Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q2 2024 increased by 29% year-over-year, reaching $3.9 million.
- Gross margin improved to 30% in Q2 2024, up from 21.7% in Q1 2024.
- Backlog increased to $29.8 million, indicating strong future revenue potential.
- Significant contracts were secured, including a $2 million design phase for a waste-to-energy system in Europe with a potential value of $120-$160 million.
- Successful collection of a significant past-due receivable from a client in Saudi Arabia, improving cash flow and financial stability.
Negative Points
- Revenue related to system supply to the U.S. Navy decreased by $0.6 million due to the current stage of the project.
- Gross profit percentage decreased from 37% in Q2 2023 to 29% in Q2 2024, mainly due to increased direct material costs.
- Sales related to biogas upgrading and pollution controls decreased by $0.4 million compared to the previous year.
- Research and development expenses decreased, potentially impacting future innovation.
- The company realized a loss from the sale of HPQ shares, impacting overall financial performance.
Q & A Highlights
Q: Can you provide more details on the significant contracts landed this quarter?
A: (P. Peter Pascali, President and CEO) We started landing major contracts, including government and non-government deals worth millions of dollars. This includes contracts across various business lines, reflecting our clients' adaptation to new interest rate environments and supply chain challenges.
Q: What is the status of the receivable from the client in Saudi Arabia?
A: (P. Peter Pascali, President and CEO) Our client in Saudi Arabia made a significant payment on a past-due receivable, which many had questioned. This payment reaffirms our strategic decision and highlights the potential opportunities in that region.
Q: How are the company's margins expected to improve with repeat orders?
A: (P. Peter Pascali, President and CEO) With repeat orders, margins are expected to increase significantly due to reduced engineering costs and cost savings from multiple orders. This transition will lead to improved profitability.
Q: Can you elaborate on the new contract for a waste-to-energy system in Europe?
A: (P. Peter Pascali, President and CEO) We signed a contract for a land-based waste-to-energy system with a European entity. The first phase is a $2 million design phase, with the potential second phase valued between $120 and $160 million, based on the final design specifications.
Q: What are the key financial highlights for Q2 2024?
A: (Andre Mainella, Chief Financial Officer) Revenue for Q2 2024 was $3.9 million, a 29% increase year-over-year. Gross profit was $1.1 million, representing 29% of revenue. The backlog stands at $29.8 million, with a strong emphasis on energy transition and emission reduction.
Q: How did the company manage to reduce SG&A expenses significantly?
A: (Andre Mainella, Chief Financial Officer) SG&A expenses decreased by over $6 million due to a partial reversal of credit loss and bad debt expense, reduced share-based expenses, and lower reliance on external services.
Q: What are the company's plans for improving efficiency and cost management?
A: (P. Peter Pascali, President and CEO) We are focused on improving efficiency, finding new and better suppliers, and growing our customer base. We aim to manage costs effectively to improve margins and achieve significant cost reductions for large orders.
Q: What is the outlook for the company's future growth?
A: (P. Peter Pascali, President and CEO) We are optimistic about the future, given the strong first half of the year. We will prioritize completing project benchmarks, managing costs, and exploring new business opportunities globally.
Q: How is the company positioned in the market compared to its competitors?
A: (P. Peter Pascali, President and CEO) We are positioning ourselves as a key player in interesting markets, working with multibillion-dollar companies. Our focus on innovative technologies and strategic partnerships sets us apart from competitors.
Q: What are the company's key business strategies?
A: (P. Peter Pascali, President and CEO) PyroGenesis focuses on three verticals: energy transition and emissions reduction, commodity security and optimization, and waste remediation. We leverage our expertise in ultra-high temperature processes to provide solutions for heavy industry.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
