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8-K - 8-K - LIME ENERGY CO. | a14-7019_18k.htm |
Exhibit 99.1
Transcription C. Adam Procell/John Downey
Downey: |
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started. (Unintelligible) Okay, well, first of all, thanks, and I appreciate this. Been wanting to sit down. Weve been interested in your company, as you know, since you got here. This last wrinkle has been difficult for yall, I know, and I |
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Procell: |
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Sure has. |
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Downey: |
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I need to talk to you some about that. But I actually did want to start just asking I have to assume, you know, choosing you is something of a confidence-building measure. I mean, for investors. I mean, John ORourke, still with the company. I mean, obviously, and all that sort of stuff. But so, how do you see Lime, you rebuilding confidence. Id really like to start there. I may have to talk about the past a little bit more, but |
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Procell: |
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Sure, well we, its in a very exciting new dawn, really, at Lime Energy for myself and everybody on the team. You know, the team thats managing a hundred percent of the company now is the team thats been managing the utility program business for the last five years, and we look at the last five years as a, as a wonderful success story. And so we, its not to cast any aspersions on the other businesses, but we look at the opportunity to have Lime Energy be purely the small business direct-install leader that the utility program business has become, as a great opportunity. So, and for myself, for my part, is what I can take credit for is having led a successful growth of that business, and so, if that builds confidence going |
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forward, in the overall Lime Energy brand, then, and corporation, then I think that thats Im excited to hear that. |
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Downey: |
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Yeah. Well, and I I guess what I mean what I mean by confidence building, thats couple things. One is, you know, Lime gets to say now that, you know, we do understand we had some problems. And yall have been very frank about that. You know, and youve worked at it, announced it immediately, you worked at it, you let people go, and you tried to square everything away. But now, you know, now Lime gets to say were not run by the people who were running it when the mistakes were made, you know. So I, what Im trying to get at, a little bit, is, is what are the steps you think that Lime is going to have to take to, to reassure investors you know, and reassure the company itself that were on the right foot, footing now, you know. |
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Procell: |
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Yeah, I dont think theres really much we can do that is as powerful, certainly, and maybe theres nothing we can do at all, except to demonstrate that our business model is profitable. And the business model of the utility program business has been strong |
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Downey: |
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Mm-hmm. |
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Procell: |
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But even as a business unit of the bigger company, it hasnt had the opportunity to prove that to investors. And so we feel that, you know, 2014, really, is that, weve pointed to it for a while now as that year. So I dont think theres a lot else we could do. You know we, if, if somebodys looking for a company thats exciting, innovative, creative and a leader in |
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their space, we have proven that. Thats who we are. And the utilities are selecting us for that. I think our test with investors, though, is to demonstrate that were in this model thats wonderful for utility clients, and wonderful for small businesses. That its also wonderful for Lime Energy in terms of profitability. |
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Downey: |
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And when you said that it wasnt able to demonstrate necessarily how successful it could be, your sense is that it sort of got lost in the larger earnings. I mean, you, for instance the Florida project took a while to get, you know, you finally sold that. |
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Procell: |
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Right. |
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Downey: |
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All that sort of stuff. So, I mean, is that what you mean by |
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Procell: |
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I, I |
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Downey: |
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demonstrating that |
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Procell: |
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I think theres two, I think theres two components to it. One is that, but I wouldnt solely say that, because that would be false to say that, that, somewhere buried in the numbers was a very profitable business unit in utility programs, because it wasnt. But the reason that it hasnt been, is because its been in a growth mode, and its been starting up. |
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Downey: |
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Right. |
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Procell: |
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You know, what our model is, is very unique, very innovative. Weve received an award for innovation for our model. And its a performance- |
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based model. And that necessarily means that when we start these programs up, were investing in the cost. |
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Downey: |
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Right. |
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Procell: |
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So, 2013 was a breakout year for us. But it was a breakout year that included starting up five new programs. So there were a lot of costs in 2013 that we dont anticipate in 2014. And then as the business gets to scale, adding a program or two a year, wont be the kind of drag that weve seen in starting multiple programs up at this size. |
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Downey: |
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Right. And is that sort of you goal? A couple of projects a year, is that the way you see yourselves growing now? |
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Procell: |
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Yeah. As a matter of fact, in 2014, we dont really foresee starting up, necessarily, new programs with new clients. We are expanding with all of our clients. You know, were successful in the programs, and they ask us to do more. So we think that growth in the short term is with existing clients. And thats good, regarding what I just discussed about those startup costs. |
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Downey: |
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Yeah. So, now, and the other thing about confidence and should have asked this, as well is, you know, was there any problem with your customers, or, you know, when all this was going on, everybody stuck with you, I think. All the utilities. But, I mean, has it been harder to get in the door? Has it, you know, because you had the financial reporting problems? |
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Procell: |
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Yes. |
Downey: |
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Yeah. |
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Procell: |
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We had a wonderful run of what we call business development. Which is winning the program contracts with utilities, where we won, and I have to check the numbers, but easily over two hundred million dollars worth of contracts with utilities, in 2010 and 11, and then from June of 2012 when we put the 8K out, that has slowed dramatically. |
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Downey: |
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Mm-hmm. |
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Procell: |
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And its really a very simple formula, right? And you said it, is that when they put a request for a proposal out, Section 8 says, include your most recent financial statements. And when you say, to a very conservative investor-owned utility, heres our financial statements, but you cant trust them yet. |
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Downey: |
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Right. |
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Procell: |
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Doesnt help, right? So we, we pursued several contracts, and were told that we scored first in all the technical criteria, and we just lost it on risk. |
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Downey: |
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Right. Now then, the can you describe, you know, like I said, Ive been covering you all for a while. While nobody would set deadlines, and all that, you could tell early on, people didnt expect it to take the full year it ended up taking. |
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Procell: |
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Right. |
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Downey: |
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You know, so why did it take the full year? I mean, that had to be, in a way, that was killing you. I mean, now killing the business |
Procell: |
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Sure. |
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Downey: |
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But just being inside. |
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Procell: |
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No, but it was. And so I, its two things. One, its a little hard for me to comment on the details of it, because |
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Downey: |
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Sure. |
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Procell: |
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I was not an executive manager and officer of the company at that time. |
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Downey: |
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Right. |
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Procell: |
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Wasnt privy to the steps that were gone through. But I had the perspective that you described, as someone running a business unit, was, you know, does anyone at the top understand that the longer this goes on, we will be restating financials for the former company, Lime Energy. |
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Downey: |
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Yeah. |
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Procell: |
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At some point, you just have to say, its got, weve got to get through this. So I shared that frustration. And in terms of the details of all that, I actually, I actually have to defer commenting on the details of that, only because the SEC investigation, as you know, is still ongoing. But yes, it was maddening. And I believe it was maddening for my predecessor. |
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Downey: |
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Yeah. |
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Procell: |
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And I dont think we really knew when it would conclude. But what I described earlier, that we were hamstrung on in pursuing new utility clients we believe that that is in our past because of the restatement. |
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Because we really think that the issue is literally saying, here are our up-to-date regulatory compliant financial statements. |
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Downey: |
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Right. And I, since you mention the SEC, I was going to ask about that. Let me just go ahead and get that out of the way. Yall have reported that youve been informed that there is one. Do you have any idea how much, how much more time this is likely to take, or where it, you know, where it stands. |
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Procell: |
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I hate say, it seems that Im in the same position that John was in with respect to that. You know, that Im advised that, you know, we dont control the SECs timing of it. |
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Downey: |
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Right. |
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Procell: |
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They probably have more pressing things on their desk. And we just, we just dont know. |
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Downey: |
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Right. I assume, as its kind of long, as they ask question, yall have been, youve been cooperating with the investigation, obviously. |
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Procell: |
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Yeah, sure, we provided them everything theyve asked. |
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Downey: |
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Lets see, can I Ill ask, again this may be the kind of thing you cant answer, but, have they had recent questions, or has it been a while since theyve communicated any inquiries to you all? |
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Procell: |
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I just dont think I can talk about that. |
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Downey: |
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Thats fine. |
Procell: |
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That level of detail. |
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Downey: |
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Thats fine, thats fine. I think were done with that for now. |
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Procell: |
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Okay. |
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Downey: |
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The at what point do you see Lime aggressively looking for new business again. Like you said, youre well, go ahead. Let me ask you that (Unintelligible). |
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Procell: |
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We started doing that, when we restated last August. |
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Downey: |
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Okay. |
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Procell: |
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So we are, we are back fully in the business development game, and like I said, we dont think have that the issues in our past are hanging over us any more. |
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Downey: |
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Okay. And, so, you were there, as you said, you were there, when you were in the midst of it, and feeling like you, just, you, I mean, you knew you werent going to get bit, essentially. You knew you were going to get that call, at some point, that said, Im sorry (Unintelligible) financial. |
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Procell: |
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Would love to, but |
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Downey: |
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So, does it feel different out there now? I mean, you know, you have, youre already out there doing business development. You dont expect to add anything this year, but that doesnt necessarily mean you dont have a lot of leads. |
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Procell: |
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Its a long cycle. |
Downey: |
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Yeah. |
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Procell: |
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And thats the only reason. So, yes, I think it feels much better. You know, we attend, regularly attend, industry conferences. We meet with folks. What we generally do with our innovative business model is, were kind of evangelizing it. |
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Downey: |
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Mm-hmm. |
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Procell: |
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Because its not something that a lot of utilities understand. |
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Downey: |
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Mm-hmm. |
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Procell: |
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And theyve been much more receptive to it. And to us. So, yeah, I do believe weve, weve turned the corner on that. I think its pretty clear that what utilities were concerned about, was what I would describe as a doomsday scenario. |
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Downey: |
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Right. |
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Procell: |
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Right? And so were past that period. |
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Downey: |
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Right. |
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Procell: |
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Its very obvious that weve got our house in order. Weve straightened out our focus, and were a stronger company for having done it. |
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Downey: |
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You know, one thing about that. Would, would, would Lime have divested as much as it did if it werent for the the financial there was one the one whole division yall had with, with, you know, government, you know, dealing with the government up-fits, and that sort |
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of stuff. Energy efficiency. My understanding was that basically there were bonds required that |
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Procell: |
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Right. |
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Downey: |
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That you no longer qualified for. |
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Procell: |
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Right. |
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Downey: |
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I mean, is that, is that a line of business you would be in today if it werent for that, or was the direction |
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Procell: |
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I would hope not. I would describe it as this: That is ultimately the reason we pushed the panic button and did that quickly when we did it quickly. But I would hope that we would have focused on this single business unit because we had this business that had tremendous growth and profitability opportunity. And I think that a company benefits from knowing who they are and what they do, and having the industry know that. So I guess I would just say, we might not have, John. We might not have. But it was in our best interest to do so. So I would hope that we would have. Companies dont always make the best decision unless theyre forced to. |
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Downey: |
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Right. |
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Procell: |
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But I do think that we benefit from having all those divestitures. |
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Downey: |
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Okay. I just have to ask you, how did it come how did you end up on top? I mean, was it because the division that you were leading was essentially becoming the whole company? I mean, and how did you find out? Im just sort of curious. |
Procell: |
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So the board, so the board came to the conclusion that, yes, a piece at a time, that had happened. Right? We had multiple businesses with multiple unit presidents. And then we found ourselves with a corporation that had run five business units, now running one. And so, its pretty obvious that the president of the business unit could be the president of the company, and that was, that was the first thing that happened. And then in terms of the chief executive officer, it was just kind of, you know, the timing was, it was November, and were putting the 2014 plan, and its just the cost structure of the company. We needed to get our cost structure in line. We have, we have investors that have been with us for a long time. And theyre looking for profitability to be now, and not something projected in the future. |
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Downey: |
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And so when you say, it was a decision of the cost structure, is that a decision that you didnt need a CEO and a president, essentially? Is that what youre saying? The chief executive, since there was only one division, essentially, the president of that division and CEO were somewhat |
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Procell: |
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Yes. |
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Downey: |
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Okay. |
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Procell: |
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Yes. And I think that that would have been repeating a mistake that we made in the past. I think if you go back four or five years, we had three. We had a president and a CEO, and a COO, that each had run individual companies that came together. You know? And so I think that the board |
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looks back at that and say, just leave me a crowded house to sort itself out, is an expense. And it might not even be the best leadership strategy. |
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Downey: |
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Right. How many people do you have at Lime Energy now? Now the dust has settled. Where are you? |
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Procell: |
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I think its about a hundred and thirty. |
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Downey: |
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Mm-hmm. And do you know about how many you have here in Charlotte, now? Is it about seventy still, or is it |
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Procell: |
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I think its less than that. Its probably forty or fifty. And were hiring. We hired five people in Charlotte in the last two months. Continue to expand with our (Unintelligible) Duke Energy Progress. |
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Downey: |
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And you work with Duke Energy Progress. You dont work yet with Duke Energy Carolinas, right? I mean, thats |
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Procell: |
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We dont work yet in that territory. |
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Downey: |
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Yeah. |
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Procell: |
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So, yeah, theyre one company now, of course, but |
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Downey: |
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Sure. |
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Procell: |
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were in the legacy Duke Energy Progress territory. |
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Downey: |
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Right. Right. And the utilities operate separately, so |
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Procell: |
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Thats correct. Regulates. |
Downey: |
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So, what do you see then, as your growth prospects now? Youre doing some hiring now. A couple years from now, are you going to be about, 140, 150, or do you see faster growth than that? I mean, what |
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Procell: |
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I think that would be pretty fast growth. |
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Downey: |
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Yeah. |
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Procell: |
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But the market opportunity is there for that level of growth. So thats a lot to bite off in terms of a projection, and Im not going to make any projections today, and |
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Downey: |
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Yeah. |
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Procell: |
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Were kind of getting on the track of doing regular earnings calls, and projections. So well kind of set, do some kind of level set in the next couple of months on a couple of calls. But the order of magnitude of growth, that would be very aggressive, but also its very, very feasible. Put it this way, there are hundreds of millions of dollars of incremental small business direct install work that someones going to be doing. |
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Downey: |
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Mm-hmm. |
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Procell: |
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And right now were the leader in the market. And we, you know, we raised six million dollars in the last 60 days to capitalize expansion of the business. So we would hope to be the ones getting our fair share of that market share growth. |
Downey: |
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And the I was going to come the question about that as well. That, thats growth capital, thats not, thats not money you needed to cover past problems or anything like that. |
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Procell: |
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Yeah, Id say its a little, Id say, in honesty, its a little bit of both. |
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Downey: |
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Okay. |
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Procell: |
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Right? So we dug a hole. And its hard to say, its simultaneously both, because the hole that we dug, we, we, were able to stretch vendor payments out, so, you know, play a little bit of catch up with that. |
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Downey: |
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Right. |
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Procell: |
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What it isnt, is six million dollars that came in and went out the door to catch up on old payments. Its not that. |
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Downey: |
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Right. |
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Procell: |
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So, were maintaining a balance in the bank. And you know with the recent past, things about the recent past that you mention, you know, theres things we can control and things we cant control. |
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Downey: |
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Right. |
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Procell: |
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We cant change the past. We cant change the 8Ks that have gone out over the last several years. What we can do is strengthen the balance sheet. So were determined to do that. And our partners, our vendors are our partners. And they understand that. So theyre willing, on the |
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payment side, to work with us, and, you know, understand the value to everybody involved, if we can maintain a stronger balance sheet. |
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Downey: |
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Right. Now, I know, how close are you to your next earnings call? I assume were fairly close. |
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Procell: |
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March 31st is the regulatory deadline, and I think itll probably be right around the end of March that we do a |
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Downey: |
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Okay. |
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Procell: |
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2013. |
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Downey: |
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Cause I know thats going to limit, or may limit, somehow you can answer. But, lets see. Well, Im going to ask this question, if you cant answer it, Ill just understand. But, John had said, when he was still running the company, that it was doable to be, to be, profitable in the fourth quarter, not for the year, but in the fourth quarter. Is that still in your reach? |
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Procell: |
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So thats the, thats the kind of thing I cant comment on |
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Downey: |
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Thats fine. |
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Procell: |
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And when the numbers are not, are not tied out, yet. So, technically I dont have the answer. I mean, we have ideas. I dont have the answer. And it will be released at the end of March. |
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Downey: |
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Yeah. |
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Procell: |
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So I just, I just wont, wont comment on that. |
Downey: |
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I understand. And I knew we were coming up on that. (Unintelligible) know what you hit that block. |
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Procell: |
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Right. Yeah. |
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Downey: |
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But just had to ask. But, sort of more long term. You know, as you said, youre very much in a build-out mode, even in your division. That was true, I think, of a lot of Lime Energy, for the time Ive covered them. They were actually a fairly new company, and yeah, so, you dont necessarily expect profitability in a company at those stages. You know, theres a lot of investment up front. But, you know, not talking about the next quarter, or anything like that you dont I think youve had two profitable quarters in your entire history, if I recall correctly, and I believe thats right. |
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Procell: |
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I think it is. |
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Downey: |
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Does that change in the near, I mean, the new sort of stripped down Lime Energy, or the focused Lime Energy? Does that change in the near future? Is there a way you can answer it fuzzily enough that its comfortable for you? |
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Procell: |
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Yeah, I mean, not to make projections |
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Downey: |
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Right. |
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Procell: |
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But the our intent in making it the SG&A cuts that we made doing the executive management right-sizing that we did, and focusing on |
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whether by choice or by necessity, focusing on expanding existing programs, rather than starting new ones |
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Downey: |
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Mm-hmm. |
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Procell: |
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Is all designed to lead to profitability. So, we dont believe that have a business thats in startup mode. We believe we will have programs that start up down the road. So, and I mentioned earlier, I guess tipped our hand a little bit, saying that we have investors who expect us to be profitable now. Not to be profitable in the future. |
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Downey: |
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Right. Right. The you mentioned that you yourself sort of going through that time, you know, sometimes wondered, do they know at top, at the top, what this is doing to us. How did, how do you see, you said you werent an executive officer, and I understand. But how do you see how your personnel made it through all that time. I mean, you know, what was it like |
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Procell: |
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Right. |
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Downey: |
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being here. |
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Procell: |
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Well, you know, Ill speak for the utility program business unit, which was a distinct business unit, and they all made it through. So, we didnt lose anybody. We, the seven or eight senior managers of that business unit are the, are the seven or eight senior business managers of the company now. And we did it because since 2009 we created a very unique, very positive culture and entrepreneurial spirit in that business unit. Which grew, as you know, out of the ground in 2009 from nothing. |
Downey: |
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Right. |
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Procell: |
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And, and won a contract in Buffalo, and its taken off since then. And so its kind of that sense of ownership that those people have, and the sweat equity they poured into the business, I think, is what made them stick around. And it took a lot of encouraging of one another to do that. And that extends down also obviously through the troops. You know, weve had, weve had great retention. Weve had people that got nervous and left the company and went to a competitor, and the majority of them have come back, in seeing that the companys still around. So its hard to explain other than to say that, you know, there is a wonderful culture inside of Lime. Probably hard for people to imagine on the outside, reading the news. But its been that, really. Its been a culture of family, you know, and when were together, that, thats really the way we feel about it. |
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Downey: |
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Whats, whats, what do you see youve been, youve been CEO now for what, about three months? |
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Procell: |
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Yeah. |
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Downey: |
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Whats, whats the big opportunity you see right now? You know, where you, you know, its all in your hands now. |
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Procell: |
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Right. |
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Downey: |
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What are you looking to do? |
Procell: |
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But, more of what were doing, more of what weve done. And I think that, you know, were in a position that a few companies get in, where you set out to do something, and while youre doing it, you get really, really good at something that has a value to clients that you didnt anticipate. And we have become a conduit to the small business customers, for utilities, that is something they need desperately. You know, they also need the energy efficiency resources that we set out to get them, and were very good at getting those. And theyre cost-effective. Thats why we keep getting more work. But in doing so, weve been able to set up this conduit that allows the utilities to sell other products and services to small businesses that when we arrived, they really know nothing about. Its very hard for a utility to they dont have customer service reps for laundromats and pizzerias, right. |
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Downey: |
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Right. |
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Procell: |
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They have them for universities and hospitals. So they know very little about these customers. So were finding that theres great value in the technology weve invested in and the data that we gather by being out in the field with these customers. |
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Downey: |
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Thats interesting. You ended up being sort of the, their inside man for the, you know, as you said this, they would have large customers, because you need the people inside |
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Procell: |
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Right. |
Downey: |
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who know the business. The, Ive asked you, you know, whats the opportunity. Whats the big challenge facing you still? Youve gotten through a lot. Whats the big challenge facing you still? |
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Procell: |
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I would say that it is the people, and training, and having 130 people be experts in what we do is a real challenge. And as we need, when we get to 200 people, it will be that much more of a challenge, right? Because there are not seventy people out there that I can go get that are doing what were doing. And thats, thats a problem. So we bring people from adjacent industries. I get an electrician, and then I get him to be a sales auditor. Right? So Ive got some sales training to do there. I get a mortgage sales person thats out of work, and I train them to be a sales auditor, and then I got to teach that person, Ive got to teach her about the lighting fixtures, that she has no experience in. |
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Downey: |
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Right. |
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Procell: |
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So theres, theres just always, you know, if I had, at any given moment, my best fill-in-the-blank-for-the-title person working on a given program, wed be killing it all the time. But we just, you know, weve got to get that expertise and knowledge in what we do, which is unique and new, out to people that were on board. Thats a challenge. So I guess its always kind of people. And I think for us its the uniqueness of what we do makes it a training and on-boarding issue. |
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Downey: |
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Right. Right. And just sort of to clean up past stuff, I think. You settled the lawsuits, or its been preliminarily accepted by the |
Procell: |
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Its been accepted by the judge, which is in my understanding is as good as settled. But then theres a mandatory time frame |
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Downey: |
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Exactly. |
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Procell: |
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that any class participant can say no, this isnt good enough. |
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Downey: |
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Right. |
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Procell: |
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And I would just say we certainly dont anticipate that. |
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Downey: |
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Right. |
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Procell: |
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Its a class action lawsuit. |
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Downey: |
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Exactly. Exactly. So thats essentially out of the way. You mentioned the SEC is still out there. And not much you can say about that. And Im thinking, and I just want to make sure this is correct. Does that, you know given that, given that youve got your financials in order, given that, the SEC is really the only, the only thing left out there from the past that you still, is still an unknown for you. |
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Procell: |
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Correct. |
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Downey: |
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Okay. Okay. So, how, you said youre the only, you said youre the leader out there. How many companies are your competition right now? Roughly. |
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Procell: |
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Couple different phases. Couple different profiles of competitors. |
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Downey: |
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Mm-hmm. |
Procell: |
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So, if there are a small handful of larger contractors that do the audit and install the way we do. |
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Downey: |
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Mm-hmm. |
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Procell: |
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So they fancy themselves competitors, and they show up to compete for contracts. There is a small handful of very big companies that are utility consultants. |
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Downey: |
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Mm-hmm. |
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Procell: |
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Program administrators, and they handle programs for, that serve large customers well. And they would like to handle programs that serve small customers well. But the uniqueness of what we do is being integrated. Right? So were program administrators, program designers, we have experts in marketing and sales, and we do the audit, and we order the material, and we warehouse it, and we hire the electrician to do the install. That integrated services approach is very unique. There are no companies that are implementing the programs under our design that way. |
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Downey: |
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Right. Are you still you know I recall early on as this business was growing, and I will say I know that Lime has always seen this as their big growth time, I mean their growth focus, even before, you know, they decided to get out of some of the other businesses. But you were, you were, you were able to hit significantly better returns than, you know, than you were contracted for. You were, you were, Im trying to remember the act, I dont remember the numbers offhand, but in New York, and all that sort of stuff, you were just hitting very good numbers. Are you still |
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able to do that, or has it gotten to the point where you, you know, you now know better what youre capable of, and your customers know better what youre capable of and, you know. Or are you still finding it, you know, that, that, youre being able to exceed expectations in your contracts? |
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Procell: |
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I would say that what we used to talk about a lot, and you heard a lot about, is exceeding the, literally the megawatt hour savings goal in the contract. |
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Downey: |
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Exactly, yeah. |
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Procell: |
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And would say theres been a little bit of the effect that you describe, where we understand just how much we can do, so we promise it, and our utilities believe it, and so the goals get set higher. So its a little harder to be at, its kind of like growth, right? Its easy to grow at 80% for the first couple of years, then it gets harder. |
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Downey: |
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Yeah. |
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Procell: |
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So, right. I do think theres been a little bit of that effect. We continue to exceed our savings targets. And I would say that, again, its kind of like the description I gave of a company that finds out that theres some things theyre really good at, that they werent anticipating being the value. |
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Downey: |
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Mm-hmm. |
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Procell: |
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I think were exceeding expectations even better, and its less about savings. Were still exceeding the savings target, not wildly any longer. But we are doing things with customer satisfaction results |
Downey: |
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Right. |
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Procell: |
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With realization results, with innovative product channeling in of new products, doing multiple measures, not just lighting but doing refrigeration. Were doing a lot of things that continue to have our clients, consider us to be exceeding their expectations. |
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Downey: |
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Right. And that has to do with, what you were talking about before, about being the conduit for more services. |
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Procell: |
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Correct. |
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Downey: |
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Yeah. Yeah. The, one more question I just have to you. Are yall staying in Charlotte, by the way? |
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Procell: |
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Oh, absolutely. Were as committed to the southeast as weve ever been. And, you know, with the predecessor company, Applied Energy Management, weve been headquartered in Charlotte triad for a decade. So no plans to go anywhere. This is home for the company. And, you know, weve got one really, really big client here. |
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Downey: |
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Yeah. |
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Procell: |
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Which we didnt have, right? So, I mean, we were headquartered here, and moved our headquarters here when we really didnt have a lot of work here. |
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Downey: |
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Right. |
Procell: |
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So now more than ever, with the work were doing with Duke, excited to be here. |
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Downey: |
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Okay, and do you see, I mean, as you said, you went from five divisions to one. At some point do you see the opportunity for diversification again, or is this the company that you see Lime being for the, you know, reasonable future? |
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Procell: |
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I think were certainly open to it. I mean, there are some very, very adjacent things that weve done very well in the past. We did thousands and thousands of bank branches for the major banks in the country. Now, were headquartered in Charlotte, North Carolina, and were not doing any work with banks anywhere, because weve chosen to be very focused. The tools weve developed, the capabilities weve developed for doing multiple small businesses in a utility territory are completely transferable. I fully believe we could, if Chase called tomorrow, we could go back and do a thousand bank branches more efficiently than we did them five years ago. The, we used to sell, as you know our small business programs are for the smallest of businesses under a certain KW threshold. The mid-sized businesses above that, we sold to direct for many years. What we found hard was to develop a national model where youre kind of going at risk, and you go to all these cities and start an office |
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Downey: |
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Right. |
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Procell: |
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hire sales people, and then see if you can sell the hundred thousand dollar job, the two hundred thousand dollar job. If youre doing that |
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incrementally on top of the small business job, because youve got a sales force, youve got a warehouse, youve got a presence, that seems to make sense. |
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Downey: |
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Right. |
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Procell: |
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So I would say there are some adjacencies that are in our, that are in our historical past, that we will probably look to explore down the road. |
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Downey: |
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What has, what has to happen before you have the confidence to your confidence, not investor confidence, but your confidence, to go forward with those sorts of things. |
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Procell: |
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Yeah, just the feeling that we will not, that it will not take away from the ability to serve our utility clients and their small businesses. And, you know, theres people in the company right now that have confidence that we could do that, and, you know, three months in as CEO, I just, I feel we owe it to a small list of utility clients, who have many, many small business customers, to stay focused on delivering the goals in those programs. |
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Downey: |
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One last question I do need to ask about the, about the past, and that is, what, what safeguards do you have in now, in place now, that you didnt before. You know, just |
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Procell: |
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So, again, I would probably say that thats take me into a place where Im going to be talking about things with that, related to our internal investigation, and now the SEC investigation, so I really dont want to go there. But we certainly, and you mentioned, that, you know, what I can do |
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is obviously refer you to and/or talk about everything weve put out in an 8K, right? |
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Downey: |
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Right. |
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Procell: |
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And weve put several out. You mentioned that we terminated employees. |
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Downey: |
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Right. |
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Procell: |
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So now youre asking about the changes in financial controls, and there were changes made, some of that was released in the 8K. |
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Downey: |
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Right. |
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Procell: |
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And I can just tell you that organizationally, there was an immediate change, at the onset of our internal investigation, that took accounting practices out of the operation and put the appropriate firewall for a public company to have the accounting done in accounting, and for operations to report data. And that, at the time we had a problem, that was not the case. And that was a change we made immediately. |
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Downey: |
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Right. Right. Were you surprised to end up the CEO? I just had to ask. |
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Procell: |
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No, because it was a slow, painful evolution, right? |
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Downey: |
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Right. |
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Procell: |
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So, I mean, there were many, many times when we looked at each other. There were many times when John ORourke looked at each other, for months and months last year, and said, you know, perhaps, one of us could lead this company. Right? So as the president of the utility program |
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businesses, we, as it became clear that that was going to be 100% of Lime Energy, I did start to see myself as the President CEO before I was given that job. |
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Downey: |
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Okay. You know, actually, I think the questions I can reasonably ask, you know, at this point. And maybe we, you know, we can talk more when things are all settled down. But I will look forward to talking to you as the business grows. But before I, before I finish, these are the questions I had. I dont know if weve hit the, what you see as the important points for whats going on Lime right now. And Id just like to give you an opportunity, cause you on, youre doing the job, Im trying to see what its like from the outside. |
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Procell: |
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Right. Right. |
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Downey: |
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Is there something we havent talked about that you think is key? |
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Procell: |
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I think a lot of its been talked about, but I would pull out as the key points are, you know, for Lime this is a, this is a new era. Its a new dawn. And at the same time, there is a success story here. So if you could pull out, over the last five years, if you went and isolated the company we bought in 2005 that was doing direct sales to C&I customers |
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Downey: |
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Mm-hmm. |
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Procell: |
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That then in 2008 and 9 had the problem with the brick-and-mortar, the scaling that business nationally, they started to struggle, the economy tanked in 2009, what happened was, one of the best strategic moves that Ive ever been around in my career, which was to turn that business and |
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focus its core capabilities on utilities because we made the bet on two things: one is, getting efficiencies from small businesses is going to be important, and doing it on an integrated-services basis, its going to be the only way to unlock the potential in that market. And both of those bets paid off. And in 2013, there were two major industry reports that cited exactly that. Thats four years later. So we made a bet in 2009, and spent four years getting out in front of the pack on something. So when I say its a new dawn, its not like weve cleaned, brushed ourselves off and we start from here. Theres a great success story that was inside of Lime Energy all along, and, and, and now we feel like, all we able to talk about it a little as Im doing today, and we feel like were able to show people that that really is what Lime Energy is all about. |
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Downey: |
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Right. And you managed to do it when you, when you had significant financial and legal problems. |
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Procell: |
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Lot of headwinds. And as much on the personnel part that you talked about. Theres a lot of therapy going on. Theres a lot of wasted time and energy on talking about, you know, is it going to be here for us, and were past all that. You know, so, theres two things. Yes, weve restated our financials and can talk to new clients a lot better. And we just not, were not looking over our shoulder. Were not worried. And were moving forward. So its a very good time here at Lime. |
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Downey: |
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Okay. Well, I do appreciate it. Thats actually, I think, what we needed to do. |
Procell: |
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Great. |
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Downey: |
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And, [recording ends] |