My notes FWIW....
Richard's comments-
Focus on volume partners to drive growth
3 existing partners in China are ordering more plants
Welcomes China 3 Gorges group which RI views as the next phase of growth in addition to the provincial partners.
Additional orders from China Rail - they are beyond testing FLC units & on to ordering additional units
Taiwan Desal order - rapid deployment leads to NiroBox winning orders in competitive desal mkt.
IC project going well & April 2nd milestone met
Cambodia - near to completion (for 100,000 people)
Cash flow - on plan
Push for SPS & recurring revenue because of higher margins
IC - lots of cash in & then out to finance IC project.
Covid still a headwind to doing business, especially in Asia slowing down face-face meetings due to quarantines
RI re-affirmed guidance
Franceso's comments-
Rev from SPS building nicely up to 28% vs Q1 2020
Focus on SPS & new orders up 36% PCP incl $5M in China
Continuing focus on efficiency - Opex down 10% on prev qtr
$10.4M pmt from cust & nett cash used of $20.9M related to IC CF
Cash & cash equiv of $14.9M + 27.4M in investments
order back log $191M as of March incl 23M of SPS orders
SPS rev to be $35-50M in 2021 for positive EBITDA
Q & A
China
2017-last year steady ramp in progress up until COVID delays.
historically Q1 slow with spring festivals, Q4 busiest
potential for larger orders strengthened (with progression from provincial to national partnerships) but with no accurate timeline
strong demand lower cost MABR with Class 1A, & less energy & chemical use
Production facility sometimes goes to multiple shifts on occasions + we have 2 extra facilities in 2 diff provinces to build aspirals.
Negative 21M cashflow due to IC but if we combine 2 prev Qtrs, cashflow balances out.
IC on schedule & on budget
Confident on guidance & EBITDA positive
SPS contracts - contracted backlog 27M (3.7+23) plus 3 volume partners (Kaitian, iTest & Panjin) which RI estimates $50m more business to others mentioned which possibly will overflow into next year.
USA & Caribbean
Water scarcity where fresh water costs up to US3/m3 opportunities to save customer up to 50% where FLC can sell both MABR & NiroBox on as WaaS like Bahamas with IRR of 20% or higher (in commercial buildings & managed real estate).
Does FLC expect additional outflows due to restructuring? Yes most of costs accrued in 2020, but outflows occur in 2021 as FLC transforms its operations from CES to SPS
3 Gorges - discussions go back several years, 3 Gorges have been given the remit to sort out the Yangtze river basin.
FLC did a test project that went extremely well with FLC supplying great data from it. Customer then ordered 29 aspirals for 14 towns. Hard to predict exact volumes.
USA - municipal markets ~55,000 water utilities so hard to deal with - FLC better off to deal with commercial companies & not municipal.
Future is that plants will be in neighborhoods with WWT inconspicuous where 'you can't see, smell or hear them' ,automated with low maintenance.
Cost control - continue to drive costs down with standardized SPS solutions, but FLC is also needs to accommodate growing business.
What is excluded from underlying EBITDA? =Non-operating / non recurring costs - restructuring costs & San Quentin
Taiwan units on their way by ship.
Australia - could be useful in many applications, RI says FLC needs to go where 'the doors are opened to us' - China, SE Asia, Cambodia 1st WWT plant, & Philippines with its stricter regulations & compliance laws. Still open to partner approaches.
Why did RI get involved & is business thesis intact - yes absolutely he sees adoption of stricter regulations being enforced, trend to decentralize, present incredible opportunities.
AGM in May 27th.. in Perth
GLTA
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