Q1 2022 Berkshire Grey Inc Earnings Call

May 12, 2022

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Thank you for standing by and welcome to the Berkshire Gray first quarter 2022 earnings call. At this time, all participants are in a listen only mode.

Thank you for standing by and welcome to the Berkshire Greif first quarter 2022 earnings call.

At this time all participants are in a listen only mode.

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I would now like to hand the conference over to our speaker today, Ms. Hari Buddha, Vice President Investor Relations. Thank you. Good-bye my colleagues from?gov fellow

I would now like to hand, the conference over to your Speaker today, Ms. Sara Buda, Vice President Investor Relations. Thank you. Please go ahead.

Thank you good morning, everybody and thank you for joining Berkshire <unk> first quarter 2022 earnings conference call earlier today, we issued a press release announcing our financial results. The release is available on our Investor Relations website at IR deck, Berkshire, Great Dot Com, leading today's discussion is Berkshire, great founder and Chief Executive Officer, Tom Wagner.

Thank you. Good morning, everybody. And thank you for joining Berkshire Gray's first quarter 2022 earnings conference call. Earlier today, we issued a press release announcing our financial results. The release is available on our investor relations website at IR.berkshiregray.com. Leading today's discussion is Berkshire Gray founder and chief executive officer Tom Wagner. Steve Johnson, our president and Mark Fiddler, our chief financial officer are also here with us today. Following management's prepared remarks, we will open up the call to questions.

Steve Johnson, our president and Mark <unk>, Our Chief Financial Officer are also here with US today. Following management's prepared remarks, we will open up the call to questions before we get started we would like to inform you that certain statements made during this conference call may constitute forward looking statements within the meaning of the private Securities Litigation Reform Act.

Before we get started, we would like to inform you that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

Future operating performance and financial results of the business may differ materially from those expressed or implied in any forward-looking statements provided on this conference call due to various risks and uncertainties and risks.

Future operating performance and financial results of the business may differ materially from those expressed or implied in any forward looking statements provided on this conference call due to various risks and the risks uncertainties and risk factors information concerning these uncertainties and risk factors is contained in our filings with the SEC.

Information concerning these uncertainties and risk factors is contained in our filings with the SEC. Forward-looking statements included in this call are based on information currently available to us and represent the company's current view as of the date these statements are made. We do not commit to update these statements.

Forward looking statements included in this call are based on information currently available to us and represent the company's current view as of the date. These statements are made we do not commit to update these statements as a reminder will be referring to some non-GAAP financial measures. During today's call. A detailed reconciliation of GAAP and non-GAAP measures can be found.

As a reminder, we will be referring to some non-GAAP financial measures during today's call. A detailed reconciliation of GAAP and non-GAAP measures can be found in our earnings press release today, which will be furnished to the SEC and is available now on our IR website.

In our earnings press release today, which will be furnished to the SEC and is available now on our IR website. These non-GAAP financial measures are in addition, and not substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measure derived in accordance with GAAP.

These non-GAAP financial measures are in addition and not substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measure derived in accordance with GAAP. With that, I'll now turn the call over to Tom Wagner, CEO .

I'll now turn the call over to Tom Wagner our CEO .

Thank you, Sarah. And good morning, everyone. Welcome to our first quarter 2022 earnings call. It's been six weeks since

Thank you Sarah and good morning, everyone.

Welcome to our first quarter 2022 earnings call.

Been six weeks since our last call.

Today I'm going to focus on a few topics that underscore our growth opportunity, our unique position in the robotic automation market, and how we continue to build on the successes we realized in 2021.

Today, I'm going to focus on a few topics that underscore our growth opportunity our unique position in the robotic automation market and how we continue to build on the successes we realized in 2021.

Along those lines, in the first quarter we secured a new logo with an industry leading retailer, launched new products which address critical market needs and broaden our unique product portfolio, and rapidly built a $100 million pipeline for a new product that we launched only a few months ago.

Along those lines in the first quarter, we secured a new logo with an industry leading retailer.

Launched new products, which address critical market needs and broaden our unique product portfolio and rapidly built a $100 million pipeline for our new products that we launched only a few months ago.

Mark and I will spend some time discussing these items in more detail. Today we also have Steve Johnson, our President, joining the call to talk more about our go-to-market activities and customer traction.

Mark and I will spend some time discussing these items in more detail.

Today, We also Steve Johnson, our president joining the call to talk more about our go to market activities and customer traction.

As we get started, let me remind you of our mission here at Berkshire Gray. We make industry-leading, AI-enabled, robotic systems that fill e-commerce and retail orders and handle e-commerce packages as they make their way to your door. Our mission is to help customers succeed with intelligent robotic automation that gets the right goods to the right places in the right quantities at the right time.

As we get started let me remind you of our mission here at Berkshire Greg.

We make industry, leading AI enabled robotic systems that Phil E Commerce, and retail orders and handle the ecommerce packages as they make their way to your door.

Our mission is to help customers succeed with intelligent robotic automation that gets the right goods to the right places and the right quantities at the right times, we automate difficult and labor intensive task within fulfillment operations, including picking sorting packing moving.

We automate difficult and labor-intensive tasks within fulfillment operations, including picking, sorting, packing, moving, and organizing.

And organizing.

These are core functions that are found in almost every logistics operation and lead to a $280 billion addressable market for our product.

These are core functions that are found in almost every logistics operation and lead to a $280 billion addressable market for our products.

Our technology is proven in production and driving tangible ROI for Fortune 100 customers. We secured repeat orders from every one of our anchor customers and are growing our new business pipeline as well. We have the right strategy, the right technology, and the right team in place today to capitalize on the tremendous market opportunity before us.

Technology is proven in production and driving tangible ROI for Fortune 100 customers. We secured repeat orders from every one of our anchor customers and are growing our new business pipeline as well.

We have the right strategy, the right technology and the right team in place today to capitalize on the tremendous market opportunity before us.

Now let me talk about the quarter, our pipeline, and our technology advancement.

Now, let me talk about the quarter, our pipeline and our technology advancements.

For the first quarter, we delivered revenue of approximately $5.5 million ahead of analyst expectations. Total orders to date are $203 million, and we have a backlog of $103 million as of the end of Q1.

For the first quarter, we delivered revenue of approximately $5 5 million ahead of analyst expectations.

Total orders to date are $203 million and we have a backlog of $103 million as of the end of Q1.

As Mark will discuss, we are reducing product cost to drive future gross margin improvements, and we continue to invest in our technology to position us for long-term growth.

As Mark will discuss we are reducing product cost to drive future gross margin improvements and we continue to invest in our technology to position us for long term growth.

Most importantly, we remain confident in our plan of becoming a billion-dollar company and achieving our target long-term operating model of approximately 50% gross margin and 25% adjusted EBITDA margin.

Most importantly, we remain confident in our plan of becoming a $1 billion company and achieving our target long term operating model of approximately 50% gross margin and 25% adjusted EBITDA margin.

Moving on to customers. Our pipeline is robust we remain actively engaged at multiple levels with all of our anchor customers. Our technology is proven and in deployment and we believe we are an important part of their long term automation strategy.

Moving on to customers, our pipeline is robust. We remain actively engaged at multiple levels with all of our anchor customers. Our technology is proven and in deployment, and we believe we are an important part of their long-term automation strategy.

Regarding new customers, in the past few months, we secured an initial order with a major retail brand and a follow-on order from a new customer we landed in late 2021. This means order and follow-on order in rapid succession and is yet another positive indicator.

Regarding new customers for the past few months, we secured an initial order with a major retail brands and a follow on order from a new customer we landed in late 2021. This means order and follow on order in rapid succession and is yet another positive indicator.

Our current pipeline includes hundreds of identified opportunities and unique perspective customers. Steve will provide some more color on the line.

Our current pipeline includes hundreds of identified opportunities as unique perspective customers, Steve will provide some more color on that shortly.

Now I'd like to talk about some of our recent product news, which broadens our product portfolio and expands our growth opportunities.

Last week we announced the next generation of our mobile solution, BGFlex.

Last week, we announced the next generation of our mobile solution BG Flex our mobile solution consists of autonomous mobile robots sort sequence and move items for ecommerce orders and store replenishment and we have large installations in operation today.

Our mobile solution consists of autonomous mobile robots that sort, sequence, and move items for e-commerce, orders, and store replenishment. We have large installations in operation today.

With BG Flex, we combine a high density buffer with our mobile robots, robotic picking stations, operator picking stations, and our orchestration software, which manages the flow of goods and work through the system.

With BG flags, we combine a high density buffer with our mobile robots robotic picking stations operate are picking stations and our orchestration software, which manages the flow of goods and work through the system.

These new features lead to increased density and decreased footprint, expanding the applicability of our solution beyond large distribution centers to back of store and stand-alone micro fulfillment.

These new features lead to increased density and decreased footprint.

Expanding the applicability of our solution beyond large distribution centers to back of store and Standalone micro fulfillment centers. This is important as our customers increasingly rely on automation to address the unprecedented consumer demand for near real time order fulfillment such as <unk>.

This is important as our customers increasingly rely on automation to address the unprecedented consumer demand for near real-time order fulfillment, such as buy online, pick up in store, and curbside delivery.

Buy online pickup in store and curbside delivery.

Our new BG Flex mobile solution is yet another example of our ability to build on our standard product modules to deliver the automation our customers need to compete in today's on-demand economy.

Our new BG Flex mobile solution is yet. Another example of our ability to build on our standard product module to deliver the automation our customers need to compete in today's on demand economy.

Along similar lines, we also recently announced a robotic pick and pack with identification, or RPPI solution. This system is built on our existing core picking technology and adds new features for touchless e-commerce auto-bagging. This allows retailers to increase fulfillment throughput while using sustainable approaches. For instance, having the robots pack into recyclable mailers.

Along similar lines, we also recently announced our robotic pick and pack with identification or our PPI solution.

This system is built on our existing core picking technology and adds new features for Touchless E Commerce auto bagging.

This allows retailers to increase fulfillment throughput, while using sustainable approaches for instance, having the robots pack into recyclable mailers.

Current processes require human labor to place items into e-commerce shipping bags, which is labor-intensive, slow, and can be prone to error. Our PPI provides both automation and support for sustainability programs, which is important to our customers and important to us.

Current processes require human labor to place items into e-commerce shipping bags, which is labor intensive slow and can be prone to error.

Our PPI provides both automation and support for sustainability programs, which is important to our customers and important to us.

At Berkshire Gray, our technology is our competitive advantage. For customers, our technology is their competitive advantage as they compete in a rapidly transforming digital economy. This is why some of the world's largest retailers, e-commerce providers, and logistics companies choose Berkshire Gray. And why every one of our anchor customers has expanded their deployments with us with new orders. Repeat orders are strong affirmation of our technology.

The Berkshire, Greg our technology is our competitive advantage for customers. Our technology is their competitive advantage as they compete in a rapidly transforming digital economy.

This is why some of the world's largest retailers e-commerce providers and logistics companies choose Berkshire Greg.

And while every one of our anchor customers has expanded their deployments with us with new orders.

Pete orders are strong affirmation of our technology.

Other affirmations include our strategic partnerships, like our partnership with Swisslog, and other experts, like Frost and Sullivan, who recently named us the 2022 Enabling Technology Leader for Intelligent Robotic Automation.

Other affirmations include our strategic partnerships like our partnership with Swiss log and other experts like Frost and Sullivan, who recently named US the 2022, enabling technology leader for intelligent robotic automation.

In summary, we are well positioned for continued growth. Our technology and our team are industry leading, evidenced by repeat orders from customers. We have a strong pipeline, that Steve Johnson will discuss further in a moment.

In summary, we are well positioned for continued growth.

Technology, and our team are industry, leading evidenced by repeat orders from customers.

We have a strong pipeline the Steve Johnson will discuss further in a moment.

There are material long-term macro tailwinds like changes in consumer shopping behaviors, for example app-based ordering, as well as escalating labor costs and labor scarcity that are driving our customers to automate their operations.

There are material long term macro tailwind like changes in consumer shopping behaviors. For example, app based ordering as well as escalating labor costs and labor scarcity that are driving our customers to automate their operations.

We have unique and differentiated products that are proven and in operation with Fortune 100 customers.

We have a unique and differentiated products that are proven and in operation with fortune 100 customers.

We have even more conviction now about the growth opportunity we have in front of us today as we build a profitable billion dollar company.

Now let me turn it over to Steve to talk about our commercial momentum and our pipeline for growth.

Now, let me turn it over to Steve to talk about our commercial momentum and our pipeline for growth.

Thanks Tom and good morning everyone. Since this is my first earnings call with BG, let me provide a brief background. I joined Berkshire Gray in late 2019 to establish our go-to-market team.

Thanks, Tom and good morning, everyone. As this is my first earnings call with DG, Let me provide a brief background I joined <unk> in late 2019 to establish our go to market teams build on the success of our initial anchor customers and to expand our go to market strategy is.

build on the success of our initial anchor customers, and to expand our go-to-market strategy.

It was clear to me then, and even more clear today, that Berkshire Gray is uniquely positioned for substantial and rapid growth. Macro forces provide strong...

It is clear to me, then and even more clear today that Berkshire Gray is uniquely positioned for substantial and rapid growth.

Macro forces provides a strong tailwind for our business changes in consumer expectations due to the Amazon effect put significant pressure on retailers e-commerce providers three deals.

changes in consumer expectations, do the Amazon effect, put significant pressure on retailers, e-commerce providers, 3PL.

The volume and pace of e-commerce orders is intense and growing, and labor challenges add to this pressure. When I joined the company, we knew that the market was there for us to grab, and that's exactly what we've been doing, as evidenced by the 203 million in orders that we've received to date. To help us win this environment, we implemented a strategy for selling into verticals and adding partnerships for scale.

The volume and pace of E. Commerce orders is intense and growing and labor challenges add to this pressure when I joined the company. We knew that the market was there for us to grab and that's exactly what we've been doing as evidenced by the $203 million in orders that we've received to date.

To help us win in this environment, we implemented a strategy for selling into verticals and adding partnerships for scale <unk>.

To execute on this strategy, we have a three-prong sales approach. Number one, expansion of anchor customers, which we've done. Number two, direct sales to land new customers, which we're also doing. And three, partnering with leading systems integrators and technology partners. Let me provide some more detail on each of these.

To execute on this strategy, we have a three pronged sales approach number one expansion of anchor customers, which we've done number two direct sales to land new customers, which we're also doing and three partnering with leading systems integrators and technology partners. Let me provide some more detail on each of these.

First I'll touch on our anchor customers as you know our anchor customers include Walmart Fedex target and another fortune 100 retailer.

As you know, our anchor customers include Walmart, FedEx, Target, and another Fortune 100 retailer. All of them have placed following orders. And we have potential opportunities for multi-year strategic agreements with the company.

All of them have placed follow on orders and we have potential opportunities for multiyear strategic agreements with them as we stated our current pipeline with anchor customers totaled over $2 5 billion and the longer opportunity is even greater.

As we say, our current pipeline with anchor customers totals over 2.5 billion and the longer opportunities is even greater. So our anchor customers have been and will continue to be an important part of our growth strategy.

Our anchor customers have been and will continue to be an important part of our growth strategy.

Second, our teams have been successful in securing new customers.

Our teams have been successful in securing new customers recently, we added new logo and secured follow on orders with another customer before we then installed <unk> systems with that customer.

Recently, we added a new logo and secured following orders with another customer before we even installed the first systems with that customer. All of our products solutions are getting started.

All of our products solutions are gaining traction in the market. One example is our <unk> footwall or RP W. This is a new solution that helps e-commerce providers automate order fulfillment a process that is mostly manual today.

One example is a robotic footwall or RPW. This is a new solution that helps e-commerce providers automate order fulfillment, a process that is mostly manual today. Since the introduction of RPW, we've had several new customer orders and have had dozens of active discussions representing about 100 million in potential business, a positive start for a product we just announced a few months ago.

Since the introduction of <unk>, we had several new customer orders and have had dozens of active discussions representing about $100 million of potential business deposits start for a product, we just announced a few months ago.

Across all our solutions, our new customer pipeline includes over 200 identified opportunities with 175 unique prospective customers representing about a billion in pipeline. This, combined with our expansion opportunities with anchor counts, brings our total pipeline to 3.5 billion.

Across all our solutions, our new customer pipeline includes over 200 identified opportunities with 175 unique prospective customers representing about a $1 billion in pipeline.

Combined with our expansion opportunities with anchor accounts brings our total pipeline to $3 5 billion.

The third piece of our sales strategy is partnerships. We now have 13 partners, including Swisslog, which we announced in Q1, on Logistics, a UK-based integrator that we announced last week. We're already working on joint prospects with several of these partners, and I hope to have more news soon about some shared product solutions and shared wins.

The third piece of our sales strategy is partnerships. We now have 13 partners, including Swiss law, which we announced in Q1 on logistics a UK based integrator that we announced last week, we already working on joint prospects of several of these partners and hope to have more news soon about some shared product solutions and shared wins.

Partnerships give us a formidable competitive advantage as we work together to provide customer solutions that cannot be found anywhere else.

Partnerships gives us a formidable competitive advantage as we work together to provide customer solutions that cannot be found anywhere else.

Of course, having customers advocate for BG and share their experience with other prospects has the highest influence.

Of course, having customers advocate for BG and share their experience with other prospects has the highest impact we are fortunate that our customers value our technology as a result, our existing customer base has been and will continue to be our greatest source of validation and.

We are fortunate that our customers value our technology. As a result, our existing customer base has been and will continue to be our greatest source of validation.

In summary, we're in a very strong position from a go-to-market perspective.

In summary, we're in a very strong position from a go to market perspective now.

Mark over to you.

Thanks, Steve, and good morning, everyone. I'd like to start off by discussing the results of our first quarter, and I will then provide some updates regarding some of our key initiatives for 2022. Revenue for the first quarter was $5.5 million, slightly higher than expenses, and 39% higher in the same period in 2021.

Thanks, Steve and good morning, everyone I'd like to start off by discussing the results of our first quarter and I will then provide some updates regarding some of our key initiatives for 2022.

Revenue for the first quarter was $5 5 million slightly higher than consensus from 39% higher than the same period in 2021.

secured new orders of three and a half million in the first quarter, which is about the amount that we expected. All the new orders were from non-anker customers.

We secured new orders of $3 5 million in the first quarter, which is about the amount that we expected.

All the new orders were from non anchor customers.

As of the end of Q1, we have backlogged $103 million, which we define as contracts signed with systems yet to be delivered and installed.

As of the end of Q1, we had backlog of $103 million, which we define as contracts signed with systems, yet to be delivered and installed.

More importantly, we continue to execute on deliveries with our customers.

More importantly, we continue to execute on deliveries with our customers. Our activities are starting to ramp up in recent weeks. So we expect revenues to increase significantly in Q2.

Our activities have started to ramp up in recent weeks, so we expect revenues to increase significantly in Q2. Both order flow and revenue are expected to increase substantially in the second half of this year. A similar pattern compared to 2021, where the majority of our orders and more than 85% of our revenue occurred in the second half.

Both order flow and revenue are expected to increase substantially in the second half of this year, a similar pattern compared to 2021, where the majority of our orders and more than 85% of our revenue occurred in the second half.

With our strong backlog and large pipeline, we can continue to be very well positioned for growth.

With our strong backlog and large pipeline, we continue to be very well positioned for growth.

Now I'd like to discuss some progress that we've made with operational initiatives we have for 2022. On our last call, we talked a bit about our path to achieving positive growth margins in 2023.

Now I'd like to discuss some progress that we've made with operational initiatives, we have for 2022.

On our last call, we talked a bit about our path to achieving positive gross margins in 2023, let.

Let me provide some additional context. Since we started the company, we have spent all of our engineering resources focusing on one thing, developing the capabilities and performance of our technology to where it is today. This has been the right strategy, allowing us to realize the success we've had with our customers, and has allowed us to build a robust pipeline.

Let me provide some additional context since we started the company. We have spent all of our engineering resources focusing on one thing developing the capabilities and performance of our technology to where it is today. This has been the right strategy, allowing us to realize the success, we've had with our customers and has allowed us to build a robust pipeline with.

With our technology proven and our go-to-market strategy in place, we can now focus more on cost improvement. And we believe there's a lot of low-hanging fruit here.

With our technology proven in our go to market strategy in place. We can now focus more on cost improvement and we believe there is a lot of low hanging fruit here.

It is important to note.

that our more mature products are already generating positive margins. However, one of our newer products has significant room for improvement and we have already implemented specific engineering design changes with others that will be completed this year, which will result in lowering this product's cost by 25%. We have also raised prices for the new products.

That are more mature products are already generating positive margins. However, one of our newer products has significant room for improvement and we have already implemented specific engineering design changes with others that will be completed this year, which will result in lowering this product cost by 25%.

We have also raised prices for this product as well.

We have cost reduction programs in place for all of our products, which provides us with a clear path to achieve overall positive gross margin in 2023 and beyond. Most importantly, we remain confident in our ability to achieve our run rate operating metrics of approximately 50% gross margin in the long term.

We have cost reduction programs in place for all of our products, which provides us with a clear path to achieve overall positive gross margin in 2023 and beyond.

Most importantly, we remain confident in our ability to achieve our run rate operating metrics of approximately 50% gross margins in the long term.

Moving to operating expenses total opex for the first quarter was $29 5 million on GAAP basis and <unk>.

Moving to operating expenses, total lot backs for the first quarter was $29.5 million on GAAP basis and $31.7 million excluding stock-based compensation.

<unk> $31 7 million, excluding stock based compensation.

due to mark-to-market adjustments relating to certain stock awards.

Due to mark to market adjustments related to certain stock awards, our total stock base comp.

expense was negative for the quarter, resulting in a P&L benefit. As expected, total operating expenses, excluding stock comp for the quarter, is roughly flat compared to the fourth quarter of 2021.

<unk> expense was negative for the quarter, resulting in a P&L benefit.

As expected total operating expenses, excluding stock comp for the quarter was roughly flat compared to the fourth quarter of 'twenty one we.

We believe we have a good organizational base to support the growth of our business and for the remainder of this year, we expect total operating expenses excluding stock-based compensation will be fairly consistent quarter to quarter.

We believe we have a good organizational base to support the growth of our business and for the remainder of this year. We expect total operating expenses, excluding stock based compensation will be fairly consistent quarter to quarter.

The adjusted EBITDA, which is defined as loss from operations adjusted primarily for depreciation, stock-comp expense, and changes in fair value of warrants, was negative $29.4 million for the first quarter of 2022, compared to negative $19.5 million for the same period in 2021, and negative $34 million for the prior quarter. A reconciliation of our net loss to adjusted EBITDA is in included on our pressure.

Adjusted EBITDA, which is defined as loss from operations adjusted primarily for depreciation and stock comp expense and changes in fair value of warrants was negative $29 4 million for the first quarter of 'twenty, two compared to negative $19 5 million for the same period in 'twenty one and.

And negative $34 million for the prior quarter.

A reconciliation of our net loss to adjusted EBITDA is included in our press release.

On the balance sheet, we ended the quarter in solid cash position with over $140 million in no debt.

On the balance sheet, we ended the quarter and solid cash position with over $140 million and no debt.

As mentioned, we ended the quarter with $103 million in backlog, providing good visibility for revenue for this year. We continue to expect revenue of approximately $90 million for 2022, which is consistent with the guidance we gave in our last call, and we expect to build on our order and backlog to support future revenue.

And we expect to build on our order book and backlog to support future revenue.

Finally, to reiterate some key points we've talked about, we continue to be in strong position to execute our business.

Finally to reiterate some key points, we've talked about we continue to be in strong position to execute our business plan.

Tailwinds driving the need for automation continue to be as prevalent as ever. Our customers love our technology proven by the following orders we've received, particularly from accurate customers and they want more.

<unk> is driving the need for automation continues to be as prevalent as ever our customers love our technology driven by the follow on orders, we've received particularly from anchor customers and they want more.

We're making rapid, tangible progress on our product cost reduction initiatives, and our strong backlog combined with our large pipeline provides us with even greater conviction about our long-term growth prospects, and now Operator will

We're making rapid tangible progress on our product cost reduction initiatives and our strong backlog combined with our large pipeline provides us with even greater conviction about our long term growth prospects.

Now operator, we will turn it over for Q&A.

And as a reminder to ask a question.

And as a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key.

Nebraska Star one on your telephone.

A question Brett founder Husky.

Please standby, we will file the Q&A roster.

Our first question comes from the line of Greg Palm with Greg Helm Capital, your line is now open.

Our first question comes from the line of Greg Palm with Craig Hallum Capital. Your line is now open.

Good morning, everyone. Thanks for taking the questions.

Yeah, good morning everyone. Thanks for taking the questions and congrats on the continued progress.

Congrats on the continued progress.

Thanks, Greg.

So I wanted to start with the reiteration of the foliar guide. You know, just curious what your visibility is like now versus, you know, several months ago, any worry or concern that some of these projects could get pushed? I mean, not because of anything you're doing, but just broader supply challenges. What are you seeing out there?

So I wanted to start with.

The reiteration of the full year guide just curious what your visibility is like now versus several months ago, any worry or concern that some of these projects could get pushed I mean, not because of anything youre doing but just broader supply challenges what are you seeing out there.

Yes, our view is pretty much the same as it was six weeks ago.

Yeah, so our view is pretty much the same as it was six weeks ago. You know, we have $103 million in backlog, you know, based on the deployment schedules that we have. You know, that's the best estimate that we have right now for revenue for this year. Obviously, the risks that we talked about last time are still sort of out there now, which are, you know, supply chain issues.

One.

$103 million in backlog.

Based on the deployment schedules that we have.

The best estimate that we have right now for our revenue for this year. Obviously the risks that we talked about last time are still sort of out there now which are supply chain issues.

The global supply chain issues, to the extent that it impacts our customer deployment schedules or even our schedules, that risk is still there. But based on where we sit today and the schedule that we have right now, that's our best estimate right now.

The global supply chain issues to the extent that it impacts our customers' deployment schedules or even our schedules that risk is still there, but based on where we sit today and the schedule that we have right now that's our best estimate right now.

Okay, good. And you talked about the potential for more meaningful order growth activity in the second half. I know you don't guide for orders, but how should we think about order growth for this year? I mean, is it something in the ballpark of consistent with revenue growth? Is it higher? Is it lower? What should we be thinking about?

Okay. Good.

You talked about the potential for more meaningful order growth.

Activity in the second half I know you don't guide for orders, but how should we think about order growth for this year I mean is it something in the ballpark of consistent with revenue growth or is it higher or is it lower what should we be thinking about.

I think what we'll see is.

I think what we'll see is, as we mentioned, and we really don't guide to order numbers, but like what we experienced last year, we expect to see a significant increase in order activity from all of our customers in the second half, both from our anchor customers and from new prospects as well.

As we mentioned we.

And we don't really don't guide to order numbers, but.

No.

Like what we experienced last year, we expect to see a significant increase in order activity from all of our customers in the second half both from their anchor customers and from new prospects as well.

Okay, and then last one just any update on progress of large scale commercial arrangements I know there is no official news to report today, but how many customers do you think might be looking at doing something like this I mean are all of your anchor customers sort of engaged in this.

Okay, and then last one, just any update on, you know, progress of large scale commercial arrangements? I know there's no official news to report today. But you know, how many customers do you think might be looking at doing something like this? I mean, are all of your anchor customers sort of engaged in this, you know, opportunity or is it just, you know, one or two at this point?

No opportunity or is it just.

One or two at this point.

Yeah, hey Greg, thank you for asking. You know, currently we have follow-on orders with all of our anchors that continues to be great validation. I did mention the long-term arrangements in our last call and I would suggest that still work in process. We'll share updates as we're able.

Yeah, Hey, Greg Thank you for asking.

Currently we have follow on orders with all of our anchors that continues to be great validation.

Did mentioned the long term.

Arrangements in our last call and I would suggest that it's still work in process, we'll share updates as we're able.

Okay Fair enough all right I'll hop back in the queue, Thanks, and good luck.

Okay, fair enough. All right, I'll hop back in the queue. Thanks and good luck. Thank you.

Thank you Greg Thanks, Greg.

Our next question comes from the line of John Walsh with Credit Swiss. Your line is now open.

Our next question comes from the line of John Walsh with Credit Suisse. Your line is now open.

Hi, good morning, and thanks for taking the questions and a good start to the year.

Hi, good morning and thanks for taking the questions and a good start to the year.

Thanks, John .

Maybe just the first question and obviously

Maybe just the first question and obviously.

You know, this earnings season, we heard a very large

This earnings season, we heard a very large online retailer talk about scaling back a little bit.

online retailer, talk about scaling back a little bit, some other suppliers saying that they're a little more leveraged to the larger deployments, talking about automated warehouse being a watch item. Obviously, what do you see from your customers and some of the other verticals you touch that might not be that kind of deployment?

Some other suppliers, saying that are a little more leverage to.

The larger deployments talking about automated warehouse being a watch item.

Obviously.

What are you kind of see from your customers and some of the other verticals you touch that might not be that kind of deployment.

John , can you just add a few more words to your question, please? Yeah, so I think maybe I'll just use some names and say it another way, but after Amazon reported, there was some tempering of expectations for their automated warehousing spend. Honeywell, for Intelligrated, they had automated warehouse be a watch item.

John could you just add a few more words to your question. Please yes, so I think.

Maybe I'll just I'll use some names and say it another way, but after Amazon reported there were some.

Tempering of expectations further automated warehousing spend hung.

Honeywell.

For <unk>.

Had automated warehouse be a watch item.

You know, obviously your product, right, is broader than just one individual vertical. So just curious what you're seeing as you talk to your customers across different verticals or even within automated warehouse where those customers might not have as high of a penetration rate.

Obviously your product right.

Broader than just one individual verticals. So just curious what youre seeing as you talk to your customers across different verticals or even within automated warehouse, where those customers might not have as high a penetration rate.

Trying to hear what you guys are saying given that a couple of folks have kind of thrown a little bit of cold water there.

trying to hear what you guys are saying given that a couple of folks have kind of thrown a little bit of cold water.

No, we continue to see high energy for the need to automate tempo of customers in the door tempo of conversations and so forth is all high and as it was and continuing that trend. We haven't we haven't seen any pullback.

No we continue to see high energy for the need to automate.

<unk> customers in the door tempo of conversations and so forth is all.

The high end as it was then continuing that trend we haven't we haven't seen any pullback.

Okay. Thank you.

And then, you know, what if we could just talk a little bit about, you know, this partner network, you know, now you have 13, you know, what are some of the things that you're thinking about that makes that successful that we could monitor as outsiders looking in? I mean, are you planning to add more partners? You know, how do we think about the opportunity there? Because that seems pretty, like it would be a pretty good opportunity.

And then what if we could just talk a little bit about.

This partner network.

Now you have 13.

What are some of the things that you're thinking about that makes that successful.

We can monitor as outsiders looking in I mean are you planning to add more partners.

How do we think about the opportunity there because that seems pretty.

It could be a pretty good opportunity.

Hey, John This is Steve good question.

Hey John , this is Steve. Good question. So from a partner perspective, we're selectively adding partners for verticals. That's where we're focused at the moment. Partners have trusted advisors with their customers and we're leveraging our joint go-to-market as well as fulfillment help from those partners as well.

From a from a partner perspective.

We are selectively adding partners four verticals, that's where we're focused at the moment.

Partners have trusted advisors with their customers.

We're leveraging our joint go to market as well.

Fulfillment help from those partners as well so.

We'll be adding some, it's not going to be a lot, we're leveraging the partners that we have. We've got some great partners now that we'll continue to work with and do more together. Did I answer your question?

We'll be adding some it's not going to be a lot just.

Leveraging the partners that we have we've got some great partners now that will continue to work with them.

And do more together than they are.

Ask your question.

Yeah, no, that's good. And maybe just a last one here and then I'll pass the baton. But, you know, as we just think about uses of cash for the year, any updates relative to the framework you laid out last quarter.

Yeah, No that's good and maybe just a last one here and then I'll pass the baton but as.

As we just think about uses of cash for the year.

Any updates relative to the framework you laid out last quarter.

you know, wanted to get kind of a mark to market update there on uses of cash for the year. Thanks.

Wanted to get kind of a mark to market update there on uses of cash for the year. Thank you.

Yes, no update is still in the $10 million to $11 million per month burn rate, which is pretty much what we experienced in Q1. So we expect that to be pretty consistent through the rest of the year.

Yeah, no updates. It's still in the 10 to 11 million per month burn rate, which is pretty much what we experienced in Q1, so we expect that to be pretty consistent through the rest of the year.

Great. Thank you very much.

Great. Thank you Jim Thanks, John .

Again, ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchstone telephone.

Again, ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone.

Our next question is from Andrew Oban with Bank of America, your line is now open. Hey guys, you have Sabrina Abrams on for Andrew Oban.

Our next question is from Andrew <unk> with Bank of America. Your line is now open.

Hey, guys you have spring Abrams on for Andrew.

This agreement.

Do you guys think you can talk a little bit about your pricing power and ability to price backlog, understanding it's a very high inflation environment, and I know you talked a little bit about being able to reduce product costs and raise prices for a particular product. So you guys think you can talk a little bit about your ability to do that. Sure.

Do you guys think you can talk a little bit about your pricing power and ability and price backlog understanding at the very high inflation environment and I know you talk a little bit about being able to reduce product cost and raise prices for particular project product. So.

I think you can talk a little bit about your ability to do that.

Sure.

So.

You know, what we do is, in terms of the backlog, all the components and items that we have to order from our vendors are already on order, so our prices were already locked in with our vendors so there's no

What we do is in terms of the backlog.

All of the components.

And items that we have to order from our vendors were already on order. So our prices were already locked in with our vendors. So there's no there's.

There's no inflation risk with respect to what's in backlog and what's on order. For us, it's a very managed process. We manage it very closely. We also tend to lock in prices with our vendors around the same time when we're agreeing to pricing with our customers, so there's a natural hedge there, if you would.

No inflation risks with respect to what's in backlog and what's on order.

And the.

For us as a very managed process, we manage it very closely.

We also tend to lock in prices with our vendors around the same time, when we're agreeing to pricing with our customers. So there's a natural hedge there if you would.

Because we have a long planning cycle, we can sometimes also order some key components well in advance if we know that there could be some inflationary or even supply chain issues for long lead-time items that we can purchase items to have in stock so that we don't fall risk to those kinds of issues.

Because we have a long planning cycle, we can.

Sometimes also order.

Some key components well in advance if we know that there could be some inflationary or even supply chain issues for long lead time items that we can.

Items two to have in stock so that we don't.

We don't fall risk to those kinds of.

Issue so.

That's pretty much how we kind of develop our pricing and lock in our prices with our vendors.

That's pretty much how we kind of.

Develop our pricing and lock in our prices with our vendors.

Okay. Thank you for the color.

Great. Thank you for the color. Um, and just to follow up, uh, sort of looking at orders and backlog, it looks like you were able to work down some of your backlog this quarter. Um, are you seeing any improvement in supply chain constraints, especially as they impact your customers? Um, and if supply chain does improve in the back half, is there potential upside to the revenue guide?

And just a follow up on sort of looking at orders and backlog. It looks like you were able to work down some of your backlog this quarter.

Are you seeing any improvement and supply chain constraints, especially as they impact your customers.

And if supply chain does improve in the back half is there potential upside to that revenue guide.

There's no change to our revenue guide right now. I would say that this global supply chain risk is still there, so there's really no change from what our view is from just six weeks ago. It's something that we monitor very carefully and we manage very carefully with our customers, but it is still a risk nonetheless.

There is no.

There is no change to our revenue guide right now.

I would say that the.

This global supply chain risk is still there.

And so there's really no change from what our view is from just six weeks ago, It's something that we monitor very carefully and we manage very carefully with our customers, but it is still a risk nonetheless.

You know, our customers have to sometimes do some construction and order items that's not really part of our scope and not in our control, and if they're experiencing issues from a supply chain perspective, that could impact schedules.

Our customers have too.

Sometimes do some construction and order items that.

Not really part of our scope.

Not in our control and if they are experiencing issues from a supply chain perspective that could impact schedules.

and much like even if we have things on order with our vendors, they too could experience some risks as well.

And much like even if we have things on order with our vendors.

<unk> could see.

Experienced some risks as well so.

Where.

There would be no change to our guidance based on what we see.

There would be no no change to our guidance based on where we sit today.

Got it thanks, and one last question six weeks ago. I guess, you provided guidance that you were maybe expecting to raise funds in the next 12 months is that still on.

Got it. Thanks. And one last question. Six weeks ago, I guess you provided a guidance that you sort of were maybe expecting to raise funds in the next 12 months. Is that still on track? Yes. Yes, it's still on track.

On track.

Yes, yes, that's still on track.

Thanks, I'll pass it along.

Great. Thank you Sabrina.

And there are no further questions I will now turn it back over to our presenters for closing comments.

And there are no further questions, I'll now turn it back over to our presenters for closing comments.

Everybody thank you very much for spending the time with us today and we look forward to talking to you more in the future

Everybody. Thank you very much for spending the time with us today, and we look forward to talking to you more in the future.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now decide.

Thank you for watching!

Okay.

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Thank you for standing by and welcome to the Berkshire Gray first quarter 2022 earnings call. At this time, all participants are in a listen only mode.

Thank you for standing by and welcome to the Berkshire Gray first quarter 2022 earnings call. At this time, all participants are in a listen-only mode.

After the speaker presentation, there will be a question and answer session.

After the speaker's presentation, there will be a question and answer session.

To ask a question during this session, you will need to press star one on your telephone.

I ask a question during the session you will need to press star one on your telephone.

Please be advised for today's conference is being recorded. If you require any further assistance, please press star zero.

Please be advised today's conference is being recorded if you require any further assistance. Please press star zero.

I would now like to hand the conference over to our speaker today, Ms. Sarah Buddha, Vice President Investor Relations. Thank you. It is my honor to introduce Ms. Sarah Buddha.

I would now like you had a conference over to your speaker today, Ms High Buda, Vice President Investor Relations. Thank you. Please go ahead.

Thank you. Good morning everybody and thank you for joining Berkshire Gray's first quarter 2022 earnings conference call. Earlier today we issued a press release announcing our financial results. The release is available on our investor relations website at ir.berkshiregray.com. Leading today's discussion is Berkshire Gray's founder and chief executive officer Tom Wagner. Steve Johnson, our president, and Mark Fidler, our chief financial officer, are also here with us today. Following management's prepared remarks, we will open up the call to questions.

Thank you good morning, everybody and thank you for joining Berkshire greatest first quarter 2022 earnings conference call earlier today, we issued a press release announcing our financial results. The release is available on our Investor Relations website at IR Deb, Berkshire Green Dot Com, leading today's discussion is Berkshire grades founder and Chief Executive Officer, Tom Wagner.

future operating performance and financial results of the business may differ materially from those expressed or implied in any forward-looking statements provided on this conference call due to various risks and uncertainties and risks

Forward looking statements included in this call are based on information currently available to us and represent the company's current view as of the date. These statements are made we do not commit to update these statements. As a reminder, we're really been referring to some non-GAAP financial measures. During today's call a detailed reconciliation of GAAP and non-GAAP measures can be found.

As a reminder, we will be referring to some non-GAAP financial measures during today's call. A detailed reconciliation of GAAP and non-GAAP measures can be found in our Earnings Press release today, which will be furnished to the SEC and is available now on our IR website.

I'll now turn the call over to Tom Wagner our CEO .

Thank you Sarah and good morning everyone. Welcome to our first quarter of 2022 earnings call. It's been six weeks since our

Thank you Sarah and good morning, everyone.

Welcome to our first quarter 2022 earnings call, it's been six weeks since our last call.

Along those lines in the first quarter, we secured a new logo with an industry, leading retailer launched new products, which address critical market needs and broaden our unique product portfolio and rapidly built a $100 million pipeline for our new product that we launched only a few months ago.

Mark and I will spend some time discussing these items in more detail. Today we also have Steve Johnson, our president, joining the call to talk more about our go-to-market activities and customer traction.

Mark and I will spend some time discussing these items in more detail.

Today, we also have Steve Johnson, our president joining the call to talk more about our go to market activities and customer traction.

As we get started, let me remind you of our mission here at Berkshire Gray. We make industry-leading AI-enabled robotic systems that fill e-commerce and retail orders and handle e-commerce packages as they make their way to your door. Our mission is to help customers succeed with intelligent robotic automation that gets the right goods to the right places and the right quantities at the right time.

As we get started let me remind you of our mission here at Berkshire Greg.

We make industry, leading AI enabled robotic systems that Phil E Commerce, and retail orders and handle e-commerce packages as they make their way to your door.

We automate difficult and labor-intensive tasks within fulfillment operations, including picking, sorting, packing, moving, and organizing.

And organizing.

These are core functions that are found in almost every logistics operation and lead to a $280 billion addressable market for our product.

These are core functions that are found in almost every logistics operation and lead to a $280 billion addressable market for our products.

We have the right strategy, the right technology and the right team in place today to capitalize on the tremendous market opportunity before us.

Now let me talk about the quarter, our pipeline, and our technology advancement.

Now, let me talk about the quarter, our pipeline and our technology advancements.

For the first quarter, we delivered revenue of approximately $5.5 million ahead of analyst expectations. Total orders to date are $203 million and we have a backlog of $103 million as of the end of Q1.

For the first quarter, we delivered revenue of approximately $5 5 million ahead of analyst expectations.

Total orders to date are $203 million and we have a backlog of $103 million as of the end of Q1.

As Mark will discuss, we are reducing product cost to drive future gross margin improvements, and we continue to invest in our technology to position us for long-term growth.

As Mark will discuss we are reducing product cost to drive future gross margin improvements and we continue to invest in our technology to position us for long term growth.

Most importantly, we remain confident in our plan of becoming a billion dollar company and achieving our target long-term operating model of approximately 50% gross margin and 25% adjusted EBITDA margin.

Most importantly, we remain confident in our plan of becoming a $1 billion company and achieving our target long term operating model of approximately 50% gross margin and 25% adjusted EBITDA margin.

Moving on to customers. Our pipeline is robust we remain actively engaged in multiple levels with all of our anchor customers.

Technology is proven and in deployment and we believe we are an important part of their long term automation strategy.

Regarding new customers, in the past few months we secured an initial order with a major retail brand and a follow-on order from a new customer we landed in late 2021. This means order and follow-on order and rapid succession and is yet another positive indicator.

Regarding new customers in the past few months, we secured an initial order with a major retail brands and a follow on order from a new customer we landed in late 2021. This means order and follow on order in rapid succession and is yet another positive indicator.

Our current pipeline includes hundreds of identified opportunities and unique perspective customers. Steve will provide some more color options.

Our current pipeline includes hundreds of identified opportunities as unique perspective customers, Steve will provide some more color on that shortly.

Now I'd like to talk about some of our recent product news, which broadens our product portfolio and expands our growth opportunities.

Last week we announced the next generation of our mobile solution, BGFlex.

Our mobile solution consists of autonomous mobile robots that sort, sequence, and move items for e-commerce, orders, and store replenishment. We have large installations in operation today.

With BGFlex, we combine a high-density buffer with our mobile robots, robotic picking stations, operator picking stations, and our orchestration software, which manages the flow of goods and work through the system.

With these new flags, we combine a high density buffer with our mobile robots robotic picking stations operate are picking stations and our orchestration software, which manages the flow of goods and work through the system.

These new features lead to increased density and decreased footprint, expanding the applicability of our solution beyond large distribution centers to back of store and standalone micro-fulfillment centers.

These new features lead to increased density and decreased footprint expanding the applicability of our solution beyond large distribution centers to back of store and Standalone micro fulfillment centers. This is important as our customers increasingly rely on automation to address the.

Unprecedented consumer demand for near real time order fulfillment, such as buy online pickup in store and curbside delivery.

Our new BGFlex mobile solution is yet another example of our ability to build on our standard product modules to deliver the automation our customers need to compete in today's on-demand economy.

Our new BG Flex mobile solution is yet. Another example of our ability to build on our standard product modules to deliver the automation our customers need to compete in today's on demand economy.

Along similar lines, we also recently announced our robotic pick and pack with identification, or RPPI solution. This system is built on our existing core picking technology and adds new features for touchless e-commerce auto-bagging. This allows retailers to increase fulfillment throughput while using sustainable approaches. For instance, having the robots pack into recyclable mailers.

Along similar lines, we also recently announced our robotic pick and pack with identification.

Our PPI solution.

This system is built on our existing core picking technology and adds new features for Touchless E Commerce auto bagging.

Allows retailers to increase fulfillment throughput, while using sustainable approaches for instance, having the robots pack into recyclable mailers.

Current processes require human labor to place items into E Commerce shipping days, which is labor intensive slow and can be prone to error.

Our PPI provides both automation and support for sustainability programs, which is important to our customers and important to us.

The Berkshire Gray, our technology is our competitive advantage for customers.

Our technology is their competitive advantage as they compete in a rapidly transforming digital economy.

This is why some of the world's largest retailers e-commerce providers and logistics companies choose Berkshire Greg.

Every one of our anchor customers has expanded their deployments with us with new orders repeat orders are strong affirmation of our technology.

Other affirmations include our strategic partnerships, like our partnership with SwissLog, and other experts like Frost and Sullivan, who recently named us the 2022 Enabling Technology Leader for Intelligent Robotic Automation.

Other affirmations include our strategic partnerships like our partnership with Swiss law and other experts like Frost <unk> Sullivan, who recently named US the 2022, enabling technology leader for intelligent robotic automation.

In summary, we are well positioned for continued growth. Our technology and our team are industry leading, evidenced by repeat orders from customers. We have a strong pipeline that Steve Johnson will discuss further in a moment.

In summary, we are well positioned for continued growth our technology and our team are industry, leading evidenced by repeat orders from customers.

We have a strong pipeline the Steve Johnson will discuss further in a moment.

There are material long-term macro tailwinds like changes in consumer shopping behaviors, for example, app-based ordering, as well as escalating labor costs and labor scarcity that are driving our customers to automate their operations.

They are a material long term macro tailwind like changes in consumer shopping behaviors. For example, app based ordering as well as escalating labor costs and labor scarcity that are driving our customers to automate their operations.

We have unique and differentiated products that are proven and in operation with Fortune 100 customers.

We have unique and differentiated products that are proven and in operation with fortune 100 customers.

We have even more conviction now about the growth opportunity we have in front of us today as we build a profitable billion dollar company.

We have even more conviction now about the growth opportunity we have in front of us today as we build a profitable $1 billion company.

Now let me turn it over to Steve to talk about our commercial momentum and our pipeline for growth.

Now, let me turn it over to Steve to talk about our commercial momentum and our pipeline for growth.

Thanks, Tom, and good morning, everyone. This is my first earnings call with BG. Let me provide a brief background. I joined Berkshire Gray in late 2019 to establish our go-to-market team.

build on the success of our initial anchor customers, and to expand our go-to-market strategy.

It was clear to me then, and even more clear today, that Berkshire Gray is uniquely positioned for substantial and rapid growth. Macrophoresis provides strong growth.

More clear today that Berkshire Gray is uniquely positioned for substantial and rapid growth <unk>.

Macro forces provides a strong tailwind for our business changes in consumer expectations due to the Amazon effect put significant pressure on retailers ecommerce providers three pls.

changes in consumer expectations, do the Amazon effect, put significant pressure on retailers, e-commerce providers, 3PL.

Volume and pace of E. Commerce orders is intent on growing and labor challenges add to this pressure when I joined the company. We knew that the market was there for us to grab and that's exactly what we've been doing as evidenced by the $203 million in orders that we've received to date to help us win in this environment, we implemented a strategy for selling <unk>.

Articles and adding partnerships or scale.

First I'll touch on our anchor customers as you know our anchor customers include Walmart Fedex target and another fortune 100 retailer.

As we've stated, our current pipeline with anchor customers totals over $2.5 billion, and the longer opportunities is even greater. So our anchor customers have been and will continue to be an important part of our growth strategy.

Our anchor customers have been and will continue to be an important part of our growth strategy.

Second, our teams have been successful in securing new customers.

Our teams have been successful in securing new customers recently, we added new logo and secured follow on orders with another customer before we then installed four systems with that customer.

Recently, we added a new logo and secured fallen orders with another customer before you even installed the first systems with that customer. All of our products solutions are getting better.

All of our product solutions are gaining traction in the market. One example is our <unk> footwall or RPE W. This is a new solution that helps e-commerce providers automate order fulfillment a process that is mostly manual today.

One example is our robotic footwall or RPW. This is a new solution that helps e-commerce providers automate order fulfillment, a process that is mostly manual today. Since the introduction of RPW, we've had several new customer orders and have had dozens of active discussions representing about 100 million in potential business. A positive start for a product we just announced a few months

Since the introduction of <unk>, we've had several new customer orders and have had dozens of active discussions representing about $100 million of potential business a positive start for a product, we just announced a few months ago.

Across all our solutions, our new customer pipeline includes over 200 identified opportunities with 175 unique prospective customers representing about a $1 billion in pipeline.

Combined with our expansion opportunities with anchor accounts brings our total pipeline to $3 5 billion.

The third piece of our sales strategy is partnerships. We now have 13 partners, including Swisslog, which we announced in Q1, on Logistics, a UK-based integrator that we announced last week. We are already working on joint prospects with several of these partners, and I hope to have more news soon about some shared product solutions and shared wins.

The third piece of our sales strategy is partnerships. We now have 13 partners, including Swiss law, which we announced in Q1 on logistics a U K based integrator that we announced last week, we're already working on joint prospects of several of these partners and have to hope to have more news soon that some shared product solutions and shared wins.

Partnerships give us a formidable competitive advantage as we work together to provide customer solutions that cannot be found anywhere else.

Partnerships gives us a formidable competitive advantage as we work together to provide customer solutions that cannot be found anywhere else.

Of course, having customers advocate for BG and share their experience with other prospects has the highest impact.

We are fortunate that our customers value our technology. As a result, our existing customer base has been and will continue to be our greatest source of validation.

In summary, we're in a very strong position from a go-to-market perspective.

In summary, we're in a very strong position from a go to market perspective now.

Mark over to you.

Thanks, Steve, and good morning, everyone. I'd like to start off by discussing the results of our first quarter, and I will then provide some updates regarding some of our key initiatives for 2022. Revenue for the first quarter was five and a half million dollars, slightly higher than expenses, and 39% higher in the same period in 2021.

Thanks, Steve and good morning, everyone I'd like to start off by discussing the results of our first quarter and I will then provide some updates regarding some of our key initiatives for 2022.

Revenue for the first quarter was $5 $5 million slightly higher than consensus and 39% higher than the same period in 2021.

We secured new orders of $3 5 million in the first quarter, which is about the amount that we expected.

secured new orders of three and a half million in the first quarter, which is about the amount that we expected. All the new orders were from

All the new orders were from non anchor customers as.

As of the end of Q1, we have backlogged $103 million, which we define as contracts signed with systems yet to be delivered and installed.

As of the end of Q1, we had backlog of $103 million, which we.

Buying as contracts signed with systems, yet to be delivered and installed.

More importantly, we continue to execute on deliveries with our customers.

More importantly, we continue to execute on deliveries with our customers. Our activities are starting to ramp up in recent weeks. So we expect revenues to increase significantly in Q2.

Our activities have started to ramp up in recent weeks, so we expect revenues to increase significantly in Q2. Both order flow and revenue are expected to increase substantially in the second half of this year. A similar pattern, compared to 2021, where the majority of our orders and more than 85% of our revenue occurred in the second half.

with our strong backlog and large pipeline, we continue to be very well positioned for growth.

With our strong backlog and large pipeline, we continue to be very well positioned for growth.

Now I'd like to discuss some progress that we've made with operational initiatives we have for 2022. On our last call, we talked a bit about our path to achieving positive growth margins in 2023.

Now I'd like to discuss the progress that we've made with operational initiatives, we have for 2022.

On our last call, we talked a bit about our path to achieving positive gross margins in 2023, let.

With our technology proven and our go-to-market strategy in place, we can now focus more on cost improvement. And we believe there's a lot of low-hanging fruit here.

With our technology proven in our go to market strategy in place. We can now focus more on cost improvement and we believe there is a lot of low hanging fruit here.

It is important to note.

Our more mature products are already generating positive margins. However, one of our newer products with significant room for improvement and we have already implemented specific engineering design changes with others that will be completed this year, which will result in lowering this product cost by 25%.

We have also raised prices for this product as well.

We have cost reduction programs in place for all of our products, which provides us with a clear path to achieve overall positive gross margin in 2023 and beyond.

Most importantly, we remain confident in our ability to achieve our run rate operating metrics are approximately 50% gross margins in the long term.

Moving to operating expenses, total up-ex for the first quarter was $29.5 million on gap basis and $31.7 million excluding stock-based compensation.

Moving to operating expenses total opex for the first quarter was $29 5 million on GAAP basis, and $31 7 million excluding stock based compensation.

due to mark-to-market adjustments relating to certain stock awards.

Due to mark to market adjustments related to certain stock awards, our total stock base comp.

expense was negative for the quarter resulting in a P&L benefit. As expected, total operating expenses excluding stock comp for the quarter is roughly flat compared to the fourth quarter of 21.

<unk> expense was negative for the quarter, resulting in a P&L benefit.

As expected total operating expenses, excluding stock comp for the quarter was roughly flat compared to the fourth quarter of 'twenty one we.

Adjusted EBITDA, which is defined as loss from operations, adjusted primarily for depreciation, stock-off expense, and changes in fair value warrants, was negative 29.4 million for the first quarter of 22, compared to negative 19.5 million for the same period in 21, and negative 34 million for the prior quarter. A reconciliation of our net loss to adjusted EBITDA has included our pressure.

And negative $34 million for the prior quarter, a reconciliation of our net loss to adjusted EBITDA is included in our press release.

On the balance sheet, we ended the quarter in solid cash position with over $140 million in no debt.

On the balance sheet, we ended the quarter and solid cash position with over $140 million and no debt.

As mentioned, we ended the quarter with 103 million in backlog, providing good visibility for revenue for this year. We continue to expect revenue of approximately 90 million for 2022, which is consistent with the guidance we gave in our last call, and we expect to build on our order and backlog to support future revenue.

As mentioned, we ended the quarter with $103 million of backlog, providing good visibility for revenue for this year.

We continue to expect revenue of approximately $90 million for 2022, which is consistent with the guidance we gave in our last call.

And we expect to build on our order book and backlog to support future revenue.

Finally, to reiterate some key points we've talked about, we continue to be in strong position to execute our business.

Finally to reiterate some key points, we've talked about we continue to be in strong position to execute our business plan.

Tailwind is driving the need for automation continues to be as prevalent as ever our customers love our technology driven by the follow on orders, we've received particularly from anchor customers and they want more.

We're making rapid, tangible progress on our product cost reduction initiatives, and our strong backlog, combined with our large pipeline, provides us with even greater conviction about our long-term growth prospects. And now, Operator, we'll

Making rapid tangible progress on our product cost reduction initiatives and our strong backlog combined with our large pipeline provides us with even greater conviction about our long term growth prospects.

And now operator, we will turn it over for Q&A.

And as a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key.

And as a reminder to ask a question.

The press Star one on your telephone.

A question Brett the founder Husky. Please.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Greg Palm with Craig Hallum Capital. Your line is now open.

Our first question comes from the line of Greg Palm with Greg Helm Capital, your line is now open.

Yeah, good morning everyone. Thanks for taking the questions and congrats on the continued progress.

Good morning, everyone. Thanks for taking the questions.

Congrats on the continued progress.

Thanks, Greg.

So I wanted to start with the.

Yes, our view is pretty much the same as it was six weeks ago.

We have one.

$103 million in backlog.

Based on the deployment schedules that we have.

The best estimate that we have right now for our revenue for this year. Obviously the risks that we talked about last time are still sort of out there now which are supply chain issues.

Okay. Good.

You talked about the potential for more meaningful order growth activity in the second half I know you don't guide for orders, but how should we think about order growth for this year I mean is it something in the ballpark of consistent with revenue growth is it higher or is it lower what should we be thinking about.

I think what we'll see is, as we mentioned, and we don't really don't guide to order numbers, but like what we experienced last year, we expect to see a significant increase in order activity from all of our customers in the second half, both from our anchor customers and from new prospects as well.

I think what we'll see is.

As we mentioned.

And we don't really don't guide to order numbers, but.

Like what we experienced last year, we expect to see a significant increase in order activity from all of our customers in the second half both from our anchor customers and from new prospects as well.

Okay. And then last one, just any update on, you know, progress of large-scale commercial arrangements. I know there's no official news to report today, but, you know, how many customers do you think might be looking at doing something like this? I mean, are all of your anchor customers sort of engaged in this, you know, opportunity, or is it just, you know, one or two at this point?

Opportunity or is it just one or two at this point.

Yeah, hey, Greg, thank you for asking. You know, currently, we have follow on orders with all of our anchors that continues to be great validation. I did mention the long term arrangements in our last call and I would suggest that still work in process will share updates as we're able.

Yeah, Hey, Greg Thank you for asking.

Currently we have follow on orders with all of our anchors that continues to be great validation.

I did mentioned in the long term.

Arrangements in our last call and I would suggest that it's still work in process, we'll share updates as we're able.

Okay, fair enough. All right, I'll hop back in the queue. Thanks, and good luck. Thank you.

Okay Fair enough all right I'll hop back in the queue, Thanks, and good luck.

Thank you Greg This is Greg.

Our next question comes from the line of John Walsh with Credit Swiss. Your line is now open.

Our next question comes from the line of John Walsh with Credit Suisse. Your line is now open.

Hi, good morning and thanks for taking the questions and a good start to the year.

Hi, good morning, and thanks for taking the questions and a good start to the year.

Thanks, John .

Maybe just the first question and obviously

Maybe just the first question and obviously.

You know, this earnings season, we heard a very large

This earnings season, we heard a very large online retailer talk about scaling back a little bit.

Some other suppliers, saying that are a little more leverage to.

The larger deployments talking about automated warehouse being a watch item obviously.

What are you kind of see from your customers and some of the other verticals you touch that might not be that kind of deployment.

John can you just add a few more words to your question. Please yes, so I think.

Maybe I'll just I'll use some names and say it another way, but after Amazon reported there were some.

Tempering of expectations further automated warehousing spend hunt.

Honeywell.

For <unk>.

Had automated warehouse be a watch item.

You know obviously your product right is broader than just one individual vertical so just curious what you're seeing as you talk to your customers across different verticals or even within automated warehouse where those customers might not have as high of a penetration rate.

Obviously your product right.

Broader than just one individual vertical so just curious what youre seeing as you talk to your customers across different verticals or even within automated warehouse, where those customers might not have as high of a penetration rate.

trying to hear what you guys are saying given that a couple of folks have kind of thrown a little bit of cold water

Trying to hear what you guys are saying given that a couple of folks have kind of thrown a little bit of cold water there.

No, we continue to see high energy for the need to automate, tempo of customers in the door, tempo of conversations and so forth is all the high and as it was in continuing that trend. We haven't seen any pullback.

No we continue to see high energy for the need to automate.

<unk> of customers in the door tempo of conversations and so forth is all.

The high end as it was in continuing that trend, we haven't we haven't seen any pullback.

Okay. Thank you.

And then, you know, what if we could just talk a little bit about, you know, this partner network, you know, now you have 13, you know, what are some of the things that you're thinking about that makes that successful that we can monitor as outsiders looking in? I mean, are you planning to add more partners? You know, how do we think about the opportunity there? Because that seems pretty, like it'd be a pretty good opportunity.

And then what if we could just talk a little bit about.

This partner network.

Now you have 13.

What are some of the things that you're thinking about that makes that successful.

We can monitor as outsiders looking in I mean is are you planning to add more partners.

How do we think about the opportunity there because that seems pretty.

So it could be a pretty good opportunity.

Hey, John This is Steve good question.

From a from a partner perspective.

We are selectively adding partners four verticals, that's where we're focused at the moment.

Partners have trusted advisors with their customers.

Leveraging our joint go to market as well as.

Fulfillment help from those partners as well so.

We'll be adding some it's not going to be a lot just a little bit.

Leveraging the partners that we have we've got some great partners now that will continue to work with them.

And do more together than.

That answer your question.

Yeah, no, that's good and maybe just a last one here and then I'll pass the baton. But, you know, as we just think about uses of cash for the year, any updates relative to the framework you laid out last quarter?

Yeah, No that's good and maybe just a last one here and then I'll pass the baton.

As we just think about uses of cash for the year.

Any updates relative to the framework you laid out last quarter just.

wanted to get kind of a mark to market update there on uses of cash for the year.

Wanted to get kind of a mark to market update there on uses of cash for the year. Thank you.

Yeah, no update. It's still in the 10 to 11 million per month burn rate, which is pretty much what we experienced in Q1. So we expect that to be pretty consistent through the rest of the year. miles per month.

Yes, no update that's still in the $10 million to $11 million per month burn rate, which is pretty much what we experienced in Q1. So we expect that to be pretty consistent through the rest of the year.

Great. Thank you very much.

Great. Thank you John Thanks, John .

Again, ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchstone telephone.

Again, ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone.

Our next question is from Andrew Obim with Bank of America. Your line is now open. Hey guys, you have Sabrina Abrams on for Andrew Obim.

Our next question is from Andrew <unk> with Bank of America. Your line is now open.

Hey, guys you have Sabrina Abrams on for Andrew.

This agreement.

Do you guys think you can talk a little bit about your pricing power and ability to price backlog, understanding it's a very high inflation environment, and I know you talk a little bit about being able to reduce product costs and raise prices for a particular product. So you guys think you can talk a little bit about your ability to do that. Sure.

Do you guys think you can talk a little bit about your pricing power and ability to price backlog understanding it's a very high inflation environment and I know you talk a little bit about being able to reduce product cost and raise prices for particular project product. So.

I think you can talk a little bit about your ability to do that.

Sure.

So.

What we do is in terms of the backlog.

All of the components.

And items that we have to order from our vendors are we're already on order. So our prices were already locked in with our vendors. So there's no. There's no inflation risks with respect to what's in backlog and what's on order.

no inflation risk with respect to what's in backlog and what's on order. For us it's a very managed process. We manage it very closely. We also tend to lock in prices with our vendors around the same time when we're agreeing to pricing with our customers. So there's a natural hedge there if you would.

In the.

For us as a very managed process, we manage it very closely.

We also tend to lock in prices with our vendors around the same time, when we are a range of pricing with our customers. So there's a natural hedge there if you would.

Because we have a long planning cycle, we can.

Sometimes also order.

Some key components well in advance if we know that there could be some inflationary or even supply chain issues for long lead time items that we can.

Just items to have in stock so that we don't.

We don't fall risk to those kinds of.

Issue so.

That's pretty much how we kind of develop our pricing and lock in our prices with our vendors.

That's pretty much how we kind of.

Develop our pricing and lock in our prices with our vendors.

Great, thank you for the color. And just to follow up, sort of looking at orders and backlog, it looks like you were able to work down some of your backlog this quarter. Are you seeing any improvement in supply chain constraints, especially as they impact your customers? And if supply chain does improve in the back half, is there a potential upside to the revenue guide?

Great. Thank you for the color and just a follow up on sort of looking at orders and backlog. It looks like you were able to work down some of your backlog this quarter.

Are you seeing any improvement and supply chain constraints, especially as they impact your customers.

And if supply chain does improve in the back half is there potential upside to that revenue guide.

There's no change to our revenue guide right now. I would say that this global supply chain risk is still there, and so there's really no change from what our view is from just six weeks ago. It's something that we monitor very carefully, and we manage very carefully with our customers, but it is still a risk nonetheless.

There is no.

There is no change to our revenue guide right now.

I would say that the.

This global supply chain risk is still there.

And so theres really no change from what our view is from just six weeks ago, It's something that we monitor very carefully and we manage very carefully with our customers, but it is still a risk nonetheless.

You know, our customers have to sometimes do some construction and order items that's not really part of our scope and not in our control. And if they're experiencing issues from a supply chain perspective, that could impact the schedule.

Our customers have too.

Sometimes do some construction and order items that.

Not really part of our scope.

Not in our control and if they are experiencing issues from a supply chain perspective that could impact schedules.

And much like even if we have things on order with our vendors, they too could see, you know, experience some risks as well.

And much like even if we have.

On order with our vendors.

<unk> could I could see.

Experienced some risks as well.

<unk>.

Where.

there would be no, no change to our guidance, you know, based on what we're seeing.

There would be no no change to our guidance based on where we sit today.

Got it thanks, and one last question six weeks ago, I guess, you provided guidance I E.

There may be expecting to raise funds in the next 12 months is that still on.

On track.

Yep Yep, that's still on track.

Thanks, I'll pass it along.

Great. Thank you Sabrina.

And there are no further questions, I'll now turn it back over to our percentage for closing comments.

And there are no further questions I will now turn it back over to <unk> for closing comments.

Everybody. Thank you very much for spending the time with us today, and we look forward to talking to you more in the future.

Everybody thank you very much for spending the time with us today and we look forward to talking to you more in the future

Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now...

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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