Sidney Hinton, chief executive officer at PowerSecure (Nasdaq: POWR), had a great deal of positive news to discuss as the power technology firm announced record earnings and revenues for 2012 on Thursday.
But he also refused to say something that “tickles everybody’s ears” on the investment side – raising prices – during a conference call with analysts.
Asked about PowerSecure’s distributed generation, or DG, business pricing, Hinton didn’t follow conventional wisdom. He wants to drive business by LOWERING prices.
Here’s the exchange as provided by website SeekingAlpha:
“Okay, let’s go into DG,” asked William Bremer of Maxim Group.
“Specifically I’m curious about the pricing environment there, especially in the turnkey contracts. Do you feel as though pricing will be better in ’13?”
Hinton: In DG?
Bremer: Yes.
Hinton: No.
I think I’d be – I know the answer that tickles everybody’s ears, but I’d be stupid to say yes.
Our job is to penetrate the market deeper and deeper which what we try to do for our customers, we try to lower our price every single year and increase our margin every single year. So pricing in general I would say would have downward pressure on it and we’re the ones pushing it because we want to grow the market.
My view there is very simple on the backup power. Everybody wants it. You yourself, you want backup power at your house. You might say no, I don’t. If the utility offered it to you for $1 a month I bet you’d pay $1 a month and take it.
So what that tells me is there’s elasticity that if there’s a huge demand there people haven’t gotten the price points. Well, that’s what we’re out doing.
We’re driving the price down, down and we’re driving the cost down even further.
So I would say there’s hopefully downward pressure.
I really do pray that there’s downward pressure on pricing and upward pressure on our margin. That means we’re doing a win-win. We’re winning for our investors.
At the same time we’re winning for our customers. But that’s how I would view the pricing market on the DG.
Bright Future?
Hinton, who has worked with the company since 2000 and has served as CEO dating back to 2007, said earlier in the call that he has big expectations for this year – and beyond.
“As we enter 2013, our stated goals of achieving $300 million in revenues and mid double digit operating margins in 2015 are well within sight and we’re tracking almost exactly where we want to be at this stage of the five year plan,” he said.
“With the visibility into 2013 we already have from our backlog, PowerSecure has not entered a year in this strong a position since 2006 and we are a much stronger company given the breadth and depth of our product and customer base today than we were back in 2006.”
