Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Robert Blum - Lytham Partners

Tony Ker - Chairman

Dennis M. Danzik - CEO

Richard Winterich - COO

Kevin Bridges - CFO

Analysts

Raveel Afzaal - Mackie Research Capital

Al Nagaraj - Industrial Alliance

Steve Kammermayer - Clarus Securities

Ridgeline Energy SVC (OTCQX:RGDEF) Q3 2013 Earnings Call February 19, 2013 8:30 AM ET

Operator

Good day and welcome to the Ridgeline Energy reports the third quarter of fiscal year 2013 conference call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Robert Blum. Mr. Blum, the floor is yours sir.

Robert Blum

Thank you Mike and thank you all for joining us to review the financial results of Ridgeline Energy Services for the third quarter of fiscal year 2013 which ended December 31, 2012. As the conference call operator indicated, my name is Robert Blum. I am with Lytham Partners. We are the financial Relations Consulting firm for Ridgeline Energy Services.

With us on the call representing the company today are, Tony Ker, Executive Chairman of the Board; Dennis M. Danzik, Chief Executive Officer; Richard Winterich, Chief Operating Officer and Kevin Bridges, Chief Financial Officer.

At the conclusion of today's prepared remarks we will open the call for questions. If anyone participating on today's call does not have a full text copy of the release you can retrieve it off the company's website at www.ridgelinecanada.com or on numerous financial websites on the web.

Before we begin with the prepared remarks, we submit for the record the following statements. This conference call may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Listeners are cautioned not to place undue reliance on forward-looking information as no assurances can be given as to future results, levels of activity or achievement.

With that said, let me turn the call over to Tony Ker, Executive Chairman of Ridgeline Energy Services. Tony?

Tony Ker

Thank you Robert and thank you for joining us today. We do appreciate your participation on the support of Ridgeline. With the markets set to go up in the next 60 minutes we will try to provide you with a brief overview of events that are taking place and leave a few minutes for your questions.

First, I would like to say its my absolute pleasure to take on my new responsibilities as Executive Director and Chairman of the Board of Directors of Ridgeline. Four years ago, Ridgeline started working with Mr. Dennis Danzik to apply his team’s scientific and technical achievements to a water treatment technology for the oil and gas industry. Ridgeline has been successful in deploying a cost effective water treatment process and equipment manufacturing system that's become a leader in the industry. Simultaneously, the company has also been able to progressively expand into the industrial, commercial water treatment and now has a completed vertical integration with the conversion of waste water affluent into energy.

At this point in the company's development in the industrial water treatment showed significantly faster growth and higher returns than the oil and gas industry and therefore we would remain on the industrial waste water treatment area. That’s where we will focus our efforts. Ridgeline’s continued success is also about having a plan and driving to become the low cost water treatment solution for specific water treatment situations.

Careful selection of opportunities, building of a capable management team, commitment to strong ongoing engineering development and targeting of specific industries has set the company on a track for rapid growth and high potential profitability.

It's also my pleasure at this time to formally introduce someone that most of you have known for a few years now, our new Chief Executive Officer, Dennis Danzik. I want to take the time to say how pleased we all are at Dennis’ great step into the CEO spot for Ridgeline. Ridgeline serve the ability to attract the level of managerial talent and expertise that Dennis brings to Ridgeline is a real win for all of us involved in the company. For the rest of this call and after four great years as CEO of Ridgeline, it's my pleasure at this time to hand over the executive management of all operations to Mr. Danzik. Dennis?

Dennis M. Danzik

Thanks, Tony and I appreciate the compliments and I can say with some certainty that there are few things at Ridgeline that I would not change. First is the fact that I get to manage a very exciting growing company with some of my closest friends. I would not change four years of great leadership we receive from Tony Ker. Some of you know the story, somebody don’t. Tony was recruited over four years ago by Doug Johnson, our current Director and former Chairman.

Doug completed a great leadership job in selecting selling Tony for Ridgeline and getting Tony the tools that he initially needed to succeed. I would like to remind everybody on the call that in 2009 when Tony became CEO of Ridgeline, the company was at $0.07 stock with very limited opportunity. Tony took was essentially a start-up with great people on board like Tyler Heathcote and Brad Shybunka and up in our Canadian offices and worked very hard to find an opportunity. I am very happy that they joined me.

With that said, a big thank you to all the Ridgeline employees now located across North America, lots of success ahead for our shareholders and the entire Ridgeline team.

Now before we move on to our third quarter financial results, I would like to stress a few items that I will shape immediately over the next quarter. First our message; it’s very simple, it’s a very simple message, water, water, water. Second, our job; it’s water; we secure it, we treat it, we manage it. Third, we apply good engineering practice to vertically integrate that every step of our job which is water.

Our company will also stand for continuing scientific innovation, that’s how we got where we are at today. Over the next several months, you will see the first series of our patents being filed and new technology introduced that will significantly change the way the industrial waste water industry deals with interceptor waste water.

We will also continue our growing opportunities in the oil and gas industry. Due to the continued hard work of Ridgeline staff, Tyler Heathcote, Brad Shybunka and Scott Havrisik, our potential with oil and gas has never been better than it is this year. Our opportunities have grown over four years from a small air in Canada to California, Texas, Wyoming and now Western Pennsylvania.

Lastly, as Tony discussed, we will continue to dial in specific strategic targets and we will continue to develop super properties like our Santa Fe Springs and Missouri facilities. Due to the dedication of California division employees, [Joe Murray, Doug Bean, J.N. Johnson and Bob Ellis] to name a few we have proven that our statistical plans to develop properties works and overtime can produce long-term financial results. This results in recurring revenues in a growing industry and in many cases that we all state that goes along with it.

Now we move onto the financial specifics for the quarter with our Chief Financial Officer, Mr. Kevin Bridges, Kevin?

Kevin Bridges

Thank you, Dennis. I will begin with the company's result of operations. Total revenues for the third quarter of fiscal ‘13 increased approximately 73% compared to the third quarter of fiscal ‘12, with the increase attributable to the contribution from our water division which included our Santa Fe Springs facility, our recent asset acquisition of PTEC and for management of [TMG] and 13 Tons operations. So the third quarter and entire fiscal year all revenue is generated from our environment and GreenFill division.

Total cost of sales was higher in the third quarter as compared to the same period in 2012, primarily due to our water treatment operations which were not present in the prior year. Note that our overall gross profit increased 55% from the same period in 2012, although revenues and overall gross profits benefited from the contributions of Santa Fe Springs feedback, TMG and 13 Tons operations, gross margin percentages were negatively impacted by TMG and GreenFill operations in the third quarter. The company’s gross margin for the third quarter was 31% compared to 34% for the same period in 2012.

Our net adjusted company's balance sheet, where total assets increased approximately $5.5 million from the end of our second quarter. The decreases involve cash and working capital resulting from various investing activities. Our cash balance decreased by $4.2 million to approximately $3.6 million and working capital has declined to $4 million from $9.6 million at the end of the second quarter.

These decreases are primarily attributable to cash fueled in investing activities of $6 million offset by cash provided by operating activities of $1.8 million. Our third quarter fiscal ’13 investing activities included an additional $1 million in acquisition deposits and other advances related to the pending acquisitions of our Santa Fe Springs facility, $3.6 million for capital expenditures and development costs and $1.4 million for the acquisition of PTEC.

Note that the majority of the acquisition deposits and other advances for the Santa Fe Springs facility will be credited towards the overall purchase price at closing. Total assets are now $51.7 million up from $46.2 million at the end of the second quarter. As of December 31, 2012; the company had minimal debt but in January 13 it took on $1.6 million of new debt comprised of advances on an existing credit facility and a short-term promissory note.

Total equity has increased to $42.2 million at the end of the third quarter up from $41.6 million at the end of the second quarter. The third quarter results include net non-cash charges of $1.25 million, $1.1 million pertaining to the amortization of intellectual property acquired in January 2012, other intangible assets and fixed assets.

Other non-cash items primarily consist of $0.4 million pertaining to stock-based compensation expense offset by $2.25 million pertaining to changes in fair value of a note payable and PTEC (inaudible). The company's net loss for this quarter was [$0.8 million] or $0.01 per share as compared to the prior year’s loss attributable to the company of [$0.1 million] or less than $0.01 per share. There were approximately 133 million shares outstanding at the end of the third quarter.

Thank you for your attention. I will now turn the call back over to Dennis.

Dennis M. Danzik

Thank you, Kevin. Now for an operational update I would like to turn the call over to Richard Winterich, our Chief Operating Officer.

Richard Winterich

The third quarter was very, sorry for my voice (inaudible) weather today but the third quarter was a very busy time for us. Basically, we started with our Scottsdale manufacturing facility where we completed the rehab of that building. We transitioned manufacturing into that site and that transition went very smoothly. We are basically are up and running, doing welding, plastic tank fabrication and electrical control panel fabrication at that facility.

The second site that we had significant activity was Santa Fe Springs. We have three additional systems that we installed at Santa Fe Springs and we are waiting for city approval to commission those systems to get them up and running. We also are putting in a solid handling system at Santa Fe Springs.

The company produced equipment is about 90% installed at that site at this time but we are waiting for some city approvals but then we've put in some ancillary equipment like the crane and the clear span building to control the owners at that particular site. At Santa Fe Springs, we also are working at we started the transition of employees. Basically, the employees that came over from Lakeland, we retained about two-thirds of those employees and a third of those were terminated by Lakeland.

We anticipate that will generate savings, operational savings in the $0.5 million range as we go forward. We are also in the process of automating the scale activity at that site and we successfully completed the transition of the accounting activity after the Quickbooks system that they were on in to our Great Plains accounting system that’s being run out of Scottsdale.

In addition, Kevin mentioned that we had acquired PTEC and the PTEC acquisition is going well. We wanted to, there is a major component of our system that we were basically sourcing from PTEC. We currently have six units that are for our internal consumption going to PTEC. Couple are in process. We have deposits with others. Those units are built by a third-party fabricator and we're currently developing plans to move that fabrication into Scottsdale with the redesign of that equipment to be very specific to our application as we go forward.

In addition to that, basically on our environmental business in the Greenfield site, we built an additional site in Youngstown, Alberta, Canada and that site would be taking materials beginning of our fourth quarter.

With that, I will turn it back to Dennis.

Dennis M. Danzik

Thank you, Rick. I appreciate that. Now, we're ready to take some questions and see who is in the queue. Operator, please instruct our listeners on queuing up their questions.

Question-and-Answer Session

Operator

Yes sir. (Operator Instructions) The first question we have comes from Raveel Afzaal of Mackie Research Capital. Please go ahead.

Raveel Afzaal - Mackie Research Capital

I have a question regarding your capital budgeting, are you guys closer now to figuring out how much CMT acquisition might cost or what’s your capital budget could look like for the remainder of the year?

Dennis M. Danzik

Well Raveel, this is Dennis. Basically, we took over the Missouri facility at the beginning of December. Our first priority was to do exactly what we did at Santa Fe Springs and that takes a little bit of time. We still need another month or so before we assemble what type of waste water improvements that we are going to put on at that facility, that facility is 70% waste water associated and 30% energy associated and that’s a little bit of a twist for us not much. It is a twin and obviously not as large as our Santa Fe Springs facility but certainly has an equivalent earnings potential to our California facility.

So we are going to need 30 to 60 days and probably on the next conference call we will detail what we intend to spend at that facility. We are extremely pleased with our revenue run rate at that facility and very pleased that we were able to turn it around in such a short period of time. How were we able to do that basically because we have the experience of Santa Fe Springs under our belt.

Raveel Afzaal - Mackie Research Capital

Okay, thank you and a housekeeping question, could you tell us what’s your targeted gross margins are for your REI and RGI division?

Tony Ker

You know I am going to answer that, that's Tony, Raveel. The REI you can kind of see from the segments of information on the financial reports as a good place to use indication going forward. We think that is going to be a very stable business. For the RGI, we are actually start building that business and it’s a huge range of returns in that area, we expect because some of what we are doing on the web based area to be able to help those returns and they are not going to be forecast at this time.

Operator

Next we have Al Nagaraj of Industrial Alliance.

Al Nagaraj - Industrial Alliance

I have a question in regards to the growth prospects and capacity of the combined facilities in terms of revenues, can you shine some light on that in terms of how are you going to planning to use these facilities to and to what extend you can leverage these facilities? Thanks.

Dennis M. Danzik

Certainly, thank you, Al. The answer for the question on what we think that the total revenue annual (inaudible) I refer to as a super property that’s our and we referred in the balance sheet, that is a property that has substantial acreage with it and existing or expandable waste water discharge and when we first started down the process and started going after the industrial waste water side, we were targeting $30 million to $35 million of property without integration.

Now that we are able to not only clean water, but effectively develop a couple of products that are soluble out of the waste affluent of that water. We are fully integrated. The Missouri property is the first example of that, but we are quickly duplicating that at Santa Fe Springs.

The property potential now is anywhere between $65 million and $75 million a year per facility, based on our current experience. And we think that that may even go higher. The nice part about the business and those particular properties is that we are simply installing a technology and equipment that we are very good at manufacturing.

We've had now four years of underground experience building and installing this equipment and we are getting very, very good at it, and our cost efficiencies are improving constantly. So hopefully that gives you an overview. Our operating margins are on that revenue, we are happy with and we will be glad to offer you some specifics if you would like to do a follow-up.

Al Nagaraj - Industrial Alliance

Yeah, so that's another thing, right. So in terms of the operating margins on this property on a normalized basis right you are building up now with unsteady state, what kind of margins you are anticipating and how your expectation so far have been converted as you do it, when you buy a facility, you go into a facility, you have a vision, hey I can make this much of margins and then how they reality has matched in so far. You know I know its two questions there but if you can…

Dennis M. Danzik

Hopefully I'm getting the drift of your questions. I can talk specifically right now about Santa Fe Springs where we are operating, it looks like an average share of about 54% to 55% which we are very pleased with, and obviously we are not going to get into complete specifics but that property is going up some nice monthly cash flows. And we expect the same thing out of the Missouri facility.

Al Nagaraj - Industrial Alliance

And was it something that came above expectations, but when you buy this property right normally you look at it and say how was the experience in Santa Fe for you, maybe you had a range when you got in or like…

Dennis M. Danzik

Well, our expectations on gross operating margins were high when we entered the business. Even in the oil and gas industry we were looking at those exceeding 50%. Now that they are actually in practice and I'm sitting here next to Kevin looking at his wonderful financials, we are very, very pleased with that.

Now when we look at a property this particular property was offered to us by bankers, and I can tell you there's more of those coming. We are not going to get into specific where and when, but those opportunities are out there for Ridgeline because we have the ability to get those things up and going and profitable in a relatively short period of time, whereas before they were basically just a liquid landfill, truck packs up and dumps and pays a pretty good penalty for dumping things in to the municipal waste water system. We eliminated that.

That’s the only thing that we did for a living. We can get a handsome return to our shareholders with a complete vertical integration as we’ve done in Missouri. We expect our returns to be substantial.

Al Nagaraj - Industrial Alliance

So, I assume when you say growth, operating margins it’s like the gross profit base on the direct expenses for the sites, right? Not the --.

Dennis M. Danzik

That’s correct.

Operator

(Operator Instructions) The next question we have comes from [James Morrison].

Unidentified Analyst

On the revenue, can we assume that the revenue you got from management (inaudible) from 13TON and the Missouri facility were effectively pass-throughs? Will you be earning margin on those management agreement right now or are you negotiating their purchase?

Tony Ker

Absolutely.

Unidentified Analyst

You are operating on a margin?

Tony Ker

Absolutely. It's under the same way that we set up Santa Fe Spring. So if we earn a margin, we get it. If we have a loss, we get it. So it flows right through to us.

Unidentified Analyst

Okay, and then on Santa Fe Spring, you said that you added three more facilities. So am I correct in assuming that that exceeded six and how long will that take you to fill that capacity or do you expect to be able to fill it right away?

Tony Ker

Right now, we have four units there. So we originally have one unit there processing. Now we have four units onsite that can process. We are going for the city approval and once we get the city approval, what we will start doing is segregating a lot of the waste streams so that they can be dealt with more efficiently if they pass up and down each line. So a lot of the material we are taking now with the oil and grease, we want to segregate that so that we can create that back end revenue stream by selling that product into the market.

Unidentified Analyst

Does the four you say are on site is that including the three that you’ve installed that you are referencing before?

Tony Ker

There is four units on site, one with the original units then there since we’ve been on that property or shortly after we’ve been on that property. The three additional units have been installed in the fourth quarter and we are just waiting the city so we can basically commission those units and start running them.

Unidentified Analyst

But they are not being used right now.

Tony Ker

The three are not being used right now they will be shortly.

Unidentified Analyst

Okay, so the revenue run rate you have right now is based on like I think you said that you are running around $10 million or $11 million on the run rate now aiming to be at 20 million by March or spring time.

Tony Ker

Well let me correct you on that Jim. The run rate at because of the acquisition of [30] tons in California is between 16 million and 17 million now.

Unidentified Analyst

Right I am excluding that I guess. How much are you expecting to scale your revenue based on getting those three units permitted. Is it linear, can you just say right now if you are running it if you are running it I think 16 to 17. Can you just triple it, like you add and three times that?

Dennis M. Danzik

Yeah the purpose of the additional units at Santa Fe Springs is to bring cost down through segregation of the waste streams. We bring in, we have over 200 customers of that facility and you will see the same thing at the Missouri facility. The units that are installed there and the equipment are installed is not necessarily a function of limiting or expanding our capacity. It’s through, let's put it this way, been able to mine that water for the valuables that are in it, and as well as treat it.

The more that we can segregate that the more our operating cost go down. The less people and less labor that we have impacting that waste water treatment, and then as we go revenues will continue to go up. We have seen several new contracts and those range and it work from a few hundred thousand dollars to several hundred thousand dollars a year and they are multi-year and you will continue to see revenues rise.

I can't predict right now and tell you what it will be a year from today, but they will be much higher, demand of that property continues to increase.

Operator

And next we have [Fulham Meyer of Fulham K. Meyer & Company].

Unidentified Analyst

You were making reference made me just back off as a former oil field service analyst that you appreciate, I got very involved in you guys on the promise of what was going to happen in the oil field in the way of what I call well site water management and I've got to admit that I've been very happy with your transition to generating a great cash flow platform because as we've all found out its painfully tedious to deal with the oil industry, I've known that and I do appreciate that you've established a very strong, let's say for lack of a better word, cash flow platform for going after in time this longer term project. With that said, you mentioned something about new technology to be introduced, what were you referring to or what kind of new technology are you referring to?

Dennis M. Danzik

Well, there's two parts of that. The first part is our patent strategy for this year which includes the developments that we have that will be going out into the field that are pretty dramatic improvements in our system that Rick has overseen with our engineering staff here in Scottsdale as well as the input of our operators in the field. So you’ll start to see those (inaudible) of patents go up whether it applies to our storage system, whether it applies to things like gas collection off of our systems, I think pumping improvements, reverse osmosis just a wide variety of things, as a matter of fact I think there's nine categories and you will start to see us file those patents this year and we are looking forward to that.

The second part of that is that we do have two technologies that are now fully developed and ready to commercialize. The primary one is an interceptor product that basically kills the bulk truck. In the waste water industry across the US and certainly Canada and in other countries underground interceptors are the number one headache of every municipality in the world that has to actually deal with waste water and sanitary sewers. Those interceptors are continually plugged with oils and grease. Those are valuable to us and as a lot of you know I've worked for a number of years to get to the position where we could in fact, kill more trucks just as we do in the oil and gas industry, we want to kill trucks that are out in the…

Unidentified Analyst

How do you go about killing trucks? In other words can you walk…

Dennis M. Danzik

Yeah, you eliminate their use and I can't get into the specifics of how the technology operates at this point obviously, but we intend to announce that in April and get those data’s in the field. So that that doesn't require pumping. It is a very, very large market just in the United States. On average restaurant will spend $3000 or more a year on interceptor service and we've got a better way to do that. And that is predicated on us proving out our infrastructure at properties like Santa Fe Springs and Missouri. You've got to get the basics done before you can accelerate and we’ve proven that so now we are ready to step forward and bring some more technologies into the market.

Unidentified Analyst

Now there was mention of developments in Western Pennsylvania, could you amplify, put some color on that?

Dennis M. Danzik

Yeah, that's oil and gas opportunity that we have there and as I stated in my previous thistle there, that was our oil and gas opportunities have never been better than they are in 2013. That industry as a whole continues to creep ever so slowly to water reclamation. It is taking time but I can tell you that it is accelerating. While that mass is picking up speed, it's gathering more mass and it's moving to where we wanted to move.

I believe that you will see some subtle regulations come out over the next couple of years that will help us but what's really been the change, the sea change in that business is the industry itself. They want to drive down cost and waste water cost, the oil and gas industry continue to rise and we're in the right place at the right time with the right answer and Western Pennsylvania is obviously the Marcellus, which is very expensive to get rid of water up there.

They basically regulated themselves out of that business in Pennsylvania and everything is being shipped out. It's very expensive and we're working on that opportunity now. It's in study in a fee-for-service, for fee-for-service study but nonetheless in study. So, we can’t talk too much about it but the opportunity is substantial. It's our Western Pennsylvania opportunity right now is about $30,000 a day in revenue run rate.

Unidentified Analyst

One last question. Where do we stand on the final closing of the Santa Fe Springs Lakeland purchase?

Tony Ker

This is Tony. I would like to answer that. We're at the stage where as you may remember, it was taken out of bankruptcy. There is a few lien holders that we were working with to make sure that the money goes directly to them. That has to go through a bankruptcy court final approval and I was, last week there was going to be 14 days, we might have to add four, five days to that just because of the process in the court. It’s not something I am completely familiar with but we have put our money in escrow and sitting there good to go what I have really put the stipulation down is that money is to go the lien holders. So we end up having that property without any liens holding against it that’s where we are at.

Operator

Next we have Steve Kammermayer of Clarus Securities. Please go ahead.

Steve Kammermayer - Clarus Securities

Just a quick question, so on the Missouri facility I think what you said earlier when you had first taken over was running at a loss and now it’s slightly profitable and it could get up to as profitable as Santa Fe Springs, do you have a timeline in both how long that will take to get up to that sort of run rate of 54% to 55% operating margins you said?

Dennis M. Danzik

Well again, we need more experience on that property. It’s just too soon after only about 75 days of operating on there to really give you a legitimate answer on that question. I can say this much when we stepped on to the property; it was losing a substantial amount of money every month and the company as a whole as an operation had never made money. In a month, we had it pass or near breakeven and now we have a bit of positive cash flow, is that going to improve every week? We work on it every day. And when will it be a Santa Fe Springs? That’s for the next conference call.

One of the things that we pride ourselves it doesn't seem like four years but it has been four years and one of the things that we pride ourselves is not giving stupid answers. So just have a little patience with us and we are giving you our word that we are going to continue to cultivate that property to adjust to its best potential.

Steve Kammermayer - Clarus Securities

Okay and I think you have said its going to be both 30 to 60 days now to get the acquisition closed is that much for the things that I heard there right?

Dennis M. Danzik

Sorry, I didn't quite catch that last.

Steve Kammermayer - Clarus Securities

I think original press release about Missouri site closing was expected around March 15, and now I think today, that I hear rights its still 30 to 60 days away?

Richard Winterich

What the March 15 was referenced to the management agreement which has 90 renewable on it, so its like that's the date that we are working towards but there is a automatic renewal if we don't get to an agreement on it or whatever, but I couldn't give you a particular closing date right now other than that's what the management agreement stated only first started.

Dennis M. Danzik

I am handling those negotiations along with some of the, that I can tell you that we are well down the road on the construction of the purchase agreement.

Steve Kammermayer - Clarus Securities

And maybe can you just give us a quick update on the Redcliff facility; I think you have started with your pilot project now to accept the wet waste house, how is that going and is there sort of plan to ramp that up?

Richard Winterich

The pilot has been approved, so the process itself has been approved by both authorities in Alberta. So there is a little bit of contest between (inaudible) Alberta environmental as a municipal facility or is it falls under the other Canadian site and who regulates it. So right now those two agencies are working with each other and we will get an approval. We would anticipate that which is soon and then I understand that you were at that Redcliff site. So we are basically moving that forward sort of a little bit of a twist is we are actually looking into Saskatchewan, it looks like we might get our first permit in Saskatchewan ahead of Redcliff just because of the bureaucratic process there seems to be moving a little quicker. So, we are anticipating having a wet waste site both in Alberta and Saskatchewan and I would anticipate that we are looking forward to really generating significant revenue and having it beyond the revenue for the project related revenue.

Operator

Next, we have [Ed Ajootian], investor.

Unidentified Analyst

Are you by using this technique of using a management agreement prior to actually entering into a definitive purchase agreement on these properties consent at all that you are basically improving the value of the very property that you are trying to buy?

Dennis M. Danzik

Well, no we are not. We think that it’s a very, very good way to do business. And I give Tony Ker credit for getting that first one formulated. What that allows us to do is immediately get an auditing team in which is exactly what we just did with Missouri facility which had a couple of different offices. Kevin acted very quickly. We got our audit team in. Tony got a third party valuator in. You are never going to, there's no magic. You don't show up on a property one day and all of a sudden it’s printing money on Tuesday. It takes a number of months for these things to be turned around.

Do we tell all of our potential acquisitions everything that we do to make that property or that facility a success? Absolutely not. You got to remember that the technologies that we use are our trade secrets. They are so dispersed and their construction and manufacturer and operation that we don't have any worries about putting that technology in and anybody walking off with it.

So it’s a good marriage. It allows us to get to know the employees. It allows us to get to know the history of the facility, and get auditors in there so that we understand that we are not taking on something that's going to damage our company, and it gives us a little bit of a breathing room as well.

Do we really want to do this and what's the value to our shareholders in doing this transaction. It also gives the seller the ability to take a look at Ridgeline and say wow these guys come in, they are going to really do something with this asset. Now do I really want to take the risk of throwing out world class management for what I had previous? I hope that answers your question.

Unidentified Analyst

Yeah, I guess so, but from the outside looking at it, it looks really funny that now when you are trying to enter into a definitive [PMS], you say that you've already turned around [Sante]. It seems to me that you we just given them more leverage to negotiate a higher cost.

Dennis M. Danzik

No, I can assure you that’s not the case. The ability to turn those facilities around is Ridgeline. It isn’t somebody going in and moving desks around. You have to have technology, you have to be able to control to secure and control the source for that fluid and that’s where we do best. So these waste water facilities cannot operate the vacuum.

You just can’t stick any manager in there with any common technology and expect things to change, they won't. And most of these facilities, they seem large, 18 acres, 5 acres, but they don’t have enough room to put in conventional waste water treatment. So if we were to leave, that asset would go right back to where it was the day that we came in. That’s assured.

So we have very little risk in that area, and as far as the price going up. We are in the middle of two, we've done one. We just haven't had that happen. Could it happen in the future? Yes, anything can happen, but unlikely in my opinion.

Unidentified Analyst

One another question. You declined to provide written forward quarterly revenue guidance. Is there anything you can tell us verbally regarding what you are expecting for next quarter?

Dennis M. Danzik

We're going to get guidance in about two to three weeks. Obviously, our growth rate is and remains substantial. So in approximately two to three weeks and I would imagine that we will do that in a conference call.

Unidentified Analyst

Excellent and one quick question, the obvious issue looking at the balance sheet at this point you are going to need financing and probably need it pretty quickly. Can you give us any thoughts on your philosophy of what direction you may go with respect to the breakout between debt and equity?

Dennis M. Danzik

Well the first rule is we are in no hurry. We are not going to run down any particular hallway immediately, it’s just not going to happen. I personally loan the company money and quite frankly if it needs more I will loan it more at incredibly attractive interest rates.

Our options on the table right now, I can tell you that we have substantial offers of debt, debentures, equity from several great companies, great investors and some of our current investors. So we are looking at all of our opportunities, we are in a quarter which is historically our highest receivables coming in the door and we are going to take our time and we are going to evaluate that now that we have down our feet firmly on the ground.

Operator

Well it appears that we have no further questions at this time and we will go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks gentlemen?

Dennis M. Danzik

Hey this is Dennis again. We thank you for your participation today. I would like to turn it back over to Tony to see if he has any closing remarks, but I would like to thank everybody for a great quarter and look forward to the results for the upcoming year end, Tony.

Tony Ker

Yeah, thanks Dennis, no I just wanted to say, we got the company at the point where its poised to go forward on this technology and the industrial waste water is something we all are excited about and thank you very much for your attendance and listening in on our conference call.

Operator

We thank you, sir and for the rest of the management for your time. The conference is now concluded. We thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you and take care everyone.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Ridgeline Energy's CEO Discusses F3Q13 Results - Earnings Call Transcript
This Transcript
All Transcripts