Clear Blue Technologies International Inc (CVE:CBLU) CEO on $38 Billion Off-Grid Power Industry
Clear Blue Technologies International Inc (CVE:CBLU) manages off-grid power systems around the world. CEO Miriam Tuerk reveals that power systems are about to go through a revolution as cities and countries switch to reliable, wireless, off-grid systems. The company’s revenue model is derived from the initial sale and installation of its systems but it also has strong growing and recurring revenue in the form of managing those systems once installed. Tuerk believes off-grid power infrastructure represents a $38 billion marketplace that is only beginning to emerge. Clear Blue experienced 200 percent growth in Q2, which Tuerk believes is sustainable going forward.
James West: My guest this segment is Miriam Tuerk. She’s the CEO of Clear Blue Technologies International, trading on the TSX Venture under the symbol CBLU. Miriam, welcome.
Miriam Tuerk: thanks so much for having me, James.
James West: Miriam, can we start with an overview, please? What is it that Clear Blue Technologies International does?
Miriam Tuerk: So Clear Blue Technology plays in the smart, off-grid space. We make the brains of an off-grid system, and the reason why that is a huge potential is because the power grid, which today powers everything that matters in the world, is about to go through the same revolution that the telecom industry went through.
So 30 years ago, all telecom was connected to a cable; now it’s completely wireless, and that caused a revolution to happen in the world. The power infrastructure is about to go through that exact same change. It’s going to go to a situation where most of our devices are Internet Of Things: our oil and gas pipeline sensors, our cell phone towers, our street lights, our Wi-Fi hot spots, are all going to be powered from wireless off-grid power. And in order to do that, you’ve got to have the brains of the system which manages and operates that off-grid system. And that’s what Clear Blue does.
James West: Interesting. So, what is the power source in these devices?
Miriam Tuerk: So every one of those off-grid systems is a mini electricity grid. It generates energy from solar or hybrid systems; it stores the energy in the batteries, some form of energy storage, whether it be lithium, which of course is a very exciting opportunity for the marketplace and for Clear Blue, or led acid or whatever, and then it also controls and powers the load.
In the middle of that is an electronics device which is the brains of the system. It manages and operates and makes it highly reliable and easy to operate and maintain, and we manage all of our systems that are in 34 countries around the world, remotely from our control centre here in Toronto. So we are in the business of managing distributed off-grid power around the world.
James West: Wow, fascinating. How does the revenue model work?
Miriam Tuerk: So unlike most, if not all, companies in that industry, we have a recurring revenue model where we manage and operate the systems on an ongoing basis. So a part of our revenue is the one-time, up-front sale, and then a part of our revenue is the ongoing, and ongoing recurring revenue has been proven to deliver significant value back to shareholders, 10 to 18 times EBITDA on a strong, growing recurring revenue platform, and that’s what Clear Blue is building.
James West: Interesting. So is the company profitable?
Miriam Tuerk: No, and we don’t want to be, at this point. This is a $38 billion marketplace that is just taking off; and as with any high-growth company that has the potential to be a billion-dollar revenue company, which is what we think Clear Blue will eventually become, needs to invest upfront. So we are investing in sales, business development, verticals, and R&D, and are not planning on being profitable for a few years.
James West: Sure. So what does your growth trajectory look like?
Miriam Tuerk: So our last quarter, which we published trailing four quarters, and we tried a telemarketplace to look at trailing four quarters because it’s still early in revenue slumping, lumpy, we were about almost 200 percent growth. And our Q3 is coming out next week, sot the 200 percent growth we had in Q2 is very indicative of what we see the potential of in the marketplace. So, doubling our revenue.
James West: Wow. So, 200 percent growth, is that something that’s sustainable into multiple years going forward?
Miriam Tuerk: Yes. We believe it is; we believe it’s an indicator of what’s going to happen going forward, and everyone on the team is working very hard to make sure that that actually happens.
James West: Interesting. So in the off-grid power world, is it more applicable to countries that don’t have a fully developed power grid, or is it applicable in both developed power grids and undeveloped power grids?
Miriam Tuerk: So it’s mostly applicable where you’re doing a new installation, and the reason is because our marketplace does not require five-year ROI investment; it’s the one-time capital construction cost of an off-grid system is actually cheaper than the cost of the electricity grid. The cost of getting power to a location, that distribution, is 60 percent your cost of your electricity bill from Ontario Hydro or any other power utility. And so you get rid of that cost and you replace it with an off-grid system.
James West: Interesting.
Miriam Tuerk: So a lot of people think that’s emerging market, but it’s also infill. So when you start to look at rolling out Fibe G in a large urban infrastructure in North America, when you’re starting to put Wi-Fi hotspots or security cameras, when you’re doing new oil and gas pipeline, God hope we get those going quickly – when you get those infrastructure in place, you’re going to want to have lots of environmental sensor power control, you’re going to do it all off-grid.
So there’s lots of, more than 50 percent of our business is in the North American marketplace, and we anticipate doing half our business in Western markets and half our business in emerging markets; we’re in both places.
James West: Great. Diversified.
Miriam Tuerk: That’s right.
James West: Okay. So is it conceivable that the infrastructure for which these systems are applicable – street lights, oil and gas monitoring systems, etcetera – is it conceivable that all of the legacy systems that are currently wired, are going to ultimately be replaced by these types of systems?
Miriam Tuerk: Absolutely, and this is where you start to hear all of the discussion about ‘we need to upgrade our infrastructure’, and when you upgrade your infrastructure and you replace streetlight poles or you replace new things, inevitably you have to replace the cabling as well. And as soon as you have to replace that cable distribution, it becomes a slam-dunk business case that it’s cheaper.
So we’ve done a number of projects where it’s a new infrastructure built to replace an old infrastructure, and there it’s much cheaper to go off-grid.
James West: Oh, okay, so that sort of brings me to my next question: is this type of a system ultimately cheaper to install and operate over life of system?
Miriam Tuerk: Yes. So we’ve had one recent project where a large city actually said that putting in a grid-connected new streetlight on an urban street would have cost them probably $35,000 a pole, and going off-grid was a few thousand dollars. So we’re not talking about almost cheaper; we’re talking order of magnitude cheaper to go with an off-grid system.
It’s the reason why today, when you get a new apartment or condo or house, you don’t even bother getting a telephone line for your house, you just go wireless. And over the next five years, you’re going to see the same thing: we are going to be in a world very quickly where it’s inconceivable to have power from pole to pole to pole down a street, down a highway, whether it’s a new neighbourhood, an industrial business park, or Bloor Street where we already have systems on Bloor Street in Toronto.
We actually had a press release a few weeks ago – we’ve got systems in more than 12 municipalities across Ontario and throughout North America, I think we have projects in 25 different states in the US in addition to those 34 countries around the world. So it’s happening everywhere.
James West: So it sounds to me like we’re moving towards a future with no electrical power grid that is centralized and run by government; sounds like we might be moving towards individual off-grid independent power?
Miriam Tuerk: Yeah, you think about, you think about how disruptive that is to the model where, you know, again I go back to the telecom industry; AT&T owned the whole network, and then when cellular happened, now there’s Verizon, and there’s Virgin Wireless, and so there’s a really great aspect of this, that the power utilities have monopolies, and this off-grid power capability allows you to go in and provide an alternative source and create competition and disruption.
And any technology that makes it disruptive – so when the City of Hamilton can start to put streetlights anywhere they want at a much cheaper cost and not deal with the power exorbitant rates that they’re being given, they move to those models for many different business reasons, one of which is to have competitive alternatives. And that’s what Clear Blue delivers to these customers, because we make it possible to not just do your garden solar lights, but to put them in main streets, in mission critical areas, where it really matters. And it’s very disruptive and a high-growth opportunity for the company.
James West: Wow. That is a fascinating business story – it’s one of the best I’ve heard in months. We’re going to follow with interest. Thank you very much for joining us today.
Miriam Tuerk: Thanks so much for your time, James. Really appreciate it.
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