Recently I had an interview and one of the panel asked about my Linkedin profile – more specifically, why I was not posting to boost my personal brand profile. Obviously, this was not in the evaluation of Tom Pokorsky, Fluence new CEO

https://www.linkedin.com/in/thomas-pokorsky-93a0b74/

https://www.linkedin.com/in/thomas-pokorsky-0515191a8/

Maybe he is more focused on his job. Pokorsky brings 35 years’ experience in water with 15 years in a CEO seat:

• Founded and grew Nexom in the wastewater sector, delivering 25% annual revenue growth and 50% EBITDA growth, leading to its sale to KKR. 
• Water Pollution Control Corporation (later “Sanitaire”), doubled revenue and profits, negotiated its sale to ITT Industries, and then grew its Advanced Water Treatment group (now part of Xylem) from $60M to $350M in four years, including $100M in organic growth and five successful acquisitions on three continents.

Pokorsky is on a 4 year contract with a US$465,000 base salary plus a discretionary bonus of up to US$75,000. He was also granted 31,250,000 sign-on stock options (~5% of outstanding issued shares).

Richard Irving who has been in the CEO chair for the last 2 years will be heading to the board as chairman.

As the business progresses toward profitability, I’m looking to see if Pokorsky experience and contacts can progress this. 

This is a company that is building, selling, and installing real and proven water solutions that make a difference. Maybe they need to talk about their blockchain linked monitoring (they don’t have this) to make the market take an interest, or am I missing something?

Revenue is up, for smart product and customer engineered solutions while recurring revenue has seen a slide. Overall though revenue is up 18% over FY20, to exceed $100M. Expenses are also lower by approximately 8% which has resulted in cashflow positive for Q4/21 although still negative for FY21.

They appear to be beating competitors in sales in the self-respiring membrane aerated biofilm reactors (MABR) market which provide an energy-efficient alternative that facilitates a very high-quality effluent.

Earnings guidance for FY22 is for smart product solutions revenues of $45 million or up 22% growth FY21 which is supported by a work backlog.

This is the risk - the company is carrying a reasonable debt load at US32.0M of debt, around 5% increase although it has US40M in cash offsetting this. Some of the loans are bank guarantees against inflight project which are expected to be released in FY22.

Will be watching to see the debt reduced with the bank guarantees released and to see if they can continue to grow the sales book. If they can tip further toward being cash-flow positive and do this and while maintaining a healthy balance sheet the share price should improve (without a linked blockchain monitoring announcement). 

Continuing to hold a small parcel on Strawman.

Water is becoming more and more important the world over, climate change is going to increase this as weather patterns change. Moving wastewater to non-potable water suitable for irrigation for example. The technology which has now been commercialised for 5 years can be dropped on site as an “operational in weeks” unit. Once running the system has a low energy demand – less by about half compared to competitors. 

The systems are being pitched as decentralised, which eliminates the requirement for transporting water, or even building the pipelines in the first instance. 

This is a similar theme to changes in the energy sector. Long strings of power lines are expensive to build and maintain, so decentralised microgrids are being adopted. Microgrids are being built in places such as islands or remote communities which was my thought process for Fluence systems.

As ESG changes are pushed in dogooderism or via legislation, water treatment system may be end up in urban environments that demand wastewater recycling. 

In addition to the wastewater systems, the company also build desalination plants which are also drop onsite installations - again, acknowledging there is more to it that simply delivery. 

Have been watching this one from the sidelines, however, they are starting to get runs on the board both in sales and deployments. That and they are no longer a loss proposition.