MagneGas Corporation (NASDAQ:MNGA) Management Interview

MagneGas Small LogoScreen Shot 2014-03-24 at 10.00.25 AM

MagneGas Corporation
CEO: Ermanno Santilli
CFO: Luisa Ingargiola


Interview Transcripts:

WSA: Good day from Wall Street.  This is Juan Costello with the Wall Street Analyst.  Joining us today are Ermanno Santilli, the CEO for MagneGas Corporation, as well as the company’s Chief Financial Officer, Luisa Ingargiola.  The company trades on NASDAQ and their ticker symbol is MNGA.  Thanks for joining us today.

Luisa Ingargiola:  Thank you.

Ermanno Santilli:  Our pleasure.  Thanks for having us.

WSA: Great.  Now, starting off, please give us a brief history and overview of the company for some of our listeners that are new to your story.

Ermanno Santilli:  Well, MagneGas Corporation was founded – at least it was listed in 2007 on NASDAQ and it was founded by Dr. Santilli, who is an ex-Harvard, MIT, Boston University Professor, and he developed a technology called submerged plasma arc gasification which we believe is unique in the world.  It’s patented, and we have identified at least three different applications in different industries that we are pursuing right now.

WSA: So in terms of your most recent news, can you talk about the exciting unveiling of the liquid biomass solution there at the conference in Florida?

Ermanno Santilli:  Yes.  Our submerged plasma gasification system is a great technology, and we recognize that we need partners in country either to certify, verify, or provide channel access, and our partners in Italy, Nuova MagneGas Italia, recently confirmed with the independent test accredited by the European Union that our system can sterilize manures either animal or human sewage to levels which are acceptable by the European Union to serve as a fertilization or irrigation.  In the US, we have to certify that same application, and what we have identified is that we are going to process Class B wastes, turn them into Class A, reduce the disposal cost, and possibly render those waste as well suitable for irrigation and fertilization in the US.

WSA: Excellent then.  So, yeah, in terms of the technology, can you talk about some of the recent demolition projects you have in place?

Ermanno Santilli:  Yes.  All the applications we have are for metal cutting gas.  For example, acetylene is a very old gas.  It is very dangerous to produce, transport, use, and it’s carcinogenic to user.  MagneGas we believe is the only metal-cutting gas in the industry that has a flame temperature higher than acetylene, and that was recently confirmed by the City College of New York.  The higher flame temperature means it is a faster cut, it is a cleaner cut for metal, and it uses less oxygen.  Therefore, one of our business models is to sell MagneGas in the industrial gas sector replacing acetylene and these latest demolition projects are just the testament to the fact that MagneGas is a tremendous product and customers that we land in Florida or Michigan, they then turnaround and want to take this to other job sites because they love the product, it’s faster, safer, and cleaner.

WSA: That’s great, and can you talk about some of your patents?

Ermanno Santilli:  Patents, excuse me, yes.  We have several layers of patents protecting our technology.  The first and the base layer is a recent patent, original patent we raised for the gas, protecting the actual makeup of the gas and how it actually is analyzed and how it combusts.  The other patents we have relate to the actual apparatus of our technology.  We have several patents for the existing apparatus, and we have recently found a new provisional apparatus patent for a new type of design called the Venturi design.  On top of that, our industrial partners for coal combustion, Future Energy in Australia, they are raising patents along with ourselves for various coal combustion applications, which is actually the third market that we’ve identified in pursuing.

WSA: Certainly and what are some of the other key trends that you guys have been seeing in this sector and how are you positioning the company to capitalize on them?

Ermanno Santilli:  Well, each sector or each of our three business lines is really different.  On the industrial gas side, I believe acetylene is so dangerous that eventually it will be banned or the production will be pushed out to the point where the actual cost of production is too high.  We’ve come up with the better product just as the industry is looking for a replacement product for acetylene, so that’s great.  On the sterilization side, our technology takes probably the most abundant waste liquid in the world, which is sewage or manures from livestock and we transform them into something which is safe and nutrient rich to be used as a fertilizer, so that’s a natural fertilizer that the society builds and use because it’s not safe to the parasites and bacteria such as E. coli and in our opinion we render it safe to be used, so turning something which is abundant and a waste product into something which is usable, of course, that is going to get increasingly more and more traction.  On the coal combustion side, this is possibly and we believe this is going to be a tremendous opportunity for MagneGas Corporation, because we have not identified a gas that in our opinion has such a high flame temperature as MagneGas and why that is important is that many fuels that burn in a low flame temperature have a low efficiency, so that means you are not getting as much heat as you can out of that burn and you are releasing emissions.  MagneGas has disrupted because in some cases, because in some cases we can check those emissions and less smoke and we can convert it into energy or if it’s combusted with the other fuels such as oils, we increase the flame temperature of that combustion resulting in a higher efficiency and lower emissions.  Once again what we are doing is we are taking something that is already there, we are disrupting it, we are adding MagneGas, we are improving the efficiency and getting more energy, so that’s something that we’ve recently developed although our partner in Australia started working on this in 2009, and we’ve gotten a tremendous amount of traction in the US, in Mexico, and recently in Italy as well.

WSA: Great and what are some of the other factors that you feel make MagneGas and your technology unique from some of the other players in the sector, and in a position to grab market share.

Ermanno Santilli:  Well, excuse me, if you looked at typical – typically a person in the space is familiar with the solid gasification systems.  Most of them are very large, very expensive, very complicated.  MagneGas has a small footprint.  It is easy to access.  It is relatively safe.  It’s a low-pressure vessel, and more importantly, it has some inherent benefits over solid gasification systems.  For example, solid gasification systems, you do get a gas, but it is a gas which is a dirty gas, it’s a smoky gas, and it has all sorts of pollutants that need to be scrubbed before it can be used.  MagneGas because it’s a submerged gasification system, the actual gas coming out of the unit is immediately usable, and the waste energy industry just loves that.  I’m actually here in Orlando to speak at the biomass conference, the largest biomass conference in the US, and I’m very pleased with the response we have so far and the feedback we are having on that.  The other inherent advantage we have over solid gasification systems is this: MagneGas—every watt of energy we put into the liquid as opposed to solid gasification systems which are heating up to a certain degree the space while either the air or the vacuum around the solid material that they’re targeting.

WSA: Good and perhaps you guys can walk us through your background and experience and talk a little bit about the management there.

Ermanno Santilli:  Sure, Luisa, you want to start?

Luisa Ingargiola:  Sure.  I have 30 years’ experience in finance, various positions in finance in some real estate limited partnerships to major corporations and I have MBA.  I joined the company in 2006 and essentially brought MagneGas from a pink sheet all the way up to the NASDAQ and I’ve been operating as the CFO.

Ermanno Santilli:  My background was I had about 20 years of experience in some global brands such as Bobcat, Thermo King, Ingersoll Rand.  I have worked in US, Belgium, and the UK, and hold dual citizenship.  I received my Bachelor of Science from Boston College and my MBA from Indiana University.  I formed MagneGas Europe in 2009 to work with some of the distributors who are working over there, primarily MagneGas Italy, and moved over about 18 months ago here to the United States to take over the position of CEO of MagneGas Corporation.

WSA: What are some of the goals and milestones that the team are hoping to accomplish over the next year?

Ermanno Santilli:  Well, what we’d like to accomplish is, one, we’d like to achieve a breakeven position for the industrial gas business on a standalone basis.  We’d like to achieve that this year.  We’d like to place a unit at a pilot profile power plant somewhere in the world…potentially the US, potentially Italy, and potentially Mexico, and from the other business line, the third business line sterilization, we’d like to launch this new product here in the US of transforming Class B waste to Class A, and start placing units at pilot facilities and we’re actually speaking with some people right now about that.

WSA: Sure.  As far as investors and the financial community are concerned, do you guys believe that the MagneGas story and your message and the company’s upside are completely understood and appreciated by them, and if not, what do you wish investors better understood about the company?

Ermanno Santilli:  I’d love to hear Luisa’s opinion on that as well.  My opinion is that we probably are undervalued.  I think that if you look at our three different business lines that we have; industrial gas, sterilization of liquid waste, and coal combustion, all it takes is one of those to hit the mark and our valuations you could argue would increase.  I believe that we recently had an influx of new shareholders with new questions and new demands and new excitement, which is tremendous.  As I was saying just in January of this year, our annual average trading line was about 30,000 shares, so there’s been a dramatic increase and I think that’s a result of the fact that we are getting the message out there that we are getting better traction on our developments and that the market is listening.

WSA: Luisa, did you want to add anything?

Luisa Ingargiola:  No, I think that that’s a very good summary of where we are at today, and we have an exciting technology and it seems like the more people hear about it, the more interest there is in what we are doing.

WSA: Certainly.  Once again joining us today are Ermanno Santilli, CEO for MagneGas Corporation as well as the company’s Chief Financial Officer, Luisa Ingargiola.  The company as mentioned trades on NASDAQ, ticker symbol is MNGA, currently trading at $1.90 a share and market cap is in the $40 million range, and before we conclude here, to recap some of your key points, why do you believe investor should consider the company as a good investment opportunity today?

Ermanno Santilli:  Well, like I said before, I think we have a unique technology.  We believe that we are alone in the world.  This technology is patented, and we have three solid opportunities that we’re pursuing now and other opportunities that we will present in the future.  We are getting excellent traction.  We recently had an influx of new shareholders.  Our trading volume has increased, and I think we are on the right track.

WSA: Well we certainly look forward to continue to track the company’s growth and report on your upcoming progress, and I’d like to thank you guys for taking the time to join us today and update our investors on MagneGas.

Ermanno Santilli:  Thank you very much.  It was our pleasure.


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