Ben: Let’s talk about what’s new in 2020. You mentioned that you’re a four-year-old company. You're actually an MP Corrosion Innovation of the Year Awards winner a few years back. I know with each passing year there’s new technology, there’s new things that you're integrating into your platforms. I know there was an announcement a few months ago that you were looking into pilot projects using these drones for ultrasonic wall thickness inspections. I know you've got various manufacturers that you're partnering with and looking for these pilot projects. Talk about what’s new within the last few weeks or months that’s on the horizon at Apellix.
Bob: In addition to those pilot programs for non-destructive testing, which we have engaged three large international and national companies to do work with them, the goal is to teach them how to use these robotic systems and then hand them over to them as a lease so they can operate them around the world and we would support the equipment and support them that way.
As you mentioned, one of the things we’re doing is we have a joint development agreement with International Paints/AkzoNobel, to bring our protective coating spray-painting drone to market, we’re about nine months into a two-year development agreement with them.
Ben: You mentioned the partnerships, the development agreements that you have with people that are potentially using your assets in the field. What type of feedback have you gotten from some of these early adopters of your technology? Have you made any refinements, for example, based on the field data that you are getting? Discuss, if you could, what you've heard from the people that are using your systems.
Bob: We have, and this is really interesting. It gets a little forward looking at some point because, what’s happening, some of these customers are large enough that they can, in some respects, set their own standards. As the industry is moving toward risk-based inspections — and we’re talking specifically here about ultrasonic thickness measurement, dry film thickness measurement. So we’re not talking about the cleaning or the coating yet. As these pilots are progressing with the non-destructive testing, they’re realizing, oh my, these industrial robotics can go in there and take a measurement per minute, 60 or 100 measurements per hour.
Whereas on an above-ground storage tank, for example, if we put a person up there as part of an API 653 or SSPC PA-2 examination, they’re maybe going to get 20 or 30 readings a day. So what does that mean for standards? What’s happening is, as this nascent field of industrial inspection, where you’re making contact with the surface — because it’s a little different than the visual inspections that have been around for quite a while, where you're flying some distance away doing a camera — these are actually physically making contact and replacing the corrosion engineer at elevation with a robotic system. Because the efficiency is there, there’s the potential that this may change the standards.
The underwriters and the asset insurers, of course, are very interested in this as well. Because the goal is to get a better understanding of the condition of that underlying asset and to make better predictions. So NDE 4.0, non-destructive examinations and evaluations, those tools that we’re able to bring with newer modern technology to help extend the life of these assets, are things that I think are really pushing the industry forward. Now, they’re just starting, but there’s a lot — it’s like a snowball rolling downhill. There’s a lot of momentum building behind it.
Ben: Do companies — and I’ll preface this by saying that I’m aware you're still in the fairly early stages of all of this — but do companies tend to understand the value equation? I’m sure there are some people that will look at the technology involved. There’s obviously a certain upfront cost that wouldn’t be there through traditional means. But the upside of the type of systems that you’re proposing is that you can recoup so much value and savings down the line because you're not having to consistently put workers in harm’s way or out in the field or travel costs. All of those types of factors.
The companies you speak with — it sounds like they have a good understanding of the value equation, that even if there’s a certain upfront technology cost, the savings (should this be successful down the line from not having to do these traditional inspections) and then of course what you're able to save by spotting these corrosion issues, the idea is that you're bringing these savings over the life cycle of the equipment or the assets, whatever it may be, right? Do companies understand that well?
Bob: They do. In part, a lot of this is — because we’re a new company and we’re putting new products into the market, we’ve paid a lot of attention and had a lot of conversations with industry to see what was bringing the most value to them. Our business model currently is a lease, so that reduces that upfront large expenditure so that it flattens that out over time. That allows a company to have something that always works, is always updated, always has software updates, and maybe we send out a new drone, for example, when one starts indicating that the motor is getting X number of flight hours and needs to be replaced. So they get a constantly upgraded, evolving piece of technology that always just works. It’s just a recurring fee, kind of like Microsoft Office software as a service fee. They understand that value created.
Then the value that we’re able to bring to the job is we’re able to free up the engineers to do the more value-creation tasks. We’re able to also eliminate a lot of the costs associated with getting workers in elevation, which rough rule of thumb is 60 percent of the cost of the job could be just getting your workers at elevation. So if you don’t have to have cranes, you don’t have to have lifts — again, you have to pick the right tool from your toolbox to use, and this is not the exact solution you need for every situation, but in certain situations, if you're able to eliminate scaffolding or cranes, you can eliminate a lot of costs. Even better, if you're able to return asset to service quicker or prevent an asset from being taken out of service to do this inspection or maintenance, that has even larger dollar savings.