Crown ElectroKinetics Corp. (NASDAQ:CRKN) Q3 2023 Earnings Call Transcript November 14, 2023
Operator: Good morning, everyone, and welcome to the Crown ElectroKinetics Corporation Third Quarter 2023 Conference Call. At this time, participants are in a listen-only mode. A question-and-answer will not be following the management’s remarks. This conference call is being recorded. A replay of today’s call will be available on the Investor Relations section of the Crown’s website. I will now hand the call over to Jason Assad, Director of Corporate Communications for introductions, and the reading of the Safe Harbor statement. Please go ahead.
Jason Assad: Thank you, operator. Good afternoon, everyone, and welcome to Crown’s third quarter 2023 call. With us today on the call are Doug Croxall, Crown’s Chief Executive Officer and Chairman; and Joel Krutz, Chief Financial Officer, in addition to Mike Sullivan, David Martinez, and Jeremy Hubbard from our Fiber Optics Division. Before we begin, I’d like to remind you that today’s call contains certain forward-looking statements from our management made within the meaning of the Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements.
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These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company’s quarterly report on Form 10-Q for the third quarter ended 2023 filed with the SEC. Copies of these documents are available on the SEC’s website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now, at this time, it is my pleasure to introduce Doug Croxall, CEO and Chairman of Crown. Doug?
Doug Croxall: Thanks, Jason. And welcome, everybody, to our third quarter earnings call. We’re going to do things a little bit different than our traditional earnings call, which typically is just myself and Joel Krutz speaking. We had an Investor Call a little — about a month or two months ago, I guess, and you got to hear from Dave Martinez and Mike Sullivan. So today, I’m going to give a general corporate update, putting on a couple of highlights, and then I’m going to hand the call over to Dave Martinez, who will go through a customer update, Mike Sullivan, who will go over a construction update, and newest to our team is Jeremy Hubbard, who runs recruiting for us, and he will go through a recruiting and personnel update.
So as you saw from our recent announcement, we’ve added our third MSA, our third customer, and we started work on customer number two. So we have two active projects now in the field. Both of these are in Arizona in the Phoenix area. One is micro-trenching and one is traditional directional drilling. As we had mentioned before, we’re going to continue to focus on the Arizona market. I spent time with our customers last week, and there’s significant work for us to do. We will continue to add customers, and we’ll continue to add more and more projects with the customers that we’ve already announced. We do think that there will be some opportunities to move out of the State of Arizona, and when those arise, we will look at those as long as they’re within the general vicinity of Arizona or the Southwest, West Coast area.
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Q&A Session
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We also expect, and we should be adding another, hopefully, two to three MSAs before the end of the calendar year. I know that we get a lot of requests as to who the customer actually is, and while we are precluded from putting our customers’ name in press release, I do want to give some insight as to whose fiber optic networks we’re building and who the prime contractors are that we’re working with. So the work that we’re doing in Arizona currently is for fiber optic networks that are going to be owned by Google Fiber, Verizon, and GIGAFIBER. Some of the prime contractors that we’re working with are Chilson, MovTech, Mears, and Blue Edge. So while we can’t go into specifics, at least not today, as to what each of those customers are going to represent, those are the type of customers that we’re working with.
Some of the best construction companies in the country and obviously some of the best fiber optic networks in the country as well. So I want to move quickly onto the EK film side because the rest of the team’s going to bring you up to speed on the rest of the fiber optic side. On the film side, we actually just got word yesterday that some of our mastering that was being done with our vendor in Europe has come back positive. So we’re looking to go to the next step in our mastering phase. We expect that we should have 12-inch masters done sometime before the end of the calendar year and be able to cycle that into our production with product coming hopefully towards the end of Q1 next year or early Q2. We will continue to provide updates on the film business and the film mastering as those occur.
One of the things that we also want to do this year which we’ve not done in the past is that after today’s earnings call, you don’t typically hear from our company until our 10-K earnings call which isn’t until typically the end of March. And so that’s obviously four months, four and a half months. So what we’re going to do sometime in mid-January is another Investor Call like the one that we did in mid-September, where you’re going to get to hear from the team, we’re going to give you an update on customer’s revenue, EBITDA and all the things that you’re going to hear about today. So with that said, I’d like to turn the call over to Dave Martinez who’s going to walk through some of our customers.
David Martinez : Hey, Doug. Hello, good morning, everyone. It’s my pleasure to be here again today. I want to share with you a few of our new opportunities that we have been able to secure with three of our key customers since our last update. The first customer is a Houston-based company focused on developing fiber network infrastructure solutions and is a premier provider of engineering, design, construction services to the pipeline and utility industries. It is a subsidiary of a much larger parent company consisting of over 200 companies that service North America. With this customer, we have been able to secure three HDD, Horizontal Directional Drill projects in the Phoenix, Arizona market, but more products are expected to be awarded as the permits and work is available.
In this market, it seems to be an almost weekly basis. Just this last week, we met with this customer to discuss a partnership for a project in Northern Arizona that is over 1.2 million feet of directional drilling and another 600 feet of aerial. Although this is still in the early stages, we are working diligently with the customer to secure this award. The second customer has been involved in some of the largest and most complex infrastructure construction projects across the country. With offices across North America, 80 plus years of experience and nearly 32,000 employees, this customer has become a leader in the infrastructure construction. We recently secured an MSA Master Service Agreement with this customer. During a recent meeting we had with them in their Phoenix office, they shared with us some of their projects, timelines, and their need for partners with micro-trench capabilities.
They were very excited to hear that we have those micro-trenchers and we can place them on their projects immediately. We will be following up with this team this week to further discuss the logistics and the timing of the projects and awards. They have also shared with us that this project is expected to run seven to ten years. The third customer that I would like to share with you today is an established networking communications infrastructure company providing network infrastructure design engineering development solutions to the leading communication firms throughout the United States. This past week, we have signed an MSA with this customer and through this customer we have secured a project that includes work from micro-trenching, fiber replacement, and fiber splicing for a global internet service provider that’s providing the services to a local municipality through this customer.
