BioHiTech Global,Inc。(BHTG) 首席执行官 Frank Celli 于 2019年 第二季度业绩 - 收益电话会议记录

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BioHiTech Global, Inc. (NASDAQ:BHTG) Q2 2019 Earnings Conference Call August 15, 2019 9:00 AM ET

BioHiTech Global,Inc。(纳斯达克股票代码:[BHTG])2019年第二季度收益电话会议2019年8月15日美国东部时间上午9:00


Rich Galterio - EVP
Frank Celli - CEO
Brian Essman - CFO

  • Rich Galterio - 执行副总裁
  • Frank Celli - 首席执行官
  • Brian Essman - 首席财务官


Theodore O'Neill - Ascendiant Capital Markets
Ronald Nash - Nash Partners
Tate Sullivan - Maxim Group
Brian Greenstein - Ardour Capital
Vincent LaBarbara - Network 1 Financial

  • Theodore O'Neill - Ascendiant Capital Markets
  • 罗纳德纳什 - 纳什合伙人
  • 泰特沙利文 - 马克西姆集团
  • Brian Greenstein - Ardor Capital
  • Vincent LaBarbara - Network 1 Financial


Good day, ladies and gentlemen and thank you for standing by. Welcome to the BioHiTech Global Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
Before I turn the call over to the Company, I want to remind listeners that during the call, Management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore the company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today and therefore we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC.
In addition, any projection as to the company's future performance presented by the management include estimates as of today, August 15, 2019 and the company assumes no obligation to update these projections in the future as market conditions change. This webcast and certain financial information provided in this call are available at on the Investor Relations page.
I would now like to turn the call over to Mr. Richard Galterio, Executive Vice President of BioHiTech. Please go ahead, Mr. Galterio.

美好的一天,女士们,先生们,谢谢你们的支持。欢迎参加BioHiTech 2019年全球第二季度财务业绩电话会议。此时,所有参与者都处于只听模式。一个简短的问答环节将在正式的演讲之后进行。 [操作员说明]提醒一下,此会议正在录制中。



我现在想把这个电话转给BioHiTech执行副总裁Richard Galterio先生。请继续,Galterio先生。

Rich Galterio

Thank you, Operator, and good morning, listeners. Welcome again to the BioHiTech Global Second Quarter 2019 Financial Results Conference Call. In addition to myself, with us today are Frank E. Celli, our Chief Executive Officer; and Brian Essman, our Chief Financial Officer.
I would like to start off by providing a brief overview of our business progress in the quarter followed by a more detailed discussion of our financial results from Brian Essman and then we will turn the call over to Frank, our CEO, to provide an overview of our growth strategy as we move through the remainder of 2019.
During the quarter, we achieved 15.6% revenue growth which was driven by the early stage of commercialization at our HEBioT facility in Martinsburg West Virginia. The Martinsburg facility is the first of its kind facilities-based solution in the United States that diverts as much as 80% of municipal waste from landfills while producing a renewable Solid Recovered Fuel or SRF.
This SRF is an EPA-recognized renewable fuel that can be used as a partial replacement for coal in industrial application. We spent the second quarter going through the commissioning phase, where we tested and optimized each phase of the plant's operations including the receiving area, mechanical sorting, bio-oxidation hall and refinement. As this is new technology toward this country, we did encounter a number of unexpected hurdles which lengthened the process and slowed our ability to increase utilization rates as we had originally planned. After overcoming these hurdles, the facility began producing SRF later in the quarter that underwent a series of internal and independent laboratory testing to ensure it would meet specifications per use by our end customers.
This testing process was also lengthy and was successfully completed, enabling us to commence fuel delivery in July. While the whole process took several months longer than expected, we increased utilization every month's end and expects significant sequential increases in revenues for the remainder of the year which Frank will discuss later in this call.
In addition to our success in bringing the HEBioT technology to the United States for the first time, we accomplished several other important goals to position the company for future growth. First, we received an initial multi-unit product order for our new BioHiTech sapling food waste digester from a regional grocery chain operating 19 locations in three northeastern states. We launched the sapling in Q1 which is a larger capacity addition to our line of Revolution of Series Digesters.
This model as well as other Revolution Series Digesters provide a cost effective regulatory compliant solution that safely disposes the food waste on site, eliminating the cost and Co2 emissions associated with traditional waste tolling [ph] while reducing test-related issues typically associated with food waste storage. We have already commenced delivery of these units and are excited about the prospects of these new product addition.

感谢操作员,早上好,听众。再次欢迎参加BioHiTech 2019年全球第二季度财务业绩电话会议。除了我自己,今天和我们一起是我们的首席执行官Frank E. Celli;和我们的首席财务官Brian Essman。

我想首先简要介绍一下我们在本季度的业务进展情况,然后对Brian Essman的财务业绩进行更详细的讨论,然后我们将把这一呼吁转交给我们的首席执行官Frank,以提供我们在2019年剩余时间内的增长战略。






Second, we raised $1.885 million in an over-subscribed offering of units during the first and second quarter of 2019. The offering consisted of Series D preferred shares and warrants to purchase stock at a fixed price of $3.50 and was led by management and a number of long-term investors in the company.
And third, we completed the sale of our 2.2% equity interest in Gold Medal back to the parent in July of 2019. This enables us to focus our financial resources on our HEBioT and Digester technologies. We invested $2 million of those proceeds from the sale into our Martinsburg facility through our majority-owned HEBioT development subsidiary. This enabled us to increase our ownership interest in the Martinsburg facility to approximately 86% at the subsidiary level and give us a 52% majority interest at the corporate level.
We will continue to provide Gold Medal, our partner in the HEBioT subsidiary with management oversight of its growing waste management services business and look forward to working together with Gold Medal to forward our HEBioT development road map.
At this time, I would like to turn the call over to Brian Essman, our Chief Financial Officer to discuss our financial results.



我们将继续提供我们在HEBioT子公司的合作伙伴Gold Medal,管理其日益增长的废物管理服务业务,并期待与Gold Medal合作推进我们的HEBioT发展路线图。

在这个时候,我想转达我们的首席财务官Brian Essman,讨论我们的财务业绩。

Brian Essman

Thank you, Rich, and good morning to everyone. Total revenue on the second quarter of 2019 grew by 15.6% to reach $1.051 million compared to $909,000 in the second quarter of 2018. While recurring revenue derived from rental service and maintenance decrease 2.1% to $448,000, the decrease was the result of the improved reliability and performance of our Revolution Series Digesters requiring significantly less billing for on-site services.
In fact, our core rental revenues from digesters, under rental contract actually increased by 31.9% or $84,000 in the quarter due to a 31.8% increase in units under rental contract. The larger rental base in the improved efficiency led to a 43.9% decrease in expenses relating to the recurring digester business as well as lower levels of non-rental service in parts revenues and the resulting expenses.
The contribution before depreciation from rental, service and maintenance activities increased by $90,000 or 39.2% from $230,000 in the second quarter of 2018 to $321,000 in the second quarter of 2019, resulting in a contribution margin on the related sales of 71.4% in the second quarter of 2019 as compared to 50.2% in the second quarter of 2018.
Digester rental and related revenue were accounted for 43% revenue in the quarter compared to 50% in the second quarter of 2018 as we continue to diversify the base. Our HEBioT operations contributed meaningful revenue for the first time, totaling $277,000 or 26% of total revenue. This new revenue stream reflects the initiation and commissioning of the Martinsburg facility that we acquired our controlling interest in December of 2008. Revenue from management advisory fees related to our management services contract with Gold Medal remain constant at approximately $250,000 and we expect this revenue to remain at this level for the foreseeable future. This revenue stream represented 24% of total revenue compared to 28% of total revenue in the second quarter of 2018.
We reported $75,000 in digester equipment sales in the second quarter of 2019 compared to $200,000 in the second quarter of 2018. As we noted in our earnings release, we have recently seen an increase in direct sales interest from several large perspective customers and we'll discuss this in greater detail later in the call.
Operating expenses in the second quarter in 2019 increased by 39.1% to $2.97 million compared to $2.14 million in the second quarter of 2018. The increase in expense was mainly the result of a $495,000 increase in depreciation expense and $490,000 in HEBioTic senses associated with the startup of the Martinsburg facility, partially offset by $100,000 decrease in digester rental service and maintenance expenses previously discussed.
In addition, there was a $70,000 increase in digester sales expenses. Excluding the new HEBioT related expenses, selling, general and administrative and professional fees decreased by $267,000 or 15.8% compared to the second quarter of 2018. We recorded an operating loss of $1.9 million in the second quarter of 2019 compared to an operating loss of $1.2 million in the second quarter of 2018. The net loss was $2.9 million in the second quarter of 2019 compared to a loss of $5.5 million in the second quarter of 2018 inclusive of $3.5 million in interest expense incurred in warrant valuation and conversions.

谢谢Rich,大家早上好。 2019年第二季度的总收入增长了15.6%,达到105.1万美元,而2018年第二季度为909,000美元。虽然租赁服务和维护的经常性收入减少了2.1%,达到448,000美元,但这一减少是由于可靠性提高所致。我们的Revolution系列消化器的性能和性能要求显着降低现场服务的费用。


租赁,服务和维护活动折旧前的贡献从2018年第二季度的230,000美元增加了90,000美元或39.2%至2019年第二季度的321,000美元,导致第二季度相关销售额的利润率为71.4% 2019年,而2018年第二季度为50.2%。




此外,沼气池销售费用增加了70,000美元。不包括新的HEBioT相关费用,销售,一般和行政及专业费用与2018年第二季度相比减少了267,000美元或15.8%。我们在2019年第二季度录得经营亏损190万美元,而营业亏损为1.2美元。 2019年第二季度净亏损290万美元,而2018年第二季度亏损550万美元,包括权证估值和转换产生的350万美元利息费用。

In the second quarter of 2019, our net loss was $0.15 per share on $14.9 million weighted average shares outstanding, compared to a net loss of $0.40 per share on $14.2 million weighted average shares outstanding.
Now to our balance sheet. We ended the second quarter of 2019 with $1.7 million of unrestricted cash with shareholders' equity of $8.8 million compared to $2.4 million of unrestricted cash with shareholders' equity of $10 million as of December 31, 2018.
I will now turn the call over to Frank to discuss our growth strategy as we move through 2019.


现在到我们的资产负债表。 截至2018年12月31日,我们在2019年第二季度结束时拥有170万美元的无限制现金,股东权益为880万美元,而无限制现金为240万美元,股东权益为1000万美元。


Frank Celli

Thank you, Brian. We've made significant progress in the second quarter and I want to take some time to emphasize just how important the successful commercialization of this first HEBioT facility in the United States is to our company and its stockholders.
Remember, our facilities converting household trash into a renewable fuel and diverting about 80% of that trash from landfills. Prior to the plant's operation, the vast majority of that waste would end up in a landfill. What does that mean for the environment? Well, when we reach plant capacity, the reduction in trucking miles and landfill emissions will result in about 250,000 less metric tons of carbon dioxide released into the atmosphere each year. That's the equivalent of 28 million gallons of gasoline or 44,000 homes worth of electricity usage. That doesn't factor the additional reduction in mining and related emission savings when you replace coal with our fuel.
Now that the plant is open and we've begun to successfully delivery fuel, the waste industry, other municipalities and many fortune 500 companies have taken notice. In fact, the demand for our fuel has been increasing every day. In addition to our contract with Argos, we have secured a second contracted party and are having multiple discussions with other potential buyers of our fuel. At this time, we've got more fuel demand than production capacity at Martinsburg and this sets us up very well for our road map of potential future HEBioT facilities in New York state, Pennsylvania and New Jersey.
We also have numerous additional companies interested in delivering waste to the facility to meet their sustainability goals. With this demand on both feedstock and offtake [ph], we've got no doubt that we've got the right formula for sustainable growth for years to come.
With regards to our digester business, we're very pleased with the reliability of our revolution digesters and the outlook that we see for future success. The underlying health of that business is evidenced by increases in the recurring rental revenue for our install of digester base and our higher contribution margins from that revenue. We've talked about the longer sales cycles for larger opportunities for a while now and while our revenue growth trajectory has been modest at this point, our pipeline is by far the largest and strongest we've ever had. With the regulatory environment continuing to get more astringent and with the growing call for corporate America to become more environmentally responsible, we're seeing a heightened level of interest in activity from a variety of potential customers.
I'd like to highlight some of those opportunities and why we're so excited about the future of the business. I see our larger customer opportunities in this business in two tiers: the 20 to 50 unit range and the 100 or more. Right now when we talk about the 20 to 50 unit range we've previously announced an order from a regional grocery chain which we begun to deliver and we have at least three other customers with 20 to 50 locations that have tested and now leased at least one unit where we're negotiating for potential larger roll outs. In the 100 plus category, we're working with three potential customers all of which have units deployed in the field and we are in active discussions from large scale deployments. One of these represents an opportunity that is well in excess of 500 units.







We also are working to expand our relationship with a number of our current customers to expand into the hospitality and healthcare markets both directly as well as with our distribution partners and waste consultants. We expect to see larger lease deployments from these efforts in the second half of 2019 and a significant increase in unit deployment in 2020. Additionally, we expect to see our equipment sales increase based upon our current pipeline and look forward to closing on these opportunities.
As we move through the remainder of the year, we expect to see significant improvement in our business as the growth from our Martinsburg facility flow through our financials and we successfully execute on the growing pipeline in our digester business. The regulatory environment, the social demand for environmental responsibility and the growing waste in plastics problem are creating a significant tailwind for us as we head into the future. We also believe that having completed the launch of a fully operational HEBioT facility that is already having a positive environmental impact will help accelerate our roll out into additional locations.
Before I turn the call over to your questions, I'd like to thank each and every one of our employees for their dedication in helping us to position the company for a sustainable long term growth. I'd also like to thank our investors for entrusting a portion of their investment dollars in our company.
Operator, this concludes our prepared remarks and you can now open the call with questions.






Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Theodore O'Neill with Ascendiant Capital Markets. Please proceed with your question.

谢谢。 这时我们将进行问答环节。 [操作员说明]我们的第一个问题来自Theodore O'Neill与Ascendiant Capital Markets的合作。 请继续你的问题。

Theodore O'Neill

Thank you. Congratulations on a good quarter.

谢谢。 祝贺好季度。

Frank Celli

Thank you, Theodore.


Theodore O'Neill

I have three questions. One is what sort of things have you learned as you work to get the HEBioT facility to meet the standards for your customer? And in regard to direct sales versus rental, is there something going on in the marketplace that makes direct sales heavier going forward? Or is it just a timing thing? And finally, can you give us an update on the application to build the HEBioT facility at Rensselaer?

我有三个问题。 一个是当您努力让HEBioT设施满足您的客户标准时,您学到了什么? 而就直接销售与租赁而言,市场上是否出现了直接销售较重的问题? 或者它只是一个计时的事情? 最后,您能否向我们介绍在伦斯勒建立HEBioT设施的应用程序的最新情况?

Frank Celli

Yes. First question about what have we learned -- let me split that question in maybe two parts: one, being obviously what have we learned in the commissioning process of the first plant in the United States. As most people know, there are multiple facilities using this technology in Europe that certainly we have visited, we did our diligence, we did our engineering reports based on, but until you actually do it, you got to figure out the ins and outs on how these facilities operate. There was always a question about is waste in the United States exactly the same as in Europe? We felt comfortable that it might not be exactly the same, but it was reasonably close.
I think most of what we learned in the commissioning process which we are really happy with was anything you would learn in commissioning, any manufacturing facility that's largely dependent on automation and whatnot, we didn't run into any major stumbling blocks from an equipment standpoint. We definitely did learn some things in the construction process and design that we'll use to become a little bit more efficient going forward. But for the most part, it was minor stuff -- positioning of magnets, how much metal was actually in the waste, should we locate an [indiscernible] here or there. I would say things that will help improve operating and construction efficiency going forward -- fire suppression systems, how sensitive are they to dust and so on and so forth.
I would say overall, the commissioning process from a mechanical standpoint went actually relatively smooth. We expected to have minor bumps in the road of course and we're still tweaking things on a daily basis to where we're now trying to achieve maximum operating efficiency. So I think it was, 'hey, start the plan up, operate' and now try to figure out how do we become most efficient in the plan and we definitely didn't learn things about design and equipment performance for the future. But I wouldn't say there was anything really earth-shattering. It's a little time-consuming, but commissioning any manufacturing facility would be.
Second answer is what have we learned about the fuel which we felt was much more important? There was no time where we didn't believe that the operation of the plant would go as we expected. It was always the production, the fuel that was the piece that we were unsure about in a sense that, 'hey, how long would it take to meet this specification'? We assumed it wouldn't come right out of the machines on the first shot and be acceptable, but how much tweaking would it take? What was the right 'what we'll call a kind of recipe' to meet the standards that the regulators and our buyers would require? I think most of the learning process has been in the actual production of the fuel and what do we need to do to make sure we meet the standards.
The other thing we learned is -- and we think this first plan obviously will act as a catalyst to speed things up in the future, but this has never been done in the United States before. This is the first Solid Recovered Fuel produced from municipal solid waste. In the U.S., we needed to understand what would it take our buyers to become comfortable with actually combusting that fuel. Remember the magnitude of what we're doing here, we're taking household trash for the first time and converting it into an EPA-approved fuel to be used as a replacement for coal. You could imagine the users of this fuel who are operating billion-dollar facilities are going to be a little bit sensitive to, 'hey, are we just going to throw this stuff there and burn it?' Right? They're going to want to make sure it goes through a series of tests that it meets the standard and that they don't jeopardize their own operations which is very understandable.

是。关于我们学到了什么的第一个问题 - 让我将这个问题分成两部分:一部分,显然是我们在美国第一家工厂的调试过程中学到的东西。正如大多数人所知,在欧洲有多个使用这种技术的设施当然我们已经访问过,我们做了我们的努力,我们做了我们的工程报告,但是直到你真正做到了,你必须弄清楚这些来龙去脉这些设施如何运作。总有一个问题是美国的废物与欧洲完全一样吗?我们感到很舒服,它可能不完全相同,但它相当接近。

我认为我们在调试过程中学到的大部分内容都是您在调试过程中学到的,任何在很大程度上依赖于自动化的生产设施,以及从设备的角度来看,我们没有遇到任何重大障碍。我们确实在构建过程和设计中学到了一些东西,我们将用它们来提高效率。但是在大多数情况下,这是次要的东西 - 磁铁的定位,废物中实际有多少金属,我们是否应该在这里或那里找到[音频不清晰]。我会说有助于提高运营和施工效率的事情 - 灭火系统,它们对尘埃的敏感程度等等。



我们学到的另一件事是 - 我们认为这个第一个计划显然将成为未来加速工作的催化剂,但这在以前从未在美国完成。这是第一种由城市固体废物生产的固体回收燃料。在美国,我们需要了解买家对实际燃烧燃料感到满意的程度。记住我们在这里所做的事情的重要性,我们首次将家庭垃圾转化为EPA认可的燃料,用作煤的替代品。你可以想象这些燃料的用户正在运营价值数十亿美元的设施会对它们有点敏感,“嘿,我们只是把这些东西扔到那里燃烧它吗?”对?他们希望确保它经过一系列符合标准的测试,并且不会危及他们自己的操作,这是非常容易理解的。

The learning process there was interesting, but we've got it down, we're successfully delivering the fuel and as I mention, the demand for the fuel out of this facility quite honestly exceeds what we can produce at this point. That's the answer to your first question. I think the next question was direct sales on digesters. Not really sure, to be honest with you, Theodore, other than the customers we're dealing with now in our pipeline are significant potential deployment customers with big balance sheets and their cost to capital may just be better. Not sure quite frankly, but we have definitely seen an increase in increase [ph] about purchasing our equipment as opposed to leasing. We're fairly indifferent because we will generate a recurring revenue stream either way. It kind of helps our cash flow if we do get a big order that happens to be a purchase order. Not sure if it's a trend that will continue or not.
On Rensselaer, we're in the edge -- we publicly announced we're in the state permitting process as we speak. That process has been going on for multiple months now. It's a standardized process to permit a solid waste management facility in the state of New York. Here is what I can say. We have not had any significant pushback from the state regulators. They seem to be accepting of the need for the technology and it's in technical review where they're analyzing the process in flow and whatnot. It's a fairly boiler plate process. We don't see any speed bumps right now, but you just have to wait it out and continue to answer their questions.


在伦斯勒,我们处于优势地位 - 我们公开宣布,在我们发言时,我们正处于州许可流程中。这个过程现在持续了好几个月。这是一个允许在纽约州建立固体废物管理设施的标准化流程。这是我可以说的。我们没有受到州监管机构的任何重大阻力。他们似乎接受了对技术的需求,并且正在进行技术审查,他们正在分析流程中的流程等等。这是一个相当锅炉板的过程。我们现在没有看到任何减速带,但你只需要等待它并继续回答他们的问题。

Theodore O'Neill

Great. Thanks a lot.

非常好。 非常感谢。

Frank Celli

You're welcome.



Our next question comes from the line of Ronald Nash with Nash Partners. Please proceed with your question.

我们的下一个问题来自罗纳德纳什与纳什合伙人的合作。 请继续你的问题。


Yes. Good morning. You mentioned in your [indiscernible] there was delay in the fuel from the time that you thought you delayed out. Is the delay because of the FDA or is it because of the customer base that require so much more? Would you expand on that a little bit?

是。 早上好。 你在[音频不清晰]中提到,从你认为你推迟的时候起燃料有延迟。 延迟是因为FDA还是因为客户群需要更多? 你会扩展一点吗?

Frank Celli

Yes, Ron. Thank you by the way. As I mentioned this, you know, I would say the delay was certainly not in the manufacturer. We were able to manufacture the fuel as we expected. There was a rigorous process of both internal testing, their own independent testing as well as state regulators testing. There were three steps essentially in sort of what I would say the approval process to actually begin to deliver and combust the fuel. I would say it was not real -- I don't think it was a delay. I think it was a process that ended up being multiple steps before, as I mentioned, the buyer of the fuel was comfortable in saying, 'hey, we're going to take your word for it and we're going to burn something that used to be waste in our billion-dollar facility'. You could imagine they don't take those things lightly. And I don't blame them to be quite honest with you.
No, we didn't hit any bumps in the road where test results didn't come back in a fashion that we didn't expect or couldn't deal with. Obviously the first batches of fuel came back and tested not compliant to what we need it to be, but that wasn't unexpected. That's what gave us the road map to make the modifications for the operation which we have done and then achieve the test results we needed to achieve. I think it was just processed, Ron. And I don't blame ultimately the buyer. They're not going to burn this stuff without the state regulators and yes, it's a go. They're not going to jeopardize their existing business. The fact that we've been through the process now however and been approved, I think is certainly a great indication that going forward in the future, we understand exactly what to manufacture, how quickly we can get through the process a lot quicker. I expect there will be a process in all future plans, but I don't expect it to be quite as long as what it was for West Virginia.
And let's just all remember here, this is a big deal. I don't know that the company gets enough credit for what we're actually accomplishing, but remember, we're taking bags of trash off the curve and in a process that takes place over a few weeks, converting it into fuel that is now displacing coal. The environmental benefits of that as we mentioned in the script are enormous. It's never been done before and lets also remember, this is being done at no additional cost with no subsidy or whatnot. So to be able to accomplish what we've accomplished for the first time in the United States, I don't think should be taken lightly and I don't know that we get enough credit for it right now.

是的,罗恩。谢谢顺便说一下。正如我提到的那样,你知道,我会说延迟肯定不在制造商那里。我们能够像我们预期的那样制造燃料。内部测试,他们自己的独立测试以及州监管机构测试都有严格的过程。基本上有三个步骤,我会说实际开始交付和燃烧燃料的批准过程。我会说这不是真的 - 我不认为这是一个延迟。我认为这是一个过程,最后成为多个步骤,正如我所提到的,燃料的买主很舒服地说,'嘿,我们会接受你的话,我们会烧一些东西,曾经是我们十亿美元设施的浪费'。你可以想象他们不会轻易接受这些事情。而且我不怪他们对你说实话。




Great. Well done. Thank you very much, appreciate it.

非常好。 做得好。 非常感谢,谢谢。

Frank Celli

Thanks, Ron.



Our next question comes from the line of Tate Sullivan with Maxim Group. Please proceed with your question.

我们的下一个问题来自Tate Sullivan与Maxim Group的合作。 请继续你的问题。


Thanks for all the detail on the solid recovered fuel. And I think you mentioned securing the second contract and great comments on being out on capacity to having the demand outstrip capacity. How do the contracts work? Is it on a customer's need on a spec basis? Or is it long term contracts? How do you structure the contracts if you can get a detail there please?

感谢固体回收燃料的所有细节。 而且我认为你提到了保证第二份合同以及关于满足需求超出能力的能力的好评。 合同如何运作? 它是否符合客户的规格要求? 还是长期合同? 如果你能在那里得到一个细节,你如何构建合同?

Frank Celli

Yes. They're slightly different. Our primary contract is with Argos, the local cement manufacturer located in West Virginia. That contract does require that we deliver the overwhelming majority of the fuel manufactured in the West Virginia plant to their site. That contract is a 10-year contract. It requires us to deliver a minimum of 35,000 tons a year of fuel, up to 50,000 tons a year of fuel. So that's the majority of the fuel generating capacity we have in West Virginia. They have actually expressed interest in clicking more than that 50,000 tonnes if we had the ability to produce it. And that, you know, still kind of remains to be seen just to put it in perspective. You'll add a 40% to 45% fuel yield. We were expecting to generate anywhere between 40,000 and 45,000 tonnes of fuel. We have a minimum commitment of the 35,000. The second contract is a bit more strategic in the sense that it's with an entity that's got multiple facilities located throughout the United States. We already knew we had all of the fuel that we can manufacture or sold locally but this really shuts us up for having an ongoing relationship with a buyer for future plans. So this is a bit more strategic.
There's not a minimum delivery requirement with the second contract. It's sort of negotiated as per their need and as per what we actually have available to send to them. So it's a little bit more open-ended. It's not a put-or-pay or take-or-pay but it's a good arm's length contract at market rates. And it allows us to expand our relationships with buyers of the fuel going forward. So it was -- we entered into that deal a bit more strategically to set ourselves up for the future. And we've got multiple other parties who are also requesting that we start to deliver fuel out of Martinsburg. So right now, great problems to have but quite honestly, we don't have the production capacity in Martinsburg to fill the demand for all of those interested parties. I'll take that problem all day long. And again, I think it positions us very well for hey, this is why we need to locate a plant in upstate New York or in Pennsylvania or in New Jersey. There is a demand for this fuel.
Let's remember, you know, we're not solving one problem here while we emphasize keeping waste out of landfills, and that's our primary objective, sustainable disposal solutions. You know, the emissions reductions associated with replacing some coal is not insignificant to the users as fuel. So the trend appears to be very positive and there will be ongoing and continued demand for clean-burning alternative fuels and the fact that we can produce it cost-effectively and make a margin on that while also keeping waste out of landfills, I think, again is another thing. I don't believe the market has yet fully understood the magnitude of what we're doing here but we feel like we're positioned really well, not only for West Virginia but for plants in the future.


第二份合同没有最低交货要求。这是根据他们的需要和我们实际可以发送给他们的协商而来的。所以这是一个更开放的结果。这不是一种支付或支付或支付或支付,但它是一个很好的公平合约按市场价格计算。它使我们能够扩大与未来燃料买家的关系。所以它是 - 我们更具策略性地进入这项交易,为未来做好准备。我们还有其他多方也在要求我们开始向马丁斯堡提供燃料。所以现在,存在很多问题,但老实说,我们没有马丁斯堡的生产能力来满足所有相关方的需求。我会整天解决这个问题。而且,我认为它非常适合我们,这就是为什么我们需要在纽约州北部或宾夕法尼亚州或新泽西州找到一家工厂。需要这种燃料。

让我们记住,你知道,我们在这里没有解决一个问题,同时我们强调将废物排除在垃圾填埋场之外,这是我们的主要目标 - 可持续处置解决方案。你知道,与更换一些煤有关的减排对于用户而言并非微不足道。因此,趋势似乎是非常积极的,并且我们会继续持续不断地需要清洁燃烧的替代燃料,以及我们可以经济有效地生产它并在此基础上留出余量,同时也可以防止垃圾填埋,我想,又是另一回事。我不相信市场还没有完全理解我们在这里所做的事情的重要性,但我们觉得我们的定位非常好,不仅适用于西弗吉尼亚州,也适用于未来的工厂。


Okay, thank you. And then the -- just to clarify. Post after the end of 2Q is when you delivered the fuel and it started being burned in furnaces yet or will that be a potential follow on announcement of [indiscernible] or has that already happened?

好的谢谢你。 然后 - 只是为了澄清。 在2Q结束后发布的是当你交付燃料并且它开始在熔炉中燃烧时,或者是否会发布[音频不清晰]或者已经发生了这种情况?

Frank Celli

No, that fuel is being burnt in furnaces as we speak.



Okay. And did I -- my last one. Did I hear that rolling out more HEBioT facilities helps you or digest your business as well or do they -- with that did I misinterpret that link?

好的。 我做了 - 我的最后一个。 我是否听说过推出更多的HEBioT设施可以帮助您或消化您的业务或者做到这一点 - 我错误地解释了这个链接?

Frank Celli

No, I think what we -- I understand how it can be a bit confusing. What we like to promote is the fact that our two technologies are complementary to each other. So just a quick example, we have customers that generate food waste, that can use our on-site digesters for the disposal of the food waste portion of their waste and then could contract with us as well to take all of their residual and remaining materials to our HEBioT facilities, which essentially provides them sort of with a turnkey one-stop shop zero waste provider. Not every customer qualifies for that but certainly, hotels, grocery stores, retail facilities that potentially generate food waste on-site could use a combination of our technologies. And in fact, we're in discussions with multiple parties that will be using a combination of our technologies. But that's not the model in every case. Sometimes they could be used together. Sometimes, they're just used independently.

不,我想我们 - 我明白它有多混乱。 我们想要推广的是我们的两种技术相互补充。 所以,只是一个简单的例子,我们有客户产生食物浪费,可以使用我们的现场消化器处理他们的废物的食物垃圾部分,然后可以与我们签订合同,以收集他们所有剩余和剩余的材料 我们的HEBioT设施基本上为他们提供了一站式的一站式零废物提供商。 并非所有客户都符合这一要求,但当然,酒店,杂货店,可能在现场产生食物浪费的零售设施可以结合使用我们的技术。 事实上,我们正在与将要使用我们的技术组合的多方进行讨论。 但在每种情况下,这都不是模型。 有时他们可以一起使用。 有时,它们只是独立使用。


Okay. One more for me, please. You mentioned market rates for the SRS. What -- how do they -- what do they fluctuate with? Does it fluctuate with the coal prices at the facility that customers currently use? Or what is the other benchmark maybe that we can look at?

好的。 请给我一个。 您提到了SRS的市场价格。 什么 - 他们是怎么做的 - 他们有什么波动? 它是否随客户目前使用的设施的煤价波动? 或者我们可以看一下其他基准是什么?

Frank Celli

I think unfortunately and I don't think this is what the future bears. But I think currently, I think we'll benchmark to coal, right? We're just going to be smart out as an alternative to coal. I do believe, however, that the increased regulations on emissions and sustainability should result in a market that allows us to sell our material, not at a discount to coal and maybe who knows someday at a potential premium to coal. There's a lot of work we need to do on carbon credit opportunities and whatnot. So until we got the first plan up and running we haven't had the opportunity yet to figure out okay, are there other incentives and benefits to using our products that may in fact allow us to command a premium to coal? I don't know the answer to that yet and we're certainly not projecting that. I think for the short term, we need to be thought of as benchmarking to coal.

我不幸的是,我认为这不是未来的结果。 但我认为目前,我认为我们将以煤为基准,对吧? 我们只是要聪明地替代煤炭。 然而,我确实相信,增加的排放和可持续性法规应该会导致市场允许我们出售我们的材料,而不是以煤炭的折扣,也许谁知道某天可能会对煤炭有潜在溢价。 我们需要做很多关于碳信用额度机会的工作。 因此,在我们开始运行第一个计划之前,我们还没有机会找到好处,使用我们的产品是否有其他激励和好处,实际上可以让我们获得煤炭溢价? 我还不知道答案,我们肯定不会这样做。 我认为从短期来看,我们需要将其视为煤炭的基准。


Okay, thank you very much.



Our next question comes from the line of Brian Greenstein with Ardour Capital. Please proceed with your question.

我们的下一个问题来自Brian Greenstein与Ardor Capital的合作。 请继续你的问题。

Brian Greenstein

Hi, guys, congrats on the quarter. Frank, you guys mentioned margin improvement in the digestive business. Can you just give us a little more color?

嗨,伙计们,恭喜这个季度。 弗兰克,你们提到了消化业务的利润率改善。 你能给我们一点颜色吗?

Frank Celli

Yes, absolutely. I mean, we've talked for a while about the launch of our revolution digesters. We developed that product line for a reason. We listened to the demand of our customers who said, hey, we want a cost-effective, reliable, low maintenance product. And we executed on that. As you know, Brian we went into development a while back on essentially replacing our legacy old eco-safe digester line that were a bit more primitive and clumsy and whatnot. We completely expected that we would achieve margin improvement in the sense that when we engineered this product, it was engineered to be a no-touch product that we weren't going to have to do a whole lot of truck rolls at and our customers would be able to rely on it day after day 24/7 and we've accomplished exactly that.
We think and believe that accomplishment and that the success that we've had with the rollout of those revolution digesters, not just from our own improved financial performance but from the improved reliability and performance at our customers' locations. We believe that's part of the catalyst to sort of the growth in our pipeline and the larger unit deployment. So again, some of the things that don't really get noticed I think are, hey, we've been innovative, right? We answered the call to what our customers were asking for. It's improved our own financial performance from a margin perspective, probably equally, if not more important, right. It's been one of the key factors, I think in getting this increased interest on larger deployments and rollouts from our customer base. So it's not a surprise to us.
I mean, we planned it, we engineered it that way and we executed on it so we expect that to continue to improve as we get smarter as our technology continues to be even enhanced more. And as -- certainly as we achieve more economies of scale. So when we're -- instead of putting one unit out at a time, you know one unit grew to five-unit orders, 5 units are growing to 20 unit orders, 20 unit orders seem to be moving towards 100 unit orders and hopefully, 100 unit orders end up resulting in 500 unit orders. So with those economies of scale, we'd expect we get even more improvement down the line but it's not a surprise to us, right? I mean, we planned we were going to do something. We told the market we're going to do something and we went and did it, right. And we're going to continue to do that.



我的意思是,我们计划了它,我们按照这种方式进行了设计,并且我们对它进行了执行,因此我们希望随着我们的技术不断提高而不断提高,我们将继续改进。而且 - 当然,我们实现了更多的规模经济。因此,当我们 - 而不是一次放出一个单元时,你知道一个单元增长到五个单元订单,5个单元增长到20个单元订单,20个单元订单似乎正朝着100个单元订单发展,并且希望,100单位订单最终导致500单位订单。因此,对于那些规模经济,我们期望我们能够获得更多的改善,但这对我们来说并不意外,对吧?我的意思是,我们计划做一些事情。我们告诉市场我们会做点什么而且我们去做了,对吧。我们将继续这样做。

Brian Greenstein

Okay, great, thanks.



[Operator Instructions] Our next question comes from the line of Vincent LaBarbara with Network 1 Financial. Please proceed with your question.

[操作员说明]我们的下一个问题来自Vincent LaBarbara与Network 1 Financial的合作。 请继续你的问题。

Vincent LaBarbara

Hi, Frank. I'll give you credit because I was at the West Virginia facility before you even was operating again. I saw and I know the magnitude of it, so congratulations on producing SRF. I'd give you guys a lot of credit for that.

嗨,弗兰克。 我会给你信任,因为在你再次经营之前,我在西弗吉尼亚州的工厂。 我看到了,我知道它的重要性,所以祝贺生产SRF。 我会给你们很多功劳。

Frank Celli

Thank you, Vincent.


Vincent LaBarbara

You're welcome. But I do have another question. You mentioned something earlier in your presentation about more astringent regulation or environmental regulations from I guess states or local federal governments. Are any of those government offering any types of incentives? Or subsidize companies to become more compliant or efficient?

别客气。 但我确实有另一个问题。 您在演讲中早些时候提到了一些关于我认为州或地方联邦政府的更严格的监管或环境法规的事情。 这些政府是否提供任何类型的激励措施? 或者补贴公司变得更加合规或更有效率?

Frank Celli

That's a great question, Vincent. We get that question a lot. Historically we've been asked by customers as well as investors often, 'hey, are there any tax benefits or subsidies or whatnot?' And it certainly feels like there should be. Historically, there hasn't been many. We've had increased regulation which we're happy to have kind of moving us in the right direction on bins [ph], on food waste, into landfills, on sustainability objectives and whatnot. Finally and more recently New York state just introduced the program called the New York State Food Waste Reduction & Diversion Reimbursement program. It's the first example that we've seen of a state-city municipality offering some type of economic benefit to customers who utilized a food waste diversion technology. It's not specific to our product of course, but it's the first example we've seen and in fact we've had -- that became just a paraphrase essentially any equipment purchased after June of last year that's used to divert food waste from landfills can qualify for up to 44% reimbursement of the cost of that equipment which is pretty substantial.
One of the caveats however is that you need to actually be able to document the benefits of that piece of equipment which we feel fits perfectly with our model because as you know, we've been the ones out there pounding our chest about being the only smart disposable device on the market and can actually quantify that. We've added one customer so far, successfully be approved for the reimbursement. We've got four more that are in the application process right now that we believe will be approved. I think this is indicative of what other areas of the country will and should do.
I do want to emphasize, we've always prided ourselves on the fact that our products were cost-effective without subsidies and grant. So if you read between the lines and you say, 'hey, we've got regulatory movement and regulation saying you've got to do something with food waste, you've got to be more sustainable, we've got a cost-effective product' and now we've got potentially money out there available to certain customers to utilize our product, I'd like to think that is certainly a very good opportunity for us to achieve some more scale at least in New York state for right now.
But I think New York state starts it and I think it could potentially spread throughout the country. We think it's a huge catalyst for additional growth. 44% of our already-cost effective product is a big deal and I do want to remind everyone, the key here is the user to be approved does have to quantify and prove with real data that they are diverting that food waste and how they're doing it, we do hold a patent for accumulating and producing that type of data from a food waste disposal device. Not going to say we own the market, but it certainly gives us a leg up on all of our competitors.

这是一个很好的问题,文森特。我们经常提出这个问题。从历史上看,我们经常被客户和投资者问过,“嘿,有没有任何税收优惠或补贴或什么?”它当然感觉应该有。从历史上看,并没有很多。我们已经加强了监管,我们很高兴能够在垃圾箱[ph],食品垃圾,垃圾填埋场,可持续发展目标等等方面将我们推向正确的方向。最后,最近纽约州刚刚推出了名为“纽约州减少粮食和减少废物再利用补偿计划”的计划。这是我们第一个看到州市政府为使用食物垃圾分流技术的客户提供某种经济利益的例子。当然,这并不是我们产品的具体内容,但它是我们见过的第一个例子,事实上我们已经看到了 - 这只是一个解释,基本上是去年6月之后用来从垃圾填埋场转移食物垃圾的任何设备。有资格获得高达44%的设备费用报销,这是相当可观的。


我想强调的是,我们一直为自己的产品而不考虑补贴和补助而具有成本效益这一事实感到自豪。因此,如果你在两行之间进行阅读,你会说,'嘿,我们有监管运动和监管,说你必须做一些食物浪费,你必须更具可持续性,我们有成本 - 有效的产品'现在我们有可能为某些客户提供资金以利用我们的产品,我想这对我们来说是一个非常好的机会,至少在纽约州获得更多的规模现在。

但我认为纽约州启动它,我认为它可能会在全国范围内传播。我们认为这是进一步增长的巨大催化剂。 44%我们已经具有成本效益的产品是一个大问题,我想提醒大家,关键在于获得批准的用户必须量化并用真实数据证明他们正在转移食物浪费以及他们如何我们确实拥有从食品垃圾处理设备中积累和生产这类数据的专利。不是说我们拥有市场,但它确实让我们在所有竞争对手中占据优势。

Vincent LaBarbara

Great. And Frank, can you please repeat the name of that program?

非常好。 弗兰克,请你重复一下这个节目的名字吗?

Frank Celli

It's called New York State's Food Waste Reduction & Diversion Reimbursement program. Vincent, we can send you a little marketing flyer we did on it so you have access to it. Yes, it explains the program in a pretty simple way, but basically, New York state businesses that generate at least a ton which is 2,000 lbs of food a week can qualify for up to 44% reimbursement on an eligible product of which we've been deemed eligible and have had success already. It doesn't sound like a big deal, but imagine how many businesses in New York City alone generate at least a ton of food waste a week. I don't know the number, Vincent, but it's a big number, I can tell you that.

它被称为纽约州的减少食物垃圾和转移补偿计划。 文森特,我们可以向您发送我们在其上做的一些营销传单,以便您可以访问它。 是的,它以一种非常简单的方式解释了该计划,但基本上,每周产生至少一吨2000磅食物的纽约州企业可以获得高达44%的符合条件的产品报销,我们已经 被认为有资格并且已经取得了成功。 这听起来不是什么大不了的事,但想象一下,仅纽约市就有多少企业每周产生至少一吨的食物浪费。 我不知道数字,文森特,但这是一个很大的数字,我可以告诉你。

Vincent LaBarbara

[Indiscernible] for the name of the report because I'm sure it is a big number. But is there any other state other than New York that you know about?

[Indiscernible]报告的名称,因为我确定这是一个很大的数字。 但是除了纽约以外还有其他任何你知道的州吗?

Frank Celli

There's not any that I am aware of right now. There may be some stuff in the works, but this is the first real example that we've seen of it. We do think though it's going to be a trend that will continue because if these regulators want to keep food waste out of landfills, you can't use the stick all the time. You've got to use the carat sometimes. I think the carat works better and this is a great opportunity for regulators to use the carat to achieve their ultimate goals. I think it resembles solar many years back, Vincent.

我现在没有任何意识到这一点。 工程中可能有一些东西,但这是我们见过它的第一个真实例子。 我们确实认为,这将是一种趋势,但如果这些监管机构想要将垃圾填埋场中的食物浪费,那么你就不能一直使用垃圾桶了。 你有时必须使用克拉。 我认为克拉的效果更好,这对监管机构来说是一个很好的机会,可以使用克拉来达到最终目标。 文森特,我认为它在很多年前就像太阳能一样。

Vincent LaBarbara

I got it. Okay. Thank you very much, Frank.

我知道了。 好的。 非常感谢,弗兰克。

Frank Celli




Our next question comes from the line of Brad [ph] with Pioneer Capital. Please proceed with your question.

我们的下一个问题来自Brad [Ph]与Pioneer Capital的合作。 请继续你的问题。


Good morning. If the more traditional disposal companies have started to take notice of what you're doing?

早上好。 如果更传统的处置公司已经开始注意到你在做什么?

Frank Celli

That's a great question. The answer is absolutely yes. I can't say exactly who, but I will tell you that at our Martinsburg facility, we have begun receiving waste from a national publicly traded traditional waste company because their customer -- it actually started with their customer -- their customer heard about our facility and wanted to utilize it to achieve their own sustainability goals and that led to a relationship between us and that national hauler to where they're not only delivering the waste from that specific customer, but other customers as well. So we've got at a minimum one publicly traded company as a customer utilizing our facility. We've got a couple of other what I think you'd call municipal haulers. So not in the private sector, but towns that collect their own waste that have delivered waste to our facility. And ton the digester side, I don't know if we announced it or not, but we did announce it actually. We recently entered into a distribution agreement with another nationally publicly traded waste disposal company to potentially distribute our digester product.
Yes, they are becoming aware. I can tell you from past experience, those traditional waste haulers particularly the big publicly traded ones, they are very slow to acknowledge, recognize and utilize sort of technology solutions, but I think the writings on the wall, I can safely say to you that at the Martinsburg plan, we will successfully divert 100,000 plus tons a year which to put that in people terms is 200 million lbs a year of waste from landfills owned by publicly traded waste companies in the region and that I can assure you gets their attention because at a 60% to 70% EBITDA margin on every ton of waste that comes into those landfills, that's a material impact on their cash flow and they have to pay attention. It just takes a little time to get them to really realize, 'hey, this is starting to make a difference'. They've begun to recognize us. They have started to become customers of ours and I expect those relationships to grow in the future.

这是一个很好的问题。答案绝对是肯定的。我不能确切地说出谁,但我会告诉你,在我们的马丁斯堡工厂,我们已经开始接收来自全国公开交易的传统废物公司的废物,因为他们的客户 - 实际上是从他们的客户开始 - 他们的客户听说过我们的设施,并希望利用它来实现自己的可持续发展目标,并导致我们与国家搬运工之间的关系,他们不仅要提供来自特定客户的废物,还要提供其他客户。因此,作为使用我们设施的客户,我们至少有一家上市公司。我们还有其他一些我认为你称之为市政搬运工的东西。所以不是在私营部门,而是收集自己的废物的城镇,这些废物已经将废物运送到我们的设施。在消化器方面,我不知道我们是否宣布,但我们确实已经公布了它。我们最近与另一家全国性公开交易的废物处理公司签订了分销协议,以分销我们的沼气产品。



Thank you.



Ladies and gentlemen we have reached the end of the question-and-answer session and I will like to turn the call back to Frank Celli for closing remarks.

女士们,先生们,我们已经到了问答环节的结尾,我想把电话转回Frank Celli,以便结束发言。

Frank Celli

Thank you, Operator. I just like to close in thanking everyone who participated on the call today and I look forward to speaking with you again on the next quarter's results. Thank you.

谢谢运营商。 我想最近感谢今天参加电话会议的所有人,我期待在下一季度的结果中再次与您交谈。 谢谢。


This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

今天的会议结束了。 您可以在此时断开线路。 感谢您的参与,祝您度过愉快的一天。


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