Unidentified Company Representative: $700 million.
A €“Gregory Peloquin: And like you mentioned already, it’s going to go from 0 to 100 here in the next months.
A €“Ed Richardson: We think the electric locomotive business will be much larger than the land in a very short period of time.
Q €“Porter Taylor: Well, it’s actually it’s not just largely than Lam, but from going larger than Lam. If I do my math right, if you assume that it’s roughly 50-50, 60-40 split, so you’re talking about something in the to 10,000 to 15,000 progress rail diesel out there. They’re the incumbent. You would think they’re likely to have a chance to what we what we saw with Union Pacific and some of their work, they went €“ they were they went back to Abate peers. So if you’re looking at that and you say $1 million to $3 million on something that’s $10 million to $15 million, we’re talking about if you’re going to fill it in 4 or 5, let’s, say, 6 years, you’re talking about thousands of engines a year potentially. I mean I was back in my own head fund days, I’d be talking to my private capital guys about showing up in your town and talking about taking this company private because.
I mean, this, to me, you’ve got a great business, makes you a ton of money it would be nice to get your cash flow positive in the U.S., so you can do some things whether it’s investing capacity or, quite honestly, buy your stock like a fool because of the way it’s priced. But as I said, I do hope that we’re able to get some people out to help you the story because this is the best story I hear.
A €“Gregory Peloquin: Thank you.
A €“Ed Richardson: Thank you very much. We think it is as well, and we’re really excited about the future. That’s for sure.
Q €“Porter Taylor: Yes. I mean this is €“ this rail business alone is €“ has the potential to be €“ take you guys on revenues to north of $1 billion, I would think.
A €“Ed Richardson: We hope you’re right. We think we’ll get to $500 million in the next 4 or 5 years.
Q €“Porter Taylor: Yes. And then it goes from there yes. Keep up the good work, keep executing on the €“ all these things. It’s fascinating that you guys constantly find new areas and new niches to expand in while you have so much on the table already.
Operator: Our next question comes from Daniel Berner with Bernard Family Fund.
Unidentified Analyst: Very interesting hearing from everyone in the Q&A thus far. Can you maybe help those of us that are new to the story, understand what was it from a business standpoint that occurred in 2021 timeframe that enabled your inflection to profitability? I think maybe part of the frustration of people watching the stock price is folks are concerned whether this is a permanent inflection or a temporary inflection. That’s strictly a function of the cyclicality of the the semi cap equipment market. So maybe if we could roll back 4 quarters and talk about what happened there? And maybe if you could, big picture, talk about whether that’s, in your view, a sustainable inflection and how that’s sustainable.
Ed Richardson: Happy to do that. First of all, as Greg mentioned, at $700 million at one time, we were and 1,000 employees and losing money hand over fist. And so we ended up selling the security systems business to Honeywell, it’s $75 million, and we sold the RFP business to Arrow for $238 million. And roll it back to $140 million company and then started to invest in trying to figure out what we wanted to be when we grow up. And it’s really listening to our customers, what we call engineered solutions. And every time a customer comes to us and said, we need this module, we need this piece of equipment, we try to design it for them. We have, as Wendy mentioned, nearly 100 engineers and all with a tremendous amount of experience in power management.
It isn’t rocket science. It’s our customers telling us what they need, and that’s where the ultracapacitor business has come from. When turbine operators telling us they want to replace lead acid batteries and — the now with cell towers in the same area. Actually Progress Rail saw the patents that we have in the ultracapacitors that go into wind turbines, and they were building these electrical locomotives with lead acid batteries and wanted to know if we could provide something to replace the lead acid batteries. Our engineers looked at it and said, well, it’s a lower current, but you can use lithium iron phosphate batteries to replace it, and we designed a unit for them. and we’ve been selling them those products for battery compartment for about 3 years.
And ultimately, now they’re bringing the production of those electric locomotives in the United States, and they asked us if we could build the entire battery compartment. And those battery compartments are over $1 million a piece. And it’s 1 to 10 in each electric locomotive, every 1 of these opportunities came out of customer-driven demand. And as we get into selling somebody like Caterpillar, they keep coming at us with more and more products that they want us to design and build for them. And that just hundreds of customers. We have 20,000 customers all over the world, and customers are coming to us all the time about design this for us, design that for us, and that’s what’s made the success. So we went from 2011 at $140 million, adding these various products up to $160 million where we broke even.
At $176 million, we made a profit. And then the next year, we were up at, what, about $224 million. And you can see this year, we’ll be over $260 million and the profits that the customers have taught us these products and the profits that are coming from it. So that’s a long drawn-out speech, but that’s it. It’s not rocket science, it’s customers telling us what they want us to build and we have the engineering team and the experience to do it.
