GEO Investing

Uge International (OOTC:UGEIF) (UGE.V), a global leader in solar energy solutions for the commercial and industrial sector, communicates to shareholders through Executive Casts, a platform currently hosted on that gives small and microcap companies additional shareholder outreach options.  In early June 2017, Nick Blitterswyk, the Company’s CEO, elaborated on key aspects of UGE’s business, including project flow, cost control and his views on capital structure, especially from the perspective of what might be best for shareholders.  He also talked about M&A strategies, which are particularly salient in light of the acquisitions of Carmanah’s On-Grid solar business and Endura Energy.

M&A Strategy

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When thinking about acquisitions, and we’ve made two now over the last 18 months or so, we really take the strategic and opportunistic look at them? So, as an overall company, we talked earlier about how we do and I call it front-half back-half, the marketing, sales, development, and engineer, procure, construct. And over our lifetime we’ve built a very, very solid platform, arguably I would say number one in the industry, that allows us to execute very, very effectively here.

So, in those two acquisitions that we have made, the first one was actually platform strengthening. It provided really good support to the back-half, and after that we really felt that we were the leader in the industry in that.

The second one that we just closed two months ago I call a little more opportunistic. It was a chance for us to take out our biggest competitor in the Canadian market.  Based on circumstances with its parent company, we got a great deal on it.

And third, which affects both, was that the culture was a great fit. This is a company that we had no one, really, throughout our history, and we knew that the same kind of attention to quality, the interest in sustainability, and so on, was a fit with us.

Looking forward, we are interested in continuing to make creative acquisitions that add to UGE from a strategic perspective, and will provide our shareholders a good return we think as well, and so, you know right now Canada is a market we’re very cemented in; the Northeast U.S. we’re one of the leaders. If not the leader, we want to make sure that we are the leader, so we’re looking at opportunities whether on the M&A side, or maybe poaching some people if the right deals are not there to be had.

Cost Control and Budgeting

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We really feel that as a company, it’s important for us to be really focused on execution and building that trust. Many of our clients turn out to be repeat clients, in some cases in pretty large magnitude. I don’t think it’ll be uncommon for us to do 1, 2, 3 dozen projects with one client. So for us, the execution is very key and to that regard, our head of projects and engineering has arguably installed more in this industry than anybody else.

I look at costing and so on, one of the good things that we have is that when a contract is signed, that project might be fully installed in, say four to six months, sort of our target range. So, there’s not too large of a window there. And we’re also able to typically, when signing a contract, be locking in our costs for the most part at that time.

With the way the costs are actually coming down in the market, if anything, we’re able to go back to those suppliers and say, “Hey, we were going to pay forty cents a watt for these panels, but the market is now thirty-eight, we should get a break on this as well.” And that’s actually what we’ve seen, is that our margins are much more likely to increase after a contract is signed than the opposite.

Views on Capital Structure

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We’re fortunate that over the course of the company’s history we’ve really limited how much capital we’ve needed to raise and from what sources. So, as of today, we have about 37 million shares outstanding. We have a pretty limited number of warrants and options out as well, so that really gives us a pretty clean cap table.

We also have really high insider ownership, so it’s in the range of 50% amongst myself, directors, executives and so on. I think investors can be pretty sure that we’re going to have their best interests at heart, because those are ours as well.

And maybe what I’ll add to that is, you know, being cashflow positive here over the last, since about September of 2016, we’re also in the position of strength, actually, generating quite a bit of cash in Q1 [2017] and so on. And so, we have the, I think, advantage now of being highly strategic about hopefully not raising capital unless it’s for a really good use that’s going to provide investors and ourselves for that matter, shareholders, a good return.

About Nick Blitterswyk

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.

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