In Executive Casts’ continuing series on UGE International (OTCQB:UGEIF) (UGE.V) (TSXV: UGE), CEO Nick Blitterswyk helps investors learn a little more about the Company’s important metrics and current challenges, from his perspective.
Executive Casts is a platform for executives of well-established smaller capitalized companies to open up about various aspects of their companies.
Highlighted in this post:
- Important Metrics
- Current Challenges
- Project Sales Cycle
Important Metrics
So UGE, in terms of the growth that we’re going through right now and what we think is really important to follow, you know, number one is of course the top line revenue, so our Q1 was about 5.5 million USD, which was nearly as much as we generated in all of last year. And we had a backlog of about 31 million USD at the end of Q1, so, you know, we’re expecting that revenue trend to continue. So, number one revenue, number two is just EBITDA, if that met our net profit. So, we haven’t generated a profit yet, but we feel that we’re very, very close, and in fact I know our target margin as a company right now is about 20 to 23 percent, and we see that growing over time. Our Q1, just based on the mix of products, when they were being installed, was below average. If it had been within our target range, it would have been profitable, so we feel we’re quite close there as well. And then largely the margins, maybe I’ll touch on as well in this sense that, you know, we’re looking for those to normalize over time as our revenue is spread over more projects and I think we have a lot of levers to pull there as well. The last thing I’ll say is that we generated over 600,000 dollars of cash in Q1. We’ve been generally cashflow positive since about September of last year, and as an overall company, looking to continue that trend as well.
Current Challenges
So, in terms of the challenges that we’re facing right now, you know, it’s mostly a matter of looking at our backlog, looking at our Q1 revenue. You know, we think that 4 or 5x revenue growth is here, is completely reasonable. So, we’re managing that. You know, we have a great team that is installing these projects. You know, Q1 was a great start to that, already providing the 1x in terms of revenue off of last year, and so I’m confident we’ll get there. And then I think number two is, if we show the market, if we show the capital market that 2017 is a real solid growth here for us, we’re also looking into 2018 already and thinking, “How do we continue that growth rate for the next year as well?”
Project Sales Cycle
If I use as an example a recent project that we have just completed, it’s been a large bottled water company, and so what we did is, you know, typically it’s about 1-12 months for us to meet a client, qualify that it’s a good opportunity, and develop that into an actual contract and project, in this bottled water company space it was around that time, three or four months for us to negotiate a contract with them, to provide them with cheaper energy, and typically for a single site like that, we’re talking about 4-6 months to actually engineer, buy the equipment, build it. And one of the reasons why I like this one too is that from there, it’s a large bottled water company with many sites, we actually took another two or three months to negotiate an additional three sites, and now we’re building the next three sites for this client as well. So, that’s sort of the typical type of time frame that we’re on, the one caveat is that a couple times we worked on portfolios that are more in the 10-20 site type of range, and so that might be like over three trenches, over 12-18 months or something like that as we stretch things out.
About Nick Blitterswyk
Nick founded UGE with a focus on distributed renewables to address the world’s energy challenges. His leadership and belief in a productive and enjoyable company culture has grown UGE into a global leader. Raised on a Canadian nature reserve, Nick is a Fellow of the Society Actuaries with previous experience at JPMorgan and AIG.