Clear Blue Technologies International’s (TSXV: CBLU) CEO Miriam Tuerk talks about their Smart-Off Grid Technology

The Wall Street Analyzer

Clear Blue Technologies International
(TSXV: CBLU)
CEO: Miriam Tuerk

INTERVIEW TRANSCRIPTS:

WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Miriam Tuerk, CEO and Co-Founder of Clear Blue Technologies. The company trades on a TSX Venture, ticker symbol CBLU. Thanks for joining us today, Miriam.

Miriam Tuerk: Very pleased to spend some time with you.

WSA: Sure. Please start off by providing us with an overview of the company for some of our listeners here today that are new to your story.

Miriam Tuerk: Well, let me start first of all with what our products are all about. We have a patented Smart-Off Grid technology, and we use that technology to remotely manage, monitor, and control the power of IoT devices anywhere in the world 24/7. So, say for example, you have a telecom tower or a light pole powered by a solar panel or a wind turbine and a battery. Our smart controller communicates wirelessly in real-time to send our cloud-based system critical data, and through that we have a management technology platform as well as a service team that allows us to manage, monitor and control that power anywhere in the world today.

One of the best features in our products is that we can predict how the system is going to perform through the weather. For instance, in the City of Hamilton, Ontario, over the next week we might have very bad weather, and we need to manage through a low-power period. Similarly, if you’re dealing with a very hot place in Africa, you could have a period of time where the weather is very, very hot and you need to manage power through it. So our unique technology makes the systems resilient, reliable and eliminates the need for locally trained resources, in order to allow us to provide mission critical uptime power for infrastructure all over the world.

We generate revenue in two ways. Firstly, we provide energy-as-a-service. We manage, monitor and operate the systems for our customers on an ongoing recurring revenue basis around the world. And because they want guaranteed performance, they ask us to provide them with the best technology in-system. So, in addition to our controller and power electronics technology, we provide an entire power solution with the best batteries, the best solar panels and systems, and that’s the second form of our revenue. We’re geographically diverse. We have customers in 35 countries around the world in more than 20 states in the US and eight Canadian provinces. And globally our systems have been installed to power controlled lighting, security cameras, cell phone towers, including sites inEurope, the Middle East, Latin America, and sub-Saharan Africa.

WSA: So bring us of the speed there on some of your most recent news and activities. You just had a project there in North Dakota and one in Toronto?

Miriam Tuerk: Yeah, so in January we announced our deployment of our solution across North Dakota with the Department of Transportation there. Many people would be familiar with the Humbolt tragedy that happened in Canada last year at a rural intersection, and so the safety and reliability of lighting at rural intersections to eliminate bad car accidents is the key motivation for this. And the Department of Transport in North Dakota selected us to provide 50 systems at 50 rural intersections across the state.

We also just announced 40 street lights along Bloor Street West in Toronto. Bloor Street West is kind of like the Greenwich Village of Toronto and very nice neighborhood. We’re powering street lights, security cameras and Wi-Fi hotspots in that area. That’s an exciting project for us because cost savings versus going to the grid was quite significant. The City of Toronto said that they thought it would cost $35,000 per pole to connect to the grid, and with us they were saving more than $30,000 per pole with an off-grid solution.

We also announced our new product line for lithium batteries in the last month. And last year, we had a number of huge telecom announcements. We’ve been selected as the smart off-grid power service and solution company for the Telecom Infra Project, founded by Facebook, among others. We announced our partnership with BRCK to provide off-grid power to thousands of hotspots and communication spots in Africa. We also announced a big partnership with Telefónica. They have a program called Internet para Todos, which aims to connect 100 million people to cell networks. Telefónica is one of the top five telecom companies in the world, with €54 billion in annual revenue. And this is going to allow them to expand their network by a material percentage and grow their business.

And then lastly, we were listed on the Frankfurt Stock Exchange in November, and then we had a couple of other smaller announcements.

WSA: So what are some of the main goals and milestones that you’re looking at here over the course of the next six to 12 months?

Miriam Tuerk: So we’ve already achieved a number of key milestones. As of Q3 2018, we had installed more than 3350 systems worldwide. We listed on the Toronto Stock Exchange and the Frankfurt Stock Exchange. And our trailing fourth quarter revenues ended September 30^th of last year with just under $4.5 million, which was almost 300% increase over the revenue of the same period of the previous year. So we are starting to move up the hockey stick in terms of recurring revenue and one-time revenue—we’re doubling our revenue every year right now.

And we’ve also laid in place a number of key partnerships, including our collaboration with the Telecom Infra Project, which was founded by Facebook, Intel, Nokia, SK Telecom and Deutsche Telekom. And that initiative which have got billions of dollars of investments from more than 400 companies around the world is planning on bringing the next billion people online and in order to do that they need power. From a forward-looking perspective, we’re seeking selective opportunities to grow in different geographic marketplaces. We see some exciting things happening in South America as a result of our work we’re doing with Telefónica in Peru and that will still grow.

We see a lot of potential for this technology in Southeast Asia and other emerging markets. We hope to grow our partnership with Vanu out of Rwanda, and then potentially to places like India. And we’re also starting to move and transition our revenue model to more and more increasing recurring revenue and a subscription based service. Already today, every customer we sell to has a recurring revenue service management contract with us where we manage and operate the systems. And our plan is to grow our recurring revenue significantly because that delivers value to the customer and value to our shareholders.

WSA: Sure, what is the current market opportunity regarding the solar panel lighting and what makes you uniquely position there to capitalize and grab market share?

Miriam Tuerk: So, the interesting thing about the power grid today is that it has not changed in over 100 years. It’s pretty much the same as what Tesla and Westinghouse were building over a 100 years ago.

Big central power generation and then a big mass of distribution networks is kind of what the telecom industry looked like 30 years ago. So when you look at the telecom industry, you used to have this monopolistic control of a slow-moving industry. There was one phone per household in North America, and one out of every 10 homes in an emerging market might have had a phone.

AT&T and the RBACs and they had to try to break them up to try to introduce some disruption and get that industry moving forward.

With the movement from grid telecom to wireless telecom all of a sudden, you had huge explosion in the number of wireless devices out there. Now everybody in the emerging markets has wireless telecommunications in many different places. And in the Western markets you have, say, five cell phones in the house. So the market grew significantly.

From a capital markets perspective we went from AT&T, which was a low-valued monopolistic company not moving forward to significant disruption, innovation and competition. And so today you have T-Mobile, Verizon Mobile and Virgin Mobile who are all new entrants into the marketplace that have grabbed big market share.

The power industry is about to go through exactly that same disruption. And the reason is because of solar technology. It’s not because solar is green that is a great benefit and a key value, but it’s because our solar cell is 2 inches in size. And so if you do a big central generation station for water for hydro, for example, you have to build a huge generating station. But if you’re building a solar plant you’re taking millions of little solar cells and you’re putting them in a central solar farm. The problem is $.40 of solar in a farm cost you another $.60 of cabling and distribution so that you’re paying a buck for that solar at the streetlight pole or at the cell phone tower or at the security camera or at your house.

But if you now take that $0.40 of solar and you put it at the streetlight, it costs you $.40 instead of the dollar. And so this fundamental economic shift. And the fact that it’s not a three year or a five year investment, it’s a one-time cost savings, is driving this massive rollout. The City of Toronto at Bloor West Village estimated that it was going to cost them $35,000 per pole to connect that pole to the grid. Even though it was right in downtown Toronto right on the side of the sidewalk power is only 20, 30 feet away — but it’s 20, 30 feet through concrete through rights-of-way, through roadways and through buildings and so very expensive. And instead of spending $35,000 they spent about $5,000 for the solar off-grid power. So that huge and compelling change also introduces competition.

Now, all of a sudden, when the City of Hamilton wants to put in a wind streetlight down the street or a Wi-Fi hotspot somewhere they have more choices than just their local power utility. And so through that we believe over the next five to 10 years the world is going to go wireless power. We’re aiming to become the leading energy-as-a-service company that’s managing and operating those systems for the City of Toronto, the City of Hamilton, Telefónica and any other customer around the world, as that’s where the business opportunity is.

WSA: You were able to increase your revenues last quarter by over 280%. What are some of the key drivers there that you believe investors should be aware of about the company?

Miriam Tuerk: The key driver is that in the Western markets, like North America, and in mission critical infrastructure, we’ve been able to prove to our customers how systems work and that they are operating well.

So if you’re in Long Island, New York, and you’ve got these smart off-grid solar streetlights on a new roadway, we’re able to show that we can make it through a Nor’Easter. We can make it through a rainstorm, if there’s shading, or a new tree is growing, and here is how the systems perform.

And because of that, we have built significant confidence in our products. And through that confidence we’re starting to get everybody. So last fall we were able to announce that some traction in the Ontario market, we now have more than 18 municipalities in Southern Ontario. Everyone is starting to use it, because they have experienced our energy-as-a-service, and the proof of the experience of these systems work.

And then when you look at things like the Telecom Infra Project. Two years ago, we did not have any telecommunications projects and systems. We did our first project with Vanu from the Bose family in the middle of 2017 about a year and a half ago, and within 18 months we went from 0% revenue, to 10% of total revenue in Q3 2018.

And so in emerging markets and Western markets, and in both verticals (our lighting street infrastructure and our telecom cell phone tower business), we are growing significantly. And as we know, if we get into other verticals and deploy globally, the growth path is quite strong for us.

WSA: Sure, and perhaps you can walk us through your background and experience Miriam and talk about who the key management team there is?

Miriam Tuerk: So the company was founded by myself, John Tuerk, who is our Chief Power Officer and Mark Windrim who is our Chief Technology Officer. We started the company in my basement in 2011 and we all came from technical backgrounds in energy and in IT. We wanted to use our expertise to create something that could facilitate clean power, that with both low-cost and reliable enough to be installed for critical systems. We wanted to build a company that wasn’t dependent upon some of these, but was really going to be compelling from a business value proposition and solved the bigger problem.

There is a huge opportunity for growth in this market. As our world becomes increasingly digitalized, we see growth in the Internet of Things, but the energy demand for these high-tech devices is actually decreasing. Through the growth of all of these smart devices we’re going to have things such as safer railway infrastructures that have more braking systems to prevent train disrailment, and we have dark rural intersections which will reduce the risk of car accidents. All of that demand creates a significant opportunity to deliver something mission critical that’s a key part of our safety and our infrastructure, and that can be cost beneficial with off-grid renewable energy.

And because of this, we think the smart off-grid power in both the developed and the emerging world is going to explode, and it’s going to become the dominant power solution. I think that five to 10 years from now, in the same way that I would never think of putting a phone on my desk, I just use cellular phones, I’m going to not even think about wiring every streetlight or every telecom tower to the grid.

It’s going to take over the emerging market very quickly. And as the developed world replaces their infrastructure and rolls out new IoT projects, like 5G which needs new telecom systems installed every few hundred feet.

So it’s a massive infrastructure rollout, and powering that through solar off-grid and eliminating the cable destruction is really where the market is going to go.

WSA: Right, so once again joining us today is Miriam Tuerk, the CEO and Founder for Clear Blue Technologies. The company trades on the TSX venture, ticker symbol CBLU. And before we conclude here Miriam to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?

Miriam Tuerk: So with our growth strategy of geographic expansion, greater penetration in the global industry verticals and continued expansion into new industry and new vertical we believe that 2019 is going to be a breakout year for Clear Blue.

Key pilot projects with new, very large customers that we announced last year like BRCK and Telefónica are a major focus for our team, and they lay the foundation for the future growth that we plan to capitalize on. We are confident that we will deliver long-term shareholder value as the revenues and margins grow as we grow our recurring revenue base.

Clear Blue really at the start line. The market opportunity is huge and the telecom marketplace just shows you what happens when you have that type of transition. The time is now. Things are moving very quickly. We’re the first company in the sector, so we are the first market, we have a market leadership position.

And with Facebook selecting us as the smart off-grid partner in the marketplace, they told us that they had talked to every major power company. I don’t want to list them, but they had gone to many of the top ones you’d think of when you talk about power technology, and no one had what we had built from a capability perspective.

And then also we already have a huge footprint of existing customers. We have systems in 35 countries around the world and a proven proper hub, referenceable track record with many cities, many governments, many municipalities and many telcos. We’ve demonstrated that this is a great opportunity and that we can deliver on that opportunity to ultimately deliver great results to our shareholders, investors and our customers and other stakeholders.

WSA: Well, we certainly look forward to continue and to track the company’s growth and report on your upcoming progress, and we like to thank you for taking the time to join us today there Miriam and update our registered audience on CBLU. It was great having you on.

Miriam Tuerk: Thanks so much for showing some interest in what we’re doing.