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Legend Power Systems Inc (LPSIF) Q2 2025 Earnings Call Highlights: Revenue Surge Amidst Margin ...
Revenue: $523,000 in Q2 fiscal 2025, up from $124,000 in Q2 fiscal 2024.
Gross Margin: 22% for the quarter, down from 46% in the prior year.
Gross Margin Dollars: $114,000 compared to $57,000 in Q2 fiscal 2024.
Cash Position: Ended the quarter with $224,000 in cash.
Working Capital: $874,000 at the end of the quarter.
Trade Receivables and Deposits: Over $750,000 received subsequent to March 31.
SmartGATE Systems Sold: 70 Gen3 SmartGATEs sold.
SmartGATE Systems Deployed: 43 Gen3 SmartGATEs fully deployed, with 27 more scheduled.
Backlog: 15-plus systems in backlog.
Inventory Reduction: Inventory decreased significantly, converting into goods for sale and cash.
Customer ROI: Customers experiencing a 15% ROI, with some achieving higher results.
Operational Savings: $2 in non-energy savings for every dollar of energy savings.
Warning! GuruFocus has detected 6 Warning Signs with LPSIF.
Release Date: May 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Legend Power Systems Inc (LPSIF) reported a significant increase in revenue for Q2 2025, reaching $523,000 compared to $124,000 in the same quarter of the previous year.
The company has successfully managed its backlog by leveraging existing inventory, maintaining strong supplier relationships, and prioritizing critical needs.
The Gen3 SmartGATE systems have exceeded performance expectations, leading to high customer satisfaction and repeat business.
Legend Power Systems Inc (LPSIF) has secured several strategic partnerships and is seeing increased adoption of its Gen3 systems, with 70 units sold and 43 deployed.
The company is experiencing a shift from energy savings to operational risk mitigation, which is transforming its value proposition and driving sales growth.
Gross margin for the quarter decreased to 22% from 46% in the previous year, due to increased costs of certain inventory components and unfavorable product mix.
Legend Power Systems Inc (LPSIF) continues to operate in a tight cash environment, necessitating expense and operational cost reductions.
Some part orders were put on hold, impacting the company's ability to fulfill all commitments promptly.
The company faces challenges in maintaining its working capital, with ongoing discussions about potential equity raises to support growth.
There is uncertainty regarding the impact of recent changes to the IRA tax credits in the US on product demand, which could affect future sales.
Q: Are all 50 systems mentioned by a customer Gen3, and what about the legacy systems? A: The customer still has three legacy Gen1 systems, but the majority are Gen3. We are discussing upgrades with them due to the significant improvements seen with SmartGATE Gen3. - Mike Cioce, VP Sales and Marketing
Q: Can you discuss your working capital requirements and the possibility of another equity raise? A: We've managed working capital with small financings and are exploring various options, including equity, to support growth. We are also receiving 50% deposits on significant orders, which helps manage cash flow. - Randy Buchamer, CEO
Q: What steps are being taken to improve gross profit margins back to historic levels? A: We experienced an anomaly last quarter due to product mix and installations. We are optimizing our bill of materials and expect to return to strong margins, potentially within one or two quarters. - Paul Moffat, COO
Q: Do you expect any impact on product demand from recent changes to the IRA tax credits in the US? A: We haven't seen significant effects from these changes. Our value proposition is rooted in traditional business values, such as lower risk and higher profitability, which are not dependent on government incentives. - Randy Buchamer, CEO and Mike Cioce, VP Sales and Marketing
Q: How does the current backlog impact cash flow and revenue? A: We have 15 systems in backlog, with some inventory prepaid. We are managing inventory and supplier relationships to optimize costs and cash flow. The backlog is fluid, and we are shipping systems over the coming months. - Randy Buchamer, CEO and Paul Moffat, COO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
