This week it is the acquisition of CSA Inc. and its 3D analytical tools supporting over 90% of nuclear reactors in the United States. Last week it was adding NGRAIN Corporation, which uses Artificial Intelligence (AI) to help maintain assets such as Lockheed Martin F-22 and F-35 fighter jets for the US military.
Clearly, 2018 is destined to become a defining year in the history of Universal mCloud Corp. (CVE:MCLD), which already has a plan mapped out for quickly integrating technologies from CSA and NGRAIN with its own AI capabilities to advance into new markets and grow sales quickly.
In the 1.5 years since it was founded, Universal mCloud has connected over 6,000 assets through the Internet of Things (IoT), all of them having to do with power generation and transmission.
Many of those assets are HVAC units controlling the office and restaurant temperatures for well-known brands such as Bank of America or Wendy’s. A different unit of the company helps electricity transmission infrastructure operated by the likes of Southern California Edison (primary electricity supplier for much of Southern California) and PG&E (natural gas and electricity to northern California) monitor for potentially dangerous transformer abnormalities.
As President and Chief Executive Officer Russel McMeekin puts it, “We help customers use less power on the consumption side, make more on the production side, and convey optimally through their transmission infrastructure.”
McMeekin goes on to explain that Universal mCloud has identified a long list of synergies to lever from combining 3D analytics, AI and augmented reality to serve a large and growing client list featuring some of the world’s best-known companies.
CSA and NGRAIN are both leaders in their respective industries, but to this point have focused on single product verticals with very similar technologies and thus limited the number of markets they might address. This is understandable when you are analyzing assets such as nuclear plants and military jets. Micro precision is mandated.
But that culture of extreme precision is, in turn, what makes the two companies such a perfect fit with Universal mCLoud – that focus made their technologies the best in the business, while Universal mCloud has a broader portfolio of product applications and business contacts to put the technologies to wide use.
McMeekin says that out of the gate the company will be focusing the acquisitions on new business in the wind turbine space for 2018. In addition, Universal mCloud is well positioned now to very rapidly scale HVAC assets via its partnership with Canadian telecommunications giant TELUS Corporation.
On the wind turbine front, the NGRAIN technology, in particular, is expected to bring rapid growth in clients and assets to service. “Today, wind turbine blades are inspected by having people climb up to check them,” McMeekin explains. “Drones capture the data we need, then AI detects blade flaws caused by any number of damaging agents in the operating environment. It is not overstating things to call this a paradigm shift in the way blades are inspected.”
With TELUS, an agreement signed in October 2017 sees TELUS sell to its customers a set of Smart Building 4G IoT connected solutions into which Universal mCloud is integrated. The data is sent to Universal mCloud for analysis through the TELUS communications network and instructions sent back to the systems to make them work optimally. Cost savings are rarely less than 10% per year.
The TELUS relationship has the added advantage of a $50mln fund standing behind it to cover the cost of retrofitting buildings with the sensors and communications infrastructure to make them IoT-ready.
The fund is an off-balance sheet Special Purpose Vehicle that owns the IoT equipment. “The customer takes ownership of the benefits, not the hardware,” says McMeekin. While the NGRAIN acquisition brings with it $1.2mln in revenue, and CSA more than $2mln, the TELUS Smart Building partnership will bring most of the growth in 2018.
“We are currently at approximately 6,000 units and expect to more than triple that in 2018,” McMeekin explains. “Each asset represents a monthly recurring value, and if you discount their cash flows back to today we get a healthy net present value. To absorb our overhead we need approximately 15,000 connected assets. After that, all new sales make a high-margin contribution to our bottom line.”
It is worth noting that in the markets Universal mCloud is most strongly positioned to address, there are tens of millions of potentially connectable assets.
“Our target as an organization is to reach 300,000 connected assets within the next five years,“ says McMeekin.