Media Update, page-2420

the Ivory Coast O&M is going to be a monster, but it won’t be signed until late 2022/early 2023 assuming the project tracks to plan.

in the meantime the focus is shifting from large bespoke projects with low margins (10-20%) to smaller off the shelf products with higher margins (40-50%).

while the O&M contracts are lucrative, the risk, time, bandwidth and capital one large custom engineered project takes up is not something a small cap with very limited capital and management/personnel bandwidth can handle. We punched well above our weight for the Ivory Coast deal, mostly because it came with the merger and had been worked on for many years and it still took a few years to close out post merger.

Fluence will reap the rewards of that contract for many years to come.. and it’s going to be a cash cow and fund the company’s ambitions in the short to medium term... but it’s not the kind of business Fluence will be chasing going forward.

so rather than earn $100m in revenues in a low margin business for $10-20m operating profit... you can earn the same operating profit from as little as $20-40m revenue from a higher margin business and get paid fast.

the missing link to success is distribution... Fluence needs partners with a distribution channel that can push our products out to customers... in China this has worked well and has stalled somewhat because of the pandemic... but there are some very large opportunities that are cooking and the recent uptick in hires in the Fluence China business is a very encouraging sign we are going to see some progress soon on that front.