SmallCaps Daily Sits Down with CN Energy Group CEO, Steven Berman

Steven Berman
Chief Executive Officer

Mr. Steven Berman, age 47, has over 28 years of leadership expertise in customer service, finance, sales, and innovative technology. Mr. Berman is the founder of Berman Electronic Enterprises LLC (“BE Enterprises”), a private global enterprise in the semiconductor industry, and has operated this firm for the past 15 years. Before his tenure in the semiconductor industry, Berman was an investment banker at some of North America’s leading investment firms including Citigroup and Dreyfus, a division of Mellon Investments Corporation.

Full Interview:

Thank you for answering my questions about CN Energy Group Inc. (NASDAQ: CNEY). For our readers who may be unfamiliar, please briefly describe the company and its mission.

CN Energy is a world-class manufacturer and supplier of wood-based activated carbon. Activated carbon has numerous applications and is mainly used in pharmaceutical manufacturing, water purification, food and beverage production, and environmental protection.

Our mission is to produce our premium quality product with a zero carbon footprint and to be 100% recyclable. We are currently succeeding at that and our next phase is to do it on a global scale.

As the newly appointed CEO of CNEY, how do you foresee your leadership impacting the company's growth strategy, especially concerning expansion into the US market and the semiconductor distribution industry?

I’m very excited to bring leadership and a track record of success to CN Energy. I am a legacy shareholder and participated in the IPO in February 2021. I bring 28 years of business success to the company. I started on Wall Street in 1996 and worked for several lending investment banking firms including Mellon-Dreyfus and Citigroup.

In 2009, I founded a global business, Berman Electronic Enterprises LLC, a leading distributor of electronic components worldwide, servicing OEMs and Contract Manufacturers. It’s an industry I know well and I plan to move CN Energy into this space via acquisition. It would serve as the first US footprint for the company (CN Energy) and a new high-margin source of revenue to complement the activated carbon business.

CN Energy has carved a niche in the growing renewable energy space with its wood-based activated carbon and biomass electricity. Can you elaborate on the specific market segments you target, and how does your approach cater to their needs?

The specific markets that we target are pharmaceutical manufacturing, water purification, food and beverage production as well as environmental protection. Allow me to talk about the approach and how it's customized for each client:

  • What we produce is far from a boilerplate-activated carbon product. What we do at CN Energy is highly customized for each client and their specific requirements.
  • Each client is case-by-case specific.
  • Our team is highly skilled in the various customizations and client demands per manufacturing segment.
  • When I speak of expertise and manufacturing technical knowledge, we have 32 patents supporting our process. This speaks volumes to our capabilities.

Given the competitive landscape, what competitive advantages does CNEY offer to secure a leading position in the wood-based activated carbon market?

First and foremost, CN Energy produces 100% recyclable activated carbon products that are NON-TOXIC. This is the most obvious differentiator and competitive advantage we have. In addition, our very strong and loyal roster of clients demand a clean product and we continue to deliver that to specification. Our competitors are not able to satisfy these demands because they mostly have coal-based products.

CN Energy has achieved remarkable growth in both revenue and net income in recent years. What factors do you attribute to this success, and how does the company plan to sustain and build upon this momentum?

As the new CEO, I would agree the revenue profile is very strong and I plan to expand this product set beyond activated carbon and create a global footprint. This approach will not only sustain our revenues, it will also enable a strong growth trajectory. In addition, while the company’s net income has recently decreased, I am extremely focused on optimizing our expenses and production costs to increase net income.

The recent announcement of preliminary financial results for Q1 2024 is promising. Can you elaborate on the strategies driving your revenue growth and path to profitability?

Our strategy remains to continue to do the things we do well. Currently, we are driving strong revenue from our activated carbon lines. We have a consistent sales pipeline of loyal customers who trust in our ability to deliver a high-quality product. One of the biggest changes for CN Energy, since I have arrived, is my transparency relating to my vision and the progress of the company. I know this will be well received by our investor community.

With plans to expand into the semiconductor distribution industry, leveraging AI technology, while maintaining its core focus on manufacturing and distributing wood-based activated carbon for various industries, how does CN Energy plan to strategically balance these dual business models?

Activated carbon is a low-margin, yet stable and mature business. I would say it is similar to Amazon in that Amazon's shipping business is also very stable and low margin. So they then built up a cloud service business which is highly profitable and high-margin. These profits help to fuel and build up the infrastructure of the shipping business. More warehouses, more materials, etc. It’s like pouring gravy on top of everything.

I look at Berman Electronic in the same way; a high-margin profitable business. As I have been in the semiconductor space for 22 years, I am excited to create the world's first publicly traded independent distributor of electronics and semiconductors. Having access to the US capital markets, the upside is potentially limitless.

The company's activated carbon products have comparative advantages in safety, efficiency, and reliability for end users in industries such as water purification. How does CN Energy Group differentiate its products from competitors, particularly in terms of quality and performance?

One of our important business cycles is the discovery of forest or wood scrap suppliers. We spend a lot of time trying to partner with wood manufacturers who would otherwise dispose of their wood scraps and are happy to partner with us, who responsibly transform this waste into a clean manufacturing product. Another example is agricultural waste from plantations. They have tons of useless materials after a harvest. We can take these wastes and make recyclable materials with numerous applications.

CN Energy Group's commitment to sustainability is evident through its utilization of forestry residues and wood wastes for activated carbon production. Can you discuss the environmental benefits of this approach and the company's efforts towards sustainable development goals?

I am considering acquisitions for the following reasons:

  1. To expand our product offering
  2. To leverage best practices for cost reduction strategies
  3. Most importantly, expanding into product segments that carry a higher profit margin profile

The idea is to bring together the technical strengths of our activated carbon product combined with the end-to-end product lifecycle efficiency of the semiconductor business line. We believe this will fuel our global footprint.

CN Energy Group aims to expand its product portfolio and leverage cost-reduction strategies through potential acquisitions. Could you provide insight into the company's acquisition strategy and the types of businesses or technologies it is considering for expansion?

I am already engaged with several environmental companies in the USA as well as Europe and the Pacific Rim as potential new clients. I believe it’s about knocking on as many doors as possible, about showing American companies our high-quality products and very competitive pricing. It’s also about making strategic investments in marketing and adding successful people to my management team.

CN Energy's expansion into the US market is a significant milestone in the company's growth strategy. What are the key objectives and challenges in penetrating the US market, and how does the company plan to address them?

There are so many applications for our products and I think an important and major key is also having an American leader who understands the supply chain and deep relationships, which I am proud to bring these qualities to the company. The second part of my plan is to launch Berman Electronic under the CN Energy family of companies through thoughtful acquisition.

Looking ahead, what are the key priorities and milestones for CNEY in achieving long-term growth, profitability, and shareholder value?

As an incoming CEO, my number one priority is governance, safety, and soundness. I have already launched an internal process to ensure the operations of our entities are meeting a very high standard for success. This includes:

  • Continuous reviews of our sales pipeline
  • Expenses management routine
  • And profitably metrics

I am confident that these steps will result in even stronger revenues and positive income in a sustainable way.

What are some of the biggest potential challenges CNEY might face in the coming years, and how is the company prepared to address them?

Our number one constraint now and in the future is the cost associated with manufacturing activated carbon. We currently manage this very closely but it is clear to me this is a low-margin product. With that said, and as stated previously, we are going to offset our low-margin products with higher-margin products as we continue to expand our product set.

Secondly, our primary source of revenue and manufacturing is in China. This can be a very difficult environment to manage at times and to mitigate this business risk, we will expand into other regions and globalize this company.

Is there any other information you wish to share with our investors so we can highlight the key investment opportunities for CN Energy Group?

As the incoming CEO, it is my goal to continue to be extremely transparent about my vision for CN Energy Group. I am deploying all my years of experience to stabilize and grow the price of the stock and I am confident that my vision and global expansion strategy will build investor confidence. I believe this company has a differentiated product that far exceeds the capabilities of our competitors. I also believe this is the perfect time to invest in my vision and what CN Energy can do globally under my leadership.

Thank you for your time.

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