Capstone Green Energy (CGRNQ) 15 Nov 222023 Q2 Earnings call transcript

Good day, ladies and gentlemen and welcome to your Capstone Green Energy Earnings Conference Call and Webcast for the Financial Results for the Second Quarter Fiscal Year 2023 ended on September 30, 2022. [Operator Instructions] As a reminder, today’s program will be recorded. At this time, it’s my pleasure to turn the floor over to, Mr. Don Ayers, Vice President of Technology. Sir, the floor is yours.

much. very you Thank thank call. joining and second fiscal quarter conference you afternoon today’s for XXXX Good

call me and for Exchange the Energy quarterly President ended Chief On XX-Q with second Officer. its issued and Green Jamison, Financial XX, the and September Chief fiscal Energy’s its Capstone report earnings XXXX Executive filed Capstone with Commission Officer; Today, Scott release Interim today Robinson, XXXX. Green are its Darren and Securities

on slides circumstances. This today, to the under that statements estimates referring our be any reflect found during today. website as November events Investor be call and will disclaims these Capstone conference to future obligations section Relations of We XXXX. company’s views representing the update can to revise contains or XX, forward-looking the statements, call or

slides. forth in I Jamison, to Executive the earnings Darren to appendix the You Chief Exchange cases, provisions like Slide undue filings adjusted place Please the those implied release the involve are, in concerning for would the Securities and expressed to to go differ materially unknown statements, from on as by EBITDA Officer. factors note actual such Darren presentation the today’s reconciliations our uncertainties in turn the over forward-looking today, or beyond they and when and and referring the factors in control. Safe EBITDA, are statements. discussion that known and these Capstone’s information through Scott now President to results that should call set and not they other refer mention to earnings Commission and could risks, some because and they release cause with Harbor reliance on that Please X

second Good Don. you joining of afternoon, XXXX. results review September XX, for our fiscal you, XXXX ending everyone. for quarter Thank today Thank

brief positive review and our I including will financial EBITDA a U.S. start Act provide and then then Act to today’s with would our then policy overview to If run to Energy-as-a-Service, with the review highlights business an results company of or by X, like like conclude overview through Reduction quarter’s Inflation summary. business. the you then our a turn I plan, Slide followed agenda. and IRA I financial of or the would and then the changes, recent of EaaS

be We take will our then open from analysts. to questions

sequentially to and revenues go Let’s quarter the Slide quarter, of encouraged Slide million first in and quarter from the jump year second up for I shows and XX% ago ahead our remain quarter. the tough $XX.X XXXX ability the of XX% from X from chain X. grow revenue an fiscal the Energy-as-a-Service increase extremely million $XX.X of XX% being This half team’s totaled our backdrop. $XX.X supply growth the fiscal a Revenues first to revenue $XX.X million, for first is XXXX. strategy. led and for growth in by half up macro million by of

recuperatior materials first the for the gross customer margins to fell and source related CXXXX during to to the quarter requirements chain meet supply enclosures the However, alternative quarter. specifically costs, compared XX% due quarter in to to to XX% increased need delivery the

margin million in loss $X.X sequentially quarter, $XXX,XXX loss expediting positive improved was the charges. fiscal half half Adjusted was the down high On The improvement year. in year, as versus expenses supply the negative quarter-to-quarter. business negative supply of net again is by chain last costs, expenses, additional offset to ‘XX net first increased EDITDA basis first from quarter. $X last XX% the additional due charges and from EaaS million loss of million Our compared discussed. negative chain to but chain year. $X.X last of from approximately EBITDA first improved Again, freight driven million growth a though, Sequentially, to for XX% $X.X the the in of negative expediting $X by this an $X.X approximately supply from first net was $X.X Energy-as-a-Service to million million and XX% $X.X $X.X million, or million impacted improvement million was a which freight increased by

on fleet approximately Lastly, represents importantly, total EaaS long-term XXXX. fleet XX Energy-as-a-Service long-term under the versus and perhaps most XX, XX.X This contract approximately Today, megawatts year-over-year. the growth XXXX contract XX XXX% is rental megawatts. on September under was XX, rental megawatts September

saying to megawatts quarters, several our been by to XXXX. is under for XX goal have reminders get As XX, contract March

X. Let’s Slide continue over to

bookings X. capital primarily net the from $XX.X rental assets of quarter the XX, quarter improved $XX.X quarter. September was XX, at quarter. XX, million million extremely X.X% needs the XX%. important to as the strong EaaS was second $X.X the $X.X proceeds June see $X.X new million, August product million, up the Gross from Also as gross June were ago. product during for $XX.X or to product importantly, of rental million at the on X.X $XX.X extremely to $X.X $XXX,XXX was the a Ending rental was up from second XXXX. XXX% year This cash quarter, of You offset million offering sequentially was or up public XXXX at Total from margin $XX.X by XXXX up book-to-bill $X.X revenue for September million from in Also million, cash. manufacture EaaS due is or Lake XX Street million million million for working $XX.X to solid backlog and ratio new

to $X.X a As a the in $XXX,XXX by result, quarter. June operating cash of net provided positive million activities was loss compared

mitigate supply into or our we Protection new increase for To some mentioned challenging January price quarter. presented chain the increase products, all That I XX, are has price this, will and this parts contracts. of a FTP go Factory implementing effect headwinds service XXXX. earlier, spare As Plan

EBITDA and to to review X. move positive year our plan. ahead go XXXX Let’s Slide want I fiscal adjusted

progress the key have three them in pillars four in outlined with on fourth. strategy executed fully have the and We significant of

spread operating the reductions and reduce our active the was, million $X.X restructuring for Board board from pillar of a was model. across management. around the assets first fiscal labor force by our partners expenses executive moving to distribution led full This year, by Directors, The personnel, Energy-as-a-Service to business

second The a price pillar increase. was

inflation, X, to pace need As a the we keep we X% effective price did with of XX%. May to increase in range

the X% January are earlier, We implementing increases the ‘XX. to to FPP supply for factors also by focus parts contracts a existing well increased inflation also has spare the second round by and CPI increase offset X% and we Also FPP increased on as in contracts noted on new price as integrity. chain of pricing

of positive trade distributor megawatts fee of X% to to our adjusted pillar branding, is DSS X%, X the show the contract first ‘XX, last significant our million first Slide megawatts of by the EBITDA Slide us And adjusted numbers under year ‘XX the improvements the will target shows XXXX quarter fourth fiscal The And showing our the $X.X to negative goal details the and contract it achieving fee was on progress for XX acquisition of strategy pillar and megawatts more charge our of today, X EBITDA annual fiscal distributors components from half is to business million which full customer the shows. marketing, March. which Third versus global second training, our of an include change from half adjusted our we the shows EBITDA. negative increase to to successfully our well from X. in mix. year. under Turn in Energy-as-a-Service this additional to for $X to year lead business XX in way last we expect

our Next, it to I you with the of on product to for what is fact heavily positive last is or an long-term is things The our powerful presentations, which the cornerstone reviewing looks the will the left previous business our have been middle had EBITDA move years. sure Capstone in model, graph way doing show XX slide favor offering strategy. as is service the EaaS update. many model existing the you X Slide first of for bar I the versus a model how EaaS long-term flow. before it us. cash FPP, predictable bars worth of right drive which income technology. again, traditional of and sales seen it’s far of And type but like that what do provide for be to with strong The can can am In EaaS and economics our the product and the sales the illustrates third traditional set Case was

$X product XX%. For the to XX% gross a million for $X.X X over compares at same And generate years can in sale years. revenues unit, or with spare parts this margin at million a X we CXXXX

contract supply to-date units demand. working new rentals I’ll and we our contract rentals X XX, we out through goal sets Scott, relief, XX to XXXX, go achieve and margins, we an do XX for similar in limitations ahead CFO fleet. for our financial XX. On rates. important had margin have go as turn To the impact is working picture to to We Slide equipment, ‘XX, extent meet even of And XX move under us. on know we to of rental our shipping megawatts we our the October of March supply the chain XX reach Slide improvements to on require does and goal under but customer in call our re-rented primarily rental megawatts growth Scott? the chain negatively Let’s specific the the now constraints had fleet. our results. way this XXXX. to is higher some megawatts megawatt It well the to of over are and to end our had to been track can March believe by which that capital return some capital

our Thank now detail XXXX. I results more fiscal afternoon you, for Darren second good of review financial quarter and everyone. in will the

was subscription of This of the results can $X.X in up to compared which QX to ‘XX. rental of million, term our fiscal from the and first distributor $X.X rental $X.X million, a ‘XX. first million loss quarter XX% from million results operating $XX.X in the to loss ‘XX. includes compared aforementioned to chain in quarter ‘XX XX, first $XX.X was for Financial compared million see positive the million increase ‘XX. long our supply in million were revenue. support an a ‘XX previous primarily QX ‘XX. Moving to EBITDA $XXX,XXX in expenses a revenues and from Parts, fiscal $X.X challenges. Total the million for contracts was fiscal revenue ‘XX million you Gross Slide were quarter of fees first of slightly $XX.X quarter percentage the rentals, to second $X.X service EBITDA accessory revenue, the had as down increased compared quarter negative $X.X of ‘XX. fiscal first fiscal million due to up was quarter. from Product of margin in primarily fiscal in $XX.X of the the in and ‘XX, in QX service a Net FPP revenue the QX due $X.X net of million Adjusted quarter adjusted to of quarter XX%

This from across will the lines. XX, Slide accessory million, fiscal million last of compared the of ‘XX. million product compared the and driven you revenue in sales is activity at $XX.X prior $X.X to quarter year. Product the Turning quarter year results financial higher period, $XX.X up million to by was fiscal second revenue product to all see which ‘XX had year for $XX.X the second

the and cost in a million million year for $XX.X While million reduction margin XX% Top prior has $X.X $X revenue the loss primarily revenue in $X year due XX issues, a year all rental million to X EBITDA million activities. net from XX from the Adjusted million offset offset operating of the was XX%, was to to to $XX.X last loss. as to up year ‘XX Gross benefiting financial the increases million due million EBITDA are from prior period, improved million, of compared revenue loss period. compared results. million $X.X Net $XX.X increased direct price to year-to-date shows lines margin negative Total in $XX.X $X.X ago expenses chain earlier from months loss was loss mentioned. to Operating increased expenses was activities fiscal to parts, due down ago previously year price the period. supply of million year. fiscal a percentage million $XX.X period a cost the cited the partially due $X.X Slide the from $X.X reduction Gross contributions from increases year from same period, service increases. decreased in September product of from ended to $X.X from XX% by price in by adjusted million versus selling growth from and year. which in year-to-date material ‘XX EBITDA Energy-as-a-Service previously to and line has reduced product line adjusted in a to million $X.X selling XX%

from selected Turning to provided significantly the The accounts XXX was quarter to was million by $X approximately due $X.X collections. the $XX.X to and the June Cash inventory mentioned to Slide receivable million million September due demand during due in days advance will sheet inventory turns quarter. previously primarily a vendors improved receivable increased negative at in days from from operating to cash levels activities XX, increased values, you to nearly the of to to purchase quarter. in items. million compared in the XX Accounts increase $X.X $XXX,XXX to forecasted price improved declined and variation increases dropped balance driven from the inventory $XX.X X.Xx. June see X.Xx Total DSO inventory million our the as due to XX, million raised. by XXXX flow in Despite $XX.X recent continued chain and supply necessity capital Cash other challenges. largely shortages to

will March the more to it we ‘XX. of by back I we products fleet addition, you, production on focus and both over Darren. ramp In new turn to need XX megawatts do as inventory XX growing rental

you, Scott. Thank

goals. take of our like overall to our part minutes profitability I’d investors we As of how and few update, are working to a quarterly achieve remind strategy to our

out Slide XX set goals. go those Let’s to to

direct First the sales is force.

new We EaaS our of continue sales the to products. to network rental maximize growth our partner adjust direct and our sale force

force anticipate continues to of this grow output couple direct until quarters a I and we with mature, our As team. efficiency sales reach and more desired

network. partner distributor our is Next

are that EaaS continue resources, attachment sales contract increase distributors additional we Now relax, the rate service of industry FPP of global our are and our worldwide COVID-XX business. to add to and subside pushing hard beginning impacts growth leading to the drive rental

mix our of in Next the is to grow EAS our business.

on focused this quite for We a have been transformation while.

business. drive near-term to fleet key fast is are continue we is by it our key to only we of valuation balance sheet We our ability this capital our business. but for megawatts, so. it’s goal and higher do the profitability, will rental can and to our limited to It growth, The get grow the how XX regarding

clean resiliency, a business This customers multiple energy products our problem-solver to grids. customers. we Next, integrating expanding range are our smart product We custom customers. energy and be our that be for we can flexible diversify we into need to to market a be solutions and service means a in operate ensure of dynamic energy offerings and solutions flexible to helping with efficiency, reduction, with wide and our and micro provide and carbon

to We upgraded growth customer less need aftermarket repeat satisfaction parts also the continue our not part. the to for only facility in UK. need recently typically are to and Remanufactured than margins also program availability increase are our good and parts orders. remanufacturing they parts the drive expensive the but XX% a in environment, escalate and new We U.S. the of

this drive to margins and to environment. parts We customers parts continue challenging available remanufacture chain additional for somewhat ways more to our looking in supply make

turns focusing Scott working and Next, mentioned. capital on we are managing inventory as

but several dropped we to receivables of Our collect. days, due past to in the need have is XX million excellent, quarter DSO which we dollars still

approximately and from inventory DSO tight free cash would pre-COVID. was additional which build Our balance to Reducing XX where up days, DSO rental is target reduced sheet high management our it more to our back has margin units.

program the Support marketing of System, subscription to efforts. customer the DSS is growth Distributor or Lastly This drive program. is acquisition

dollars dollars our for the EaaS annual for X% both as We look from as us grow this more the traditional marketing, well which acquisition product System to X% Support business have increased efforts business. Distributor as fee customer affords to branding, we year,

put shows the our in. across are slide our industries how XX. operate let’s in used to to remind investors I solutions XX we markets I several as at want and several Slide Now, turn Slide this applications. growth renewable to do EV but I go potential oil I smart markets. detail, of our markets gas and want on charging traditional highlight won’t our micro-grids, each through next energy, as top in efficiency energy being

world, push Capstone. move to the should continue these As new for the grow to electrification toward lower carbon and markets

Moving In of energy on DERs beginning are a forward. grid. trend takes the XX. are distributed broader the of and infrastructure critical resources, going grids – micro I of seeing out a an Slide growth the Slide the towards hold energy global have unprecedented Micro part XX, to as smart critical become part or set example

energy by micro we a our EV new short-term This created can provide network Capstone customers, can as dimension see, customers. A to how want through we can We partners and want sell energy to a electricity long-term you cornerstone partners. a demand As and make help with needs. of system grid be will can use complete the engage we is industry. we DERs end and customer do their adding this our to the the develop and important our by of to proliferation

shows be you micro create smart there DERs will will move on this the global substantial EV forecast leverage demand. revenues. If to to for and and for XX XX, demand Slide grids Slide infrastructure This the we

the in in are EV and estate we for from as slides. touches key fact, our Micro-grids, working our power the by several and portable renewables solution of on solutions the tailwinds EV applications currently summarizes critical supply are the real Slide largest for XX our demand solutions both the elements for business. industrial world. should on together EV tie charging bolstered company bill, of a charging them seeing we today Infrastructure Europe In U.S. previous and charging, be all Act, you Investment this providing which Jobs and and

Tax be programs. as XX Moving Slide should billion us significant which climate related $XXX XX raise and most would and on Section energy to tailwind Investment be it Credit. XX, dedicated Credit of billion, This is credits, impact significant for Section to us for Reduction expected Inflation is Act. the Slide tax Tax a XX to to is The Production $XXX

on the form. You details reviewing the most factors of business to believe can the as in like are a what key couple minutes spend our conclusion, an see I’d slide In simplest on the to and investor. focus I

turn Slide today. key XX. to impacting we Let’s shows Slide the believe catalysts XX what business our are

U.S. new with our can These meaningful be the policies enhance and just truly are businesses U.S. economics you. First, of products, I significant can reviewed – to customers. especially our and are transformational U.S for be our

by The allow total including our market. our larger micro technologies to adding to to us a our per and second use revenue solutions for true end grid done be This to partners is our create This increase customers. customers. is platform, addressable with project storage would

many strategy. on growing is as critical profitable Third EaaS our profitability, cash levels, This is consistent, important tools and flow. reaching

larger Street buying of creative Lake us. And more net the it margins and our enables business strengthens This Forth, importantly, is Capstone $X.X which is is perception business, our team. for rental recent cornerstone strategies This us development our that cash reduces larger products. with flow extremely and balance sales customer’s This customer attractive strategic as and sheet renting risk and as the growing with has the direct and and become part of equity of and our the offering customers. doing of target rollouts. of they’re EaaS to million is

network and development success our with and leveraging mean partners partners jointly I projects in business them various working is our it the maximum efforts for coordinating develop our by leveraging to Lastly, marketplace.

like that Now operator? I’d questions up for the to call with open our from analysts,

is with question This Sameer Joshi Wainwright. Instructions] [Operator you. Thank H.C. from coming

is live. Your line

percentage X% the what how my us you that X% price January were remind is do And The expect taking guys. expected to revision? of receive what price increases you in – Hey, that good May. the to range customer that? implemented And afternoon, how that? of question. in you customers react context, in expect for do customers increases to Thanks Can

Sameer. questions, great No, Yes.

increase in think actually back first received. May did well we price very I the was

at online I feeling and grocery it the think the and pump. They’re reading gas seeing at everybody the inflation. is newspapers X% the store

our a increase seen folks. commodities I We’ve surprise vendors X% purchase across we from XXX worldwide. March board to so it was big about the think in just And don’t now of to from that a all

definitely So real. is inflation

price were increase. just announced think anticipating place. we in we I the week, something the put that people increase Last new like price

are optimal. the distributors will for think, increases Obviously, U.S. months two IRA Act But being than projects XX improve I here understanding. not the new is price doing less the in in substantially economics

phases, And so version price international U.S. version. in our we did and did a increase we an two

version U.S. high little And X% to as so more a subdued was the as XX%. And version range. was international X% the the in

to have we And support the The where offset price costs But of had our levels, think some But price reasonable changing still the we kind higher price. got down major material tried work the materials. enclosures, to to the the targeted we enclosure that I increase recuperator the we’ve were to of a make vendors would do. result was components, those to the and midstream. the CXXXX one-time anomalies, need economics to so do we had buy, already more back of two customers still we really

came online manufacture the to new vendor they And costs as had product. so higher the

was we’re to another material. we QX, prices, to buy So an and recuperator drop. of customer versus QX, ability see issue lower going The see we really already materials in hopefully to get enclosure demand will had

X, quarter-over-quarter. our up to see is As revenues book-to-bill you can our X.X year-over-year,

seeing we’re simultaneously. demand so build we’re fleet rental our trying products, plus, the to for higher And

years. as the than So have global chain harder And supply we we’re challenges. pulling on supply in chain

our had more materials and some we so Haynes. And expensive HR-XXX buy material to from buy traditional we

the demands still quarter. met fill and one-time sure a was customer’s we make for to So the purchase gap that the

and And still growing missed supply trend that’s chain we a yet. that issues. supply business As keep delivery customer haven’t going goal to the challenging the our the despite is keep global chain

there it comes no, and see. is certainly the customers. good That’s continued from and then seems interest customers that Yes, – interest commentary from across from to

megawatts more is question XX recent re-rent think, megawatts these of in on XX around a megawatts, percent XX is the And Just included X re-rent. re-rental I what jump this the model megawatts of to megawatts? XX from

Yes.

we’re fairly we as XXX right think dynamic about quoted, XXX – we’re now So it’s have pending. that, megawatts over megawatts I close

to so by And trying out close XX March another megawatts I’m of XXX megawatt pipeline.

So matter that models, timing. just megawatts challenging. it out close which to be customers shouldn’t which It’s going a are of XX and figuring in configurations,

on And decide, re-rent. be re-rent so based parts going ability, to new is availability, much versus and we how

we We’re then our older series. buying call more also old our packages units looking current to which upgrading is and signature version, those version the at current before them our packages, used

but And so still definitely our say possibly definitely fluid. as manage can, mix. new it’s we cash. many goal I’d it’s build a units as And is But our to

really days a we XX receivables where had But want quarter, DSO we be. elevated it’s we XXX from saw days. our You to from good dropped to still

will beneficial. on from well the the operations our much was positive the that was get money the was from operations So through that cash the raised fleet rental we timed XXX,XXX during build quarter very essentially, our we sheet. we equity balance kept we to service build all also cash how rates, generating so new if how happy can for with out quarter, very And helpful. much balance cash for the you continue I at is we’ve look cash quarter as the of that depend energy

How more charging the on that be EV you’re Last color. me. portable that support it of scale any – just you details from of charges location or one color is or helpful? multiple what would for give thanks kind little the Yes, solution insight Can in on? the working Will bit at a that? large

Yes, no, great great. question It’s Samir. It’s

EV it charging stations kilowatt So mounted. is trailer portable fast XXX and it’s so a

supercharger. from and so to ability there’s charging to And do to be place vehicle place moved

other we’ve opportunities – Europe. think the stationary I charging, going seen U.S. EV we’re for and in to both in

growth produced And going can in energy is mentioned so area companies I a to this a ago, to in we vehicles it’s I remarks, that’s we’re do be that’s a see you I grid need look largest kind about the of with of one the it’s going fact, announced far texted is folks. doing we outstrip to in And us. month sector that’s so the And a as in Southern combustion think electrification opportunity. if right and think with amount prepared California, to you market huge my buildings, definitely the we’re definitely But at of the know, had of to playing car. both charge as that, we it’ll next being everybody saying alerts be sell internal The engine vehicles XXXX. California day, flex in in don’t illegal all your for

infrastructure the just grids. you’re to from in the going that challenge have think I the graphically So highlights

more As and electrified charging solutions. need going vehicles, you generation to more buildings are more and power more get more

natural scale, And both machines support infrastructure electrification. quickly biogas, building U.S. so to or and fuels and and in even vehicle like in fortunately, be Capstone put there’s place charging gas renewable that and abundance the other of or fuels hydrogen, can

you this out That will questions. new that three be – looks point sectors, for and being that future did Thanks taking like them. or growth a on two Good one that. luck opportunity, my of

Thank you, Sameer.

Please Street Brown Capital. have Okay. proceed. Up Lake next, with we Rob

good afternoon. Hi,

Rob. Hey,

margins getting at Nice that how out, the progress of point the guess, the level, generate XX-megawatt I there and is in at looking revenue level you the time? that can in rental built what’s sort fleet

we’ll Yes, the is kind XX%. that of margins, first take target

ages, in versus fleet. We changes have anything new product saw a – ages reasonable think as a as a should But since between number. running re-rents as obviously we bit, remanufactured fleet fleet above the been of as little but better You got the we inception for the quarter, of else. again, and still the the XX% rental see than re-rents XXX% we or much expectation, mix is re-rents and we at we’re mix. add XX%. That’s is we a announced more But that, XX% reasonable

I quarter quarter We our XX on us expectations per that kind internally as it looks expect on $X.X like That’s right in megawatts. growth, of the of have toward I’d growth million for business. we kind each revenue say what would up now. move

And so be EBITDA is most we to those flow we that ops. positive off quarter, XX will continue from megawatts, cash quarter-in, every throwing should thing important The quarter-out and numbers. positive report

golden much sell how the only so that’s And is us flow cash And products kind top quarter-in, can really be, quarter-out. EBITDA is we to the of that. positive, for positive ticket of question on

at your of look and everything lots right us. point, our secondary but I part think growing now the a So, business, highlights, that strategic important else is for as is most rental quarter, bit of the little fleet I to

color. think Okay. throughout Great. guess said was the through, Thank do snapback I one-time. quarter you or take And a play margins you much does the of do those recovering for the the issues see that How the you I hitting time little to margins, that margin year? quickly? pretty then And

fairly Yes. should It quickly. snapback

are don’t current quarter XX% again, I we this see think in in. a as I margin

to probably QX think will levels. QX the we back I before it be get

parts. and the supply QX. think bleed increase majority vast some is you The was that of two I chain So, see are into in good that hit going to news

material it. we So, the new lowered And had remediate enclosure we the They and myself to got price do much to already business team the buy and one-time lead on it to times growth very easy a was because enclosure their be the in of the substantially. it’s has for jump said additional will purchase. and then work more there. manufacturers But And some manufacturer, better.

quarter, costs to down. more then so this will QX And we for some by material see but be that

QX, not grow to as as the obviously, be continue margins units the more QX QX better should will levels. that QX kind more build in units we XX% and we those I back think are to than beyond of QX probably QX can new, will and saw we And that as go So, but rental the be even XXX% rental business. good

impact, helping demand demand start see you then it’s right seen from that? the And the about not have I on But you should you how do strong much Okay. And Great. and when IRA now. IRA to timing, think environment, the presume the yet. quite

bill close U.S. CHP Yes. a years our the The in good really projects. IRA No, that’s should X paybacks to improve question. for

dramatic if And so be for We history should of see to closer or of biggest as X-year a or a ever projects, had incentive have X-year the it that and you company. shift economics payback in had X-year. we the our be the machines. transformational X-year the And payback, that’s

So, substantial U.S. see CHP should growth. projects, for we

to like XX% a see We in go have it’s close it improvement, should the XX% U.S., it rates the in if U.S. and analyzed looks roughly from about we X-year truly

business And that an million million results $XX be to $XX improved on so basis. would of annual

it’s So, significant.

an Now, as in U.S. not well. U.S. CHP, it is oil the is the and but it’s only seeing only, we uptick business are gas, it gas in

close. from bullish would on are months, a could we our anywhere look next XX to what From very from XX projects quote So, year standpoint. perspective, the to be typically product-revenue U.S. X a like months from timing months

next bill a is this be to will to X.X definitely year quarter. this book phenomenon. X But So, again,

product Our up, year-over-year. already is quarter-over-quarter, backlog

I So, year. going us that’s tailwinds for give just to next more think

spark war I should if environment, struggling, ground products. U.S. is the board, across is obviously, I roiled issues because very kind be demand still the strong the projects natural And seen and have continuing the year been projects issues at Europe rentals over look next gas and we in CHP have the spread there. energy Ukraine renewable the think below markets. hampered both of

pick doing is Mexico Latin sound. up. Australia pretty to Asia is good. starting is good. is doing America

the either. issues continued for say are most year-over-year. looking And help the of and demand, now I definitely biggest general, Europe. dollar would we growth is strong right our we markets, But in doesn’t are seeing So, we strong in have

will Okay. it over. Thank I turn you.

Rob. Thanks

Tower Shawn Research. we Next Severson have Water proceed. Please with

Hi. Thanks return – higher everyone. business, Darren, a right. affects I the the am of curious rate how environment return obviously, it’s business because EaaS rate

do and as curious, you does wants get of and to business how the through predict rates how into long rates high. interest we So, economics this? like this how stay that change to manage going as are this impact But environment, just

Energy-as-a-Service biggest cost factor of the business think I is to Definitely, grows, Yes. going capital. as our be

that’s And more own of interest have the environment so capital for impactful. great because rate to the more capital, if is expensive, going that’s out to we capital go we be and can generate our

October. little But think are know over rate withstand when looking a we October, with expires you from I Sachs said, million I lot and folks margins, a think next news XX% at that is you business of a good of over can that the bit increase. year a $XX IRR being XX% a have got with note so Goldman

note ago, a Greenhill seemed and quite was That out Company plus expensive doesn’t refinance note LIBOR so us. for X.XX%, We that it go now & at expensive. which to have year seem hired

it as know to is that ability on refinance going think in important next like debt quarters, two be that. of additional very or then look the top to what of quarter that I capital and get cost the So, will we and

something we are going is refinancing kind of keenly relationship. be, grow we and that cost just not that that’s on of So, but focused what to as Goldman, capital

we understand do with expect big what appetite make to the that And larger national that. So, you example? think announcement rollouts, expect? for for when and a get wrap? we EaaS effort. approaching big I Energy-as-a-Service would with you hotel should EaaS am rollouts, the direct as obviously, we but equipment strategy, you see product? with to is chain, Are rollouts, international on where Thanks a Would to in and next assume My goal product on expect question customers, these is them sales I see you large coming to everything, approach customers. trying that or

Shawn. question, great That’s Yes.

capital. full Most to obviously, a customers custom their products needs. offer tailor customers. goal the we solutions suite that our solution obviously a and of and So, meets to of is have our the bigger access And services

working are not sense have energy our service Caribbean, done so being on a we business make are chain said, energy we working for them And megawatt with as the with standpoint. agreement the more. first service much That may and cost several in from a we hotel which

that I customer it it’s one may properties, If the like just Marriott, that service large maybe an with very think XX more Caribbean energy and Mexico, play. depends, answer. for of throughout a So, a hotel be smaller regional

protection is performance well. do we factory if do really and and if can a you to be goal lifecycle in we or will and really service will stop one be solution, in plan, solution partner an XX-year to is be it your your provider. the for look, really on will that looking the your XX sell shop of say costs, guarantee our go what depends But wrap we as energy can Whatever married want years for. customer – you to products, we the you it fleet, So,

think I is COVID. markets damaged flexibility Obviously, So, industry think hospitality key the really I during change. and was

spend. are they capital very with so limited And

better Some other other plate hospitals did industrial the are the obviously same, lot during spend. COVID dollars of But capital and plenty have on had customers a COVID. customers during to

to tailor them want So, flexible. needs, equipment. we be And their is importantly, make that and makes are we we we more the that to realize benign earthmoving don’t make we want in, a this solution business sure meets only

are We products. not in other

behind you are And generation distributed give a to grids. great here We micro are it. and we to product Energy-as-a-Service stand in

going to from as lastly, you Thanks. have? much can demand? there a of plan re-rents, mix those to My of XX? be fulfill again still last order question their in is What cash receivables then do the get part And to you you XX need, was how out in targeted that, to get the that

brought the Scott’s numbers and the cash generated and we we here need No, down quarter operations. is Yes. from AR for how

Inventories or those of is to have So, vendors. the million XX receivables the of can increase as build about of build growth of are probably price million, from what just Scott to get two up down half mentioned, we that almost need megawatts. we for some that we still got which was get we XX would another out $X the days, $X great,

inventory Some of time. inventory been turns is, the and same have keep Xx, products Xx growing good, are over purchasing which [ph], rental over But is it obviously, to we at but before.

year, So, into million up another of we can cash. if really that million $X inventory or I free focus $X turns next on going will think

think I all of that is helpful. So,

availability. do really driven will think of be re-rents I probably the number we by more

out rental the As are the both pulling chain grow we in have harder side, it’s to past. product than supply trying side we the and the

may of re-rent, it’s re-rents. after think purchase exception, components so I have the got one, do I we And drive say more think to the X years. we of option with a that availability each But important

equipment, sheet of can as Also, new equipment. it years, or new those end, see are bring kind type to putting And so refurbishing X buy it and it it we we even then if we re-rent get from at the re-rent we the balance back product for our like margins put used we equipment on conditions.

a a and used So, that the re-rent piece of machine, virtually we whether refurbished, it’s a new new. or customer sees equipment built have purchased or it

when. is. they this is, business, know are to how don’t a little we of that are great rental regardless a reality we the So, we The grow result, from one a going many re-rent customer perspective, get as is I what product contracts strategy know people getting bit. the But confuses

you to some the build equipment older anymore. allowed the and or trying when for these you And was product COVID, have business, are and rental parts it that. got grow do in So, because the in to was have have time, the where don’t got year for they business flexibility. the the both that are to project business And you projects need and some a lead us changed of customer, are cases, have cancelled maybe re-rents a

to kind and So, creating products market back generation customers. there silver these into lining revenue and and is us actually out of in of for our getting the a put value some

Great. Thanks.

queue. So, back the will in go I

Shawn. Thanks

Okay.

floor any Darren back questions We for queue. have Jamison like in to to further I the closing no remarks. would turn

facing am some myself look those. of is, and our and at I had for performance, were touched are really are challenges for the real obviously standards target. excellent chain critical on margins see Disappointed questions we very Global most high quarter, the be in I we with will which was I from supply mitigated. can say really the and remarks. has closing as really QX, really vendors Well, very XX% two I But quarter, great two team. down of the I what gross and issues and the our But been guess that them. as have it short-term

think through to is job good work a I our doing team those.

year-over-year. hopefully So, that’s levels margin bit, see the highly will we in but revenues quarter, back needing with as back QX as quarter-over-quarter target Inventories, at and to look I get units and beyond. in a increases am think I both also down year-over-year, of up if and OpEx quarter-over-quarter our we the is up well and and of But saw rest rental little price I some products. the confident improvement understandable QX to build

We year-over-year. are seeing EBITDA adjusted improved

the growth business seeing well megawatts. as that as rental business XX in are the EaaS hitting We

Cash, of which at trying a $X.X is of I XX cash when think orders. book we great. quarter. growth business is Product positioned pending and Very the bookings bill are top X being are a especially at to intensive million business. is important gross this megawatts very to on a backlog lot with grow X.X today well we to happy product at Energy-as-a-Service capital

quarter-over-quarter. money the it was all big a it the isn’t that did from positive, for equity operations, we keeping we So, the that had during $X,XXX, raise quarter improvement

down DSO to days. XXX days come XX seeing are from We

back If days. a it was you XXX go quarter

we will very so have are days, tax free the cash be government we rental that new to And business year. overstate the to from going XXX to improvement a want U.S. how be. XX days XXX got more we gone to days to IRA where if our bill, And back incentives more have units. that’s can’t incentives, big build be, to the we next XX get I days. – transformational And can especially should up to

of what products about drive excited profitability customers. for customers, our that that, very are the our will for viability our and does and We

BXB – Abu We great getting aggressive shows, to increasing But distributors. Had there always not to DSS, it really that always really in our Adipec acquisition. to get get traffic. is by and fee think I doing show X% great X% trade events, us thrilled booth finished Dhabi. really customer allows to a just from back

cannabis MJBizCon, well. Vegas in week, got is have show a as We which this

back branding, heavy So, media doing are heavy marketing, and events. trade we to shows

top job we the – continuing good obviously as grow that’s start Greenhill us. XX who be on the Scott And doing We & for and they so disappointed. refinance was have to come happier business. looked Couldn’t banks. timing, at and out can came investment not definitely with for Goldman to and interview the Company out And see did of COVID, I different us.

year. we And in refinance Continue for forward up of a to seeing launching so get what team look that’s and them additional little some a note can development. debt hydrogen to under shortly Goldman pricing kind his and and work, the at on Don

the XXX% of are sure as development commercial and going money resources part government hydrogen through There XX% is to to make heading today, hydrogen going that’s other to Department going we come to a Energy are well. We of be lot that for hubs. we hydrogen and of And are

exciting. also that’s very So,

team and Jen in to will XX% over hub. shortly We UK is work facility done last Tracy cheaper the Building doesn’t sound exciting. and exciting, components them more year be and UK have exciting, very the at is but capacity remanufacturing with here the they great of our and here see heading

be next of mitigating more happy make customers integrity, costs we deliveries. service to this full quarters, done to those be have of and And ability not that forward the online, chain, really our them couple will chain and again. we sure an a importantly, bring then, job more to organization, get parts and hub as seeing folks miss more – so strengthening our keep we we they any amazing focusing and And look supply get and can need on strength supply increases,

want growing growing And despite is world supply the rental fleet, in keep every the chain challenges the global manufacturer facing. keep so, business, the to we that

the good talking balanced everybody And overall that after year. keep momentum to off an so which you. And look very the in to especially I We third the quarter. want quarter. of back coming excellent Thank to was quarter, QX, going forward half

does you. Ladies call. conclude gentlemen, today’s conference Thank and this

a day. lines you your phone and your participation. this wonderful time Thank have disconnect for may You at