In a recent interview with Proactive's Thomas Warner, cleantech group EQTEC PLC (AIM:EQT)’s chief executive David Palumbo and chief operating officer Jeffrey Vander Linden discussed their strategic moves to navigate through the turbulent waters.
Both leaders were optimistic about turning EQTEC’s share price around, attributing the current downturn to broader market trends.
They outlined EQTEC’s shift towards technology, innovation, and licensing, and their efforts to stabilize revenues amidst the market’s downturn.
Thomas Warner (TW): The share price has been taking a hit. A year ago, it was around 50 pence per share, down last month to just under 20, and now well below 10. Can you tell us what's going on?
David Palumbo (DP): It's been a tough time for equity shareholders. The entire board and most company employees are shareholders, so it’s personal and painful. The downturn isn’t unique to EQTEC; many in our sector are affected.
We initiated a strategy in 2021 to focus on technology, innovation, and licensing, but the 2022 market downturn forced us to adapt quickly with limited capital.
We’re focusing on future-facing, risk-mitigated opportunities with strong partners. The market is challenging, with investors fleeing equity investments and interest rates at their highest in decades. Our share price reflects a small company moving fast in tough times.
TW: Jeff, we’ve heard about the challenges. How have they affected your business?
Jeffrey Vander Linden (JVL): The first half of the year was disappointing with a decline in revenues. We hit an inflection point in our transition, focusing on strategically aligned, pre-funded projects backed by large, reliable companies.
We’re seeing regular revenues and payments. Our new contracts protect EQTEC’s interests, ensuring steady cash flow. We’re working on several projects, and as we progress, revenues will increase. We’re not out of the woods yet; we still carry some legacy risk and need to protect our immediate cash.
TW: David, how confident are you that the recovery in revenues will tide you over?
DP: We expect more reliable and consistent revenues and cash flow starting in 2024. We’re improving our overall gross margin, aiming to become EBITDA positive by the end of 2025/26. Our costs are covered by growing revenues from risk-mitigated projects, cash recovery, and further investment into the business. We’re reducing non-engineering staff and director pay and focusing on attracting strategic investors.
TW: When do you expect to see an increase in the share price?
DP: It’s hard to predict in the current market. The downturn was deeper than expected, and inflation remains high. Our share price was affected by recent bad news and market illiquidity. We need to shift from a downward spiral to an upward one. We’re focused on delivering our strategy and building confidence. As we accomplish each sale and milestone, the share price will gradually recover.
TW: Jeff, can you elaborate on the steps taken to stabilise the revenues and the company’s future outlook?
JVL: We’re focusing on risk-mitigated projects owned by others and ready with funding, ensuring regular cash flow. We’re working with credit-rated clients and partners. Our projects are pre-funded, backed by reliable companies. We have a wall of engineering approaching, leading to equipment sales and increased revenues. We’re managing legacy risks and protecting our cash. Our focus is on the right projects and partners, aiming for remarkable revenues through 2025 and beyond.
TW: David, in light of these strategies, how do you perceive the company’s positioning in the market and its future trajectory?
DP: We’re making a critical pivot into a future business that aligns with market demands. Our current valuation is a challenge, but we’re looking to attract major players who believe in EQTEC. Our focus on operation and portfolio, coupled with strategic investments, will play a pivotal role. We’re optimistic that as we continue delivering on our strategy and milestones, and as the market recovers, our share price and market valuation will see a healthy uplift.