Yahoo Finance Midwest Energy Emissions Corp (MEEC) Q4 2023 Earnings Call Transcript Highlights: A Mixed Bag ...
Revenue: $18 million for 2023, down from $21 million in 2022.
Cash on Hand: Over $20 million at the end of 2023, higher throughout the year compared to December 31, 2022.
Net Cash Improvement: Significant improvement from operating activities compared to a negative $368,000 in 2022.
Debt Restructuring: New agreement reducing debt and saving approximately $10 million for the company.
Patent Litigation Settlement: Settlement reached, terms confidential, but assures a strong foundation for growth.
Jury Verdict: Awarded $57 million for willful and contributory infringement of patents.
Release Date: April 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Midwest Energy Emissions Corp (MEEC) secured a new three-year supply business from an existing licensee in the Mercury business, estimated at about $3 million annually.
MEEC's stock listing on the TSX Venture Exchange in Canada has increased visibility and interest across the Canadian market, allowing a wider reach to new investors.
The company successfully negotiated a settlement prior to trial, establishing a baseline value for their patent technology and strengthening the foundation for new growth initiatives.
MEEC strengthened its financial operations with the appointment of a new CFO, financial consulting firm, and auditing firm, revamping financial management in preparation for future growth.
The company reported consistently strong revenue in the mercury emissions business through 2023, with cash on hand significantly higher at the end of the year, primarily due to a settlement reached in patent litigation.
Negative Points
MEEC experienced a loss in revenue in 2023 compared to the prior year, primarily due to very low natural gas prices and the closure of a major plant of one of their major customers.
The company's 10-K filing was delayed due to a late non-cash item that required additional review by auditors.
Despite the strong cash position, the company's core business revenue decreased from approximately $21 million in 2022 to $18 million in 2023.
MEEC is still in the process of clearing its debt, with the aim to remove all debt by the end of June.
The company is awaiting a final ruling from a bench trial scheduled for late May, which could impact the initial $57 million jury verdict for patent infringement.
Q & A Highlights
Q: What are the management's plans for the use of proceeds from the recent legal victory? A: Richard MacPherson, President and CEO, stated that the company's first priority is to remove all debt, which they expect to do by the end of June. They will also invest in assets necessary to enter the water treatment business and consider a stock buyback. Dividends are a possibility but will depend on the timing of the court award receipt.
Q: What are the requirements for Midwest Energy Emissions Corp to move to a larger exchange like Nasdaq or NYSE? A: The CEO mentioned that the company needs to reach and maintain a $2 share price to meet most of the requirements for listing on a larger exchange. They plan to make this move as soon as the share price stabilizes at that level.
Q: Are discussions underway with potential clients for licensing agreements post-trial? A: Yes, discussions with utilities are in progress, and some have reached out to ME2C for business solutions. These discussions involve site testing and can take a few weeks to a month or more. The company is also reaching out to other parties and will manage the process to resolve outstanding issues with power plants using their technology.
Q: Can you expand on ME2C's role and technology in PFAS remediation? A: Richard MacPherson explained that ME2C has expertise in carbon-based technologies, which they successfully applied in air business. They have added key individuals with decades of experience in water-based technologies. With the creation of WE2C, the company plans to play a major role in PFAS remediation, offering economical and environmentally sound solutions. They are building out labs and will make further announcements about strategic planning and partnerships.
Q: What is the significance of the additional hearing in May for ME2C? A: The hearing in May will address the defendant's equitable defense of an implied license. The outcome will contribute to the final ruling, which could affect the initial award from the trial. The company is confident in their position and is moving forward with business plans accordingly.
Q: What is the company's financial position following the legal victory and what are the plans for growth? A: Richard MacPherson highlighted that the company is well-positioned for growth, with plans to clear all debt and invest in new initiatives, particularly in water treatment. They are also considering a stock buyback and dividends, depending on the final court award. The company aims to increase shareholder value and move to a larger stock exchange.
This article first appeared on GuruFocus.
