Legend Power Systems Inc. (LPS) Earnings Call Transcript & Summary

Looks like everyone who has been in the waiting room has joined. So good morning, everybody. My name is Mike Cioce. I'd like to welcome everyone to Legend Power Systems' Q4 2023 Financial Results Conference Call. [Operator Instructions] I will now turn it over to Randy Buchamer, President and CEO of Legend Power to start the conference. Randy you're still on mute.

Apologize. Thanks, Mike. Too many buttons for some of these meetings. Welcome, everybody. We appreciate you taking the time. We know it's a busy time of year, so we really appreciate that you have taken the time to listen to an update on Legend Power's fiscal 2023 Q4 call. I'm joined by Florence, who is our CFO; Paul who is our COO; and Mike Cioce, who's VP, Sales and Marketing. Just quickly want to review the agendas we have appreciation of what we're going to do today. Obviously, we'll have some opening remarks. I'll give you an overview and quick highlights of some things that I think you'll find of interest. Florence will go into reviewing the results, and we'll be talking about sales and operations as we go forward. Just take a moment, if you could just read the forward-looking statement. I just want to make sure that, that disclaimer -- and you -- appreciate it. So we're taking a different approach today. And hopefully, you'll enjoy the interactivity. We're going to be able to present and share some reports and documents that we use inside the company, that I think are illustrative and clearly show the progress the company is making. Florence will talk a little bit about the quarter from a financial point of view. Mike's going to talk about the sales side, and Paul will talk about a lot of the initiatives that we've been having inside the company to improve the organization. But the focus for all of us really have been conservation of cash, speeding up cash flow, getting deposits with orders, improving key processes and really getting ready for growth, reducing our costs, and Paul will talk about that, and growing margins. And in each of those areas, we've made significant progress. From Mike's side, I think it's really exciting. You don't get to see with some of the financials, the progress on the sales side. And it's really exciting, the progress we're making with the GSA Green Proving Ground, and how we're actually being written into specs with DCAS, City of New York, et cetera. There are a lot of things going on that are really, really exciting, and I think you'll find today, informative. But I think, you'll see better appreciation for how far along we are in the sales cycle with some major organizations that are each company makers and as well as the numerous markets and things that we're in. And we're past the critical stage. People aren't wondering if our product works. We're having terrific success with Gen3 in the marketplace. We've had many different technology evaluations from government to private enterprise. And the solution is really, really delivering. And right now, we're really at the stage with many prospects that are deciding on multiyear deployment plans, how best to use -- utilize the technology for many years to come. Very exciting time for us, and we'll get into that today and hopefully, you'll have again a better appreciation for where the company really is in the marketplace. I'd like to ask Florence now if she could just to take you through some of the financial highlights.

Thank you, Randy. Good morning, everyone. So during this quarter, revenue recognized was $159,000 compared to $579,000 in Q4 of fiscal '23. Revenue recognized for the year ended September 30, '23 of $1.1 million was based on 9 SmartGATE systems and 8 completed SmartGATE installations, compared to $2.1 million for fiscal '22, which was 22 SmartGATE systems and 15 completed SmartGATE installations, respectively. So this shows an increase in average unit sale price year-over-year. Deferred revenue as at the end of the year was $210,000 compared to $30,000 in the prior year. So backlog is healthy, and we will see the transition of these revenue recognition as the orders are fulfilled. Gross margin in the fourth quarter of fiscal 2023 was negative 4% compared to 11% in Q4 of fiscal '22. Negative margins this quarter were the result of unallocated (sic) [ allocated ] fixed costs incurred. Gross margins normalized for these allocated fixed costs would have been 33%. The company ended the year with $2.5 million in cash, no debt and $3.79 million in working cap. With this working capital, we'll continue to proactively focus on the items critical to attaining our growth projections this year. We'll continue to manage our capital resources as we always have to support our sales growth plans and deliver for our shareholders. I'll now pass it to Paul, our COO, to provide some operational highlights.

Great. Thanks, Florence, and welcome, everyone, to the call. I think it's really important that we talk a little bit about our sales and operational definitions as we're using them frequently in both written and communications. And really pipeline -- these 6 steps from pipeline to revenue recognition is our revenue value stream and lean manufacturing and -- a value stream is basically a process or a set of processes that transform material and information into products and services that the customer wants, and something that we need the cash for. So it's very critical that we're looking at these 6 steps of our revenue value stream and transforming it to speed the time to sales, to speed the time to cash and to be proactive planners. So our top 5 strategic initiatives are really focused on doing that. Sorry, Mike, could I take them through the definitions, please? Yes. I wanted to do that very quickly. Pipeline and forecast, these are sales opportunities that are not yet won, pipeline decisions are not yet underway, where forecast the SmartGATE decisions are actively underway with the customer. Commitments are verbal, paperwork in process. Bookings are actual sales wins, and these are opportunities where proposals and POs have been signed. Backlog is equal to bookings. However, from an operational point of view, this is where we need to actually transform, deliver, produce the material, get it to the customer, install. And revenue recognition, of course, is where that product or service is provided to the customer and then hence, invoicing and collection of cash. so our revenue or our cash value stream. Thanks, Mike. So those 5 key initiatives are really significantly altering the way that we do things. And again, our primary focus is on speed to cash, speed to sales and proactive planning. We're transforming the business management processes to streamline the company, and we're improving company processes to improve quality, time, efficiencies and effectiveness. And this is making our processes shorter. It's increasing win rates and it brings cash sooner. Effectively, what we're doing is perfecting how we transact to support success and company growth. Our backlog is very strong. We have 10-plus units to be shipped over the next 4 months. This, in addition to deposits we will get from new bookings is going to support our positive cash flow throughout the year, and will bring additional cash to the business. In terms of our product and services roadmaps, it's very important that we understand the timing and release of new products, revisions and changes as we're aligning all of our material planning and our production to those changes. Again, so that we can be predictive, we could be on time, and we can ensure process turnaround time shortened and we're bringing cash to the business sooner. Supply chain is improving. I've seen a lot of improvements, still some holdouts, but the way we're addressing longer lead time is by ordering the parts a little sooner. And I'm very excited about the rolling forecast and sales and operational planning process, because we transformed a lot of the workflows of both sales operations, operations, productions and finance, we're able to provide a 36-month rolling forecast. And the value of that rolling forecast is very [indiscernible] as we can look monthly at changes in that forecast, and take action immediately, not only within the fiscal year, but because it's 30 months the next fiscal year and beyond. And that's a very powerful decision-making tool as we're able to react very quickly and take action where changes need to be made. And again, supporting time to sales, time to cash and proactive planning. And we're scaling to meet the increase in demand -- well, knowing we're replicating our best practices throughout the company. So our continuous improvement initiatives that are involving all departments, addressing business customer, partner and employee needs. Our cash position is very strong. We had solid cash throughout the entire year in [indiscernible]. Our operating expenses have been reduced dramatically, 30% down from $500,000 a month to less than $350,000. Our COGS has improved by 8% to 10%. And working further on that. So I'm very excited that operations is in an excellent position to continue shipping and to support the sales and the growth of this company and what we're going to see soon. So with that, Mike, I'll pass it over to you.

Thanks, Paul. Appreciate that, and thanks, everyone, for your time today. Again, I'm Mike Cioce, head of Sales and Marketing for Legend Power. And I'm pleased to give an update today on our recent progress as well as our efforts to win more deals faster. That's our mantra for the year. So we've been making significant strides on multiple fronts with smaller deals coming in and substantial momentum building on larger projects. Notably, we're pleased to announce our upcoming first shipment to the United States General Services Administration, or GSA, as part of the Green Proving Grounds or GPG. Our collaboration with the GSA has opened doors for additional opportunities and showcase the capabilities and the applicability of SmartGATE broadly across the U.S. Federal Government facilities. We have several new sales opportunities with the Federal Government that have come directly from the site selection process for the GPG. Given the unprecedented need and the level of satisfaction with the GSA currently has with us, we are able to push forward with these new sales opportunities while we continue through the Green Proving Ground process. In addition with the City of New York has been promising. They finalized the active power management specifications and are beginning to distribute them to existing RFPs. We expect the active power management specification to be officially published in January. Additionally, with the procurement processes being on a school-by-school basis, that are being rolled up by general contractors, we are confident that our standard payment terms will be applied and included in these deals going forward. As we navigate these larger opportunities, we continue to see smaller deals materialize, and I'd like to highlight a few of them to enhance your view of our position in the market. One unique case is involving a local butcher shop in Ontario, while this would not normally be 1 of our primary direct-to-customer, they were referred to us by their local utility. The shop faced significant power-related challenges affecting their high-tech processing equipment, which ultimately impacted their revenue and their ability to service the community. Through a power impact report, we identified and showed them how the SmartGATE can solve their power issues resulting in their decision to purchase the SmartGATE. This demonstrates the versatility of our business model and emphasizes the success of our standard terms, including our deposit supply in multiple markets. Another noteworthy customer is a major resort along with our other long-standing partners. The end customer's investment in large resort property required a large amount of upgrades with the existing upgraded equipment and the power quality issues, they were concerned that the power would prematurely damage their brand new equipment which came at a hefty price tag that led them to acquire a SmartGATE. They also are leveraging our financing facilities to further emphasize the success of our partner model, and aligning with our standard business terms. So we're excited about that as well. And these success stories are not isolated as buildings of all types continue to decarbonize and increase efficiency, they rely more heavily on sophisticated systems, which are more susceptible to power issues. In fact, we are recently meeting with a major technology company and during a conversation, their director of energy and sustainability, they said it best. I'd like to read you the quote that says, "With the focus on reduction of carbon emissions, buildings will always move to smart systems, making these sites sensitive to power quality issues. On the other end, in deregulated energy-only power markets, there is uptake of intermittent renewable power, which may also create power quality challenges. So power quality becomes a critical component for reliable, efficient buildings and ensuring optimized equipment lifetime as we progress forward on the carbon reduction churn." So we are currently working actively with them, with 1 of the plan to assess the hundreds of locations that they operate. And they are also pulling in multiple decision makers as part of the process. And these are a double-edged sword, as the opportunities get bigger, they can also take more time, which is why our strategic focus has been on winning more deals faster, and that's why it's so pivotal. What I'd like to do is kind of give you a quick overview on how we operate. Prior to today -- prior to this year, we were focused on more of a linear process where we would go through, educate, sell the impact assessment, conduct the power impact assessment, present the findings, handle objections. And that led to a lot of questions and data support coming later in the process. So as Paul mentioned, we were -- we're focused on reworking our processes. So as a result of that, what we're doing is we're moving those data support and those questions earlier in the process. And what -- that's focused on is being able to shorten our sales cycles, improving data integrity, enhancing transparency and increasing customer confidence as critical aspects. So as you can see, the current process takes 12 to 18 months. But with our revised approach, we aim to significantly reduce that ultimately increasing win rates and velocity. Looking ahead, we are confident in meeting our guidance for 2024 with strong commitments from committed system orders from the City of New York, from the U.S. Federal Government and other existing CRE customers that are awaiting budgets and/or bandwidth availability. So from a sales and marketing standpoint, the operational improvements, Legend Power is committed to enabling our customers to make faster, more confident and better informed decisions. In conclusion, all systems are green. Our deals are progressing well, and we are enthusiastic about the future, and we thank you all for your time, and I'll now turn it back to Randy for questions. I apologize. There was 1 thing that I've got to mention, and that is -- well, I wanted to give everyone some visibility to some of the actual results that our customers are experiencing. So you can see here what we traditionally do is we deliver a measurement and verification report. And to that, what we've also recently added is a power quality improvement report. So these are real reports from our existing customers that show the impact that we can deliver to them, not only from an energy efficiency basis, but also from a power quality improvement basis. You can see that we take hundreds of fluctuations straight out of the building. So the left side of the chart shows what the power looks like coming in from the utility. And the right side shows what it looks like coming from the power -- from the Legend Power SmartGATE System. So what we always ask our customers is which facility would you either rely on for your income, for your profits and for your reputation, 1 with high volatility on the left or the 1 with a steady power stream on the right. So there we have it. So thank you very much. I'll turn it back to Randy.

Thank you, Mike. Thank you, Florence. Thank you, Paul. We've had a slight glitch on the system, but we're going to work around it. So that's all right. Again, I think there's a lot of work and things that go on behind the scenes that people don't see. But the sales activity, the movement we're having with significant accounts is really start to pay off. We're seeing a lot of growth, obviously, in the marketplace. We're seeing technology that is coming out that's affecting adversely buildings on the grid side. I mean, the market continues to get bigger and bigger for us. We've now got over 24 SmartGATE systems out in the field. And the part that's really interesting is it, that the customers are telling us how effective it is. And in fact, we're in the process now of working on an extremely large order with an existing customer that has come back to us based on the success they've had in about 20 buildings in their network. So we're seeing, again, in all of our markets, people are starting to look at deployment plans. They're looking at many years out about what they're going to be doing with their network of buildings. And we're seeing the government programs very strong for us. They continue to support the adoption of technology that can reduce the impact of poor power. And we're fine from utilities, a different marketplace decision-makers and recommenders are asking people to talk to Legend about solving their power problems. So we're very pleased with that part of the business. I did want to mention a couple of things also before we went to the questions. But Paul was talking about cash and strong cash, we do depend on deposits. So I just wanted to mention that successful deposits in the non-government field have been strong. In fact, they've been 100%. We've asked for a 25% deposit. We expect that to continue to happen. And 1 thing that is interesting on the government side, when you looked at the announcement on October 3, about the $8 million commitments and the $15 million target we had, a lot of that was government accounts, et cetera. And 1 of the changes we had was 1 of the government accounts went to RFP because they couldn't go single source supplier. So they went to RFP for electrical contracts. We're spec-ed in as the power management solution in those RFPs that delayed the process, but that was a significant portion of the revenue we expected by the end of the year. It's not gone away. It's in fact, grown. And we are now awaiting the RFPs to come back in, and we will work with up to 5 electrical contractors that have to put in a power management program and solution, which is Legend Power. So I want to make that point that's, there are some deferrals and some delays, but nothing has gone away in our funnel to date. And we also are excited from the deposit point of view, just to leverage on the last point, by going through the contractors instead of directly to the government, we will ask those individual contractors for deposits, which will help with our cash flow. So there's some extreme positiveness out of it. And it also allows us to take those partners and ask them for a reciprocal business in other markets, et cetera. So we continue to build the brand. We're getting great feedback. I think it's now an appropriate time that we ask you to submit any questions you have. But on behalf of the team, we're excited about where we're going. We're excited about our future. And the part that we're most frustrated is we cannot publicly share all the great things happening behind the fence that we'd like to. But I think you're going to start seeing a lot more information and press releases coming up that will help you appreciate how significantly we've moved the company along over the last 6 to 9 months. On that note, questions, please.

So I've got a few questions. One of them is RFPs for particular SmartGATE for DCAS. What we can say is that there are over 2 dozen current RFPs out with DCAS. As Mike mentioned, we will be expecting a public sharing of information on RFPs, I guess, is the best way to put. And if you look for that, we expect that to come out during January. And specifically on RFPs, we are seeing over 2 dozen currently. And the number of systems that we're looking from that particular organization will be somewhere in the 60 range. The second question is bottlenecks have prevented Legend from publicly announcing a major multimillion-dollar SmartGATE purchase order broken down to customer, et cetera. Well, stay tuned, I guess, is the best way to say that. You should see something very early in January, of significance. I can say this that we believe there will be press releases out with the largest order in the company's history very soon. So we're excited about that. And bottlenecks really are deferral on the sales side from the purchasing connection. In other words, we have to follow all the process of not only the person that's buying the system, but then we have to arrange electrical contracting. And in some cases, as I've mentioned earlier with government, we've had to go to electrical contractor RFPs because they can't go single-source supplier even though we're spec-ed into contracts. So I would say the bottleneck that's prevented us from publicly announcing some of these major deals is we have to button up some of the paperwork. There's a couple that we're waiting for financing to get finished up, so we can do that. There's a couple of others that we're getting electrical contracting pricing, et cetera. Those will be done. So there's nothing there that is going away, it's just been deferred or slightly delayed following the customers' purchasing process. Go with the next. Next question, I'll give to Mike. Do you think the lack of addressing data questions early in the process may have contributed to a delay in sales?

I believe that it has had some impact. Again, what we've been doing is we've been -- again, if you look at it from a cholesterol perspective, everything everybody understands that high cholesterol of 240 and greater is meaningful. But when you find out that your cholesterol is 240, it's a completely different story. And that's really what we've been focusing on is delivering the data for the specific buildings. And we've done enough of these now to really understand what kind of questions about the data, because when we look at how do we tie data to financial results, there's not a set formula for that. So we have to go through and look at it and try to figure that out for each individual customer. So what we're doing earlier in the process now is we're presenting the findings that we have from existing customers that show what kind of -- just as we showed earlier, what kind of impact to the power quality we can have, but then also give real customer results. Like for example, for 1 of our customers, they deployed about 10 systems. They saved about $110,000 worth of energy. And they weren't quite sure how they were going to quantify the maintenance repair savings. So what they did is they did a 5-year look back on 1 common category, and that was control boards. And control boards for HVAC, elevators, lighting, those types of things. And what they actually found is their average was about $180,000 per year for those facilities that they deployed in. And what they found is in the subsequent year after deploying the $180,000 spend went to $15,000. So that was, in a way to -- we can actually go through and show how improving the power actually had hard dollar savings. So when we look at the data side of it, now that we have a better understanding of the data and how it actually relates to real life customer events, we're pulling that forward in the process, and we're making sure that, that's happening while we're doing the impact assessment, rather than presenting the information and handling it at that point in time. So we feel that this will be an accelerator for our sales efforts for sure.

Thanks, Mike. Another question that comes up is, could you please talk about cash position, cash burn and expectations for capital needs. So Florence went through the basic balance sheet numbers earlier. We're roughly now in just short of $2 million in cash plus receivables. We've got somewhere about $1.7 million or so in inventory, $1.7 million. So we've got some good working capital. What we need to do is collect on receivables, which we are focused on. We need to ensure we get deposits with the orders we have. And if we take the forecast, internal forecasts we produce and only get 50% of the deposits that are expected. We'll have more than enough working capital for the fiscal. So right now, we are looking at that constantly. And as I've said earlier, we have not had 1 person say that they won't give a deposit. We were concerned about the government accounts. If you go back into August because they told us they would only get progress payments and not cash deposits. But by going through the RFPs and now dealing with the 5 independent electrical contractors, we will ask them for a minimum of 50% of the order because we brought all the marketing and sales effort on those accounts. And in some cases, DCAS, we've got somewhere close to $2 million of equipment, sales efforts invested in the account, so we will be asking those independent contracts for deposits. So as we sit today, yes, deposits are a significant portion of our plan for cash, but we're historically showing 100% achievement of that cash deposits, and our expectation is to continue to do that. So we don't see, at this point in time, capital requirements unless we see something different in the marketplace when it comes to deposits, et cetera. Florence, if you can just explain the reason for the negative gross margins, that adjustment that you have?

Sure. So as I spoke about earlier, the negative gross margin this quarter is due to the reallocation of fixed costs. So that includes rent expense, amortization of fixed assets, et cetera. So those costs would have been reflected below the line regardless. So it would have had a 0 impact on the overall profit and loss statement of the company. And in terms of whether or not we have the visibility of this into 2024, given that these are fixed costs, they're certainly already taken into account for. So we have 100% visibility as to what those costs are. And if you look in both the financial statements and MD&A, we do strip those costs out so that you're able to see exactly how much is being allocated over into cost of sales, which are costs that are going to be incurred regardless.

And then the other question that's a follow-on to that is written, I believe, the statement is talking about margins going forward for the year. And as we said, that if you took the true margins for the quarter, about 33%, and we're on target for 50% by late 2024, early 2025. Paul's been earlier talking about a lot of the initiatives we're taking to do that. But we're confident, margins are coming up. Product availability and performance et cetera is improving. We're taking numerous methods to reduce our cost of goods. The most significant that I talked to with people on a daily basis, is transformers and transformers are the most significant component of our system and the most costly. And if you look historically, if you go back 5 years, the average transformer was probably in the 1,500 amp range and costing about $4,500. If you look at today in the larger rent ramps, that went closer to almost $15,000 during COVID. We believe and we have been looking at alternate products from the current supplier. We've gone through an evaluation with some alternate suppliers that will reduce those costs by about 50%. And we're on target to put those into place. And that's just part of some of the things that Paul and his team have been doing to reduce the cost. And another question is, given all of your work on manufacturing, what's the lag between order placement and final delivery. On most of the products now, we're finding that we can either stock within the time frames that work for us because when you've got the -- when you're managing your cash flow closely, you want to make sure you don't have more and more inventory. And as we said, we've been carrying about $1.8 million in inventory, about [ $350,000 ] of that will be old inventory and the rest would be new. Our goal is to get [ that out the ] door. So what we're doing is using the existing inventory up and bringing the components to complete orders. As Paul mentioned, there's 10 systems about going out. We're trying to use that up. We do bring components in to address the lead time, but on another call, we can go in more detail about how that is being more systemic, and rather new sporting and keeping. We're looking at some products that may be going obsolete, ensuring that we have those. We're looking at lead times with vendors and different cost structures and optimizing that for the best cost we can have and timely is to deliver. Also, we had a couple of questions that came in e-mail, and I thought I would just share a couple of those with you. One of the questions came up was in the October 3 release we talked about large orders and commitments in the neighborhood of USD 8 million plus. But those were, is very large buildings in the U.S. needed systems that were bigger than what we have. And just to put in perspective, historically, we had 1,000 amp and 1,200 amp systems, and we had 1,500 amp. And when we got the IKEA order, we had to go up to 2,000 amp then larger. We're being pulled, we're being pulled by larger opportunities. So the larger opportunities are looking for a 4,000 amp system, which we currently don't have. When engineering first looked at the 4000 amp, they were looking at significant spend significant time frame, 1.5 years and perhaps up to $2 million. We're lucky to have GURU, engineering head, Mark Peterson. We looked at it and looked at some alternative methods. We expect to be able to release to the marketplace the 4,000 amp by the end of this fiscal, and it will be at a cost basis that's nominal compared to what was first looked at. So it's very exciting. So back to the question, it was asked, there are people that are looking for 4,000 amp. What we'll do is, we'll fill orders on some of their portfolio with smaller systems. And then what we'll do is defer and install the 4,000s as it become available. So it's another example of how the platform that Mark and his team in engineering developed, keeps growing. And I hate to give Tesla plug, but I'm going to use it a little bit because it's so software driven. Once we get the larger systems, the capabilities to add functionality and additional power management capabilities is software-driven. So we're becoming less and less. We're putting things together in the back and more and more work is technology driven. So that was that particular question. Another 1 was just asking about the DCAS GSA, larger orders, et cetera. I think we've covered that in detail. I've been asked a bit about our cost structure, everyone's chipped in. Paul's led the initiative. We've taken about $1 million of our operating cost on an annual basis compared to last year. We're in the neighborhood of between $325 to $350 per month around the organization. That's very lean, but that allows us to deliver as planned. And that's 1 side of the equation, the denominator side is reduce your costs, which we've done proactively. And additionally, on the revenue side, taking the deposits and with the forecast that Mike has even significantly down sizing this forecast. We're very confident with the year, although we do expect to fulfill all the promises that the sales team has had. And also, the last question I have is, you've spoken about nonenergy savings being a larger component of savings and than reducing energy costs. Could you provide some examples from customers that illustrates how SmartGATE lowers operating costs and saves money beyond energy savings. And I'm going to turn it over to Mike, I'll just said about by saying, we're really excited about the GSA Oak Ridge Lab, relationship because that will give us a third-party document that we could share with our prospects and customers stating what they have found the nonenergy savings to be. We're also finding that more and more systems go out, as we said, over 2 dozen in the field. It's exciting because the customers are telling us, and Mike will share a couple of stories about the nonenergy savings. But I think this is very parallel to what we experienced when we had energy savings that first came to the marketplace a year years ago. Energy savings we're [ dabbing ], what's your methodology? How did you get there? That's not the case anymore. And as we've got more standardized with our methodology and having a third-party endorsement, I think you'll find like we had with the early energy questions, the aspects of nonenergy savings will become absolute and not be questioned as much as it is now because Gen3 is only out 1 year and people want to know how it works. Mike, do you want to expand on that, please?

Yes, sure. So a few things to keep in mind. First of all, when we look at maintenance repairs on a commercial office building, it's very analogous to maintenance repairs on your vehicle. Obviously, if you take it to the dealer and get every piece of preventative maintenance done, that they recommend you're going to have 1 cost basis versus if you take it to a local mechanic, you're going to have a different cost basis. And if you decide to not do it, you're going to have a different cost basis. So when it comes to predicting maintenance and repair savings, there's not a formula for that. So what we try to do is we try to create some visibility of what our customers' real experience is. And what we have -- the feedback that we've got from our customers is we try to look at it from the basis of the energy savings. So typically, what we see is the low end of maintenance repair savings is about $0.50 for every dollar worth of energy savings and the high end is about $2 worth of maintenance repair savings for every dollar of energy savings. So we try to give them that range, and that's what the data is all about. That's what the power impact report. We're really looking at understanding their data because what that enables us to do is to be able to look at a broad swath of buildings, and we'll find some that are good, we'll find some that are bad. And then -- where the power falls into the critical range. That enables us to go through and compare where they have the good buildings where they have the critical power. And then you can actually see the difference in the cost structures there. So it is a model that we help our customers be able to build out. And as Randy indicated, the work that we're doing with the U.S. federal government and Green Proving Grounds and particularly the work that Oak Ridge National Labs is doing. Oak Ridge National Labs has been tasked as part of this to help give them a model to quantify maintenance, repair and [indiscernible] savings. So we'll definitely have more information as we move through that process with Oak Ridge National Labs. So we're very excited about that. Again, as Randy said, if you go back a couple of years and you look at how do we handle our energy savings, we were able to build a model on a formula in order to be able to do that. And we did that in conjunction with a lot of the utilities to really prove out the -- as well as the IP MVP to prove out energy savings model. And now what we're doing with our customers as well as what Oak Ridge National Labs will be able to do a very similar model for the maintenance and repair savings. So again, we have all kinds of anecdotal information. For example, we've talked with multiple lighting manufacturers that they know when they have good power, their LED driver failure rates are in the low single digits. Conversely, when they know what they have bad power, that can go as high as 25%. So there's proof points there. There's proof points on the EV charging side. There have been some recent studies that have come out that said that up to 40% of charging station downtime is due to power quality issues coming in from the grid. So what we're able to do with the Gen3 as well as our sales process, we're able to help build out those models and be able to start to articulate that and the work that we're doing in the GSA is only going to add power to that.

Thanks, Mike. I think the other thing I would add is I guess, about 3 years ago and Mike said, look, what we are offering on energy savings is great, it's nice, but it's -- we need something more compelling. And he began the process of talking about power management and the adverse effects of power on buildings. If we could have the additional functionality to our system to incorporate that, we would have a real compelling solution, we're there. I mean the engineering is delivered. It's taken us 3 years. We probably have about $2 million, $2.5 million in that investment. And what I like to -- parallel is the current market value of the company does not reflect what's going on in the organization nor does not reflect our unique positioning as the only solution to address not only energy, but the power management challenges they have. So we believe, and we're very excited. We thank Mike for bringing it and it becomes more compelling and a must-have is what Mike uses a lot of times around the organization. So, it's great to have energy savings, but it's great also to have a solution that can make your elevators and your escalators if things work for your tenants and everything else. So it's really exciting time and we will add additional functionality. In fact, there will be a release out sometime soon about a new capability the system has that we'll be releasing to the marketplace for 1 of the government accounts that they asked us to add that capability. We're adding that and enhancing the system. They'll be available to the general marketplace. So, what are we focused on? I mean, when I talk to people every day, we're focused on cash. We're focused on deposits. We're focused on profitable sales. We're focusing on making sure we can take the inventory and the assets that we have that are all prepaid. I mean, that $1.8 million at cost, when it goes out the door is a direct contribution to cash. And we forget sometimes that's all prepaid. So making sure that we kept our operating costs down and develop the margins to get that back in that 50% range. And we're building led by Paul, the processes and systems to handle the rapid growth that we know is coming. So as an organization, we're excited about where we're going. We're excited about the opportunity in front of us. But most important, we're going to get this done. We will get this done. We believe the future looks -- it's very exciting for Legend and people, and we're going to take advantage of it become very leading energy solution organization. So that on behalf of the team, I'd like to wish everyone happy holidays. We wish you a fantastic 2024, and we know that 2024 from both the shareholder and Legend team member is going to be a great year. It's our time. Thank you, and have a great legendary day.