PowerBank Corp (SUUN) 2025 Q4 法說會逐字稿

Right, hello, everyone. Thank you so much for standing by. Good afternoon and welcome to the PowerBank fiscal year and 2025 financial results and corporate update conference call. My name is Megan Haley. At this time, all participants are in a listen-only mode. After today's presentation, there will be a question-and-answer session which will feature previously received questions.

Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call, and accessible on the investor relations portion of our website for access for 30 days.

So today, the company issued a press release for its financial results for the fiscal year ended June 2025. A copy of that press release can be found on the company's website at powerbankcorp.com under the investors tab.

Joining me on today's earnings call from Powerbank's management team are Dr. Richard Lu, Chief Executive Officer, and Sam Sun, Chief Financial Officer.

During this call, management will be making forward-looking statements, including statements that address Powerbank's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Power PowerBank's annual information form.

Most recently filed Annual Report on Forms 40-F, and subsequent periodic reports filed with the SEC, SEDAR, and PowerBanks press release that accompanies this call, particularly the cautionary statements made in it. The content of this call contains time sensitive information that is accurate only as of today, October 2, 2025.

Except as required by law, PowerBank disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO Dr. Richard Lu.

Hi. Thank you, Megan. Good afternoon, everyone on the call. So prior to turning the call over to our CFO, I'd like to highlight some of our existing progress to accompany our filing and the financial report for the year-to-date and the physical third quarter of 2025.

We are going to focus our presentation today on our fiscal year end results. As of today, we are sitting with projects representing approximately 84 megawatts of solar and 44 megawatt hour of battery energy storage that are expected to reach notice to proceed within the next 12 months, which we believe has the potential to grow by an order of magnitude in the coming years.

So Power is undeniably a source of energy that has unique significant cost and environmental benefits to power producers and consumers alike as technologies continue, people, solar proration across the globe.

For the full 12 months of fiscal 2025, we reported $41.5 million of revenue. This is $16.9 million lower than the last year for the same period. Our EPC services, was the most area has the reduction of $30.8 million to $23.3 million right. This is, as we discussed previously, PowerBank went public for the purpose of being able to own more assets and grow its IPP business. This strategy is going to provide a very high margin, occurring, recurring revenue over a long time and the historical develop to sell the model has been successful, because we were looking for working capital, we're looking for revenue growth, but those revenues are very lumpy and only one time when the project itself is sold and then there's no more revenue, right? So keeping more of the asset that we are developing is necessarily going to mean a reduction in EPC revenue and you will see the correlation in the financials.

So this strategy is starting to show result as though, even though the revenue were down, our gross profit actually was only $1.2 million less than last year. I think about the significant drop in revenue and think about the not so much drop on the gross profit, right? And then the first fiscal years and the gross margin improved by 5% to 25%. So the profitability is increasing on the projects, right.

Our IPP production generated $9.3 million of high margin revenue and last year this time we only had $0.6 million of recurring revenue. Now we are at 9.3%, okay. This revenue presents recurring asset-based revenue for zero emitting electricity supplied to our customers, such as the electrical system operators and municipal governments, and, I would say to end the score, we believe our IPP revenue will grow over time, in lockstep with the solar power plants we built that we choose to own upon completion.

I would like to also highlight some of the announcements, events, and the milestones in the fiscal year that support the conviction that we are well positioned for growth. So as you know we closed our acquisition of the solar flow through fund for a total value of $45 million in a all stock transaction, so it's closed.

As you also remember that the CIM Group, which is a real estate and infrastructure owner operator, lander and developer, and us have entered into a mandate letter providing up to 100 million in project-based financing for a portion. Portfolio of 97 megawatts of solar projects located in the States, right? So now portfolio is going very well and moving projects to construction, I would say, start construction before July 3, 2026, right?

We continue to execute on the company's development pipeline for solar project that currently, it's about 942 megawatts. The battery is at 864 megawatt hours. We categorize our pipeline into, as the following, and the construction, means already, in construction, advanced development. That we're -- will reach notice to proceed with the next 6 to 12 months and the development is greater than 12 months, right? So those are in our corporate presentation on the website has clearly illustrated, right.

The next update is really about our relationship with Qcells. As you see, we have announced a relationship with Qcells in Upper New York that represents about 25.58 megawatts, a total transaction of $49.5 million. Those contracts are under construction. We also expect it will retain an operation maintenance contract for those projects following completion. Currently 2 of the 4 are under construction and the 2 of them are in late stage, permitting. Okay.

We also announced a strategic expansion into the data market. We do not have an actual contract in terms of being a power supplier to a data center yet, but the conversations has going fairly well that You will see continued effort for us to provide the needed power in a timely fashion to data centers, whether it's more power from the grid through our insight of getting power from the grid or building behind the meter power solutions.

We have a 3.26 megawatts Camillus solar project and that project, as usual, as always, every year we have one or two projects going to Charleys, which is one of the subsidiary is called Solar Advocate, and that one is also under construction for Charleys demonstrating the year after year satisfactory customers returning business for us. The company closed a registered direct offering with a single institutional investor for $8.5 million and marked the first time after IPO that we raise capital on the capital market. Okay.

We are very active in the US. However, we are a -- we started in Canada, so we always have activities in Canada. So the company announced that we have 3 community solar projects in Nova Scotia. That, not only we get the contract, we also have $1.74 million of funding through the Nova Scotia Department Environment, climate change, provided to us and also from Net zero Atlantic program. Those contracts are now in the permitting and design stage. We expect the construction in 2026. So it's commercial operation in 2026, right?

Continue the development of the best projects in Ontario. Two of them are backed by Royal Bank's financing of $25.8 million. The SFF-06 is under construction, which we have announced already, and then the other ones are being permitted and will continue to bring them to commercial operation, right.

So having give you those, in single individual items and before I hand it to Sam, I will say, I want to highlight that the one big beautiful Bill Act has also created an opportunity for Power bank to accelerate our development pipeline based on the new deadline, right?

We have prioritized our development pathway in the key US states where site control, interconnection, and permitting are sufficiently advanced to qualify for the full ITC treatment and the new rules, right? In other words, we will have projects starting before December this year, so there will be no foreign entity of concern issues.

And the majority of our project will start construction past the physical work test before July 3, 2026 that we can execute to deliver to commercial operation by end of 2030. So I can have a clear visual about our passing solar, in the states to 2030, right? Having said so, as you also know, we have diversified our footprint across Canada, to, counter the, I will say the, policy risk, right? We are now in the IESO's LT2, procurement.

We have hundreds of megawatts of solar into the LT2 procurement, filing end of this month. We also have gigawatt hours of battery, bid into the capacity market in Ontario, finding, by end of December. Right.

So taking this parallel approach in both markets, right, and I would say, give us tremendous ability, not only, sitting on reasonable number of cash, but also opens doors to, I would say, giving the current market condition in the states, harvesting what we have done before in 2030 meantime grow the battery storage and other technologies because in the US we need all forms of power to counter electricity price increasing, counter the demand of data centers or digital economy, but in Canada we are focusing on key markets such as Nova Scotia, Ontario, Alberta, and BC, right?

So those will able us hold significant market share and, we are actively expanding. So, even though our top revenue reduced, but as client, we now focus on asset building versus top-line, and we are both doing the same in the US and Canada, right?

So now I'd like to turn the call over to Sam, who will review our financial results in more detail for you. Sam, please.

Thank you, Richard. First, please note that all the figures are in CAD and again, we are going to cover the 12 month numbers with the quarterly numbers available in the filings. As was submitted today, our total revenue for the 12 months was approximately $41.5 million, compared to the $58.4 million in a prior year, decrease about 29%.

[Delta] revenue increased significantly, rising from $2 million to $7 million driven by the sale of $5 million solar projects in fiscal 2025 versus the three lower margin projects in fiscal 2024. The EPC services revenue declined by about 57% to $23.3 million in fiscal 2025 compared to the $54.1 million in fiscal 2024. This decrease was primarily due to the lower construction activity, reflecting the timing differences. The six project totaling 36 megawatts in fiscal '25 versus the 4 projects totaling 24. It was in fiscal 2024.

Our IPP revenue increased by $8.7 million reaching $9.3 million in current fiscal year following the acquisition of solar flow through fund at the beginning of this year. The other service revenue remains relatively unchanged. The gross margin improved to approximately 25% in current fixed compared to 20% in the last year.

The improvement was driven by a shift in our revenue mix, with a large proportion coming from IPP, which generates more stable and higher margin revenue. In current year gross margin for IPP includes approximately $2.8 million in depreciation expenses. In addition, the gross margin for EPC service revenue improved from 18% to 30% a year over year.

Operating expenses were around $49.6 million in current year compared to $16.1 million in the prior year. The big increase was mainly due to the non-cash impairment losses, totaling about $30.4 million to the goodwill and long-lived assets in the IPP segment as well as approximately $3.5 million of additional expenses related to the solar flow through fund acquisition.

While lower sales in this year increased operating expenses as a percentage of revenue, we expect this ratio to decline going forward as we continue scaling both the business and asset base.

As noted in today's press release, adjusted EBITDA was negative about $0.7 million compared to $0.8 million in the prior fiscal year. Net loss for the year was around $31.1 million or $0.97 per basic share compared with a net loss of $3.6 million or $0.13 per share in a prior year.

Net loss was primarily the result of non-recovering impairment losses and the higher cost associated with the Solar Flow-Through Funds acquisition. As of June 30, 2025, current assets totaled $41.3 million, an increase of $23.7 million or [1.134%] from the end of fiscal 24, primarily driven by higher cash receivable and inventory.

Current liability were $43.1 million up $29.7 million from the prior year, mainly reflecting higher payables and the current portion of long-term debt, which is almost entirely non-recourse that that assumed in the surfa through acquisition. Long-term debt was $63 million, an increase of around $58.2 million year over year also driven by the acquisition of more than 70 projects from flow through acquisition.

Importantly, our debt is primarily non-recourse project debt, and we believe the current level is manageable. Our largest lender are leading North America financial institutions. For example, as announced in last November, RBC provided a $25 million loan to support the construction operation and maintenance of the 4.99 megawatts battery system project in Ontario. We continue to secure highly verbal financing terms relative to our site, which are detail in our filings.

Our cash and the short-term investments total around $15 million as June 30 225 compared to the last year $6 million. A portion of these cash balances is restricted under credit agreement assumed with the sort of acquisition.

We remain confident in our ability to execute our strategy for our next fiscal year and beyond with a focus on continued growth of IPP portfolio and advancing our pipelines. Okay, that's everything for me and we're back to you, Richard.

Thank you.

Wonderful. Thank you, Sam. So, I would say, before we opening up the call to questions and answers, I'd like to make some remarks on the market, right, as we know that, And not only the micro cap have endured sustained difficulties in the market, specifically the, clean and renewable energy market, also endured, continued headwind and if you look at the industry. Index, most companies have dropped values more than 60%, including PowerBank. A lot of company hit the market, for sale, you kind of looking at a very, discouraging, environment, right?

But on the other hand, not only every time when I speak to the market, I tell people the future is bright, and we do see, a very, I would say stabilization of the market. You can see that from the low of the industry. Probably we improved by the 30% and continue trending up, right? The fact is supply demand. The fact is cost of electricity, right?

So from my perspective, I would say, how is this company doing, is this company, Going to continue to deliver shareholder values. Is this company going to be very stable or is this company, going to follow, the rest of the players? I would say. This company is not only going to stabilize, but also trending up, for three reasons, right? As you can see, I shared with you, our IPP grow about 1,500%, right, at the cost of reducing our top revenue.

Top revenue in my view, when Renewables on clean energy is not the topic of the day. It will not convert into capital market values. So we build assets to, increase our bank strength. Our gross margin is 25%, and to continue to improve, right, cash at this moment, it's about 140% better than last year. How much cash I'm sitting on about $150 million cash at this moment, right? That will last year from a perspective for our bank, right?

And also most significantly, as I mentioned, we have been talking about the things going to the public that we are going to gradually increase our asset value and our assets increased by 250%, right? And it was $40 million and now it's $138 million, right? So those are the things we do, but so what? Right? You do all of those things. I will see the so what reflecting the three things. The number one is the strategy. I think in this turmoil market, the company to have a clear strategy to share with our investors, our shareholders. What's the path, right, to profitability? What's the path to long-term sustainable competitive profitability, right?

And you can see we are executing the strategy, even risking the perceptions of the revenue reduction, right. I think the second thing is that this company is looking for long-term stability, right? We did not go out to spend all the cash for Promotions for marketing for just to grow the top-line, and so on and so forth because, we might have to endure another two or three years of difficulties and we are prepared for it, as together with industry, as the market already stabilization, we are certainly, going to the upside of growing this company out of the stitch created by this, I would say OBBBA, right, should we say, right? And the so what also reflects our third, I would say comment is about execution, right.

Power bank is built by the people who are merchants in the power industry, developers, builders, financiers, and we are proud of our ability to execute. And I would love to have you visit our office someday. You wouldn't see a lot of people sitting around because most of us are very mobile and because we know our customer needs us, the project needs us, and the industry, the demand is there for us.

So that's what we would say this company is certainly have a bright future and I would say, stay tuned and with the $15 million in hand, we wouldn't be going to the market at such a lower time for capital. I think I might get into trouble with my lawyer now for telling you this, but the future is bright. So thank you.

Now I will turn the questions.

All right, thank you, Richard. So everyone, we are now just going to take a minute to conduct a question-and-answer session. Please allow us a moment to pause and collect all of the questions and put them to management for comment.

All right. So, Richard, our first question is, we saw a major increase in IPP revenue year over year. Are you able to provide a bit more color on how you see this revenue mix shaping up over the next year and resulting impact on margins? How has the regulatory environment in the US changed your medium-term growth plans from a US and Canadian perspective?

So there are two questions. One is about IPP forward-looking and hopefully you don't get me into trouble. And the secondly is about the OBBBA, right?

So, let me not tell you how we have announced, right? So, we have the acquisition of solar flow through, right? And since the acquisition, the team has strengthened our operation maintenance, functions. In the past that we contracted out and have less hands-on, but now we are taking a very hands-on approach.

So that's the foundation, I would say, we'll bring CAD10 million every year for the remaining 15 years, right? And the residual value after that, even though in this time, in the valuation, we cut it into a very low forecast which, I am not on board, but should I.

Auditors say this is the industry is going, we may be okay, but even at such a low future energy curve, post-FY contract, that the government already start considering a local generation program in Ontario. That's where most of the projects are that to renew or continue the contract, right? So that's the foundation of their CAD10 million a year, let's say.

The second, as you can see that we have the Royal Bank already backing two of the three energy storage and those are the capacity payment $1,500 per megawatt per day for 21 years. One of them, SFO6, should be commissioned before the end of the year, commercial operation starts generating revenue and the other two in the years to follow, right? So that's the another layer.

Then on top of that, we own two municipal PPAs in the states. We also own one community solar in the states and even in addition to that, there's a CIM mandate letter for $100 million of project financing enable us to. The 97 megawatts of community solar in New York and other states. That's a T flip that as we people on this call understand that at the end of the day, we'll be owning them, right?

So if I look at those things, from now till 2030, you will say, Probably a similar percentage of the increase of our IPP revenue, right? So that's a in terms of IPP you can see we are executing what we're telling the market that we will only sell if our customers such as Honeywell, such as QCells, such as Charleys, so on and so forth, want us to. The rest of them, we will try our best to keep it for the long-term recurring profitability to our shareholders, okay.

So now if I turn into the OBBBA, it comes down to two things. Number one is the Incentive, ITC; number 2 is down to the tariff. So what is the ITC? So the investment tax credit is said that it will be finished, if we don't start construction by July 3, 2026.

So as I mentioned, we have, I would say a significant pipeline will pass the physical work test before July 3. That will last until 2030. So the tax credit will continue to play till 23, even I assume there's no policy change, which is a big assumption because Mr. President is known for, directing new approaches, right?

So now We have focused our development team in the states on batteries, battery storage, and other technologies, and those ITC applications will continue to 2036. So we do have a clear path forward on the first impact of the OBBBA in terms of the, tax credits.

The second impact is on tariff. The tariff does increase cost. They increase our cost too, right. However, as our income, from a community solar perspective is a stack that of many components, a major stack there is the commodity cost, which is electricity. You can probably see today on Bloomberg somewhere saying that the electricity price in certain areas, grew significantly 30%, 40%, 50%, right? What does that do to us?

It actually increased my profitability for the community solar program we're building, right. In the meantime, we understand there are demands for domestic products and that we have a very good working relationship with Qcells.

Why we choose Qcells because Qcells has a huge production facility in the states and we are turning to them for domestic content, module supplies, and we also turned into domestic content of the inverter and the battery and let alone the vacuum we have always been using maybe in the US batteries, right? So those are the two impacts from OBBBA and this is how we see it and how we modify our own, I would say tactic and moving forward in the states.

Megan, I know it's a long answer. Hopefully I don't -- I'm not leaving too little time for everyone.

Oh, sorry, I'd like to add the one point here. So in terms of the, on top of what Richard just mentioned, in terms of EPC services revenue, please keep in mind that we still have around USD30 million to unrealized contract value for the kill cells and also as mentioned by the Richard, because of the OBBBA, the impact, the NTP project -- from our bank becoming the harder commodity in this, the industry.

So our clients, they are trying to secure the project from us as soon as possible. So that can speed up our cash out and the monetization of this project in the US and to speed up our IPP strategy in Canada. Thank you.

All right, thank you both so much. So moving on to our next question, how do you view the integration and synergies following the acquisition of solar flow through funds? Additionally, could you explain the significant impairment loss recorded in relation to the solar flow through fund acquisition?

And that's a very good question. A lot of people are asking me, why I paid so much for Solar Flow-Through Funds. I started this company as a developer, we have to sell, you have to grind every day, make development cost development profit. I know the margins are very good. That's how we grew this company from nothing, a $1 million a year all the way till $58 million a year in let's say 12 years, right?

But If we, if we're happy with it, we wouldn't be going to public, so we're going to public because our shareholders are saying that, where's the recurring revenue, right? So that's the foundation we made a deal with the Solar Flow-Through Funds and the same the closing of last year -- over the last year, we are getting very hands-on enhancement and so on and so forth, right?

So for me that this is a strategic and a profitable from a long-term perspective, it produces $10 million. We don't burn $10 million after paying everything, it's become a foundation for this company to survive on, right, let alone the other, the battery storage, the CIM portfolio, right? You can see not only we have a base to survive, no matter what happens in this industry, but also give us a foundation to grow, right?

So now, if you look at this one, well, if that's such a valuable thing, why, your filings are seeing a different picture. I'm a master of business demonstration. I think I understand the management content, accounting, but I certainly, not understanding everything in the, auditing world, and they have a lot of consideration. They do a lot of work.

I really appreciate everyone on the team can put this through, in such a complex item. So having said complex, I think the significant accounting treatment are coming from three areas. The first of all, giving the industry's volatility, everyone is in a turmoil here and our auditors and the management team discussed that decided to take a, I would say, a very conservative approach, including using a higher discount rate.

When you have a long asset, when you're changing the discount rate, I think mathematically we know what it will result, okay. The second reason is that the future projection is based on the past history as we see, I see that is before the acquisition that we have a contract out of operation maintenance, right?

And since the acquisition, we are taking it in-house, we continue to work through our original team there, bettering the financing conditions, right? So the production is improving. However, the historical production was just meeting the coverage ratios, meeting the agreements, but not not necessarily driving for bonus payment, right? So when you're using historical data looking at the future, not taking into consideration the operation maintenance approach going forward, right, it certainly would deliver a less valuable picture, right, so that's the second reason.

The third reason I was also comply with that should I say is the energy curve. We had an energy curve from our advisors when acquisition about more than 12 months ago, giving us the valuation of $41 million. And this time, the energy curve was different. When you're pushing for difference, the major difference is the post-FY contract revenue, right? Could it be $0.18, could it be $0.23, or could it be $0.06, could be $0.08 and the decision was regardless of the McKenzie's forecast, regardless of other industry forecasts, regardless of the data center, things on so forth.

And a data curve was taken with very low post-contra revenue, right? So you can see this layers and the layers and the layers of this conservatism got us here. I'm not unhappy because we do value assets on an annual basis, right? And the fact is, we have very good Contract we have a very good operation. We shall see a correction I would say by next year this time.

So that's another long answer to your second question.

That's great. Thank you so much. I think the next question here is our last question. So, can you please provide any updates on the company's plans for data center expansion and its crypto treasury strategy?

Okay. So this is, more of a, I would say, action and progress, right? We announced our interest in data center, beginning of the year, and we have been in discussion with a lot of data center developers, including tenants.

So I think at this moment, we do not have an actual contract working with a data center, but I will say we have reiterated our approach and to a point now we're comfortable moving forward. At the very beginning, we said, we're going to build a large micro grid, in Arizona, for example, providing data centers so on and so forth. And now we're realizing that's probably is not going to happen in five or seven years' time frame.

Then we thought about this one, what if we actually, buy a data center, probably already built, so on and so forth, right, and run it and realizing that we may not be the ones that actually running those media racks and so on and so forth, right.

So now what we landed is become the power partner to the data centers. In other words, we stay outside of the shell, providing power from the grid because we know how to send the power to the grid. We also know how to get the power from the grid, right?

In addition to that, because the reliability requirement, we will build for reliable purposes behind the meter, generation wherever possible, we have done combined heat and power gas turbines. I understand this will take five years now, so probably was not as immediate as possible, but solar is certainly possible immediately in, I would say, 6 to 12 months, but solar is not significant if you don't have land to put the solar panels.

So we put bat. Storage, giving, for example, in Ontario, they have this ultra-low rate in the night and let's say the $0.02 in the day could shot up to the top teams and so on and so forth and there's a certain way to not only RB charge but also provide a backup power, right, certain areas because I think about 50% of the power is used for conditioning of the shell and that can be solved by geothermal and other technologies, energy efficiency.

So those are the ones that we are moving forward on the data center part and we start getting tractions even so much so now we are in discussion about a distributed the data center or distribute AI versus centralized AI, right?

So for the interest of speedy delivery of an actionable data center, instead of having hundreds of megawatts a site, we might have to do more of this distributed 1,020 megawatts each in a time -- in a shorter time frame. So that's where we are in data centers. The crypto side actually moving more significantly, as you can see, the agreements we entered with the Intellistake Technologies, ITK.

What we are doing now there is really avoid making PowerBank a crypto treasury company, because we do have real business, we do have assets, we do have revenue and we love to be a power producer, right? But we do see the future of the digital assets, right? And at the end of the day, all the coins are a sum of kilowatt-hour. We produce kilowatt hours, right? So we are, here to bridge the traditional power business with the future financial instruments, right?

So number one is we announced that the Gaddes project, now it's commissioning is running. Sam, I'm looking forward to telling me how much money do I have at the end of the day so I can buy a few coins. Okay. So that's going very well. That's the first thing you need the custodian, you need this and that entire the team will provide that.

The second thing is that everyone, talking about, the AI application, right? As this company is vertically integrated, we have development, we have EPC, we have asset management, we also have operation maintenance.

So far as a traditional power company, we do it manually. We do it with humanoids, right? We have analysts, including you, Megan, that you have to read a lot of policies and so on and so forth, eventually identify a shortlist of sites so that our field people can go to secure them for future construction.

Those things can actually be more efficiently done by a PowerBank specific AI agents, right? And I can tell you we are in the midst of one of them. I think you probably saw the announcement that we are in beta testing. Right, so that's the second thing along the crypto digital venture, right?

Obviously, lastly, we haven't do it yet. We'll continue to watch the industry, listen to experts from Wall Street, Bay Street, and so on and so forth. It is about the real world assets, right, about the tokenization of either physical or financial assets, and I shall keep everyone posted, going forward. So that's the answer for the master question.

Great, thank you so much. Thank you all for your questions, and the team is available for further questions over email or phone, so please feel free to reach out to us at any time.

Okay I really appreciate everyone showed up. And you know my email, my phone, I certainly looking forward to speaking with every one of you and I tell you, the future is bright. Thank you.