The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Scott Searle - Roth Capital Partners LLC - Analyst
: Hey, good afternoon. Thanks for taking the questions. Maybe to dive right in on PREPA, Richard, it sounds like now we'll finally start to get some
revenue recognition that goes along with it. Could you give us some high-level thoughts in terms of gross margins as we look out into the September
quarter and beyond? We've had, I think, 0% gross margins in the first two quarters of the early PREPA rev.
Could you remind us what gross margins look like over the course of the $75 million contract and what we should be expecting over the next
quarter or two? And along with that, maybe help us understand cash flow from operations with the give and takes of inflows as we move into the
group three, and some more payments on that front.
Question: Scott Searle - Roth Capital Partners LLC - Analyst
: Got you. And Richard, just the -- from a cash flow perspective, it's pretty complicated. You received a fair amount, I think, for group one and group
two. How does that flow with group three? And where are we in terms of the planning phases for the additional groups?
Question: Scott Searle - Roth Capital Partners LLC - Analyst
: Got you. Very helpful. And two more, if I could just follow up on CROWS, it's exciting to see that finally happening. Could you -- what is the outlook
in terms of the September quarter? Will some revenue from CROWS in that initial award potentially sneak into the September quarter?
And I think the number you talked about in this initial tranche was $8 million to $8.5 million. Is that the annual run rate that we should be thinking
about? Or does the number change potentially get larger as we look out into '26 and '27?
Question: Scott Searle - Roth Capital Partners LLC - Analyst
: Got you. And lastly, just from a macro standpoint in terms of federal budgets, the impact that's pushing down on to local municipalities and
spending. Certainly, it seems like it slowed up the first half of this year. And it doesn't seem like you're forecasting any sort of a major recovery on
that front.
But I'm wondering, is there a steady-state level of business we should be thinking about that's relatively immune to federal funding and those
sources that have been constrained? Thanks.
Question: Edward Woo - Ascendiant Capital Markets LLC - Analyst
: Yeah. There was some major weather flood event recently. What is your flood product? And have you noticed any increases in people's interest in
that type of product? Thank you.
Question: Edward Woo - Ascendiant Capital Markets LLC - Analyst
: That's a great product. I got a tsunami warning in LA, and I was 20 miles in then. So thank you very much for answering my questions and I wish
you guys good luck. Thank you.
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