Tantalus Systems Holding Inc. (GRID) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. Thanks for joining us today. We have a very exciting update with Tantalus. For those of you who are not familiar with the story, which I think there's only a few on the webinar that I don't recognize, I would recommend maybe looking at some of the old YouTube videos on the Adelaide Capital YouTube channel because this session is really going to focus on recent news items, new team members and a demo. So the format will be I'll do an intro. Pete is going to talk about the recent announcements. Andrew will do a demo, and then we'll get into Q&A. So hopefully, we'll have about half an hour for Q&A. So if anyone has questions, feel free to enter them in the Q&A box at the bottom of your screen. I don't think we're going to work off the investor deck today, but I do need to mention forward-looking statements because this session will contain some. If you'd like to know more about those, you can check them out on the company's website, on the presentation. With that out of the way, I think everyone here knows CEO of Tantalus, Peter Londa. So I'm going to nicely skip over him and introduce Azim Lalani, the new CFO who joined in January. Maybe I'll give him a chance to give a bit of background on himself because he hasn't been properly introduced to the Adelaide network yet.

Thank you, Deborah. Good afternoon, everyone. My name is Azim Lalani, I'm the CFO. As Deborah mentioned, I joined the company in January of 2025. Previously, I was the CFO of AutoCanada, and prior to that, was the CFO of American Hotel Income Properties. I bring over 25 years of experience, most of it in the public company space in Canada and have helped organizations high-grade their systems and processes as they're scaling for growth.

Thanks, Azim. Some of you may have met Andrew Mitchell, who's Director of Utility Solutions and comes from the utility industry. But I figured it would be a good opportunity to let him give a little bit of background on himself as well. Andrew, over to you.

Thank you, Deb. Good afternoon, everyone. My name is Andrew Mitchell. As Deb said, I'm Director of Utility Solutions. This is my -- I just passed my fourth year at Tantalus, leading this grid automation effort and analytics effort. Before joining Tantalus, I spent 17 years at an electric utility as the engineering supervisor. And before that, I traveled North America and the Caribbean Basin installing SCADA system. So going into my 26th year of the utility industry and enjoying every minute of it. So hopefully, we can answer all your questions today.

Thanks, Andrew. So I'm going to turn the mic over to Peter Londa, CEO. Pete, you've got 3 really exciting announcements that were kind of back to back. I'd love to hear more about those. They're different parts of the platform, but I think they all go really well together to really push the platform approach that Tantalus has to grid modernization. So take it away.

Thanks, Deb. Am I coming across clearly, all right?

Yes, you're good.

Perfect, great. Well, first off, Azim, welcome, and Andrew, thanks for allocating time. Yes. Deb, to your comment and topic for today, we've been very fortunate to continue to demonstrate progress towards the purpose of our company, which is geared towards helping electric utilities, take a data-centric approach to modernizing their distribution grid. And while rightfully so with the amount of money that we have been investing in bringing the TRUSense Gateway to life, and for those investors that have been tracking us for some time, can appreciate the duration that it's taken us to not only develop it, bring it into the market and now really solidify it from a commercial perspective. We've been simultaneously working on several other initiatives. They're not necessarily in this order, but when you think about our core business, for a long time, we have been helping utilities and we've been gaining market share, helping public power and electric cooperative utilities start their grid modernization journey. And more often than not, that ties to enhancing their metering infrastructure, accessing data from those intelligent connected devices that we deploy inside meters and then running that through a suite of software and analytics. One way that we've demonstrated innovation and some leadership in our industry is by helping electric utilities leverage and extend the life of existing assets. And so long ago, utilities deployed some automation of metering referred to as encoder receiver transmitters or ERTs, E-R-T. Those ERTs were effectively a paging system that allowed utilities to migrate from someone physically going to the side of someone's house to take a meter reading, to either having a handheld device as they walk up and down the street or more frequently or more regularly a collector inside a truck that would drive the electric footprint once a month to collect a bill. And so one of the great elements of our solution that we've talked about for a long time is our ability to read multiple protocols, meaning all the different languages of different devices in the field, of course, none of which that speak the same language. And so our ERT reading protocol enabled utilities to start to upgrade infrastructure, their distribution grid, and pick up readings from existing devices or these ERT devices for purposes of billing or outage management and restoration. And so we announced in June what is now our company's largest ERT migration initiative with the City of Riverside in California, almost 200,000 connected meters just outside of the L.A. area. Fortunately avoided some of the fires that unfolded in the L.A. metro area not too long ago. But we've been working with Riverside on initially deploying our system in 2019, upgrading a small fraction of their metering infrastructure and leveraging our multi-protocol approach to continue to gain life or extend the life and generate a return on the investment of the existing assets. The reason why utilities do that is to allocate dollars to more pressing needs. And so over the years, we've been able to provide Riverside with additional insight from the data that we collected, and that helped them build their business case to ultimately support their next step towards grid modernization, which is now replacing those legacy ERTs that have been in the ground for a long time with our latest and greatest solution around TRUConnect AMI. The opportunity includes about the upgrade of about 80,000 electric meters, residential and commercial and industrial. We've shared publicly, while we don't provide dedicated pricing, on average, we generate about USD 100 per connected TRUConnect AMI endpoint. And then once those devices are deployed in the field, typically are there for 10, 12, 15 years depending on the utility. We generate around $4 per device per year in recurring revenue. So it's a great representation of meeting utility where it was, Riverside 2019, working with them along their journey of grid modernization, starting to automate things, and as they were ready and had budget now being the entrenched and de facto partner for them to expand. Simple math, 80,000 endpoints at $100 per endpoint represents about $8 million of opportunity for us upfront as these devices are replaced and upgraded to our latest technology and then driving recurring revenue thereafter. We anticipate that Riverside will also, through their journey, incorporate the TRUSense Cellular Gateway, the cellular version of our new offering. And from there, incremental analytics, some of which you'll see momentarily, once I'm done, and Andrew can walk us through some of the great things that our engineering teams have built. So a really exciting opportunity for us. It's a demonstration that we have not taken our eye off the ball as a team to continue to scale the core business of Tantalus as we see some of these other exciting initiatives unfold. And so to that end, 2 other announcements, one of which ties to the analytics. You'll see the demonstration of that momentarily, but really fortunate to leverage the Indiana Municipal Power Association (sic) [ Indiana Municipal Power Agency ], IMPA, as a Joint Action Agency that supports 19 utilities across Indiana and Ohio. They are the first Joint Action Agency to work on behalf of their member utilities and deploy an analytics solution. And the reason why this is important for Tantalus is threefold: one, it demonstrates what we continue to believe is market-leading analytics based on data that we can capture or that other systems can capture and turning those into predictive insights for utilities. You'll see that through Andrew's demo. The second aspect that is important for us is not only a demonstration for other Joint Action Agencies to follow, but it allows Tantalus to now deploy our analytics quickly to up to 19 utilities, where they are sharing insights across State Line, Indiana, Ohio, helping each other through shared services, pinpointing where they have vulnerabilities, prioritizing where to upgrade their CapEx. And the third element of the analytics tool and deploying it with IMPA is we're able to generate recurring revenue as each -- not only upfront as IMPA activates our analytics but then as each utility rolls out their own instance of the analytics tool, it drives incremental recurring revenue utility by utility. And for us as an organization, we support public power and electric cooperatives. Many of those are small. Some of them do not have the resources to support analytics or advanced capabilities and grid modernization, but it's important that they don't get left behind. And so as we demonstrate with IMPA the rollout of very sophisticated analytics, help smaller utilities leverage those tools to make smarter decisions, it becomes a great case study for us to start thinking about analytics-as-a-service that may be outside of a Joint Action Agency and extend the way in which we go to market with the tools that we're building. The third announcement, which obviously got significant attention earlier this week and we were overwhelmed by the support and feedback that we gathered, was the very exciting milestone for our company and announcing EPB Chattanooga, one of the most sophisticated and automated utilities in North America, selecting the TRUSense Ethernet Gateway as their next major investment with Tantalus and the next major step in their grid modernization journey. EPB is a forward-thinking leading utility. They own the largest fiber-to-the-home broadband deployment, where utilities deliver broadband services in addition to electricity. The TRUSense Ethernet Gateway has been designed in partnership with EPB as a member of our Advisory Committee and with the intent of upgrading and replacing about 80,000 legacy devices that EPB has deployed today in the field. The contract that we were able to announce demonstrates EPB's commitment to the first 20,000 of those 80,000 units. The agreement provides EPB with an option to extend beyond those initial 20,000 units that they'll purchase from us. We're not in a position to disclose the aggregate number that's included in that option at EPB's request, but it's a material opportunity for Tantalus and really a tremendous milestone for our organization. In the aggregate, it represents the largest contract in our company's history, so tremendous accomplishment by a number of our team members. And it also includes the upgrade of some of EPB's legacy metering infrastructure that they purchased from us back in the 2009, 2010 time frame that's now 15 and 16 years old, still functioning, but EPB in addition to making the investment in the TRUSense Ethernet Gateway will also be upgrading metering infrastructure at homes where they do not deploy the TRUSense Ethernet Gateway. In the aggregate, it's been pretty well covered by the analysts that have spoken to EPB quite often at our users' conference. I think the parameters that we've seen in their analysis is in alignment with what we expect. And for us, it's not only a landmark event but one that we think will lead to other utilities accelerating their decisions on the TRUSense Gateway just because of EPB's sophistication and being really one of the thought-leading utilities in the United States. So Deb, we've been really fortunate to see progress on all 3 key elements of our overall solution, the core of business today that has delivered financial results in our TRUConnect AMI and the 2 areas where we've been investing heavily, the analytics capabilities and the TRUSense Gateway.

Awesome. I see some questions come in but we'll get to those, I think, in the second half of this session. Andrew, if you're ready to go with the demo, I think that will be our next agenda item.

Sure. Just give me 1 second here to share my screen, and we'll pull up this demo.

And congratulations. It's been a phenomenal few weeks.

As soon as it resizes. Can you see the screen okay?

I can. Yes, sir.

All right. So yes, just to highlight what Pete just mentioned about our Indiana Municipal Power Agency awarding of our analytics. This is what you're looking at as our transformer analytics. And just to give you an understanding of what's taking place across North America and the Caribbean when it comes to transformers, it was just announced in an article earlier this week not only by the DOE, but a couple of other agencies that 70% of all transformers that you drive by or ride by on your way to work or home are beyond their extended life already. So in thinking about the electrical grid and what we're trying to do, a normal transformer is designed to last 30 to 35 years. And so 70% of them are already beyond that lifespan. And so having the information at your fingertips and that situational awareness allows a utility to constantly monitor what is taking place at those transformer locations. From a high-level overview, what our software allows all electric utilities to do is to be able to see when those assets are in what we call a critically overloaded state. And when a transformer is critically overloaded, if you've ever been out riding in a vehicle or seeing a pole on fire or looked up and seen smoke coming from a transformer, those would be in the critically overloaded state that did not get caught in time, and that's a very expensive endeavor for a utility to send crews out and to fix those. If you look a little bit to the right, we have what's called overloaded transformers. Overloaded transformers across North America and the Caribbean can be run at different levels based on temperatures, and that's all utility-centric based on where you're at in the country, based on weather. But we have to be able to manage those when it's super hot or super cold out to be able to make sure that those assets can be extended and continue to be utilized throughout the year safely. One of the other things that was just reported in this article that came out 2 days ago is that there's 55 gigawatts of power being generated behind the meter from residential solar and large solar investments that are not being incorporated to the grid. And so what this analytics package does is it helps utilities identify when those devices are coming online to be able to utilize them at a utility level and to be able to operate safely during storm and outage sessions. So that's one thing that utilities haven't had is that visibility to be able to see that load being generated behind a transformer and to see what that does to a transformer. This analytics package also looks at transformers from an underloaded perspective or an idle perspective. And just to give you a bit of a feel for what an idle transformer means, that means lost revenue to a utility. So if a transformer is setting out there and a business is actually running and that transformer is not being monitored correctly, it can cause a lot of under-collections or financial issues at the utility when it comes to rate design and being able to properly size out a utility. So what our analytics package does is it brings that all together in a very, very friendly fashion so that any one of the utility can have this system up and running and very quickly look it over and see what's taking place from the aspect of, do I need to send a crew out immediately for a critically overloaded transformer before there's a public safety issue and before I have to replace it? Do I have devices or transformers that need to be monitored, whether it's at a school for air conditioning or a hospital or things of that nature to make sure that I'm keeping the temperature correct and potentially, say, a nursing home or things like that? And then again, from a generation perspective. And what Tantalus does is we try to, again, keep it simple and highlight those on the map so the customers or, in our case, the utilities as our customers can see each and every one of those devices down to the interval level throughout the day and be able to optimize what they're doing throughout the utility. Without going too deep, it also allows the utility to very, very quickly understand what's taking place up and down every feeder at a utility. And when I say feeder, if you're out driving and you see a substation, what comes out of those substations are what we call feeders, and that's what your house or your office is served off of. And we have to be able to measure those correctly and size those correctly from the substation all the way down to the meter level to the house level all over the United States, Canada, and the Caribbean. And so with our software, you now can take a look at this. And as Pete mentioned, the IMPA opportunity, 19 utilities across Indiana and Ohio, the agency can now see what each and every single transformer at those 19 utilities are going to be doing to the grid, which allows that utility to be able to better price their sales and to do all kinds of things they've never been able to do before to monitor that and use it for financial gain at the utility, along with operational gain. It allows the utility to be able to look at this every day, every hour around the clock and develop trends and see if they need to change customer behaviors or offer different rates or do different things and being able to see that has just an absolutely large impact on a utility when it comes to rate design, when it comes to capital spending, when it comes to the work plans and being able to utilize that and see what's going on. If a transformer should ever end up in idle, we had one of our customers, and I won't name names, but they were losing $90,000 a month because they had 7 transformers that turned out to be idle that should not have been. So as you can imagine, in your own day-to-day operation or your own day-to-day business, at $90,000 a month in lost revenue was a large impact that the software was able to help them find immediately. One of the other things about the software that Pete mentioned again that IMPA has taken on is we're able to window down at a utility level and see what is taking place from a weather perspective as well. And we can start to understand, if I come over here and I sort my transformer, think of it this way, the larger the transformer, the more money that, that transformer costs and the more revenue that it generates for a utility. However, if that transformer is not running correctly or there's no load, say, a factory goes out of business and a utility leaves that thing sitting there, that can have a negative impact on the utility's financials. And so we can come in and sort transformers now with a click of a button and look at those things that are taking place to monitor and be able to prioritize at each and every one of those utilities across the country and say, what is happening and be very proactive to extend that asset life that is already beyond its useful life according to the DOE as of early this week and help utilities protect those assets using our software. It's a very simplistic approach in how we lay it out based on the design, but it's very powerful on the back end. If you were to look over here, what I'm showing you is we're able to determine on our devices that Pete mentioned those ERT devices that we're updating in our Tantalus devices and those TRUSense Gateways, we're able to tie those back in and see high voltages, which is a swell or low voltages, which is a sag, or outages and blinks and what that does to every single transformer in almost near-real time at a utility, whether it be 500 customers or whether it be 200,000 customers. And to have that type of situational awareness now gives utilities the ability to start making decisions much more proactively than they ever have before. With my 17 years at my former utility, and I'll put this statement to test to anyone that's ever worked in the utility industry, for the last 100 years we've been proactive, we waited until something broke before we fixed it. And now with this data that's coming along and being made available to utilities to monitor transformers and diagnose and perform the analysis and do the AI, it's shifting the mentality across the country to be proactive and to go out and look at devices before they fail, before they have to spend that operating expense on replacing something after hours or on overtime or shut a factory down while they're in the middle of production to replace a device that has failed. By looking at our software, what we have done is we've been able to take having an engineering degree out of the equation, in most sense of the word. We're able to make this very intuitive so that utility personnel coming straight out of, whether it be high school, whether it be coming in from another discipline within the utility, we can keep it very simplified to let them know when to get it to the appropriate people. So as an example, we're in the middle of summer. It's hot right now in July. Tantalus believes in a color code of green makes things good, yellow orange is marginal. And if it's red, it needs your attention. So we can look at overloaded transformers very, very quickly. And the prime example, as Pete mentioned, at the power agency of Indiana Municipal Power, one person can look at all 19 utilities or someone from each of the 19 utilities can log in and take a look. And very quickly, they could scroll through and see they only have 10 transformers in an overloaded state, and that they're yellow, which doesn't require anyone to be involved at the utility. So in just a matter of moments, you're able to define, assess the situation and call in the appropriate resources that this information you're looking at would have taken days, weeks, months or almost an entire year of a consulting team to be able to analyze and take back to a utility and make recommendations to them. Again, without going super deep, the ability to have this information at your fingertips allows utilities to change the way they operate. And so if a utility wants to look at a single transformer that could potentially be causing them an issue or, say, a customer wants to add on to their home or anything of that nature, add an EV, a solar panel, they now can look at the software, click a few buttons and understand that this current transformer's already had many, many hours of overload and very quickly look at this and assess that they probably need to do something and change this transformer out. And again, we've taken that needing of degree and specificity and try to bring that into each and every utility that Tantalus serves and will be serving with this type of analytics and offering to be able to help utilities extend that asset life and do different things much quicker than they have before. This is the transformer analytics that Indiana Municipal Power Agency has purchased, but they also purchased what we call grid reliability. And I just want to show you very quickly, the grid reliability, if you think about it, when you're on this call right now, if we were to have a power outage, if you didn't have a backup power device at your home, it would probably knock you off-line and would cause quite the quandary. Well, with our devices and our analytics, we are now able to tell utilities from the side of your home all the way back to the substation whether there is a problem on the side of the home, whether there's a bad overhead wire that many of you drive by and see that are up in the air. And when some of those break, we have what are called squeeze-ons. And if you make a fist and put your finger in it, we just put 2 wires on each side and clamp down around that. Well, those squeeze-ons over time will tend to loosen up and the wires will pull out, causing you to have blinks at your house. We now can tell utilities in advance when those are going bad. We can tell utilities the transformer's going to fail based on the data. You should get out there. And then we tied it to weather sources. And so now based on storms like last night, many of us experienced trying to travel to and from, with lightning strikes, wind, snow and ice, we can take that information, provide it to a utility every day, every hour, and they now can see what's happening to their utility when the wind speeds increase or when the rain picks up or when it snows at their utility to transition from being reactive and having you in a power outage to being proactive to fixing it during the daytime when it's nice out to be able to get said work done. With that, I wanted to just stop there and not go too deep and leave it open for questions and continue the conversation. But that is just a quick high-level overview of the 2 analytic offerings that was in the announcement for Indiana Municipal Power Agency moving forward.

Thanks, Andrew. I think that's really helpful. I don't see any questions specific to the demo. So if anyone has any, feel free to enter them in the Q&A box.

We do have some other more general questions. Let's start with EPB. So great TRUSense announcement last week. Could you clarify if EPB is part of your advisory board, and if there are similar type deals in your pipeline from other advisory members? Pete, maybe that's one for you.

Sure. So EPB was absolutely part of our advisory committee. They allocated a significant amount of time and effort to help us come up with the initial specifications, use cases, the design, the testing and helped us all the way through the certification process. So they have seen this device from initial drafting on paper to now deploying their first 20,000. Within the advisory committee, which was comprised of 9 utilities, I'd say there's another utility that is of near equal size to EPB, a utility that's never purchased anything from us historically where EPB has been a long-standing customer of our organization. And we continue to make progress with that company. Incremental to our Advisory Committee or I'd say in the aggregate, through our reporting of Q1 results that we delivered in May, so a few months ago, we reported that we had received initial orders from 33 utilities to activate their first wave of field trial or pilots. There's 33 utilities, included EPB, and in the aggregate, represent for us over $100 million of revenue opportunity if we're successful in getting those utilities across the finish line. So we've seen some great traction since really commercializing the technology and starting to put devices in the field from our contract manufacturer in October of last year.

Staying on the theme of EPB, so this is your first major deployment of the TRUSense. Why was EPB the right utility to launch at this scale? What's special about them?

Yes. So we did -- technically, the first utility was -- that we announced was the City of Bolivar, which was deploying a few hundred of the TRUSense Gateways as part of a broader TRUConnect AMI deployment. So we've seen a few utilities do that. As we think about driving -- as we think about hitting an inflection point for growth inside our organization, EPB is important, I'd say, probably for 3 reasons. One, they were part of our Advisory Committee so they've seen this thing from infancy to now commercialization. So to get to validation of a utility that has watched us work hard from an R&D perspective, run through certifications and activate manufacturing, I think it's just a good validation that the technology is substantial, it's real and it solves specific use cases. The second is their size. For us, it's one of our larger utility customers today. A project with EPB that eventually captures 80,000 units is an absolute opportunity for us to accelerate the growth profile of this company in a very prudent and predictable manner. And then the third is they are a thought leader. EPB has the first self-healing grid in North America. They are the first utility to announce the activation of a quantum computing network. They have among the most sophisticated command centers of any utility, even though they are public power, but compared to PG&E, Con Edison, FirstEnergy. And while they may be public power, I think utilities and certainly, industry participants look to EPB not only as a very well-run organization but a great assessor of technology. And typically, what we see is when EPB moves, others follow. And so as we get the endorsement of one of the large utilities of our Advisory Committee, just the sheer scale of what this project means and the visibility it gives us to drive growth for our shareholders and then the validation of a thought leader, that's why EPB is so important to us.

And beyond supporting the broadband services, what additional applications are they looking for, like power quality management, DER management? Like what do you envision them using the TRUSense for?

So they are very focused on power quality. And within power quality, some of the things that Andrew just presented, engaging with their customers. As an aside, in interacting with EPB and their leadership. I just in the last week shared conversation about a device that one of the senior execs at EPB had installed in their house, a simple sort of power quality measurement device, which just is tracking voltage. That device notifies before the utility does on power outages. I've got the same device, 4 power outages in the last 7 days in Connecticut that my family is living through because of lightning storms, heat, humidity. So we're watching it real time. EPB not only wants to have the most robust and resilient distribution grid for its community and to attract economic development with great power quality, they also want to be one of the most proactive utilities in communicating to their customers. And so in thinking through prioritization of CapEx expenditures and other things to fix and being in touch with their customers as things are starting to stress is a huge area of focus for their organization. Having very granular power quality sampling through the TRUSense Gateway at the meter socket is a key element of their long-term strategy. The third use case beyond broadband and power quality, this will take us a little bit of time, but they are watching what we are doing at United Illuminating in the state of Connecticut. EPB operates within the Tennessee Valley Authority. For the first time in 50 years, TVA has had supply constraints late last summer and now this summer. What that means is they do not have enough power to support the 154 utilities that are part of TVA. And so peak rates and max peak rates are in full effect this summer. TVA is trying to plan for brownouts and blackouts. They are pushing their distribution utilities like EPB to have more granular control of load, how much power we consume behind the meter. And so I think the notion of electric water heating, controlling down to a smart circuit breaker, shutting off noncritical load inside the home or shifting peak load inside the home is going to become incrementally important not only to EPB but TVA. And I think EPB will be a shining star on that one as they leverage our TRUFlex and our behind-the-meter load control capabilities.

Do you think this could create a blueprint for other municipal and co-op utilities to adopt TRUSense?

Yes. That's the intent, Deb, for sure. And I'd say EPB has and continues to be a tremendous advocate for Tantalus. And so as we demonstrate use cases at their utility, they are not only very eager to share the results and the progress that they're making, but also I think presenting those at think tanks, research institutes and industry trade shows.

Got it. And do you envision the pace of TRUSense rollout in the coming years, like beyond EPB, I just mean generally? Do you expect it to be relatively linear with each co-op going through all the motions or do you expect acceleration of co-ops outside your current customer base speed up their processes based on references from your early moving customers? Or could it be even more exponential if you eventually are able to sell into IOUs?

So a lot to unpack there.

Sorry, it's a long one.

No, no, no. It's a great question.

I got to throw you a long one once in a while.

That's fine. So what I would say very simply is we don't want to make the covering research analysts' lives too easy in their modeling exercises by making this linear, obviously tongue-in-cheek there a little bit. But I'd say, Deb, that every utility is going to be a little bit different. And so some utilities will move in larger scale, EPB. Some utilities may be in smaller scale but move faster because it's part of a brand-new rollout in development. EPB is in the process of replacing existing stuff from us that works. So there's a defined cadence there that they have. A city like Bolivar, they're deploying our system for the first time and eager to get it up and running, so the deployment schedule there is much tighter. So I think use cases, where the utility is in their journey, whether it's a new deployment for us versus upgrade of some existing infrastructure is really going to predicate the pace. The way we look at that because it's imprecise, it's right and every utility is different and we try to meet every utility where they are. The way we mitigate that and the way we try to get to a consistent path to drive sustainable and profitable growth for our shareholders is increasing the number of opportunities that we support. We've been really successful at that, last year, adding 31 new utilities to our user community. And then not only adding new utilities each year but then expanding what we're selling to the existing customer base. And so it's not a shotgun approach. But I'd say the more utilities we have activated, the more utilities we have in motion, the broader the visibility we have. And so some utilities move faster. Great, that means near term. If some utilities are going to take a longer time, that's okay. That means growth long term. And so right, the game for us is it's really a game of numbers and then devices or number of devices at those number of utilities. That's what all drives recurring revenue for us, and it certainly gives us, I think, a very long trajectory to deliver sustained growth for shareholders. So I hope I captured everything in that question. And if I've missed something, direct me, please.

I'm satisfied. If the person who posted it wants to ask more, feel free to continue on. For these TRUSense, TRUGrid, and TRUConnect contract wins, could you please describe which players or alternative solutions you're competing against and why the customer chose Tantalus? Feel free to answer this more generally instead of for these specific situations, if that's more insightful.

Sure. So let me give you my two cents on it, and then Andrew, as really an industry expert, probably can opine on this as well and provide some insight. At EPB, they ran an RFI as we were developing the TRUSense Gateway. Of the responses that were received, we were the only company that actually met their use cases and qualified to move forward. So I'd say in the context of EPB, they were unable to find an alternative approach. And I'd say EPB as an organization, like many utilities, they prefer not to be dependent on one vendor. In this circumstance, EPB is very comfortable being dependent on one vendor, Tantalus, partly because we are the first to market. Second, we're able to meet their use cases. Third, we have a 15-year relationship, and we are a trusted technology partner to them. Where we've seen other circumstances, the city of Bolivar. The city there was focused on upgrading metering infrastructure. They were down the path of starting to select one of our partners and competitors on the metering side, a company called Landis+Gyr. The TRUSense Gateway is what turned them very quickly to Tantalus because the city of Bolivar is also deploying fiber-to-the-home. The TRUSense Gateway is the only device in the market today that can connect an electric meter and an electric meter socket to a fiber network. There is no other competition that exists that is viable today in the market. So we have a dedicated swim lane at utilities like Bolivar. And through partners or channel partners like Irby, the goal is to make sure as many of those utilities are aware of this situation. As it relates to behind-the-meter control, we see 2 private companies, 1 that is not really selling to utilities. They're trying to sell to solar rooftop installation organizations. There's another group that's a little bit more focused on power quality, a venture-backed business that has -- is still trying to put a device in the field. We think the granularity of the data samples will be not as robust as ours, and their device is probably, the way it's currently configured about 3.5 to 4x the expense. And then we've seen -- I wouldn't say it's really competitive, but we've seen a similar device from Tesla in the context of trying to control behind-the-meter technology. But what Tesla is trying to do is in the palms of their customers' hands, control the EV charger, control the power wall, control the rooftop solar inverter and create a little mini micro grid. I would say it's competitive because they're not really pinpointing or going after utilities. I think it's an effort to try to aggregate homes and try to offer some form of distributed energy resource management, so something that we're fully capable of doing and would anticipate doing for the likes of United Illuminating. So I'd say we're -- easy to say we don't have competition, that'd be not fair, but it's -- I'd also say we're very fortunate, we've hit the market at the right time and we are first to market, and we're trying to take advantage of that first-mover advantage for sure.

Now moving on to Indiana Municipal Power Agency. Does IMPA's commitment open the door to additional JAA wide deployments in other regions? Can you comment on that?

Andrew, you want to take that one?

Yes. So we're actively involved in multiple JAAs across the United States, for example, ECG in Georgia or PMPA at South Carolina, and we have multiple customers just like IMPA that we're striving to build that model for. So 100%, absolutely, it is a doable, achievable opportunity that they're all watching right now to see how it plays out. So 100%.

The benefit -- yes, Deb, so the benefit of a Joint Action Agency for us is not only validation that positions us extremely well within that Joint Action Agency membership but also a very quick path to gain scale. Just for folks that aren't familiar, in the state -- Andrew just mentioned ECG, Electric Cities of Georgia. So in the state of Georgia in the U.S., there are 54 public power utilities. All of them are members of one Joint Action Agency. That Joint Action Agency effectively helps those utilities improve their purchasing power, improve health care benefits, improve access to insurance, provides shared services in the event a storm hits one portion of that state and coordinates resources from other utilities that are sending trucks or personnel or line or transformers, equipment, whatever the case may be. And so the Joint Action Agency works on behalf of its members. So at a place like Georgia, where we are today, a preferred AMI vendor for the Joint Action Agency defined terms and conditions, validated technology, can host our capabilities for some of the smaller utilities that don't have the resources. So it's a wonderful model for us to scale. And when we think about really advancing our business on analytics, getting the validation of a Joint Action Agency makes it not only easier, but frankly, it's just a better bet for their members to follow. So it's a really good way for us to gain scale quickly.

Got it. And then moving on to Riverside. So as you mentioned, Riverside is Tantalus' largest ERT migration project to date. How does this showcase your ability to modernize without forcing utilities to rip and replace?

So I'll take a crack at that and then Andrew, welcome your input on it, too. So legacy ERTs exist on electric, water and gas meters. We have the ability to read all 3 with 1 device. And so what we -- the benefit to the utility is that they may have money to upgrade some of their metering infrastructure on the electric side, but they simultaneously can provide benefit in automation on the water and gas to the extent that they are responsible for delivering those other commodities, meaning water and gas as commodities. In the very specific circumstance of Riverside, they deployed our capabilities in 2019. Their intent was to move forward soon after by starting to upgrade the electric meters to help read the water meters. COVID hit. Economics and budget changed. Access to capital changed. Then after COVID, supply chain constraints hit and inflation hit, again not just for Tantalus, but it changed the fundamental focus of and allocation of dollars within their budget. Our technology allowed them to extend the life of their metering infrastructure, electric and water, while simultaneously driving automation, and through that automation, saved money, they were able to allocate that money to other high-priority issues. And so it's a great example of, particularly for utilities, increasing the expected life and ROI of invested capital, no stranded assets, that reduces risk and increases the value the technology can provide. And maybe, Andrew, you want to add some color commentary on why it's so important to extend the life of assets, like the transformers would be a great example of stressed devices, but cost and lead time.

Yes, the cost post-COVID and supply chain has gone up 300% to 400% in just under a 4-year time frame. And lead times have gone from having things accessible next day to almost 1 year to 1.5 years lead time for larger transformers, for C&I customers, which are commercial and industrial. So if a utility is looking to add to their economic development to that area, they have to be able to get set equipment or repurpose what they have and start that process 1.5 years earlier than what they used to at 5x, 6x the cost of what those devices were. Pete hit the nail on the head. At the utility, they're able to defer certain costs while saving money by us extending those ERT devices for an additional 5 years. But in the same breath, we were able to provide such a value of being able to take a once-a-month reading to a daily, hourly interval reading that they were able to potentially save that amount of money when it comes to what we call peak pricing and load and being able to change behavior of their customers. And it pays for itself and you can pull that forward by a number of years based on where you're at in the United States when it comes to supply constraint at this point. So Pete mentioned earlier, the TVA is going through it. If you think about the United States, it's kind of broken down into 4 quadrants. Each one is experiencing something a little different. You have your Northwest area, you have the Southwest, you have the Southeast, and you have the Northeast. And each region of the country is power constrained in certain times and certain days. But there's also different pricing models out there, which our equipment, our Tantalus solution helps utilities wrap their arms around that and monitor day by day, minute by minute, hour by hour to be able to stay where they need to be in the regions of the country they're located.

That's helpful. We are coming up on the hour and I guess I should have asked you at the beginning. Are you guys okay to run a few minutes over?

A few minutes and then, Azim and I have to get to a flight. Busy week for us this week.

Okay. It just depends on how I'm going to prioritize questions. I do want to ask one more about Riverside. So how does the scale of Riverside's deployment -- what does the scale of Riverside's deployment say about Tantalus' core AMI business?

I'd say from my perspective, it reiterates the competitive advantage and the unique way in which we are helping electric utilities work towards the grid modernization journey. It means that as a management team, we're still a relatively small organization. We made a massive investment in the TRUSense Gateway. We also did not allow that to take our eyes off the ball of the core business that is contributing revenue and cash flow today while we begin to see a revenue ramp and contribution from the TRUSense Gateway. So in my mind, it's a great continued validation that we are offering a competitive and differentiated product on our core business. And an example that I'd say for me, watching our team not only drive real innovation through the TRUSense Gateway and get that into the market and validate it, but simultaneously continue to scale the core business, I think that's -- I'm fortunate to be surrounded by so many really talented people.

I've got a few more. I'm just going to go rapid fire because they're kind of all over the place. So in regards to today's tariff news with 20% on all Philippine exports to the U.S.A. starting next -- or starting in August. If so, what will be the initial financial impact of those on your financials, i.e., margins for the latter part of this fiscal year? I don't know if you guys have had time to digest that.

Yes, we're prepared for it. Azim, you want to handle it?

Sure. Just as a reminder, our connected devices, the TRUConnect and the TX -- the TRUSense Gateway are exposed to tariffs. Our software and services are not subject to tariffs. And even though our contracts do allow us to pass on the impact of tariffs to the customers, we've decided to make an investment and absorb 5% of the tariff cost. And the impact of that for 2025 is between $700,000 to $800,000. And that's the impact on margins.

I think what is a bit surprising is the initial reciprocal tariff to the Philippines was 17%. Today's announcement is 20%. I have not yet seen what the justification is for that, but I know it's not tied to their president and Trump's views on their politics. We are very closely connected into the Philippines with a long-standing relationship with our contract manufacturer. The United States has a significant investment and troops deployed at a number of military bases in that country. I'm hopeful that there is a resolution and a trade agreement in anticipation of August 1. And I'd say that [ Taco ] has now a running track record of saying something and then backing away from it or extending. So hopefully, we'll be prepared if this goes into effect on August 1. I'm also mindful of the fact that every date seems to move further out in the calendar. So hopefully, it continues to move until there's a resolution between the Philippines and the U.S.

I'm going to rephrase this question and the person who posted, if I get it wrong, please feel free to enter it again. I think what they're trying to ask is how many devices do you have in the field versus how many you had a year ago?

Yes. So we report number of connected devices in the aggregate that are deployed. Off the top of my head, I don't know if I can give you an answer, but on average, we deploy about 275,000 to 300,000 connected endpoints a year. No different this year than what we would have seen last year. That number may vary. Certain years, a little bit higher, a little bit lower. I'd also say the connected devices number that we've reported did not include the TRUSense Gateway because it's brand new. So if the question is more geared towards the TRUSense Gateway, we're today in the hundreds. I would anticipate a year from now, we're in thousands and tens of thousands, hopefully 2 and 3 years out. So I think we'll -- it depends on which connected device that the individual was asking about. But we're approaching 4 million endpoints deployed in the field and we'll look forward to crossing that milestone.

A question that asks you to define market share, and I don't know if they mean for TRUSense or for total market share. Pete, do you want to take a stab?

Yes, so there are 2 ways to look at that. The way we look at it is number of utilities. Our market is the United States. We bleed a little bit into Canada and the Caribbean. We'll look to expand into both of those markets in the near future. But with the -- with respect to market share and number of utilities, there are roughly 2,900 utilities in the United States. Today, we support over 325 of those utilities. So you can run some quick math at least to look at the number of utilities that we support in terms of market share. The other way to do that is by number of connected meters. Where that's a little less relevant for us is the TRUSense Gateway is not tied to a meter at all.

And then there seems to be a lot of information available. I think this one's for you, Andrew. I think they're specifically talking about the analytics platform. There seems to be a lot of information available. What's the learning curve time line in becoming proficient using the analytics?

So what we've done is we've actually taken that learning curve out and made it so that we can send simple alarms to who needs it at each and every utility with simple screenshots. So utility personnel is not required to sit in front of this analytics offering, but it's a very short 1-day, half-day training session to make someone very proficient and coming up to speed on this application.

Would you even train me, Andrew? All right. Are there any impacts to Tantalus and your customers that you'd call out from The Big Beautiful Bill?

I don't know if I'd call it The Big Beautiful Bill. But the -- I don't know. I don't think we're -- I don't know. Fortunately, deployments that we are actively supporting today are not dependent on stimulus funding or government funding. So to that extent, I don't see impact. If anything, there have been a few utilities sitting on the sidelines in hopes of accessing some of the stimulus funding that was made available under the Biden administration. I'd say, assuming that, that goes away, those utilities at least will have to start making decisions as to how they want to prioritize dollars, and instead of sitting around and waiting to see if they could apply next year, the year after. So we could actually see an acceleration of certain utilities that have been, I think, eager to move forward on grid modernization, but we're thinking they might be able to access some dollars and we're postponing. So I think as of right now, we have not seen a change in urgency or buying behavior or buying patterns in anticipation of the Trump Tax Bill. And Deb, I think unfortunately, I've got time for one more question and then have to hop.

Okay. Well, let me pick the best one.

Sorry to cut it off.

No, it's all good. I guess, okay. So here's one for you. I mean, we've talked about this many times, but extreme weather, renewables integration, aging infrastructure, some of the main challenges that utilities are facing. How do these recent deployments that you announced demonstrate Tantalus' role in addressing those challenges?

Andrew, you want to handle that one?

Yes. I mean, what we're providing utilities is the ability to manage what is local to their -- we serve what we call distribution customers. We don't generate electricity at a distribution level. And so that's basically our market for our customers. And our technology allows our customers to be able to manipulate that power that's being generated behind the meter. It allows them to utilize it when needed. It allows them to defer costs. It allows them to participate in market aggregation and selling into the open market. We are simply making our customers ready to handle the next challenge, whether it's, as Pete mentioned, in the Big Beautiful Bill that's coming to them one way or the other. We're making them ready to be able to adjust on-the-fly and whatever direction is needed from whether it be behind-the-meter, when it comes to price point and the supply constraint or whether we, heaven forbid, something happens and we have excess power, it then allows engineers to control substations and be ready for whatever the unknown is. And so that situational awareness that we're providing to that granular level to our customers allows them to be prepared in today's uncertain times.

Well, I think that's a great place to leave this session. I see that there are some questions that are unanswered. If participants want to e-mail me directly, I can answer those for you. Thank you for all the participants for lasting through the hour and a little bit beyond. Thank you, Andrew, Azim, and Peter for taking the time to answer questions and do the demo. I think it's been a very helpful session. So I appreciate everyone's time. Have a safe flight tonight, guys.

Appreciate it, Deb. Thanks for facilitating as always, and truly appreciate the questions. I'm sorry if we couldn't get to everybody but more than happy to follow up through Deb and answer individual questions as appropriate. I hope you all have a good, safe day. And Deb, thanks so much.

Yes. Have a good evening, everyone.

Have a good night.