mCloud Technologies Corp. (MCLDF) CEO Russ McMeekin on Q4 2019 and Q1 2020 Results - Earnings Call Transcript

mCloud Technologies Corp. (OTCQB:MCLDF) Q4 2019 and Q1 2020 Results Conference Call May 26, 2020 5:30 PM ET

Company Participants

Russ McMeekin - Chief Executive Officer

Chantal Schutz - Chief Financial Officer

Barry Po - Chief Marketing Officer

Conference Call Participants

Kevin Krishnaratne - Eight Capital

Steven Li - Raymond James

Operator

Good afternoon and welcome to mCloud Technologies' Fiscal 2019 Fourth Quarter and First Quarter 2020 Earnings Conference Call. Today, the Company will discuss the audited results for the fourth quarter ended December 31, 2019 and the unaudited results for the first quarter ended March 31, 2020. Joining the call today from mCloud is Russ McMeekin, Chief Executive Officer; and Chantal Schutz, Chief Financial Officer.

Before we proceed further, please note that, the remarks made on this conference call may contain forward-looking statements about mCloud Technologies current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements or any other future events or development. Forward-looking statements are based on information currently available to management and on investments and assumptions based on factors that management believes are appropriate and responsible in the circumstances. However, there can be no assurance that, the estimates and assumptions will prove to be correct. Many factors cause actual results, level of activity, performance, achievement, future events or developments to differ materially from those expressed or implied by the forward-looking statements.

As a result, mCloud Technologies cannot guarantee that any forward-looking statements will materialize and you're cautioned not to place any undue reliance on forward-looking statements. Except as may be required by law, mCloud Technologies has no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. For additional information on these assumptions and risks, please consult the cautionary statement regarding forward-looking information contained in the Company's most recent MD&A available on sedar.com.

At this time, I will turn the call over to Russ McMeekin, Chief Executive Officer of mCloud. Please go ahead, sir.

Russ McMeekin

Thank you and good afternoon everyone. We're doing this call from multiple locations and in two countries, and we're going to be using slides. I think, those of you, who have dialed in a webcast, you'll see the slide. So, we'll be adding that to our quarterly call methodology now. And also in addition to myself and Chantal, we'll have Barry speak to two slides in this presentation, so we have a full picture of what's going on.

So, we reported this and so we go to Slide number 3, FY 2019 highlights. Over 2018, we grew the Company 10-tenfolds, so that's significant growth, combination of organic and acquired growth. We exited the year with a $12 million run rate of AssetCare recurring revenues, that's derived by 41,088 connected assets.

In 2019, we did two very transformative transactions, Agnity Global which formed the foundation at AssetCare for AssetCare Mobile, and now, this post-COVID era we're in, we're seeing a lot of activity around connected workers and multiple industries, that's all made possible because of the Agnity transaction.

We did the Autopro transaction in 2019. We're at the table with a lot of major oil and gas players, who want our technology deployed to remote locations, not just in Canada, but around the world. That's made possible because of this Autopro transaction, which was very transformational.

Operational enhancements, we've got a great bench at the front office, some great salespeople at the back office, great people in finance and reporting, and that puts us in a really great position for enhancing our capital market position both in Canada moving to the Toronto Stock Exchange, we're well underway there as well as with the NASDAQ, we're also well on our way there.

Next slide. Q4 2019, a few highlights. For the quarter, we did $10 million, 30% of that revenue was from AssetCare solutions, 30% of that every year in fourth quarter, you will see a pretty robust licensing that's primarily from Agnity Mobile platform and our NGRAIN 3D technology and precision analytics technology, and then 40% of it came from project services in the fourth quarter, adding up to $10 million. Gross margin for the fourth quarter was 63% and that's due to the strong contribution from both AssetCare solution and our licensing business in the fourth quarter.

Next slide. In Q1, we saw $6.6 million and again strong gross margins in the first quarter. The AssetCare solutions contributed 60% of the revenues only 5% from licensing. So as you see early in the year, we see very light on licensing, very heavy we saw run rate -- our ARR was up 130% year-on-year, run rate about $16 million of AssetCare recurring revenue, and we were right on project services from Autopro obviously in Alberta with COVID-19, we're very challenged to being able to go to site and so on.

We expect to see also a light second quarter in projects, but AssetCare picks-up the -- picks-up the momentum here with driving recurring revenue, it drives big beautiful gross margins, long-term contracts and very sticky contracts. Also in the quarter, we close a 13.3 million special warrant financing, and we just before this call announced an additional 4 million Canadians of a strategic investor a family office in Europe, that is very keenly interested in the growth of the Company in AI and connected technology, also saw the opportunity as a prior to a NASDAQ uplift at participating in a high growth with great multiple expansion as we move to the NASDAQ.

Next slide. I'll turn this over to Barry to take us through the next couple slides. Barry, over to you.

Barry Po

Thanks, Ross, and good afternoon and good evening everyone. I'd just like to turn our attention to what mCloud has done in response to COVID-19 and the decline in oil prices. I think it's a good illustration of the versatility of our technology because we've been able to apply AssetCare to help many businesses deal with the reality that they're now in. So, if we take a look at our connected building segment as a good example.

We had success in February and March, helping businesses apply our energy savings AI for restaurant and retail brands to what we call energy hibernation and what that effectively does that allowed, it allowed us to help these restaurant and retail owners reduce their energy costs for operators at 15 major brands by up to 80%. And now, as these businesses are turning their attention to reopening, we've turned our own attentions helping businesses reopen their doors by giving them the kinds of capabilities that are going to let them reassure their customers and employees that their buildings are safe to be in.

So, there's been a lot of scientific studies showing that indoor air quality and improving indoor air quality is one of the simplest and most effective ways of curbing the risk of infection of viruses like COVID-19. And so throughout the care, we're helping these businesses bring clean air through proper ventilation, and a partnership with secure air and air filtration provider that let us join forces that way we can actively drive airborne particles to an electrostatic field that effectively kill the viruses.

Next slide, please -- oh, sorry, one bigger slide. In our connected industry segment, we also have kind of a major uptick in the demand for remote connectivity that AssetCare provides, especially in many of these kind of heavy industry sites, oil and gas companies, process companies are looking for ways to continue operations when they can't quite get people on the ground.

So, our mobile capabilities the things that we're delivering on smart-glasses provided by real work for instance are allowing subject matter experts to work with field personnel on asset maintenance issues, even if they might be thousands of miles away and our 3D Digital Twin capabilities.

Some of which you can see here on the slide are letting teams of people collaborate on asset problems, using large scale 3D models of those assets and helping them solve these problems in a matter of hours rather than waiting for people to come back on site and have those problems take place over the course of days or weeks.

So, next slide, please. So, for those of you who are kind of looking at our latest MD&A, you'll see that there's a section that describes some detailed research we undertook this past quarter. What we wanted to do, as we wanted to reliably quantify the full size of the mCloud market opportunity. And that's what you see here on this slide. It's a rundown of mCloud Serviceable Obtainable Market or SOM.

And what the obtainable market tells us is that, if we just took directly and immediately connectable assets that mCloud could reach today in the local geographies where we have specific named sales leaders with the defined sales quota. mCloud is claimed to win in a $24 billion market space. That whole market is made up of almost 24 million connected assets, approximately 2 million connectable mobile workers and opportunities to create a little over 300,000 3D Digital Twin.

And so, if you look at the 20 defined local markets that mCloud is addressing, those are really markets across North America, Europe, the Middle East, China and Southeast Asia. Our SOM shows us that we can directly target about 7.3 million commercial buildings, so restaurants midsize retail, long-term and elder care facilities as long as about 35,000 heavy industry sites. So locations like oil and gas facilities, liquefied natural gas and floating processing, storage and offloading sites or FPSOs.

The bottom line is that we're well positioned to achieve scale in a very large market. And when you look at that combined with the average monthly recurring revenues that we see today are connected asset, we've really just scratched the surface of what mCloud is going to be able to achieve at its full market potential.

Next slide, please. Over to you Chantal.

Chantal Schutz

Thank you, Barry. And thank you, Russ. And thank you everyone who's joined us on the call today. It actually marks the year that I've been with mCloud. And I have to say that the financial statements paints an excellent picture of all the exciting things that we've undertaken in the last year, and I certainly could have never imagined that it would have been this fun and this exciting. So thank you all for being here.

On this side, what we're looking at is, our non-GAAP adjusted EBITDA. So, we've taken the new guidance in 52-112, the non-GAAP disclosures guidance. And what we've done is we've added back certain items that you see on our base of our income statement as well as some salaries, wages and professional services and consulting fees to arrive at what we feel is a very fair presentation of our operational EBITDA.

Can we go to the next slide please? Just a couple of comments on our statement of financial position at March 31. As I mentioned, it's been a very exciting year here at mCloud. We've had quite a lot of acquisitions, quite a lot of financings. Our March 31st statement of financial position on the asset side is demonstrating that we closed very significant warrant financing.

We've been successfully closing the acquisition of CSA. We have seen some slowdown in collections as it relates to the COVID-19 closures of offices and primarily Alberta, where the processing of those receivables is quite manual still, and those companies not had the opportunity to be as quick with their processing of payments.

We've used about $4 million in uplifting fees, working capital for AirFusion, and some other M&A activities including completing CSA as well as going through a due diligence exercise with BuildingIQ. We did advance $0.5 million of an anticipated $1.5 million of working capital to them.

And through the course of our due diligence, we were able to ascertain fairly early on that some of the information we had been given wasn't accurate and their working capital needs were quite a lot more substantial than what they first explained to us. So, we have filed a lawsuit with them in the Delaware Court, and we do anticipate that we will be able to recover those funds.

Can you go to the next slide please? On this page just a little bit more of our statement of financial position at March 31st. As I mentioned, we did closed our $13 million warrant financing.

I think that's it for me and I'll hand things back over to Russ.

Russ McMeekin

Thanks, Chantal. Accelerating our forward-looking growth here, we gave a guidance here of $70 million to $72 million, and that assumes the following things that we're tracking to; obviously connecting 70,000 connected assets quarter-by-quarter, we must continue and we will continue that connection trajectory and Barry walk you through the various vectors we have to do that.

In addition to that, we'll be adding Digital Twins. So there will be about $8 million to $10 million coming from things like a 3D Digital Twins and Connected Workers that we didn't have before as well as we're seeing some contract activity in the Middle East, Southeast Asia that we're adding to our fleet or our opportunity.

So, our second half assumes 70,000 connected assets, 3D Digital Twin kicking in and some of the international regions that we're focused on. And again, all of these are high margin and they drive AssetCare recurring revenues, so there are off the quality that we're looking for to achieve the $70 million to $72 million of projection that we have.

Also, we're working as we mentioned already, very actively to list to the NASDAQ and uplift the TSX main board. We've got all of the requisite efforts done, documentation and so on. So now that we've filed today, that's the focus of the team to get that past the goal line.

Next Slide? So, in summary here, despite COVID-19, big growth, Q1 we saw nice assets connections despite most of that was done all remotely. We've become pretty clever in how to do things remotely. As the Barry mentioned, in fact, some of our customers have in their hand headsets as we navigate them through doing their own on-boarding with us, guiding them with our own headsets is very, the technology we've developed with AssetCare Mobile is quite advanced, in fact, the most advantage of any users of RealWear in the world.

So, we're seeing a lot of people who procured RealWear hardware. Now coming to us saying, we want to do what these other people do, and they're in markets we would have never thought of pursuing. So despite COVID-19, we're still pushing forward on finding ways of getting assets connected.

Once that list, we have a pent-up demand of installations that will occur, connecting assets all over the place, Alberta being one key area, Texas is another area. Middle East, we had someone actually went to the kingdom and got stranded there because of COVID and was not allowed to leave the kingdom, was there at Ramco, fortunately recently is now back, but that yielded a huge opportunity for us, same in Southeast Asia, in Malaysia and so on. So, these things are driving our enthusiasm for strong growth in the second half, and that strong growth as we achieved these $20 million to $25 million quarters that drives cash flow positive.

So, everyone's asking the question, when you get the cash flow positive, quite obvious, when you start generating that kind of recurring revenue, Chantal has walked you through the details of the kinds of expenses we had to get to where we are to get these exchanges done, get these acquisitions done. These things are not recurring. These are not things we do all the time, as they go away and as recurring revenue build, we build a nice profitable cash flowing business.

So now over the next slide, Slide 13. So, the bottom line, AssetCare is at the right place and at the right time. We couldn't, from a tailwind point of view here with getting things remotely connected, things are actually quite exciting on that front. To do that, however you need talent and we have over 150 highly talented people around the world. We all were developed there -- our business practices around being remote using Zoom and things of that nature.

So, we haven't missed a beat where we're very deep users of technology, we're leaders in technology. So, that put us in a very exciting position worldwide. So, despite some of the constraints that we have today or we've seen in the first quarter, and we'll continue probably to see for a few more weeks, we're very bullish about the second half of 2020 and will turn over for questions now.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Kevin Krishnaratne with Eight Capital. Please go ahead.

Kevin Krishnaratne

In Q1, when looking at AssetCare on a quarter-over-quarter, it looks like a really nice bump there in the ARPU. I mean, you clearly had a very nice strong net add in the quarter, but I'm curious to know what sort of led to the ARPU increase, are you -- is there -- are you getting a higher level of processes in the quarter relative to prior quarter? Or was there some sort of pricing has been coming off of legacy proceeds? Can you talk about some of the drivers that you saw in Q1?

Russ McMeekin

As we announced, remember in the fourth quarter that we had installed a bunch of oil and gas assets, they are $250 per asset, when you -- so the blend moves very quickly, when one asset is 5x the other asset and contribution, right. So, what you're seeing is that's the phenomena of the rhetoric. So, for example at the end of March, is when we did a lot of these new connected buildings, so you're not going to see that impact in Q1, as much as you start seeing the pickup of those in Q2. But conversely, we talked about a lot of stuff going on with the oil and gas operations in Alberta. You started seeing that impact of the ARPU in Q1.

Kevin Krishnaratne

Great, and so I mean, this is the next question launch of the guidance you did indicate that during Q1 that you saw substantial backlog start to develop. I'm assuming that related more -- is that related more to the remote worker, the oil and the heavy industry or were you seeing something more in the buildings? And if you can provide any color sort of on, where you see the mix of the 30,000 net adds coming from in 2020, I know you provided some guidance before at the end of last year, I'm referring some change there with regards to the mix of that?

Russ McMeekin

So, let's take the easy one Connected Workers is not in that additional count. So, that's additional revenues and as they become more additive in terms of number of connected people, we're going to have a new metric we will add. So, that makes that one easy. It's not in the 30,000. Numerically, it's mainly buildings. However, dollar-wise because of the ARPU value of connected oil and gas and wind turbines, you don't need many to have material impact to revenue. So, the brand numerically in terms of connected assets is primarily the buildings in the methods that Barry just described to you. But dollar wise, it's going to be pretty well split amongst them because the dollar impact of oil and gas and the dollar impact of digital twins is pretty significant at when they kick in so.

Kevin Krishnaratne

Got it. Okay, another one for you. And I'm totally excited to hear and I've chatted with Barry as well with regards to some of the initiatives in QSR and larger restaurants with, air quality and refrigeration. And, certainly going back a year when mCloud story was more on still continues to be dominated by energy efficiency and, peak power usage. I think broadening off the offering to include some these other items are quite intriguing. So, I'm wondering, though, how you think about the sales cycles, type of sales reps that you've got, and sort of channel strategy that you've got with [Indiscernible]. And a lot of things that I've been asking there, but it doesn't -- it does seem like you've got quite a more compelling bundle. I'm wondering if that requires a different type of sales guide, a different type of sales cycle process. Anything you can comment there would be very helpful.

Russ McMeekin

First of all, guys and girls, we have a combination.

Kevin Krishnaratne

Guys and girls?

Russ McMeekin

And I'll let Barry answer that because that's a very exciting part. The talent that you've brought on, at the front line in business development and their backgrounds from train and carrier, I'll let Barry address that, but great question, and I'm looking forward Barry's answer. So go ahead, Barry.

Barry Po

Yes, thanks Russ. And thanks, Kevin, for the question. We've assembled a pretty stellar team. All of these folks, men and women, who've really been sales leaders at all of the traditional kind of BMS companies across the board. So, places like train, as Russ mentioned, as well, GE and Honeywell and so forth. All these folks who have been involved in the trenches and understand the whole business of building management from the top down are now part of the mCloud team.

And so Kevin, just to maybe pick up your questions specifically about the sales cycle and how we get to market especially given the new additions. What I think is really exciting about that is that the value prop is really easy for the customer to understand, especially in light of COVID-19. It's really, really easy for customers to understand how important it is to bolster the health and safety of their employees and their customers.

And so what's really involved in the sales cycle is helping them understand, how AssetCare fits into the picture of these buildings and spaces that we want to connect to, as well as how the business model that mCloud brings. So, completely based on this commercial Software-as-a-Service style approach, that puts us apart from these heavy CapEx retrofit style traditional investments that are very common in the building industry today.

So from that perspective it's easy for customers to understand the value. And what we really need to do, especially right now is help customers understand that the buying decision is really, really easy. So, it doesn't really affect our sales cycle then perhaps making it easier for us to get on-prem customers because now they're not just talking about energy efficiency. It's energy efficiency and the way that energy efficiency is also going to make your buildings healthier and safer for others.

Kevin Krishnaratne

Thanks for that Barry. It's very helpful. Maybe one last question for girl on the line just with regards to guidance. You've previously given us guidance on normalized net income for the year. I think when you last reported, I'm wondering, if you're providing any guidance on profitability now?

Chantal Schutz

The guidance that we provided is in the adjusted EBITDA. So, we're following the guidance that is in 52-112. And we've revised that to reflect adjusted EBITDA.

Kevin Krishnaratne

So, $70 million to $72 million of revenue, and what's the guidance for annual EBITDA?

Russ McMeekin

We haven't given that yet. We will provide. We just adopted those adjusted EBITDA standards. Until before we run off and give out number, we want to make sure they comply with all the things we've adopted. So, TBD is on the adjusted EBITDA, in the same format that we use here using the same methodology. We owe you guys a range of EBITDA for the year.

Kevin Krishnaratne

Okay, thanks for that. We're very helpful to see that. Thanks a lot.

Russ McMeekin

It may take a bit, but still, let's let a bunch of things settle, COVID-19, installations, timing of a bunch of things, up listing expenses, all are good stuff. And then we'll get that. We know that we have that on the to-do-list for sure.

Kevin Krishnaratne

Okay.

Chantal Schutz

And the good news Kevin is that, now set in stone and it will be consistent quarter-over-quarter.

Kevin Krishnaratne

Cool. Awesome.

Chantal Schutz

Yes. All right. I though you would know that.

Kevin Krishnaratne

I like that, yes. Take care.

Operator

Your next question comes from Steven Li with Raymond James. Please go ahead.

Steven Li

Thank you. I want to focus a bit more on the balance sheet. So Russ, this year sure looks like it's going to be very backend loaded than Q4 heavy. Does that mean cash flow remains negative in Q2 and Q3 before turning into fall?

Russ McMeekin

That's a fair assumption, yes.

Steven Li

Okay. And the $4 million you raised today is that sufficient to tide you over to Q4?

Russ McMeekin

Yes, it is. Because, we have started collecting receivables from what's going on. So, assuming people start paying us and I think we're starting to see that working capital should be okay. I mean we always are looking at doing transactions and deals. There may be others this summer, but if we do nothing else and we just keep operating, that will take us to Q4, yes.

Steven Li

Okay, great. And also, can you give us an update on the term loan in terms of any covenant waivers discussion you might be having? Thank you.

Russ McMeekin

Chantal, go ahead please.

Chantal Schutz

Sure. So, we did received waivers up until June of this year and we have a fairly good or not fairly good, a very good relationship with our lender. We're actually in the process of looking at redesigning what the covenants are and how we look at the Company as a whole. So, I have very positive feedback and I have a very positive relationship with them. I don't anticipate that, it will be a problem getting waivers in the future if that's what's needed, while we work out what the new, sort of what the new framework looks like. As everyone I'm sure it can tell based on Russ's presentation, there's becoming some very, the distinction between Autopro as a standalone entity is becoming less and less every single day that we move forward and it's time that we started to look at some of these debt covenants in respect to that.

Steven Li

Okay. That's helpful, and just a clarification on the way you calculate your adjusted EBITDA. You add back about $4 million of salaries and professional services. Do these, any of these trail off or are they expected to recur every quarter?

Chantal Schutz

Do you want me to answer that?

Russ McMeekin

Yes, please.

Chantal Schutz

Yes. No. We do expect that those will remain consistent. Those are sort of expenses that are related very specifically to all the public company, public market works that we do, and that's the reason that we back them out because they're not super representative of what's happening internally from an operational point of view.

Steven Li

Okay, got it. And then, one last question for me. The 3D Digital Twins and then the Connected Workers, which revenue line item will they show up in?

Russ McMeekin

I don't know which of the two assets, they'll show up into. So, Chantal, I don't know if we...

Chantal Schutz

Yes.

Russ McMeekin

We haven't recognizing that in revenue yet. Go ahead. Yes.

Chantal Schutz

It will depend on the nature of the contract. So, I can't give you a definitive answer right at the moment, but depending on the nature of the contract with the client, it will be spread between the two. Some of them may be purely long-term perpetual looking type situation and some may not. So each client is kind of coming to us with different needs. So, we will make that determination based on the context of the agreements with them and IFRS-15.

Russ McMeekin

And Steven, an example, if they only have things and all I have to do is enable it, put it in the cloud, have a Digital Twin. It looks like in pure play, looks like Dropbox, right. It's just basically it's SaaS the way you go. If they come to you and say, hey here's my facility, scan it, put it into a digital twin and then I'm going to have you pay your monthly recurring revenue fee for the next three years then there's an upfront component of it. And so, we have both, some people already have a Aviva scan already, some have nothing, They just have, hey, here's my assets give them do something for me. That's why, Chantal, it depends which ones you're talking about.

Steven Li

Okay, makes sense. And the same thing applies to the Connected Worker, Russ?

Russ McMeekin

Yes, same thing, but they're always going to be in connected hardware, there's always going to be a hardware components because I think there's only one customer up to now that has come to us with their headset, saying please connect me. Most of them is, I want Connected Workers, I have nothing. It's like showing up at AT&T with no phone and no subscriber service, you want at all versus showing up with your phone saying connect me to a plan. The ladders almost never because nobody has these head mount displays.

Operator

Your next question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

Jack Vander Aarde

Good to see you guys continue to explain that connected asset base. It sounds like you're pretty confident that you're on track to reach at 70,000 targets by the end of 2020. So, I guess I'll start with a question on recurring revenue and AssetCare business revenue. Just hoping to provide more color on all the various and we're all the various sources of revenue that contribute to that recurring revenue number or is that essentially synonymous with AssetCare revenue at this point?

Russ McMeekin

Pretty synonymous with AssetCare revenue at this point, I mean, that's the only thing we have right. So, even as we have Digital Twins, there'll be AssetCare. The contract will be AssetCare contracts, it's going to be divided over a period, and it's going to be attributed to a certain asset type. So, they all kind of look the same.

Jack Vander Aarde

And then I apologize if you've already touched on this, but maybe I'd like to know, as it relates to your 2020 target for AssetCare revenue. Are you able to provide maybe like a rough breakout of that target AssetCare revenue between what you expect for smart buildings to contribute wind turbines in oil and gas like a rough percentage breakout?

Russ McMeekin

Let's do that in the next call, so I don't just make some -- what we're seeing is a transition from --when we came into the year, we're was going to be 30 million of projects and the rest of it was going to be AssetCare. Now we're seeing this big up and AssetCare more vanilla flavor AssetCare. Now we're seeing Digital Twins, Connected Workers and so on. So, it's all heading in the right direction. But to give you to me -- for me to give you something more precisely, we'll do that as the next call so I can give you. The answer is, yes. Can I do it? Can I give you a good answer? Now, the answer is probably not that great of a distribution, but because there's a lot more oil and gas happening than we expected. So, I want to give you a good number.

Jack Vander Aarde

That's fair. And I think you answered my next question. There is, -- were there any specific types of assets or verticals that that are exceeding your expectations, it sounds like that's the oil and gas vertical?

Russ McMeekin

As Barry mentioned, we didn't expect people to buy. And I think Kevin alluded to the question. When we came into the year, we expected everyone to buy until one hour reduction that drives a cost savings and reduces demand charge. Now, even though it's still a building air quality fits into the buying decision. That doesn't change. Well, it changes the buying decision, but doesn't change our thinking about buildings is important. And we're going to scale it really nicely.

What has really changed is, people thinking, I don't need to drive to or fly to oil and gas assets the way I used to. I haven't been for seven weeks now, but I'm still connected. Why don't I just do it all that way versus during a five week interruption? Why don't we just do it that way forever? And that kind of thinking was not a thinking we saw happening coming into this and now that's happening everywhere.

Everyone's saying well, if I just didn't go there for six weeks. And we're now connecting or connectible, why the hell, we ever go there ever. Why don't we just do it from here from now on in, just like this conference call. We're in three cities and two countries right now doing an earnings call that used to all be everyone in the same room.

Jack Vander Aarde

Absolutely, absolutely, it's crazy times for sure. Maybe as a follow-up on something non- AssetCare related. The press release I know commented that revenue from the legacy technical project services expected to remain a little light until at least in mid-2020. Can you just talk a bit further maybe unlike the specifics of what projects those are or maybe what specific [Indiscernible] is referring to? All Autopro?

Russ McMeekin

All Autopro, we did $2.4 million in Q1. I don't think we're going to do much better in Q2 because most of -- I mean right now, I think Alberta just allowed people to leave their home a week ago. So projects will be light again in Q2, start picking up. That one's very dependent on people being able to move around. So $30 million might be 15 out of that $70 million guidance. So, the rest is all AssetCare of the various flavors we talked about.

So, the good news is better margins, creates recurring revenue, blah, blah, blah. Everything we discussed about, but that's the technical services we're referring to. And the humans are working on these remote connections. So, they have domain knowledge that's very helpful for the team. So, they're doing productive things. So it's good for us.

Jack Vander Aarde

Okay, great. And just one more for me, back to AssetCare. Specifically, I'd like to know maybe your thoughts on what you're seeing in China with regard to previous -- like previous AssetCare implementations in those large shopping centers from, to people go over a year ago you had a few major press releases there? I guess, just because there, they were ahead of us at least in North America, with a pandemic and the economic shutdown. So what did you experience there? Are there any interrupted AssetCare contracts or in interrupted revenue from those contracts during the January, February, March? And how those rebounded since, if there was impact?

Russ McMeekin

So rebound not so. So our strategy once this started is to focus only on SDN connected malls, and only work through SDN. And fortunately in 2019, they were trained to do what we can do. So, they're reasonably self-sufficient. That being said this, the malls that were connected prior to the COVID is still only the malls that are connected now.

That being said, as they start getting more bullish, we're going to see later this year and Barry's closer than I am. Some additional malls coming on board, but we're not going to do anything that is not through that channel. We're not going to deviate from that channel. And we're going to stay very focused on SDN and SDN malls, which is equal to safe, reliable, and we know what we're getting involved with, and we're not going to deviate from that.

On wind turbines, it's only going to be along a Longyuan near-term. Those were connected and we're kind of paused their bunch of GE turbines. They're getting ready to get started again. They're sending people out in the field to do drone inspections and blades. Again, Longyuan, the largest producer of wind energy in the world, they know us, we know them, and we won't deviate from that norm, and we'll stay very focused.

So, what's changed is we're going to stay very, very focused and not try to chase what could be a big market. It doesn't matter if it could be a big market. We're not going to get distracted by that. We're going to stay very focused to those things for no other reason that it's safe on all fronts, if you know what I mean.

Operator

There are currently no further questions at this time. I'll turn the call back to Russ for any closing remarks.

Russ McMeekin

Well, thank you very much. It was very good questions, very good session, and look forward to the next call. Thank you.

Operator

This concludes today's conference call. Thanks for joining. You may now disconnect.