EGT.V - A breakout year.

Updated: Dec 29, 2020


Eguana Technologies Inc. (EGT.V) designs and manufactures s high performance residential and commercial energy storage systems. EGT.V has two decades of experience in grid edge power electronics for fuel cell, photovoltaic and battery applications, and delivers proven, durable, high quality solutions. With thousands of its proprietary energy storage inverters deployed in the European and North American markets, Eguana is one of the leading suppliers of power controls for solar self-consumption, grid services and demand charge applications at the grid edge.


Coverage began July 2017 with notes January 2018, February 2018, June 2018. December 2018, July 2019. and April 2020.


News Releases


May 5 - Reports $2.4 million in New US Orders: Predominantly for Hawaii and California, which are expected to ship over the next 2-3 months. EGT.V has confirmed Evolve manufacturing and shipments continued throughout the COVID-19 pandemic, albeit at a slower pace, as a result of minor disruptions in its supply chain throughout February.


In Hawaii, Evolve installations continued on schedule throughout February/March and are expected to increase through June as a result of the new orders. EGT.V has also expanded its relationship with CED Greentech branches throughout Southern California which include: San Diego, Riverside, Ventura, Los Angeles, Orange County, and Coachella Valley.


May 7 - Receives Additional $1.8M in PO Releases from Hanwha Q Cells, Updates Contract Manufacturing in Italy.

Hanwha Q Cells order to ship over the next two quarters - The releases will provide a minimum monthly baseline demand to stabilize supply chain and manufacturing processes.


Eguana has confirmed the QCells orders, along with new orders for the United States and Australian markets, have increased product demand beyond pre COVID-19 levels. Management expects to see the corresponding increase in shipments later this month and continuing through the balance of year.


June 1 - Announces 2nd Quarter 2020 Financial Results and Provides Update: Record setting Year-to-Date revenue of $4.44 million, Q2 2020 revenue of $1.64 million. Over $5M in orders across key markets (USA/Europe/Australia), all expected to deliver within 12 months. Continued dealer expansion in the United States and Australia: US dealer network increased to 130: US CED Greentech locations increased to 12, with 8 in CA: Australia dealer network to 34.


July 13 - Grants Key Employees Stock Options for 2020: board of directors has granted incentive stock options to acquire up to an aggregate of 2,305,000 common shares at a strike price of $0.15 per share. Of the options granted, 1,175,000 have been granted to directors and officers of the Company and the remainder to employees.


July 21 - Launches Cobalt-Free Residential Energy Storage System: Announced the expansion of its Evolve residential product line with the introduction of the Evolve LFP energy storage system. Eguana has responded to increasing market requests for a Cobalt free LFP based solution, adding greater sustainability in its product offerings.


“Consumers are discerning and we continue to offer market leading choices” commented Eguana CEO Justin Holland. “Our advanced technology platform lends itself to easy integration with different battery chemistries and energy management software which, provides for a standardized price point for both the NMC (Nickel Manganese Cobalt) and LFP products. The development team also maintained all key product advantages including: expandable and modular battery capacity, remote diagnostics and analytics, and quick and simple installation.”


Aug. 10 - Announces Debt Settlement with Doughty Hanson: Under the terms of the Agreement, dated August 7, 2020, the Company and DHCT agreed to settle C$60,000 of debt (the “Debt”) through the issuance of 461,538 common shares (“Common Shares”) at a deemed price of C$0.13 per share. The Debt arose pursuant to the terms of a convertible debenture certificate issued in connection with a private placement which closed on August 8, 2019.


Aug. 17 - Bring Intelligent Energy Storage Solutions to San Jose and the San Francisco Bay Area with Highlight Solar.

Highlight Solar, an Eguana-certified partner, is scheduled to complete their first group of Evolve energy storage systems in August with installations continuing throughout the balance of 2020.


Aug. 24 - Announces 3rd Quarter 2020 Financial Results: Record setting Year-to-Date, 9-month revenue of $6.62M a 154% YOY. Revenue for Q3 2020 of $2.18 million, a 181% increase versus the prior year third quarter.


“Our sales teams have done a tremendous job managing accounts and building our dealer network, which has resulted in a record order book inclusive of purchase orders & supply agreements, at $21 million.”


Continued dealer expansion – added 22 new dealer partners this quarter for 186 in total (US 150, Australia 36).


Oct. 16 - Provides California Update and Announces $1 Million Brokered Private Placement to Fund Expanding Cobalt Free Evolve Product Line: As of September 30th, 2020, record order book of $23 million, with significant demand coming from US markets and California in particular. Orders are expected to ship in the next 12-18 months.


Eguana recently launched a cobalt-free, LFP product line and has received strong demand in California, with orders from the state approaching $5 million, all of which are expected to ship within the next 8-12 months.


Fort Capital Securities Inc. to sell by way of private placement, limited partnership units of the Company’s subsidiary, EGT Markets Limited Partnership at $1,000 per LP Unit, for gross proceeds of up to $1M. The proceeds will be used to for the development and launch of the higher power cobalt free LFP product and general working capital purposes. The Company has the right to exchange each of the LP Units for common shares in the capital of the Company at a price of $0.15 per Common Share, at any time prior to the close of business on March 31, 2021.


Nov. 1 - Closes $1.15 Million Upsized Brokered Private Placement.


Nov. 13 - Announced Brokered Private Placement for $1.5M. Appointed Stifel GMP and Fort Capital Securities Ltd. to sell up to 10M shares at $0.15 per Common Share, for gross proceeds of up to $1.5 million. Proceeds to expedite the launch of a higher power cobalt free lithium iron phosphate product and for general working capital purposes.


Nov. 17 - Announces Closing of $1.5 Million Investment from Institutional Investor.



Summary

In the last eight months EGT.V's valuation has been on the rise, reaching as high as $0.25 cents.


Financing

EGT.V conducted two brokered placement of $1.5M towards the development of a Evolve LFP energy storage system. Both placement had no reported warrants. However, there are existing warrants from prior placement at $0.20 cents.


Earnings

To date, FY 2020 earnings are very strong and represent a significant departure from FY 2019.

Year to date (YTD), revenues almost tripled to $6.62M. In addition the loss are slightly lower. On October 16th, EGT.V reported (as of September 30, 2020) a record backlog of $23M with orders expecting to ship within 12-18 months.


ITOCHU, Hanwha Q CELLS


ITOCHU: As per latest MD&A: "Eguana has scheduled its Sunnova field trials in September for the Moixa AI based Evolve, which was developed as part of a previously announced development deal with partner ITOCHU Corporation".


Eguana has completed its battery supply transition to partner ITOCHU to reduce upfront working capital

requirements and the reduction of its cashflow cycles.


Per AGM slides, Sunnova trials were re-scheduled to October 2020. No further update have been provided since.

However, as of June 30, 2020, EGT.V had reportedly collected $0.83M in engineering services from ITOCHU.


Hanwha Q CELLS: As per latest MD&A:

"The Company successfully increased its letters of guarantee from EDC (Export Development Canada) for our contract manufacturing partners ahead of expected growth in the European market. During the quarter, Eguana structured a baseline demand of 50 systems per month with partner Hanwha QCells (“QCells”) to stabilize production and assembly processes. This manufacturing consistency will also provide for margin improvement in the coming quarters with respect to the Enduro product. The Company is also reviewing the certification process for the Elevate for European markets.


Note that the Hanwha Q CELLS deal is almost two years old and given the AGM presentation from EGT.V, it appears that it is still in its infancy. For instance, using 60,000 units installed annually (Germany/Europe), at a base unit of 50 system per month (i.e.600 units annually) would represent a 10% penetration. It is a "baseline case" but nonetheless. It is expected that transitioning the manufacturing to Jabil should provide EGT.V some much needed economies of scale.


California and Hawaii

From the AGM deck, in California $4M in LFP orders were received within two months of the launch. In Hawaii, $3.5M are expected within the next four months. Hence, roughly a third of the backlog is accounted by these two efforts which excludes other types of install in California (Non-LFP orders) as well as, orders from other States.



For Australia, EGT.V reported: +$3.5M in open orders over 12 months (per AGM presentation). Also MD&A states:


Material shipments were restarted into the Australian market to service a backlog of orders which will be recognized in the fourth fiscal quarter. Additionally, the Australian team successfully increased its dealer partners and expects to see sales traction increase in the balance of the calendar year. The Company has begun negotiations with a tier one solar company in Australia with the intention of realizing national coverage with the Evolve LFP product.


In Short

EGT.V is on a different trajectory from FY 2019. Top line revenue speaks volumes (literally) but the company is still incurring significant net losses associated with scaling its product. However, the outlook for the next 12-18 months ($23M backlog) is strong. Assuming EGT.V delivers only half of it ($12.5M) it could easily eclipsed the FY 2020 results (Note: Q4 2020 is still pending). Hence, FY 2021 may very well be a breakout year.


DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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