I called Brandon Chow. I asked him a few questions. I tried my best to type as fast as my little fingers could, sorry if some stuff got jargon'ed or muddled in minimal detail. I even do this for people like you, babedinklestinkle.
1. How the build out of UEC is coming along and when they see production starting?
A: UEC acquistions going well - attractive point was that it was ready to go. Excess capacity, whole point was to reduce time to pump out units. First units are will be ready early this year, such as Brightmark. Key thing for XBC is a tech-transfer, need to be able to take know-how in Canada and pass it into the states. Not just RNG, but Hydrogen side as well. They're very excited about UEC being a focal point in their US expansion.
2. How long does it actually take to build a unit? I'm asking so investors know when to expect the delivery and revenue recognition to begin occurring.
A: No public statements on this yet, we want to get the "production timing" ironed out so that we can give proper projections. By investors date, which is mid-year, investors will have a much better idea with respect to these data-points, including rev. recognition. Overall, purpose of investors date is to showcase new products and show delivery to their customers.
3. When will the last of the RNG legacy contracts be finished? A lot of us want to know when we can expect these legacy contracts to be fully off the books.
A: The impact of remaining contracts are a small percentage and minimal impact. Impacts were spread mostly across Q1-Q3, Q4 will show minimal impact.
4. Now that the BBB act is uncertain, do you see less activity on the US side? OTC Investors? What is Xebec's plan to attract U.S. Investors?
A: The most important thing for us, right now, are our customers (as opposed to new investors, customers drive our core-business). BBB would've helped a lot of prospective customers, and when it comes to Hydrogen and RNG is that there is bipartisan support. We'll have to monitor the situation - the entirety of the bill is not likely to pass, but I think different parts of the bill will be parsed and passed, depending on timeline. The BBB passing would've been a nice cherry on top, but keep in mind commitments from companies like Chevron were not contingent on these types of credits and benefits. We have very positive feedback, overall, our presence is known (last conference was extremely robust). There are less than 200 RNG projects in the US, and we are considered a growing leader. What investors need to understand is that this is a very, very early stage for growth, compared to other companies that have been in this sector (due to our tech and being part of RNG and Hydrogen). Important to note that XBC is headed towards US-based revenue - majority of 2022 revenue will be generated in US dollars. Our goal is to exponentially increase customer footprint in the south. In terms of any Nasdaq listing, this is contingent to overall US considerations. When it comes to US investors, the data and information we have, they are more interested in RNG and Hydrogen technologies, and we're looking into increasing US investor exposure, and increasing our customer footprint in the south is key in order for us to increase US investor exposure.
5. If you can share this info, what is the dollar value of the investment in the China Operations?
A: Cannot share that at the moment. If you look at the last financials, there is a line item that fleshes that out. Only consideration is that the investment needs to be marked up any time there is any event (fair market valuation) -- last event was investment from Corporate Entity. Came with evaluation, and we have to mark investment up. Keep in mind China is private investment, so it gets marked up any time there is an event.
6. Are you facing any immediate issues with respect Supply Chain?
A: Supply Chain situation is challenging, no way of escaping it - fluctuations with materials, travel. Best that everyone can do is hoard as many supplies and components as you can, and negotiate for those orders as best as you can. The benefit we have as that we are better capitalized, even on the private side, so our inventory is increasing - in the last year increased by double. We are actively buying more than needed, which is not necessarily ideal, but this will ensure our growth is not impacted by supply. As we grow more, we can add efficiencies in our ordering. Jim (COO) specifically is tasked with this and is on top of it.
7. Why the news about the new hire Director of corporate brand and communications was not announced?
A: Not management position - Director level, we don't announce those, not a material event.
8. What can we expect longer term for gross margins? I have been using 50% for service and 30% for equipment... but curious if either of those are off and/or upside on the equipment side... not necessarily for the upcoming quarter but to model out 2022 to 2024
A: Always targeting 30-35% +. as we get more service revenue, long-term, we're hoping for 35-40% plus. Work in progress. Priority is top-line growth. Will share more on this in Q4 call.