ForceField Energy (NASDAQ:FNRG) CEO Interview


ForceField Energy LogoDavid Natan Picture

ForceField Energy
(NASDAQ:FNRG)
CEO: David Natan

*Correction: Estimated size of replacing all LED fixture worldwide is estimated to be one trillion dollars

About: U.S.-based ForceField Energy is poised to obtain meaningful market share in key segments of the multi-billion dollar renewable energy market. ForceField Energy operates in three of the largest and fastest-growing areas of the global renewable energy space: industrial waste heat recovery and conversion, commercial LED lighting products and solar cell feedstock production.

INTERVIEW TRANSCRIPTS:

WSA: Good day from Wall Street.  This is Juan Costello with the Wall Street Analyst.  Joining us today is David Natan, the CEO of ForceField Energy Incorporated.  The company trades on NASDAQ and the ticker symbol is FNRG.  Thanks for joining us today David.

David Natan:  Thanks for having me Juan; I look forward to the conversation.

WSA: Certainly and so starting off please give us a history and overview of the company for some of our listeners that are new to your story?

David Natan:  Sure.  ForceField Energy is a US based public company on the NASDAQ.  We have two primary product lines that we have built pretty much during the last year.  Our first, first product that we are primarily focusing on is we are an LED lighting solutions provider and distributor, we also have a proprietary waste heat technology that profitably converts waste heat from industrial processes into clean electricity and does sell without subsidies that’s making excellent return on investment.

We have a clean balance sheet, very little overhang, we have modest amount of shares outstanding 16.4 million, our market cap as of today is about 93 million, we operate very conservatively and all of the management team has an excellent track record in public companies in building entities from inception into multimillion dollar entities.

WSA: Well, great and so in terms of some of your recent news can you talk about some of your recent LED lighting contract, as well as your strategic alliance there with the University of Costa Rica?

David Natan:  Sure.  What we do is we are a distributor of LED lighting.  We are a distributor for a prominent manufacturer called Shanghai Lightsky, which is an offshoot of Shanghai University located in China, one of the premier LED factories in China.  We have exclusive rights to distribute their lights throughout North America and Latin America, the Caribbean and Europe.  What differentiates us is we are not just merely a distributor such as a company like Grainger, which is a great business model.  What we – what our intention is to go after large entities that have multiple locations such as retail outlets, universities as you mentioned, governments, Fortune 500 companies where they need LED lighting and it’s not just about the lighting itself, it’s about providing a total solution.

Our package is we come in, we assess the needs, we do a complete energy audit, we quantify what the savings are, we replace the existing lighting dispose of it properly and in addition, which is unique.  We are a turnkey operation, one phone call we would devise many financing techniques including pay from savings, operating leases, financing leases and outright purchases, so there are very few entities that provide the complete package to a customer.

The underlying premise of the LED industry is people are starting to realize that it’s an explosive growth area in the energy and renewable energy market and companies are starting to realize that the technology is there now where they can get a two year return on investment or less in most cases because of the energy savings.  LED lighting saves between 50 and 85% energy compared to incandescent bulbs when you factor in maintenance savings.  In many cases the payback is less than a year, so everybody around the world is recognizing how valuable it is in addition to the savings, you know the lighting is better aesthetically, it’s a better atmosphere for customers, employees, students etcetera, so that’s why you are starting to see every company literally looking at their energy budgets especially with the cost of energy rising, so to answer your question specifically in recent months we have outlined a progress that we have made on the LED side in our ability to rapidly get to decision makers.  We are bidding on approximately 125 million dollars worth of projects.  Two of them are under LOI in Costa Rica, which represent over 40 million dollars in revenue, some over a multiyear period, some directly.

We are very confident that we are going to close on a large portion of that – of the jobs that we are bidding on.  A recent example is we just bid on a – we were awarded two locations for KFC in Latin America.  The franchise owner owns a 150 throughout Latin America and the Caribbean, so we are going to demonstrate the energy savings, which is a year or less in his – in one Quiznos location and one KFC location with the expectation of getting all of the rest of the work.  So when we prove that we can – we are a one-call provider, they come to us, we do everything totally seamless for them with a payback of a year.

The reason why we are focusing on Latin America was it’s not only Latin America, but the rest of the world and United States as well.  It’s because the cost of energy is so high in Latin America that the payback increases proportionately because the cost is so high.  For example if California, the industrial cost of electricity is nine cents a kilowatt hour, in Costa Rica it’s 24 cents going to 30 cents, so it’s a three times faster payback because of the high cost, the high kilowatt cost per hour.  So the recent press releases that we have done is indicative of the type of business that we are going after and our ability to rapidly penetrate and get to decision makers and do so on a very competitive basis with a quality product less expensive than the competition because we don’t have a big overhead structure, so that that’s our strength and differentiator in that category.

We are also – also continue to work on our waste heat technology, which is a proprietary technology that converts waste heat say from an industrial smoke stack.  It takes that waste heat, runs it through some equipment and generates electricity through a generator.  We have developed proprietary fluids to operate in that system that no one else in the world has and in today’s world with renewable energy market we feel it’s a valuable area to be in especially with the technology that no one else has.

WSA: Right, so you’re following some of the trends in the sector that you are seeing.  What are some of the other trends that you are trying to capitalize on right on?

David Natan:  Well the trend is that the energy market is growing so rapidly depending on which publication you look at.  Energy costs are expected to increase 40% over the next 10 years in many areas around the world, so it’s never going to be lower with the facing out of the incandescent lights the estimates that the LED replacement market is a trillion dollars alone, just in the LED lighting.  It’s the fastest growing area in energy, new buildings, new areas, new construction of that nature.  Also with everything that you read in the papers and you see by renewable energy being dependent on subsidies we are focusing on generating ROI without subsidy, a technology that works without subsidies because there is no guarantee that the subsidy will continue, so the energy arena is growing very rapidly.

Another area that I didn’t mention or one of our product lines that we are excited about is smart electric meters, electric meters that were attached to your home or to a streetlight or something of that nature where you can lead the electricity remotely and more importantly not only our companies, businesses, municipalities are trying to reduce their power, they are trying to manage their power as well.  So through the cloud you can literally attach a 100 streetlights in a zone, say you are in a city like Los Angeles who has publically stated that streetlights are worth 50% of their entire electric budget and they stated publically this year.

If you attached these meters to a zone within a city you can literally have a parade on one street where you need the lighting for two extra hours or a storm or a sparsely used area where you can power it down.  Somebody from their laptop computer with proper controls can go into the cloud and manage the streetlights within a jurisdiction, so that’s the type of trend that you are going to see more of in the future and especially in Latin America and the Caribbean where municipalities want to give power or grant power access to remote locations and they are not sure whether they will get paid.

Another trend is through these smart meters they can be read remotely, they can be loaded with power, so it’s like a prepaid phone.  You put a, you pay for 200 dollars worth of electricity and then you are good to go, so that’s another area that we are partnering with.  We have some very big bids that would provide excellent margins for us and we are confident we are making roads in that arena as well this year, this year and the years to follow.

WSA: Great and what else do you feel makes ForceField unique from some of the other players in the sector?

David Natan:  Our ability, I have worked for – I have been CFO of five public companies, Executive Vice President of three of those companies and we have learned how to get to decision makers quickly and do so without incurring a lot of overhead to do it very, very quickly and deliver products quickly, so one of our differentiators is our ability to get the decision makers deliver a quality product or products on a turnkey basis.  I have done 20 acquisitions in divestitures, mostly acquisitions in my career.  Our A CFO worked with me at a previously public company.  We have grown public companies from small to very large.

I will give you an example.  The last public company I worked at was a clinical trials company called PharmaNet Development Group and I was part of the management team that grew revenues from 30 million to 400 million in a three-year period.  We did eight acquisitions.  One of the top 10 performers are NASDAQ and Forbes Magazine, top 50 performer three years in a row, so we know what it takes to get there, we have a track record, every industry is different of course but those skills and what we have learned in public companies what to do and not to do, our ability to manage cash on a conservative basis.  The mere fact that we were listed, we started as a bulletin board company we achieved our NASDAQ listing something that’s very, very rarely done.  Less than five out of a hundred bulletin board companies make it to the NASDAQ and the reason we were able to do that because of our financial management.

Also management is heavily incentivized in stock, we own 25% of the company, we take literally no salary, with Richard St. Julien the Chairman who works what I call full time and a half myself and the CFO put in a tremendous amount of time taking literally no salary, so that our interest truly are aligned with the shareholders and not taking large salaries before we deliver the results that we know we can deliver.

WSA: Great and what are some of the other factors that you feel make the company unique there and from the players in the sector?

David Natan:  Well, what I was saying is a complete turnkey package, our pricing which reflects our ability to be very competitive and deliver a quality product, I mean there are many large players in the LED industry, but very few if any that can deliver what we do with one phone call to us, a complete package, unique financing because there are a plenty of LED companies out there that have customers that want the lighting, but they can’t deliver the financing.  We have focused on the financing; we have publically announced our alliance with two of the top 10 banks in the United States.  My financial background, the CFO’s background in delivering financing packages, so we like to think that we are offering a complete solution to the customer, if he is looking for the operating lease and doesn’t want the debt on his balance sheet will come up with a solution.  If he is looking for financing internally, if he wants to buy it outright or he has a pay from savings plan where the savings are so large that they literally pay for the new lightings from savings.

Also we believe and know that there are many synergistic acquisition opportunities in the arenas that we operate in, many quality companies that want to go public, but don’t have the wherewithal to do it or the expertise, corollary products to what we are doing, so we – acquisitions are part of our business plan going forward as well as growing revenues organically and as I mentioned a clean balance sheet, a minimal debt, a very modest cap structure, no overhang of our debt with somebody or a stock in friendly hands, so somebody will wake up one morning and the stock will be worth half a good distribution of shareholders and the fact that we raise money on favorable terms didn’t have to, didn’t have to mortgage the future in our cap structure.  They are all very strong points supporting our company in our future growth and what we expect to be a much higher stock price.

WSA: Certainly and so yeah you talked a little bit about your background and experience and you know the management, what are some of the goals and milestones that you guys are hoping to accomplish over the next year?

David Natan:  Our milestones are to generate, we haven’t given guidance per se, but to close on a big chunk of that, of the 125 million that we are bidding on, generate profitability for our share holders who look for other synergistic acquisitions to continue to create shareholder value by creating visibility and to complete a number of major installations on the LED side, cellular smart meters and as well as license our waste heat technology to big players in the industry who will recognize the value of this proprietary technology.  So grow our market cap significantly, continue to manage the way that we have and to make it a, make our company very exciting to potential investors and shareholders who see our ability to rapidly position ourselves to win big contracts and deliver on them creating big chunks of revenue immediately and as well as annuitized revenue stream over a period of time from our products and projects.

WSA: Sure and when it comes to the investors and the financial committee David do you believe that the ForceField Energy story, your message and upside, are completely understood and appreciated by them and if not what do you wish investors better understood about the FNRG?

David Natan:  Well, they are starting to understand, we are working very diligently to explain what the tremendous upside is and our ability to deliver quality products at competitive prices and really the management teams ability to rapidly penetrate markets and to get the decision makers and key decision makers the fact that everything that you read, everything that that’s happening in the financial community you see LED lighting, you see companies starting to understand the value of how powerful it is to reduce cost and in a two year period set up for the future and it’s much easier these days to generate cost savings and to generate revenue increases, so we are very well positioned, we understand the market, we under – we really understand what it takes to run a public company and do some based on our cumulative years of experience in a public company and what we have address, so it’s a real talent to be able to run both the day to day the business of the business and what it takes to run a public company and we have that expertise in house.

We have done it before, we have made, I made mistakes along the way, learned from them and not to make those same mistakes again and it’s – it’s evidenced by our, the progress that we have made so far and the progress that we are going to make in the future.

WSA: Great and ones again joining us today is David Natan, CEO of ForceField Energy which trades on NASDAQ, ticker symbol FNRG, currently trading at 5.82 a share market cap as mentioned close to a 93 million, and before we conclude here David to briefly recap some of the key points during the interview why do you believe investors should consider the company as a good investment opportunity today?

David Natan:  Well, to go through the bullet points we have a very experienced management team with a track record of success that that has quantifiable success in the public arena, a clean cap structure with modest shares outstanding.  We are operating in huge multi billion dollars markets that are growing and will grow in the future, so the need is there, very, very large markets.  Our customer base we are used to dealing in all our businesses with billion dollar companies.  Most of our opportunities in business going forward we have already penetrated three Fortune 500 companies.  We are dealing with Governments of countries so we have, have the ability to do that, our ability to know how to navigate a public company and our cost structure in our products being highly competitive with a quality, with quality products.  The fact that we have a really breakthrough proprietary technology that no one else in the world has in fluids that we have created to top rate in the equipment that I described to convert waste heat where the CAPEX expenditure doesn’t need subsidies to operate in such as other markets that have been dramatically impacted, so for all of those reasons we strongly believe it’s an excellent investment opportunity and that’s going to go higher from here as we close on these results and generate significant new business next year and beyond.

WSA: Well we certain look forward to continuing to track the company’s growth and reporting the upcoming progress and we would like to thank you for taking the time to join us today David and update on rest of our audience on FNRG ForceField Energy.

David Natan:  Thank you for the opportunity to talk about, to talk about ForceField Energy, I really appreciate it.

 

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