systems Q1 2022 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, press the pound key. Thank you. Legend Power, you may begin your conference.

Welcome to the Legend Power Systems Fiscal 2022 Q1 Investor Call. I'm Randy Buckemer, Legend Power's Chief Executive Officer. We're pleased to have you join us in the call today to discuss our corporate progress and financial results for the first quarter of Fiscal 2022, which were the three months ended December 31st, 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 mention about Legends forward-looking statements and risk factors, please see our year-end management discussion analysis, which was filed on CDAR today, under the company's profile at cdar.com. I'm joined today on the call. We have Florence Tan, our CFO, speaking. We have Mike Ciosi, our VP Sales and Marketing, and also speaking, Mark Peterson, VP Technology and Engineering. We're all really excited and pleased to have Paul Moffitt as our new Chief Operating Officer listening in on the call, too. Mike Ciosi will discuss the sales team's progress. Mark will provide a Generation 3 and supply chain update. Despite the macro challenges that most companies have experienced, we are experiencing growth in all aspects of our business. We are very confident that our opportunity to be a leading active power management solution provider has never been better. We see the acceleration of a 20- to 30-year transformational journey where companies are going to spend trillions of dollars each year needing to protect their buildings from electrification and decarbonization challenges. And a legend, as we've said in previous calls, is perfectly positioned to be a leading solution in this enormous business transformation. During Q1, we completed the testing of our Gen 3 system and we began an aggressive build initiative to fill our backlog. Mark will discuss Gen 3 further, but we are extremely proud of all the team members that made the creation and actual realization of Generation 3 possible. We continue to work through component supply chain challenges, but began to secure additional components to commence the assembly of 20 plus units. Unfortunately, due to the delivery timing of components, our rev rec recognized during the quarter was low. Rev recognition will pick up during the quarter we're in and going forward. We are experiencing deal flow growth and pipeline growth. Mike will give you some good color on that. We're very pleased with the new and expanded sales team's ability to quickly engage both direct and channel partners. We continue to grow backlogs. we are meeting or exceeding our insight service commitment targets, and we received our first insight order, multiple insight order, for our first order outside of the continental USA. The target markets and the seller channels continue to respond very positively to legend solutions and combined opportunities. We welcome new team members, and we focus on operations to support our growth and continued RCO growth. search which ultimately led to Paul coming onto the team and in the next call we'll have Paul give you some insight in his role but we're excited to have him on the team and his expertise in operation and process management etc is all planned to support our significant growth and generally regardless of the region companies appointed senior leadership to address ESG building energy improvement efforts and everyone is looking for new and innovative technologies leading unique technologies like the Legend Smartgate platform. And we don't have to tell you, you can read it every day in all the things you look at, that clearly the world is looking for products like Legend Smartgate platform and we're poised for significant growth. Combining our new platform with the exciting sales progress, which Mike will talk about, all of us have much to look forward to. Quite simply, we expect to see continued confirmation that the time is now for Legend Power and our solutions. During this uneasy financial market, it is comforting to know that Legend has completed a capital raise and has a sufficient balance sheet and resources to fuel our growth plans. We've invested to grow by improving our sales team and processes, building a strong engineering team that will continue to release leading-edge energy management solutions. We'll continue to improve and expand our sales team and team members as appropriate to ensure we achieve our growth targets. Now I'm going to turn the call over to Mike Ciosi, our VP Sales and Marketing, and he'll share our significant sales progress that does not show in the quarterly numbers. And Mark Peterson will talk about the fantastic Gen 3 achievements and what that means for the organization. Mike?

Thanks, Randy. I appreciate that. And you're 100% correct that our momentum that we're experiencing is tremendous and From the standpoint of our story hitting the mainstream, there are a lot of mainstream providers that are starting to identify and notice the same trends that we've been talking about, and that's the increasing instability of the grid. And that, quite frankly, is helping to generate results for Legend Power. When we look at our insights, we put out our first quarterly objective for insights back in fourth quarter of calendar 2020. And since then, we've hit all of our targets, hit or exceeded all of our targets for insights. In addition to that, when we look at our expected conversion rate of 50%, We're actually slightly ahead of that right now from a conversion perspective. So when we look at the performance and the results that we've been able to generate, we're very pleased the fact that we are on target or ahead of target for the major metrics that we've put out. Additionally, when we look at the pipeline that we're dealing with, it's never been greater. When we look at the fact that right now we're looking and assessing hundreds of buildings for insights, The pipeline for Insights as well as SmartGates has never been larger. And again, when we look at our business, we look at it from the standpoint of the direct side as well as the channel side. And on the direct side, we are engaged with large commercial real estate companies that own and operate more than $100 billion worth of commercial real estate assets. So the momentum and the interest from the market is incredibly robust. And that's really feeding some great momentum for us, great market feedback, and great interest from the industry. Let's see. From the direct side, we're also working with several large portfolio owners to come up with a strategy to assess their entire portfolio. This is a marked difference from a year and a half ago when we were trying to do one or two buildings at a time. Now we're looking at... our customers challenging us saying, hey, we want to look at the 100 buildings. How do we move through that in a timely fashion? So we're very excited about the momentum that we're gaining there. And, again, we're also seeing this with our large existing customers. We've got customers that have large building portfolios, and we are actively working with them to explore larger and larger portions of their portfolios. And that's going to continue to drive follow-on sales for us as well. In addition to that, we're also focused on bringing our maintenance and our data plans, our data subscriptions, or our recurring revenue model to our existing customer base. We have 300 customers that we can do a lot more for and that we're actively engaged with making sure that we help them to see the benefits of the recurring revenue models that we've recently released. And at the end of the day, as Randy indicated, we're in the process of installing and working on clearing out the backlog. And with the next 20 systems or so that are going to be going out against the backlog, the results from those systems are going to drive even more results. Once people see the powerful solutions and the powerful results that our platform drives, it's going to continue to fuel more results. So that's a little bit about the direct side. As most of you know that last May we did a capital raise for offensive channel sales growth. We really wanted to make sure that we push towards much larger sales and being able to do that through our channel sales partnership strategy is very key and critical to our success. To that end, we are currently at a 50-50 channel sales versus direct sales model, which is dramatically different than we were this time last year. Last year, all of our folks were dedicated to the direct side, and we had one or two people that were part-time on the channel side. So now what we're able to do is we have multiple people that are dedicated specifically to the channel side, multiple people that are directed that are on the strategic side. If we look at the momentum that we're getting in the channel side, we break everything down by Tier 1, Tier 2, and Tier 3. And we look at our Tier 1. Those are the partners that we expect have the capability, both from a size, from a customer base, and a sales organization, to commence more than $5 million worth of SmartGate sales with us per year. And right now we're working with 15 of those tier one channel partners. On the tier two side, we look at those that have the size, the sales force, and the customer base to support more than a million dollars worth of revenue a year. And we're currently working with more than 20 of those. So again, our highly experienced sales reps are continuing to drive a lot of experience. and a lot of results for Legend. And as their experience and the market's awareness of our offering continues to grow, those results will continue to grow as well. So at the end of the day, we are driving a lot of results both on the direct side and the channel side. One of the things that we're also helping doing to help grow both sides of the house, both on the direct side and the channel side, is we've got some major marketing initiatives that are coming up and that will be released in the March timeframe. One of those is a true cost of power calculator. This is going to be a web-based solution where customers can go in and build a digital version of their portfolio online, giving us the geographic location, the sizing, information as well as what the major attributes of the building are, and we can give them an order of magnitude estimate on the value of addressing their power challenges through active power management. And that's going to be very unique because it has a couple of use cases. One of those use cases is a self-service model where the customers can come onto the website and do that themselves. Another is where our sales reps can proactively go out and build a digital twin of those buildings to be able to show those customers and engage them in a compelling and meaningful way. And the third use case is also for our partners, the channel partners that we're working with, to be able to take their existing customer bases and to be able to build the value of the solution and engage with their customers in a very deep and meaningful way. So we're very excited about the True Cost of Power Calculator. That's going to be launching in March. We also are rolling out our first ever partner portal in March as well. And that's going to be a very robust platform for our partners to be able to come in and get the sales support, the marketing support, the technical support, the training support that they need to really build their smart gate practices within their business. So we're very excited about that as well. And another major component of that is deal registration. So this way the customers can be sure that they're going to be getting credit for the smart gates that they're bringing forth, smart gate sales that they're bringing forth. So we're very excited about that. In addition to that, to support all of that, we also have some additional website changes, some new content that's going to be rolling out. So we do have a big launch plan for mid-March, so please look for that. And again, that's going to focus on cost power calculator, the partner portal, and the new websites. We also do have a plan to allow a limited window for interested investors who want to take a look at those solutions and understand the depth of those. So we have plans to be able to make that investor window open as well. So in summary, the problem we solve is hitting our mainstream. It's hitting the mainstream when we look at the fact that the number one producer of smart meters in North America recently published an article talking about the fact that all of the renewable impacts is changing the grid and it's becoming more and more unstable. There's an article earlier this week in the Wall Street Journal covering off the same topic. At the end of the day, the time is right. Not only is the time right, but our experience, the results that we're driving, the investments that we've made, the team that we have, the direct momentum, the channel momentum, things have never been brighter for Legend Power. So I'm very excited to see what the future holds for us. With that said, I'm going to turn it over to Mark.