POLA - Earnings call transcript Q1 2019

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Operator

Good day, everyone, and welcome to the Polar Power First Quarter 2019 Financial Results Conference Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Shawn Severson. Please go ahead, sir.

Shawn Severson

Thank you, and good morning, everyone. you for taking XXXX Polar thank join time conference to today us Power's like all the for to call. I'd first quarter

which Executive the Operations be on who'll an today Raj will quarter's discuss Chief will begin host are, then an Sams, www.polarpower.com. followed Lewis in Author available operational at wire website after as Power’s a.m. strategic Your provide update is press overview the results providing the time the of This X Eastern Arthur the will updates Financial Officer. financial detailing key Raj, Masina, A events and as crossed results. today Officer; the Chief at Chief company's by in and Luis key Zavala, objectives by Polar Officer; well release has quarter.

comments, questions. prepared call management's we will the open to Following

remind I'd and cause number future to call will company's Sams, list information. Please described and including filings you a those could the Arthur CEO. and actual webcast begin, today time, like I'd I uncertainties from differ of this of industry results Before refer are At that and to the on the website the we to over materially company's Polar associated that turn statements a call. and be subject to results to projections, for regarding call for more risks industry made SEC in those refer the supporting risks to everyone to financial may forward-looking like Power’s

Arthur Sams

call. to earnings Polar Shawn, Power's everyone, first conference Thank you, XXXX and welcome, quarter

provide of with quarter key markets. highlights our XXXX, an discuss update call, today's before the for our each During quarter, will core for briefly first you I'll I

telecommunications is to in the majority last later our to this which sales financial growth give brief were First, XX% details with of Revenues will the Luis, Tier-X and results a system, increase of provide year, I'd DC by $X.XX $X.XX U.S. call. for million, during million greater a XXXX compared customers power financial of QX then, summary the driven like a

profit the at The Our sales backlog was, year backlog at customers over quarter end which XXXX. XX%, by Gross again, in will QX, last last over and stood year. year's U.S., telecommunication compared to $X.XX for stood believe to we the steady million compared next driven was the year of to quarter the quarter Gross quarters. an the XX%. -- our end $XX.XX last $XX for year several million of for million million remain increase of at was $X.XX $X.XX last the increase at million Tier-X last the margin increasing

earned of we $XXX,XXX a of QX me $X.XX During per XXXX, basis, share profit -- On X,XXX loss XXXX. a basic $X.XX of compared $XXX,XXX. and net diluted and $XX,XXX basic per of per we QX share as share -- excuse to a diluted boasted -- me to excuse compared loss

we strong update I'd to with higher starting backlog. in in business Now provide revenues XXXX and are happy a I'm to that say out review. like

phase and investment us. we to higher as numerous expected a meet leverage an are We in demand of company, we are opportunities clearly still front in growth as see the investing

implemented production and color XXXX, production quarter will later this production in management our Raj we key equipment. call. provide state-of-the-art XX%, to increase invest by developing continue including And new of force more positions. During first heavily infrastructure labor have manufacturing the our during we

that And window have the for both backup world-class to a our a slower build towards business conversions prudent We we you view primary advantage the with power. market We a will For take today, with category. we silos would growth. to global a in steps in and Raj of DC general update perspective, our labs, systems grow the business primary business have business action at the then these believe believe on and of in two to in I Telecom is I Emerging we big our provide could order invest rate. picture business. power but take opportunity grow and

one reminder, incumbent DC a of key advantages As our our numerous have that advantages is system power over core technologies.

Tier able segment are Beginning for for our view new and and core of DC last three international. as to couple We and innovative domestic The a X by system we X being driven having on our applications. markets develop factors. key are expand technology mile categories Tier this telecom, solutions markets major and with customize to domestic generator from demands domestic multiple

First is that using reliability network Tier backup and our systems the improving provide and hardening one to are on carriers are power. increasingly focused they

second kilowatt range. The larger the but DC will a on is also power This more XX the Verizon XG. backup sized and which driver be is XX generators with to

that this the managing will value segment site XXX installations carriers off with our continued in hybrid based highly telecom among for quarter proposition solar of XXXX power unique private to operators about improving Due These of nature providers sustained efficiency. believe one grid I'm small what What's momentum the forecast. to and is owner these I U.S. last various with backlog. Tier market high other fragmented believe Most providers evidenced are bring on it's a DC sublet more Our I also the to see mile from are this within the infrastructure by we fourth grid infrastructure. as back current system. higher firms that providers customer approximately strength optimistic our their

able will management diversify the up-and-coming and business telecom in we the customers our and help year. manufacturing to the With addition are now production capacity these target new

sales accelerated activity to half which sales in XXXX led On we later international this the the of year. front, saw

no invested orders down. from infrastructure expect the quarter half for second we've market and We are XXXX, year. of repeat this to to programs the gain see to pilot international momentum sales sales seeing slow has reason customers in we number previous internationally more and Since in to the I in acquired we of this a as from move now led in commercial active program which

hybrid in gas, hybrid focus DC noble key emerging electric We areas or solar specialty natural category our gross our energy and generators business. propane, have of vehicles, four

power rural Our and electrical needs charging. for with along residential vehicle distributed

Our power by vehicles is military being and systems hybrid specialty push for Air driven into supplying application. the Force

to the This a DC transport been robotic As compact the year fuels. engines field trial been still the new due for no involving is megatrend summer absorption and submissions the In Army California restrain of is have high the vehicles in we give the fuels, a markets per and robotics for adding Increase will there much responsible up this take on mean Natural XXXX, the natural testing. Propane as stage diesel. the The delivered to within currently more program solution in commercial regulations. cost is both be full world the including air millions domestic designed these military vehicles additional program system combine we've resulted could the and power. contractor's lower generators applications overseas. believe then the or LPG problem. off-grid the and great in procurement military is as Distributed lower gas for DC Diesel sales onboard believe last programs in development to residential technology autonomous CHP today hybrid conditioning using operators. house have consumption and various We coming than we even natural cost-effective applications meeting telecom of need reminder can natural Natural engines to and many we XX%. increasing a the We delivering Charging our and than heating being this throughout other reduce separate that generator us cost will higher LPG, of electric and of for our fuel -- power micro working energy updates the vehicles gas. grid few with engines. will or They we regions popularity and in will electric worldwide our other applications vehicles market. regions used York laundry, to during on certainly reliable integrated diesel source compared new and and a for conditioners of driven sites, we propane gas cost area. these many is to equipment generator operate These goods. excellent natural maintenance progresses. personnel to most are solar have of the will gas was in very waste escalate electric that market make have similar key The so are But the and be gas solution to of lightweight U.S. and a In believe grid. an technology. a systems in micro-grid charges fuel to a launching power vehicles maintenance and the use much propane potential air clean expect batteries New power many natural in designated bad-grid using diesel power vehicle and the propane these to LPG If solutions a as power low update. heating savings for world and could is heat DC Conclusion. cost and world. be gas point be of use the diesel, our the emissions substantial gaining, and the since words, high vehicles. at and sites in of has charge gas launch power And straighten and by

labor in the to communication inventory people rest labor increase and our our tier the strengthen force, and our our on relationships and with top the time order of carriers, infrastructure year, new domestically production of is continuing business our to towards to growing ahead focus we fulfillment demand. need reduce train and improve both the efficiency internationally, meet place subassemblies have Looking our

our tier strategic share mile expand customers by our diversify services opening other our everybody, R&D exposure carriers and grow; increase in increase our customer market; one, our to four, last commercial, to including telecom capacity market electric and U.S. solutions providers, telecom by provide power international and up residential two, manufacturing facilitate more to our through and plant roadmap. top production objectives technology key our markets product our efficiency are; military, continuing three, presence comprehensive target to to to providing reminder a car industry-leading revenue base charger; and As second technology to to and and and in increasing with and

can Now, update I'd our on Raj, it to objectives. an provide operational he to over hand so like strategic

Raj Masina

Arthur. you, Thank

that four objectives expand on Arthur those strategic me mentioned. Let

our presence increase providers The international target telecom top-tier last our carriers markets. one expand U.S. in with first to market and the mile share

expected us. develop, Congress year Organized for build one a So FirstNet launching are has to that which to first carriers these is start the the their and AT&T of telecom encouraging operate this continued and first -- it's first the eclipses This in and quarter lives to our soon. as by we the Arthur are the is that Attraction Also opportunity and geared mission U.S. U.S. very great Xs program, by seeing like tier-X view our XXXX, last-mile number U.S. carriers of save network are high is evidenced as jointly communities. in The with in remainder year. the providers. the towards momentum programs first top-tier broadband protect We telecom responders Tier for mentioned. launch responder was forecast quarter positive some backlog. nationwide America’s continued

sector will has This XXXX. half be customers from margins. We second actively pursuing also attractive more the of these

around clients countries some shareholders X these but proposals too a a carriers. actively little portion become as world. It's diversify the we'll through business our Tier We in the will Since several further the Tier expect the keep update quarter, materialize larger international engaged we've our will of us X end past of early submitting the to details, which in time. sales select from over been

our average our telecom Second are customer the providing objective to to in and by increasing comprehensive from diversifying capture revenue exposure more applications. the international product opportunity we and customers than Tier Sales our to more Xs. us other markets the base is generate revenue and giving U.S. per services markets site

maintaining countries. infrastructure ability sell select last installation of and have liquid provide As and within services radios, all now to the site. quarter, include construction in the mentioned in ancillary the These equipment services of sites we the

solutions uniquely provider of this position to that believe three relationships as initiative, comprehensive are us will partnering enable the We us As which pursue additional these will such with think continued we a for and services and applications have part for Huawei the Namibia, markets interrelated. providing strategy months. internationally. this in telecom We past carriers capabilities developing

one investments this spend the third to on business have the three on is we want in margins headwind time I The as contribution short-term. created the during has bit quarters expanding which a capacity. more past a made significant in the modest

growth bottleneck This by pursuing the to top-tier be same exacerbated fact a we take company as to we strong need seeing demand that production, terms engineering, in numerous the was grow business his outside telecoms. section. diversify, sales been further limited of by and have highlighted are several even from order to customers. steps. We likely of In the in opportunities the Arthur with Historically, and

approximately is away production full Gardena. our and in a XX,XXX This expansion second is it we when November capacity expected is in to office our feet nearly minutes just double is at square which plant reminder, corporate of the operating XXXX, from As located efficiency. opened manufacturing

they've the completed April, just facility. However, a operations deeper we taken our way steps adding than month management. restructure are to In project six

to the production overall reduce management of experience number was an management key goal resource. had responsibilities the increase that and Our

to. the So, mid-level bench-depth that talking we're adding we're about

brought Now, specialists. up the following we

department the First with to a we added then and department along its a from crib, production high services management from directors we clerks, own with one then created planners two. level tool calibration, with training. that team separate We junior of planning material created tool one increased control we production the metrology then with production to increased managers technical department two, staff, the we

floor to We're and XXXX on also staff goal quality ISO also material experienced operators. our added flow are -- and With test lead-times. also including quality presently auditors, now certified place, staff production we efficiencies labor production our presenting vendor In we a We late would expect technology shop and increase objective, lead through also being control inspectors, solving our is business in pay investing researching into we're the have becoming This an proactive we power company. throughout last in improve to and we're related our in more R&D one more drive XXXX our beyond technology is the we industry-leading summary, step revenue roadmap. believe and investments. as bottlenecks. The solutions shipments to which through of we fourth to and and prudent dividends provide

this quarter. key ago. make I two to too much continued an we have provided the We progress as on only won't spend platforms few mentioned update on time last a weeks

integrating As a the second to reminder, and our with half year. storage the we're of about the the and two key is in the generators; platforms LPG in that development lithium second are; one DC product launch one solar is solutions battery new

And improves field. also We a in our international the but first in the and remotely not regarding the are developing competitiveness. The of is and market one, systems, our systems LPG management product. solutions we our battery systems our remote that renewables, a believe in integrated second currently differentiator the process the key is monitoring new monitors, upgrading controls with this only one

with had key good and a LPG power his critical last the have to overseas. peak opens right Luis? markets we expect explained viewed vehicle quarter in across year are We're we the a of and to electrification year gas sites. it turn focused markets. launch this XXXX next residential including I'll track. LPG grid, and on of as use solar electric we now for be start LPG systems for back two power commercial and is call to We've progresses. hybrid we we we've avenues us financial suppliers natural large power or to is we believe these saving improvements few operating CFO and still for rural the we half for platform XXXX. systems telecom our product But we also and grid leverage wide planning Again summary. made on charging in multiple distributed off and initiated over a the Overall to As able year bad in etcetera. a in this discussions and on generation investments Luis, will application It of variety domestically the expect some second and have the product

Luis Zavala

systems you, million DC as is the Thank tier-X March to months an telecom sales $X.XX million sales U.S. XX, totaled of an Net Raj. increase in for to customers compared months in XXXX. our power XXXX ended $X.XX a three is increase the wireless three XX, XX% which March for of The the increase ended result of primarily

XXXX March compared to of XX, million as Our compared March at at as backlog. December XXXX XX, at XXXX, our $XX.XX backlog $X.XX $XX.XX and totaled XX% XXXX million XX, to March XX, million

purchase the compared ended XX% increase profit a slight the increased XX% of March gains in were the gross to attributable March the in and customers efficiencies seen during use previous XX, million as actually efficiencies. production same Gross in added net the for the period to XX, of coupled quarter was $X.XX XXXX. as increases in orders quarter XXXX. $X.XX XXXX Our as during in margin in manufacturing percentage compared for new from was U.S. sales the to with ended The telecom to labor XX% period months profit XXXX equipment Gross three tier-X million profit same

share expenses R&D management $X.XX our promote in $X.XX to product XX% expenses customize during the which as in three power compensation operating increase XX, months operating clientele. March XXXX. as QX, negative and and XX, capital G&A XXXX increased as XXXX. in in XXXX totaled XXXX For income basic in continue diluted diluted at increased March million $X.XX XXXX QX, of in $X.X was share QX, March million XX, XX, $X.XX totaled compared DC increase inventories of as key increased to loss Sales to as $XX.XX The March result international increases increase XX – marketing and as totaled decrease million Cash at as Working our rates. December our $XXXXXX the due salaries, XXXX. of to or of addition $X.XX of for $X.XX office primarily to was staff, our million terms. net per $XXXXX at per associated expenses a of basic ended Net X% compared to continue or to net XX% with and and million compared cash a systems This XX% shipments million, to $XX.XX million $X.X by levels Tier-X expense to with carriers million -- the expense increased result of in December was receivable as we in cash payment XX, compared the stock XXXX. we in by accounts included increased

would to I to Now, turn the like Arthur? back call Arthur.

Arthur Sams

-- thank results shareholders and to you today our strategy. everyone Yes, like for and Luis. speaking to year-end work for of I'd you, the support call. forward each in their quarter support as with we conference one continue growth look all financial their continued first thank to executing of our We on

Now, I would this like Operator? to open to questions. call up

Operator

we And Instructions] from today [Operator Dawin question Pacific Staten Please with ahead. Financial first go Corporation. take our will [ph]

Unidentified Analyst

potential February, started It's all please? I up, quicker. in better call, into markets exciting QX that Can Congratulations off on how revenue terms trend then a have the to got QX better better moving wasn't profitable March. In of you week are last frustrating up about a admit, you conference and the in your breakdown and a of give a that in going the that in bit see talked opening Raj revenue January but it's guys to quarter. hear

Arthur Sams

to Raj handle Luis, or want you that? do

Raj Masina

that? Luis, do handle want you to

Luis Zavala

regarding revenue. That’s our

from gaining -- from constant believe international domestic how domestic on I and In systems we believe, DC markets forecast on betting will steady have terms Tier-X We where revenue that carriers. a and military fast of our power then remain the also... we're some

Raj Masina

of of kind breakdown that to March January the how is was question and looking the QX. in Luis,

that. let So me take

March in last the as mean then the and quarter, January started supply indicated increased production. February So revenue in increased then ramping chain yes constraints process because in we're in mainly of and and small I

those So that are had. problem we the

was $X was exact of $X the it So million in monthly give it was basically, less $X.X than million It was less than don't January. I yes, diverge the because -- and month million. can't it between numbers. number we

and So that's culprit. the February we March, definitely improved. main And then

Unidentified Analyst

terms see full production at not restraint your about of the biggest right opening be is facilities market it's efficiency. new talk your demand are estimated What up, or when doubling you the the even That's when capacity wanted to because seems getting it today? I out product Okay. capacity trend potential On now is that operating debt your to there.

Raj Masina

revenue. have We the efficiencies factories million at with up capabilities full believe both month running to do we that $X to a in

Unidentified Analyst

last And question is one your be is, you flowing credit against position line mean to Excellent, up, your enough keep going to position? go accounts In needing talked cash to Tier-X excellent. call, your needed? get going inventory Or receivable your up. the things a how is conference Okay. cash of smoothly? good receivable? last I Is this the is about

Luis Zavala

I'll is that moving Raj. just is have one to the will right with table deal the -- -- you on the forward that we options we that which our Yes, of best mentioned. take one be now

that the we're within sustain believe we agreement for week at next year the that or two. executing next So, will us so. looking or And

Unidentified Analyst

Excellent. you much get back I'll the in and Okay. Thank queue. very

Arthur Sams

efficiencies, one also for be me production which inventory to as we or Let -- inventory. our will increase diminish is need thing will add we capital to turn our that question able that faster our

Unidentified Analyst

Excellent. Hey so you thank much.

Operator

and We'll Chatard next comes the Quantum question Tim from with Capital. that to go

Tim Chatard.

about of of people that there many manager, talked Hi. on as you've How talking production quality about. operation effort? number things control. part have you the Thanks the for add rundown things that been all Raj a

Arthur Sams

your count fingers? off But top have it head. opposed fingers of them on to on them our as knowing to We our Raj have the counted you

Raj Masina

XX%. -- we Yes staff we by as percentage a XX our it increased by increased -- we added

Arthur Sams

In workforce. overall our

Raj Masina

of it's an mid-level to close operations like But people team, looks team, terms the workforce. XX like in average. XX, management Overall the yes,

Arthur Sams

Yes. I haven't counted.

Raj Masina

Yes.

haven't yet. We counted

Arthur Sams

$X.X the new But what say probably about on team? we we spend did that million

Raj Masina

But so, Yes, spend we sales, spending Easily. we spend obviously can million can $X definitely the We is commentary. his million could believe more important on can for of service; R&D. in of that that million growing like in $X.X less our that in topline we mentioned us $X.X extremely Arthur leverage in spend into spend less busy investors. for less to one EBITDA investments invested so we point these

Arthur Sams

light that. past me a let's say the -- Old Let the shine different on mark. management X,XXX that's been for million couldn't managing quarter years $X break a production XX

did in brought we production and we new larger come charge. -- ours what a So, to we ours is larger from in companies put significantly dwarfing than management line them from

So, $X quarter. to our we a greatly of million million break to bottleneck expect $X them

Tim Chatard.

couple this further when a course that across to that you So, and level showed maintain sales or rate expect the questions you run there. quarter grow related do the about of in you from of G&A expense year this The $X.X there? million should R&D

Raj Masina

it's flat. relatively So,

So, we can the model year. the of rest it to flat for remain

Tim Chatard.

And Percentage-wise on you the quantitatively? in just along along facility at can the utilization are towards production far any you on progress lines how that full that or managing comment getting process?

Raj Masina

We XX%. would to XX% say between

Tim Chatard.

And a couple talk of quarter last about you end supplies--

Raj Masina

where we're April let's March month -- there. the of April just currently We're timeframe about in say

Tim Chatard.

that the utilization the XXXX? that XXXX by near You think expect to the that'll or or end you hit something full do of

Raj Masina

in believe there that get we XXXX. we'll Yes,

Tim Chatard.

Great. Well my answering for thanks question.

Raj Masina

problem. No

Operator

to with go Financial. now Eric Aquaman Grossman we'll And

Eric Grossman

very the early for My been I've Thank previous questions us. getting you morning, you call enjoyed for gentlemen. answered callers. much. the Thank Good very much. And have by

Operator

Thank with ahead. Capital. Bridge go much. you we'll go And Kobylarz Jeff Diamond very Instructions] [Operator Please to now

Jeff Kobylarz

Any could that you market? far developments the Maybe about to guys. morning Good item getting stands as LPG where as that Hi. generator. talk now if the

Arthur Sams

Toyota. the Right to Okay. of how And now up let purchased the quickly we're say, can still are can we for Robert ready Bosch XXX have engine. from EPA engines of integration to that to we're onto turn we the caught Toyota doing approximately inventory. as we certification. pushing along getting engines with, I as We We're testing that want equipment the as

So EPA that in say anywhere certification the for weeks I nine engines. weeks between to we those could of out be would getting four terms

As we buying then U.S. soon as up we’d we market in get will it, we overseas But the overseas. able markets to meantime, if be open the market. them do probably first

sure the controls integration not on still with we're of with engine. working that we’re the So the

Jeff Kobylarz

Okay. for that? with that new is that? how is Is the Integrating of… How the difficult designs sort doing

Arthur Sams

We've But got and forward the simply on is is close, activities coordinating resource place time move in own Robert close. just is large Toyota take certainly that takes two to time It between these their just between it companies. pretty Bosch it very that.

Jeff Kobylarz

All right. you price average what's would that your of And the what the to you generator Okay. said price sell? is then Roughly typical relative be that?

Arthur Sams

engine over fact that the Kubota It going we're will is using. the price our same the now, engine of way things new lower Matter this are will price mix. It not increase price. the older

Jeff Kobylarz

right. All Okay.

Arthur Sams

we That want.

Jeff Kobylarz

comment for your buy? tariffs Any raw you. materials on and about materials any Thank you any impact

Arthur Sams

far reduced, the electronics there's steel two they a materials steel inventories of and prices inventory of and for and prices tariff's so becoming purchase the up aluminum know. if as will affecting are significant yet. The we don't scarce, rise. large because price application. We very How going Well, continue fallen really down much? haven't as of to still purchased we that know We things, aluminum

our Magnets of the new are past tried with originating for that. electronic are purchased even out we For tariffs. that touching alternators components of quality issues that out and because we've purchasing XX China the concerned not the avoid we understand of China always that to years, are tariffs

Jeff Kobylarz

-- I you brought the And that in earnings on months. restructure you then to six right. All last you Okay. over saw said the the hired release manufacturing consultants

And last said, so your I staff… think increased you you

Arthur Sams

not We full-time No. in employees. brought We consultants. did in bring

Jeff Kobylarz

I see.

all dozen are -- starting they and about Okay. a so with kind like I'm or the do there of restructure is managers just sheet And curious to additional operations? clean trying

Arthur Sams

definitely. Definitely, Yes.

We’re giving…

Jeff Kobylarz

optimize is with started? – kind – flow the how sheet still it. that they And How that product process debating far that to along Are clean that they -- deciding does would optimization where or stand? when Got efforts? in of work the did where of like this

Arthur Sams

Okay.

the talking First the we're SAP of with Planning. implementing clean Planning terms with and all, ERP of sheet about in Material Enterprise Resource Resource

They in So terms of quality of scheduling planning, process ongoing. with is of of sheets There of all started then each clean implementing review them starting-off terms which planning in production department is are a these. paper. control, terms in

the not process So will on some so. months time. and or throughout and do light And results. material take is now we an enhancement will It's of the on overnight next turns label see switch that this go six It going to nine on. months

results are barely now. do measurable, see but Our results we

Jeff Kobylarz

Okay. the And bottlenecks are us what right tell now? biggest you can you for

Arthur Sams

The assembly is supply biggest right the right and time chain right we It's sure of the in at ready materials the making that material place go for to for amount into getting vendors planning. our and management have final subassemblies at still bottlenecks us of still the place.

Jeff Kobylarz

Okay. luck all you. this Thank Good for efforts.

Arthur Sams

Yes. the Thank for question. you

Operator

Please Robert Marcin go Next ahead. Penn is with Capital.

Robert Marcin

on volumes be of we domestic was mentioned teeing make and see expect to orders X. are we this impatient. business? – on speculated were we're international when to we're one of getting three ready U.S. there income production up. to difference two walk. When ago really crawl At do Shareholders as sales how the Apparently, a this to we've that point, see XX% Hey, supposed in years learnt the the and the going perhaps your statement just bigger backlog real Congratulations guys. year from Tier you then. you are a to International part business

gentlemen. are We starting get impatient to

Arthur Sams

that. understand We

to over say stock be years two we markets like are let's just the investment international like payoff. We'd that and our see increased the too So we'd we. past that made to in comfortable value

contract we that and Now, ago directors is have sometimes sales operations delays of two else course our shut overseas while us. will signing customers they the we then in would overconfidence to and to actually naturals that or they a the confidence the down that biggest promised our but problem

looking on going from to next We're as or these maybe Southeast contracts and trying going the day-to-day as the appearing exaggeration and start three to Asia So Africa. get two months without in much week contracts close now. delayed to

Robert Marcin

All right.

Let me…

Arthur Sams

ahead. Go

Robert Marcin

point in it out? I you on at challenging revenue? expect the XX out quarterly a a on Let basis international me a Is way know a two or that's of quarter the this calendar question. different phrase quarters what might quarters

Arthur Sams

was At international question? point will XX% our of the Okay. sales sales is be what that the

Robert Marcin

Yes.

Arthur Sams

to a Okay. reasonable throughout guess. I'd of have do this just to math on view but In the end going I'm towards my some year. that,

Robert Marcin

All in year? quarters of the to But six you encouraging. end would Okay. Towards this hope? That's four right. definitely

Arthur Sams

Yes.

Robert Marcin

great. Okay, Margins, gross…

Arthur Sams

ahead. Go

Robert Marcin

investment and job away margins, go started in Gross business the than layer to want Gross much one that recurring -- I'm Okay. I with was we appreciate guys we much XX's, how very And customer. grow needed we out higher from you do and generator way there. to don't the a we -- to proud great think grow. to cost into there. the are it a order going in manufacturers conventional all doing that's

revenue what million at know from say, we're production with various we you hit delighted XXs few margins the and revenue would but an million mid-XX, us as and now it's -- Are everything working that right? stuck give where anymore, then is be not on if or million production grow targets hope should it's over a to high-XX? $XX years. We the would at not sincerely get margin $XX the idea million peak shareholders another longer-term be you at even Can the how fore-handle to gross $XXX low few full next think the we a the there. still levels over company efficiency you're thinking gross you for years, levels. and $X year in next levels, month a positioning two What's I see the intermediate million and $XXX

Arthur Sams

Okay.

me that parts. in Let two answer question

doing part is first margin. are the The what to increase we

went of and it like with is squeezed. is, Xs. Tier we part First got we the And after their stuff volumes that that,

manufacturing with But many much companies, more concentration customer generator Tier companies, a too have base. companies, We these they Xs. customer with diverse have

large generators best So mile lower XX words, instead In offset may trick, higher-margin looking a an price. to of or last they big or two generators carriers, of the that pay deal. there's able guys, volume, they'll to who be equal because be XXX large should the the That's we or buy, estimating the overall that guys but their the get after the pay higher higher may have guy. generators buying get a at quantities are guys they than buy guys overall here's equal quantity the big trick who But guys three a the other buy is But greater generators the at or year X,XXX margins, a XX the the we But year. one day, and small the by the price. to the ordering more of end smaller smaller area. are should I'm guy. big X volume than And a

go gives Second I to good a got And efficiencies, ways area, that efficiency. improve us because -- have labor on is our we that our long that. consider it production to we've news,

Robert Marcin

All upside.

Arthur Sams

Exactly, ease. -- exactly.

So your with part the that, let me have of second answer Raj question.

Raj Masina

also we would with call gross faster, breakeven the quarter investors Because to at as like be along our the contribution Robert, operating results, yes. but margins. look slightly look point. Yes, at margins, a we it are contribution you first margins,

all incurring million we are infrastructure, the the and the production breakeven that there. hire at the with the So to and we're factory production expenses if doing we're second additional all development management $X.XX

add they're customers, even it, site you've line, say, take if some whatever though would million the even let's if you we the these around So every are margin per because of just even Tier XXs, so on revenue gross we high to international these go that that in aggressive world, target Like, pricing the top reported. adding with X to XX%, to price-sensitive. even carriers $X low the super for want

Now there opposed as just we're solar building a to sell-sites from hybrid systems, the systems, generator. selling complete ground we’re up, there hybrid providing

times So X an talking are the what here to about or AT&T. from of revenues Verizon times X size getting you're they're which

gross -- going as a that margin So of directly EBITDA. percentage significant the of a percentage that gross margin is

semi that we'd and at, to costs the earnings Ultimately, it's G&A and that our for line top to look we're up fixed the -- that to increases us why occurring. company fixed what and critical as for like the the grow overhead leverage So investors shareholders. is our that's

Robert Marcin

want All lot $XXX a of right. breakeven we company, We there's hope don't million with didn't a because costs that so. anticipate associated it We right?

Raj Masina

this No. that are way. don't I conscious understand. We, obviously, company which terms in don't But want investments, the to break to was the the make manageable, taken investment decision is investments a we want of bank. that grow

Robert Marcin

there question what original that margins a required the number of answer? What kind to expect to in back was And would you gross do…?

Raj Masina

get It those quarter-to-quarter. been in products yet. range. have because It we gained we're would the there yet, but not XX% be would priced lumpy be to The efficiencies still XX% to XX% to haven't

being to things we’re say terms not are opportunities good other of now all business, many in if international So balls yeah, could pursuing you so XX% many too is equal, right But U.S. it. that strictly air if juggling probably international. model the in the

Arthur Sams

Okay.

Now it's you question. my to a ask turn

or margins -- higher which do, growth take Or would margin the we reduce there's revenue, lower should we we've direction, of we revenue window take opportunity profit two a revenue should now, significant can go and Okay, we our high for that? you for higher generate ways we growth much can got can our to take?

Robert Marcin

balance think important. I is

need -- You to is important. balance of kind

to let's you of material that, about here you revenue, We quite okay? why, And care contract an you for of price So a you revenue say don't get this don't massive out a get business spares, at recurring a a don't service, margin. don't opportunity amount get XX% long gross time. get is

service that too. X years one So a that an without considerable generator. a capital once revenue for with a every lifetime long It’s is capital investment of entity amount this makes good a of amount

we Boeing, take have team say is So that profitability considering growth and to up So the to us and requirements just flow, is to the again. don't revenue acceptable to think -- sales million business, revenue our all I three spares or a prosperity. level economic an want way. or doing I sales, the the and of the the you million cash profitless and of on along that because That be or million service, sell million what cash money is in breakeven you? legitimate and the growth we process, $XXX shareholders of point, Unless is million don't sale then shareholders? some the profitability would want minting $XX selling along $XX planes and don't not But right? fund get have $XX we're we're the of you grow like an -- exit what able to times okay? strategy to at the million That’s So for and business million for of that nature right? two $XX then the and which the We does with suddenly $XXX then $XX management profits revenue get downturn sales, have full

avoid that free revenue lower tremendous corporation at type margins the encourage gross dollar to amount strongly XX% because not would flow we're per general of compensated generated of I with or cash So business.

Arthur Sams

Got it.

So…

Robert Marcin

where take even without there's guys? for Why The low profitability? growth valuation the would You now of on us exceptional a fair revenue type valuation right market we is? revenue, revenue valuation Is either if with of the that improve the level stock not is that paying and have business. higher very

Arthur Sams

XX Now noticed you've is I much that consume. we way one you've thing for run how years capital and the seen the business

I $X.X we the million have think get of we’re within how in we’re in think sales I million. investment agreeing been the able to to other with And kind of frugal. company mean, revenue many $XX of kind you run business. you I actually way know

Robert Marcin

the equity capital bigger. thought was I far

Arthur Sams

to That's $XX about went We But to to at about We're public public. million $XX the that public. million talking sales, sales. before $X.X million. went point we we in going spent get

terms IPO, out spent and inventory lost very $XX of machines that the the back the we accounts in money of the in on shop on into Most to we that warehouses and capital. million receivables of netted floor and work-in-progress. into of that little Now is

kind we're So frugal of there.

that situation create the loan from creating where they of a are All that next are years Now in focus is that's they on I they capital company agree stable or problems biggest companies next just they raise do clean-tech awfully companies a gets high-tech other whatever the products, I've And that in. under they because of be revenues over instead you. selling one with selling to studied and these revenues past stocks. put enable from product, and their resources the create investors. gets company situation the or an XX

So to grow our the revenues. plans are

to are plans is black. to in our not money. Our into stay ink by And the making red deep get the security

Robert Marcin

generate need growth the flow or characteristics rate, The you growth of we growth Okay. And organic market. in one composed opportunities at paid sacrifice stock rate. going profitability the in get things other, valuations to free for expense you're revenue if cash that of of the the and mind Keep that opinion. in rate, of two my the not to

You won't sell to be again. grow able ever to equity

to profitability. grow at to revenues you the you and If incredibly stock And stock disappointed. the you want show very breakeven. a I value $X, sell if to be want stock have would higher, market Not lot

Arthur Sams

on aim our And efficiencies having our greater a customer by we've production we That's presentation, our and profitability labor areas our in base. do. what to you improving of increasing by given diversification

Robert Marcin

answered My what question Arthur. the to final I your happened data center question, hope, business? is I this,

Arthur Sams

have to our business? focus production happened what its the over not center on the focus like and we to products -- Tier-X has for some the engineering customers were equipment Our to engineers we with customizing of But What to stuff production. had The and data center rollout gone over-loaded with data shift do, new have plans engineering that. away.

and some of by the So got we other delayed distracted case.

Robert Marcin

don't -- performance, carriers. for data they many customers pay sell the margins. suppliers I center, traditional pay They're products but what you pay price Tier-X sensitive from decent gross that they really they an And make their as investor that quality, only again. understand mind into your companies as the gross to you talk not tell making XX% they margins in for as letting can I

So for that the and would profit the excellent that center as diversification we can be get soon an company. into product think as I field,

Arthur Sams

is One that. the solar system, getting data is for and three center. military; solar a larger motivation hybrid systems; the is here's to two, Well, hybrid

then that. at developmental Now same incentive for ink. not after in to red any particular too order, many get but projects those tremendous the we we But the the into deeper if go us time are

Robert Marcin

priority a At it I we so ago priority. thought was product, developmental just the down have seems understand one shifted that our position I that. way to year point they on

Arthur Sams

will It has it shift shifted, but back.

Robert Marcin

all Okay, Thank you very right. much.

Arthur Sams

you. Thank

Operator

[Operator Instructions]

Arthur Sams

Actually, there are no further questions?

Operator

That's sir. further correct. are no questions, There

Arthur Sams

We you. can the wrap-up call. right. All Thank

Operator

now does right. for for you your much. disconnect. That very may All Thank to conclude participation. conference everyone our thank like And I'd you today.

Polar Power (POLA) 15 May 192019 Q1 Earnings call transcript