Earnings Transcript for CRKN - Q3 Fiscal Year 2024

Operator: Good day, everyone, and welcome to Crown's Third Quarter 2024 Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of Crown's website and will remain posted there for the next 30 days. I will now turn the conference -- hand the call over to Jason Assad, Director of Corporate Communications for introductions and the reading of the safe harbor statement. Mr. Assad, please go ahead.

Jason Assad : Thank you, operator. Good morning, everyone, and welcome to Crown's Third Quarter 2024 Results Conference Call. With us on today's call are Doug Croxall, Chief Executive Officer and Chairman; and Joel Krutz, Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains certain forward-looking statements from management made within the meaning of the Section 27A of the Securities Act of 1933 as amended and Section 21A of the Securities and Exchange Act of 1934 as amended. Words such as should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which will be on the control of the company, including those set forth in the Risk Factors section of the company's most recent 2024 quarterly 10-Q filing. Copies of these documents are available on the SEC website at sec.gov. Actual results may differ materially from those expressed or implied with 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 it's my pleasure to introduce Doug Croxall CEO and Chairman of Crown. Doug, please go ahead.

Douglas Croxall: All right. Thank you, Jason. Thanks, everyone, for joining today for our Third Quarter 2024 Earnings Call. We had our best quarter to date, achieving record revenue of $8 million, delivering on our top line forecast. As we scale, we expect this momentum of meeting and exceeding guidance to continue. This quarter's growth was primarily driven by contracts from our newer businesses. Before we dive into the updates on the 3 business divisions, I want to a moment to discuss our vision for Crown and the foundation guiding everything that we do. At Crown, we are committed to delivering innovative technology solutions that address critical challenges across multiple industries. From advancing sustainable infrastructure to promoting environmental responsibility. Our mission is to drive positive societal change that benefits both our communities and the environment. We're working towards a future where our solutions meet industry demands and shape a better tomorrow. We are actively making this vision a reality through our 3 business divisions

Joel Krutz: Thank you, Doug, and good day, everybody. Today, I'll review our financial results for the 3 and 9 months ended September 30, 2024, comparing them to the period -- same period in 2023. We reported record revenues of $8 million for the quarter, which was an increase from 0 in the same period of 2023. The growth in revenue is primarily attributable to new contracts from Crown's Fiber Optics and Water Solutions divisions which include the new slant wells and Element 82 lead detection business. Gross profit was $1.4 million for the quarter compared to 0 in the same period of 2023. R&D expenses were $0.7 million for the quarter, increased from $0.5 million for the same period of 2023, the increase being primarily driven by accelerated preparations for our upcoming alpha launch plus salaries and benefits. G&A expenses were $6.5 million for the quarter, up from $2.9 million for the same period of 2023. The increase in G&A expenses primarily due to increases in comp benefits with the new business leadership in Crown's new divisions. Stock compensation expense, professional fees and other expenses made up balance. Operating expenses were approximately $7.2 million for the quarter, up from $3.4 million in the same period of 2023. Net loss was $5.9 million for the quarter compared with a net loss of $2.9 million in the same period of 2023. Moving on to the financial results for the 9 months ended September 30, 2024. We have achieved record revenues of $13.4 million, increased from $0.1 million in the same period of 2023. Gross profit was $0.9 million compared to a gross profit of 0 in the same period of 2023. R&D expenses were $2.6 million compared to $1.5 million for the same period of 2023. And G&A expenses were $12.8 million, up from $10.5 million for the same period of 2023. Operating expenses overall were approximately $15.4 million compared to $12.4 million in 2023. And net loss was $15.5 million compared to $19.7 million in the same period of 2023, 9 months year-to-date. While cash flow remains challenging to project due to the level of new business Crown is capturing and executing as well as the working capital investment required upfront. We are closely managing expenses to align with our growth plans and anticipate reaching profitability in 2025, a testament to our strategic process. Moving to the balance sheet and our stockholders' equity was $9.9 million as of September 30, 2024, and cash was approximately $3.1 million. Now I'll turn the call back to Doug to discuss our strategic growth plans.

Douglas Croxall: All right. Thanks, Joel. As we look forward to the end of '24 and to '25, we continue to build momentum across our diverse yet complementary businesses, each with very strong pipelines of projects in place. We've made significant headway in our Fiber Optics and Water Solutions divisions, which are driving new interest in substantial growth opportunities. Our customer engagements have broadened, reaffirming our position as a trusted partner in Fiber Optics Construction and a trusted leader in addressing critical water infrastructure needs. With our expanded capabilities, and expert leadership, Crown is well positioned to achieve our growth objectives for the remainder of '24 and beyond. We reiterate our revenue guidance of $9 million in Q4 and $22 million for the end of the year '24. We're pleased to introduce our full year of 2025 outlook. We are expecting revenue between $30 million and $35 million in fiscal calendar 2025. Importantly, we remain on track to achieve profitability in 2025. Last night, I got a note from one of our strategic partners, Chuck Hansen at Electro Scan, he provides us with the equipment that does the lead pipe inspection work. And Chuck wanted me to know that there's a lot of questions about the incoming administration in the new proposed Chief of the EPA. And Chuck reminded me that it was Trump's first administration that actually took a 1991 proposal that became lead and copper rule improvement. That's the legislation that we're working under today. It was dusted off in 2017, it was finalized under Biden's regime in 2021, and we expect it to continue and to grow under Trump's administration. So with that, I'd like to thank everyone who are in the call today, thank our investors for being supportive. We're very excited about the future that we have ahead of us and the foundations that we put in place already, and we look forward to talking to you again in the new year. Thank you.

Operator: Thank you, and this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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