Eguana Technologies Inc. (EGT.V) designs and manufactures power controls for energy storage applications. Coverage was initiated on July 10th with notes on January 2 and February 1. Since the last update, the following releases were issued.
Mar. 1 - Q1 2018 Earnings and Outlook. $1.3M in revenue with 16% gross margin. The 2018 Outlook stated $1.1M the Hawaiian consumer grid-supply (“CGS”) All-in-One” product, and Commercial AC Battery launch in the United States for small commercial and electric vehicle markets. Delivery of German automotive partner systems with initial shipments of $3.2 million starting in fiscal Q3. Transition volume manufacturing to global contract partner to support growth and working capital requirements.
Mar. 22 - Launches New Energy Storage Product Lines - key partners LG Chem and Pason systems. Evolve, a fully automated home energy storage solution that maximizes the value of a home owner's solar system investment. Also launching Elevate, Eguana's popular AC Battery product line has been expanded to include larger three phase models for commercial applications
Apr. 24 - EdgePower in San Diego. EGT.V's customer EdgePower will deploy its building energy management system (BEMS) including several of Eguana’s Commercial AC Batteries at a big box retail location in Q2 2018. It will enhance the performance and flexibility of EdgePower’s BEMS, while EdgePower’s load forecasting and controls will enable better utilization of the energy storage investment.
May 31 - Revenue of $2.4M CAD, representing a +400% increase for the six months ending March 31, as compared to the same period in 2017. Expecting Commercial AC Battery to achieve certification in June. Sufficient funds until 2019 with no immediate needs for financing in 2018..
June 7 -Launches Enduro Energy Storage Product at EES Europe The Enduro is an “All in One” solution for the European residential market.
June 20 - Receives Mercedes Benz Energy endorsement for home storage. MBE to recommended Evolve to its distributors.
“Under the original private label agreement all systems were destined for the Australian market, however with this transition Mercedes has opened additional markets for Eguana’s Evolve and other product lines,” commented Justin Holland, Eguana Technologies CEO. “MBE sales worked with us to transition additional distributors in Australia, Europe, Africa, and the Middle East.We are very excited to see our products move into this rapidly expanding distribution network.”
“We ran the Eguana through 6 months of intense testing to ensure reliability and functionality,” stated Gordon Gassmann, Chief Executive Officer at Mercedes Benz Energy. “We are confident the product is right for the markets and are happy to transfer our distributor relationships directly to Eguana.”
As displayed, valuation dropped since our last note down to below $0.20 after Q1 Earning, and despite the product launch of Elevate + Evolve, and EdgePower's announcement. Q2 Earnings set a turning point, the Enduro launch, the endorsement from Mercedes Benz Energy (MBE), including the recent appointment are positioning EGT.V back in a promising trajectory. The endorsement was positive news but it has been a rumored for a while.
In fact, last week's announcement is a confirmation of the January 29 release - Completion of a multi-year master supply agreement with its German automotive partner with an estimated value of $13M for the current year. Initial product release of $3.2M has been received with planned shipments beginning in May followed by 3 additional product releases. For competitive reasons, the partner’s name and target market remain confidential.
This explain the relatively small price movement as the news was priced in. However, on the same day, Mackie re-iterated target of $0.70 cents.
“EGT indicated that the initial MBE related product roll-out, which was planned to begin in June, is expected to take place throughout Q4 (Sept) F2018. As a result, we expect Q3 (Jun) F2018 revenue to be down to ~$300-400K from ~$1 million in Q2 (Mar) F2018 with a strong pick up in H2 C2018,”
“We expect C2018 revenue should be >$10 million if this strategy plays out successfully. As a leading indicator of this revenue traction, we would expect to see a steady stream of new direct global distributor announcements by EGT in the coming weeks.”
As a result, we continue to maintain a long position on EGT.V. While not ruling out possible price decline from current levels, the expectation is that valuation will continues to grow in the next year. Looking back to the last six months, EGT.V has certainly Evolved.
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