Q3 2023 Energy Vault Holdings Inc Earnings Call

Speaker 1: Good day and welcome to the Energy Vault third quarter 2023 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Lawrence Alexander. Please go ahead, sir.

Good day and welcome to the energy Bowls third quarter 2023 earnings call. All participants will be in a listen only mode. So do you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.

And to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Laurence Alexander. Please go ahead Sir.

Speaker 2: Thank you. Hello and welcome to Energy Vault's third quarter 2023 earnings conference call. As a reminder, Energy Vault's third quarter earnings press release is available now on our investor website. A replay of this call will be available later today on the investor relations website. This call is now being recorded. If you object in any way, please disconnect now.

Thank you Hello, and welcome to energy both third quarter 2023 earnings Conference call. As a reminder, any jokes third quarter earnings press release is available now on our Investor website.

A replay of this call will be available later today on the Investor Relations website. This call is now being recorded if you object in anyway. Please disconnect now. Please note that any votes earnings release and this call contains forward looking statements.

Speaker 2: Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risk and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results to be a variety of factors. We caution everyone to be guided in their own analysis of Energy Vault by referring to our 10Q.

Subject to risk and uncertainties. These forward looking statements are only estimates and may differ materially from the actual future events or results to be a variety of factors, we caution everyone to be guarded in our own analysis, if any of your vote by referring to our 10-Q.

Yeah.

He's fighting.

Speaker 2: This filing is for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law.

For a list of factors that cause our results to differ from those anticipated in any forward looking statements. We undertake no obligation to publicly update or revise any forward looking statements, except as required by law.

In addition, please note that we will be presenting and discussing certain non-GAAP information.

Speaker 2: In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor disclaimer and the non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Please refer to the safe Harbor disclaimer and the non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Speaker 2: As previously announced, I'm delighted to introduce Bernie Coulson, our new VP of investor relations, who is on this call and will be hosting these calls in the future. Joining me on the call today is Robert Piccone, our Chairman and Chief Executive Officer, and Jan Kees van Gardand, our Chief Financial Officer. At this time, I'd like to hand this call over to Robert Piccone.

As previously announced I'm delighted to introduce Bernie Colson, our new VP of Investor Relations, who is on this call and will be hosting these calls in the future.

Joining me on the call today is Robert Kennedy, Our Chairman and Chief Executive Officer, and Jan Kees Van Garland, Chief Financial Officer.

This time I'd like to hand, the call over to Robert Kennedy.

Speaker 3: Thank you, Lawrence, and welcome to everybody to our third quarter earnings call. I'm really happy to share these results as you hopefully got a chance to see reporting record revenue.

Thank you Lauren and welcome to everybody to our third quarter earnings call I'm really happy to share. These results with you hopefully you got a chance to see reporting record revenue.

Speaker 3: in our young life here as a company in excess of 172 million.

In our our young life your of the company in excess of 172 million.

Speaker 3: as a direct result of our project execution performance that I'll talk about later. But I think a significant number in just looking at revenue for a second in terms of meeting our expectations here in our second half ramp. And just to remind you, our largest quarter before this was actually $100 million in our fourth quarter of last year in our first year of revenue.

As a direct result of our project execution performance that I'll talk about later.

But I think a significant number and just looking at revenue for a second in terms of meeting our expectations here in our second half ramp and just to remind you our largest quarter before that.

$100 million and our or fourth quarter of last year in our first year revenue.

Speaker 3: I'm really happy with the results in executing for customers. Obviously this revenue recognition is a result of that.

So really happy with the results and and executing for customers. Obviously that revenue recognition is a result of that and the teams on the ground across the various sites where.

Speaker 3: and of the teams on the ground across the various sites.

Speaker 3: where we are executing a very large steep ramp here to meet customer needs and expectations.

Where we are executing a very large a steep ramp here to meet customer needs and expectations.

Speaker 3: The other thing, as I'll mention, we announced this morning, you would have seen our first turnover of our hybrid battery system in Southern California. It's one of the largest ones in Southern California, 275 megawatt hour. Again, another milestone for the company here in this year, which is about execution across a lot of the deals. We continue to announce, as we did last year, in multi-gigawatt hours and continue to announce this year.

Other thing as Al mentioned, we announced this morning, you would've seen our first turnover of our hybrid battery system in Southern California. That's one of the largest ones are in southern California, 275 megawatt hour again, another milestone for the company here in this year, which is about execution.

Across a lot of the deals we continue to announce as we did last year are in.

In multi gigawatt hours and continued to announce this year.

Speaker 3: but want to share with you where I'm calling in from, which is China.

But want to share with you where I'm, calling in from which is China and speaking to your life from Shanghai, where I have a keynote speech later on today I'll be participating on a panel as well so it's quite early in the morning here.

Speaker 3: and speaking to you live from Shanghai, where I have a keynote speech later on today. I'll be participating on a panel as well. So it's quite early in the morning here. And the conference here is focused on carbon neutrality and a green investment conference hosted by some of the local government organizations and also various energy related partners.

And the conference here is focused on carbon neutrality and a green investment conference hosted by some of the local government organizations and also various energy related partners, but even more exciting since I've been here are my visits to our first site and route on this week I'm accompanied by one of our board members Larry.

Speaker 3: But even more exciting since I've been here are my visits to our first site in Rudong this week. I'm accompanied by one of our board members, Larry Paulson, who's here with me. Larry's no stranger to a lot of international assignments, given his background at Qualcomm and Nokia, and serving on our board here as our lead independent.

And who's here with me are Larry No stranger to a lot of international assignments, given his background at Qualcomm and Nokia and serving on our board here as our lead independent, but it's really just hard to put into words the brought excitement here locally and that's not only at the site and within all of our <unk>.

Speaker 3: But it's really just hard to put into words the broad excitement here locally. And that's not only

Speaker 3: at the site and within all of our meetings we've had thus far, but even in coming into the conference.

We've had ah, thus far but even in coming into the conference last night, where they had a kickoff and Oh, there's tremendous focus here on on this first system the impact and some of the other announcements that we made on on Monday morning yesterday with some of the new projects announced here.

Speaker 3: last night where they had a kickoff and a tremendous focus.

Speaker 3: here on this first system, the impact, and some of the other announcements that we made on Monday morning yesterday with some of the new projects announced here.

Speaker 3: It's really exciting to be a part of some of the largest renewable build-outs in the world with our efficient and reliable and very economical storage system here in our EVX.

It's really exciting to be a part of some of the largest renewable build outs in the world with our efficient and reliable and very economical storage system here in R. E D Act.

Speaker 3: Chinatown Ying is our local partner and a leader in China in environmental services and waste management has been doing incredible work collaborating with our technical team in these final commissioning phases, and I just can't say enough about their expertise in engineering and construction and Optimizing how we're implementing the technology specific for the local market

Trying to tie in the English, our local partner and a leader in China in environmental services and waste management has been doing incredible work collaborating with our technical team in these final commissioning phases and I just.

Can't say enough about their expertise and engineering and construction and optimizing how we're implementing the technology specific for the local market.

Speaker 3: They had to fight through two, three months COVID shutdowns, one right away as they got started in the first part of 2022, but also at the end of 2022. So it's been a little bit of a wild 18 months for them, but they managed to catch up for the most part toward some of the expectations we had set as when we're gonna be up and running here. And just their focus and execution has been impressive. It's not really surprising to me.

They've had to fight through two three months Covid shutdowns, one right away. They got started in the first part of 2022, but also at the end of 2022.

So it's been a little bit of a wild 18 months for them, but they managed to catch up for the most part or some of the expectations. We had set it as when we're gonna be up and running here and just their focus and execution has been impressive.

Not really surprising to me given my experience in the last 30 years across a few different industries.

Speaker 3: given my experience the last 30 years across a few different industries.

Industries coming to China, but really tremendous to see their leadership in particular.

Speaker 3: coming to China, but really tremendous to see their leadership in particular.

Speaker 3: in this space of green energy toward the goals that have been set here and on a path to try to accelerate those and really sort of ignoring the noise.

In the space of Green energy toward the goals that have been set here and on a path to try to accelerate those and and really sort of ignoring the noise from a geopolitical perspective, and just focusing on our partnership and delivering together. This technology of gravity as you might imagine is pretty well understood here given the massive installed base of grab.

Speaker 3: from a geopolitical perspective and just focusing on our partnership and delivering together.

Speaker 3: This technology of gravity, as you might imagine, is pretty well understood here, given the massive installed base of gravity-based pumped hydro systems. Very much fit for purpose, given our system like in most large countries.

<unk> based pumped hydro systems very much fit for purpose given our system like in most large countries.

Speaker 3: can be made with 100 percent local content. And as is the case here, will be the case in other large countries as well.

It can be made with 100% local content and as is the case here will be the case in other large countries as well I spent some time with our local energy vault team here as well that are working with China, Italian Yang or they're referred to as C. N T y.

Speaker 3: I spent some time with our local Energy Vault team here as well that's working with China Tianying or they're referred to as CNTY and just very excited to be here on the ground and including some of the folks that have come from the U.S. to support this and what would be another first of a kind for Energy Vault here in only our second year of revenue.

Very excited to be here on the ground and including some of the folks that have come from the U S to support this and what would be another first of a kind for energy vault here in only our second year of our revenue.

Speaker 3: Regarding the grid interconnection, and as we announced, I'm happy to share that we started that process in September , the end of last quarter, as we announced yesterday morning, while also, and very importantly, completing the installation of a 4 kilometer, 2 and a half mile, 35 kilovolt overhead electric line that connects the system to the grid. So, all of that work can completed. I saw that a little bit later yesterday here local.

Regarding the grid interconnection and as we announced I'm happy to share that we started that process in September the end of last quarter, as we announced yesterday morning.

While also and very importantly, completing the installation of a four kilometer or two and a half mile are 35 kilovolt overhead electric line that connects the system to the grid.

So all of that works can complete it I saw that a little bit later yesterday here local time.

Speaker 3: And I hope that in the future many of you will be able to see this just amazing engineering achievement in person if your travels get to Shanghai. It's located about two hours outside and would be happy to hopefully coincide some visits with some of our other partners here.

And I hope that in the future of many of you will be able to see that's just amazing engineering achievement in person. If your travels get to Shanghai located about two hours outside and.

We'd be happy to hopefully coincide some visits with some of our other partners here.

Speaker 3: versus other forms of long duration and long technical life storage. EVX is planning out to be more economical, scalable, and also a sustainable alternative.

Versus other forms of long duration and long technical life storage.

The act is playing out to be more economical scalable and also a sustainable alternative to <unk>.

Speaker 3: the existing pumped hydroelectric plants that represent, as we all know, more than 90 percent of all energy storage capacity still globally. We will, of course, continue to update you as we get closer and closer to full homologation within the state grid interconnection process that is underway with the provincial authorities and also will start to share some of the initial performance metrics as they become available.

Pumped hydro electric plants are they represent as we all know more than 90% of all energy storage capacity still globally.

We will of course continue to update you as we get closer and closer to pool homologation within the state grid interconnection process is underway with the provincial authorities.

And also we will start to share some of the initial performance metrics as they become available.

As we articulated a bit in our announcement yesterday to five new AVX gravity systems announced it. This is all part of a mandatory government policy in China for a renewable power plant projects to include energy storage.

Speaker 3: As we articulated a bit in our announcement yesterday, the five new EVX gravity systems announced that this is all part of a mandatory government policy in China for renewable power plant project to include energy storage.

Speaker 3: So it's mandated here that at 20% of the power capacity of the generation plant of the wind or solar, 20% must be storage. Typically that's running at four hours.

So it's mandated here that at 20% of the power capacity of the generation plan of the wind or solar 20% must be storage and typically that's running at four hours. It took them two but after four.

Speaker 3: to but up to four. And we're seeing this firsthand now how this central mandated policy is positively influencing the growth opportunities as demonstrated by the large multi-gigawatt hour project expansion.

And we're seeing that firsthand know how the central mandated policy is positively influencing the growth opportunities as demonstrated by the large multi gigawatt hour project expansion announced locally here by C. N T Y even before the first system here and Rudolph is fully operational.

Speaker 3: announced locally here by C&TY even before the first system here in Rudong is fully operational.

Speaker 3: So that should give you a sense of not only, I think the anticipation and the confidence people have, but also the market demand and the need that's there and how this fit for purpose technology can fit very well for China.

So that should give you a sense of not only I think the anticipation.

And the confidence people have but also the market demand and the need that's there and how that's fit for purpose technology can fit very well for China.

Speaker 3: CNTY announced these signings for an additional five deployments that total about 1.2 gigawatt hour. This brings a total of the announced deployments that are underway in China here to seven, which totals a little more than 3.2 gigawatt hours. So those are some pretty large numbers. And here in just the first 18 months.

C N T Y announced the signing up for an additional five deployments that total about 1.2 gigawatt hour of this brings the total of the announced deployments that are underway in China here to seven which totals a little more than three two gigawatt hours and so those are some pretty large numbers and here in just the first 80.

Much of our partnership.

Speaker 3: of our partnership. And you can imagine if those are announced, there's a lot of other things underway here. I've had a lot of very good meetings with China, Tianying, to understand those developments. And of course for Energy Vault, and in particular for investors, all of these projects will be driving recurring high margin royalties to Energy Vault for the lifetime of these systems at 5%.

And you can imagine if those are announced there's a lot of other things underway here I've had a lot of very good meetings with China are tightening to understand those developments and of course for energy vault and in particular for investors. All of these projects will be driving recurring high margin royalties the energy vault for the lifetime of the CIS.

At 5%.

This model is an ideal one for China and countries I'd say like China with strong construction and infrastructure growth and experience.

Speaker 3: This model is an ideal one for China, and countries I'd say like China with strong construction and infrastructure, growth, and experience, ability to source essentially all of these materials locally, which they can in China. And then a strong and unmet, I'd say, market demand for storage, so inside with commitments to net carbon neutrality, which China is for the first time in the last two years, and quite vocal about, and that's these large renewable deployments.

Our ability to source essentially all of these materials locally, which they can in China.

A strong and unmet I'd say market demand for storage.

Side with our commitments to net carbon neutrality, which China is for the first time, the last few years and quite vocal about and duck. These large renewable deployments I'm forgetting to final completion of the REIT on system.

Speaker 3: So getting to final completion of the Rudong system, I think it's a testament here to the strategic fit of our technology to China and one that would deliver on high margin royalties over time in what is and will remain the largest energy storage market in the world, at least as far as we can look forward.

It's a testament here to the strategic fit of our technology to China.

And one that will deliver on our high margin royalties over time, and what is and will remain the largest energy storage market in the world at least as far as we can look forward.

In closing out on that encouraging to see our strategy playing out here locally with it just a great partner a unique model and a differentiated solution are now that's starting to scale our gravity solutions. Our proprietary here in that licensing model fits very well and lets us achieve in China, which I think is very difficult for us.

Speaker 3: In closing out on that, encouraging to see our strategy pointing out here locally with just a great partner, a unique model, and a differentiated solution now that's starting to scale. Our gravity solutions are proprietary here and this licensing model fits very well and lets us achieve in China what I think is very difficult for others given either their single technology focus or inability to have a scalable or licenseable technology and business model. So this versatility.

Given either their single technology focus or an ability to have a scalable or license the bowl technology and business model. So this person this versatility of our gravity technology as we've announced the other license.

Speaker 3: of our gravity technology as we've announced other license, licensing and technology deals also outside of China is showing quite strong and you know noting also that these first deployments are four hours.

Licensing and technology deals also outside of China is showing quite strong and you know, noting also that these first deployments are four hours in duration for.

Speaker 3: for our quote unquote long duration system technology. So our long technical life of our gravity system as well as the circular economic environmental benefit, our lower operating expense over time, that plays very well and shows the flexibility of this technology to still be not only viable, but commercially viable even at four hours.

For our quote unquote long duration system technology, So our long technical life of our gravity system as well as the circular economic environmental benefit.

Our lower operating expense over time that plays very well and shows the flexibility of this technology to still be.

Not only viable but commercially viable even at four hours.

Speaker 3: So this business model is allowing us to participate meaningfully in this opportunity here in this very large market and with future attractive margins for the royalty streams. And we look forward to assisting our partners here and realizing more.

So the business model is allowing us to participate meaningfully in this opportunity here and it's very large market and with future attractive margins through the royalty stream and we look forward to assisting our partners here and are realizing more E. V Act initiatives here in China that I'm sure it will be announced here to come.

Speaker 3: initiatives here in China that I'm sure will be announced here.

Speaker 3: sticking with gravity and before jumping into some of the other project updates, we are seeing more near-term demand now and activity more intensely.

Sticking with gravity and before jumping into some of the other project updates we are seeing more near term demand now and activity more intensely.

Speaker 3: in both emerging storage markets like South Africa and India, but also right here in the US market with large utilities that have unique needs that actually can be uniquely met by various applications of our leading position in gravity energy storage.

In both emerging storage markets like South Africa, and India, but also right here in the U S market with large utilities that have unique needs.

Actually can be uniquely met by various applications of our leading position in gravity energy storage systems I look forward to sharing more with all of you in the coming months as we work with our customers and to giving you more visibility into these opportunities I know many of you. Many of you investors that might be listening in here.

Speaker 3: I look forward to sharing more with all of you in the coming months as we work with our customers and to give you more visibility into these opportunities. I know many of you, many of you investors that might be listening in here have written me about understanding the development of gravity and generally I think of long duration, which I think

I have written me about understanding the development of gravity and generally I think of long duration, which I think no secret that that market.

Speaker 3: no secret that that market is developing in a little bit slower way as far as long duration goes. I think very encouraging for us that it's being deployed in this case in China.

Is developing.

Little bit slower way as far as long duration go.

Think are very encouraging for us that it's being deployed in this case in China.

Speaker 3: for four hour systems, but generally we have a lot of other applications of our technology.

For four hours systems, but generally we have a lot of other applications of our technology.

Speaker 3: that we're working with customers on, given our expertise and innovation. And I would say, from a global perspective, I think we have some of the best expertise relative to civil and structural engineering.

We're working with customers on given our expertise and innovation and I would say from a global perspective, I think we have some of the best expertise relative to civil and structural engineering because of the way we've had to develop the technology and specifically focused on economics, and and reducing that cost.

Speaker 3: because of the way we've had to develop the technology and specifically focused on economics and reducing that cost.

Speaker 3: Moving on quickly here to some other projects, I know we've repeated this at every call this year, but this priority is about customer execution and executing on the large funnel of opportunities and those that have actually been converted to bookings that are underway now. And very excited about that as we have been all year. You'll recall last year we announced about 1.7 gigawatt hour of projects across short, long and ultra long with the green hydrogen deal with

Moving on quickly here to some other projects I know we've repeated this at every call this year, but this priority.

It's about customer execution and executing on a large funnel of opportunities and those that have actually been converted to bookings that are underway now.

And very excited about that as we have been all year, you'll recall last year, we announced about one seven gigawatt hour of projects across <unk>.

Short long and ultra long with the green hydrogen deal with them.

Specific gas and electric.

Speaker 3: And all of those are scheduled to be implemented in anywhere from 9 to 18 months from the contract signing. So all under very aggressive timeline. I know all of you have been watching energy vault to see, hey. You know, they clearly have closed deals and large deals with some of the largest either. I'd be like Jupiter and L green power or the largest utilities, like Pacific gas and electric, Nevada energy. But could we execute I, it was never in doubt for my side.

And all of those.

Our scheduled to be implemented and anywhere from nine to 18 months from the contract signings. So all under a very aggressive timeline I know all of you have been watching energy vault to see hey, they clearly have closed deals and large deals with some of the largest either.

Pieces like Jupiter, Enel Green power or the largest utilities like Pacific gas and electric Nevada energy.

But could we execute a I.

It was never in doubt from my side, but the team that we've assembled.

Speaker 3: that we've assembled. However, it's now starting to manifest itself, especially given the revenue that we reported this year. As I briefly mentioned earlier, our first hybrid battery and peaker plant energy storage project in Stanton, California, with Wellhead, is now fully in service.

However.

And now starting to manifest itself, especially given the revenue that we reported at <unk>. This year as I briefly mentioned earlier for hybrid battery and peak or plant energy storage project in statin, California with wellhead is now fully in service.

Speaker 3: at its maximum capacity. This is a very large 275 megawatt-hour project that has already been California ISO qualified and delivered in an exceptionally short period of time as compared to other projects within five months of site mobilization.

At its maximum capacity and this is a very large 275 megawatt hour project.

That has already been a California, ISO qualified and delivered an exceptionally short period of time as compared to other projects within five months of site mobilization.

Speaker 3: which is pretty amazing, especially given the footprint we had. We were under some pretty extreme energy density requirements for this project and in the middle of what's a very residential neighborhood there. So I think a good example of our ability to execute, in this case, fast turnaround complex project.

It's pretty amazing, especially given the footprint. We had we were under some pretty extreme energy density requirements for this project and in the middle of a what's a very residential neighborhood. There. So I think a good example of our ability to execute in this case.

Turnaround complex projects and challenging timelines and it's really what we believe is a key differentiation factor that we're very focused on so not only about having very innovative solutions from a technology perspective, obviously, having a team that can go execute those scalable repeatable, but very focused.

Speaker 3: challenging timelines and it's really what we believe is a key differentiation factor that we're very focused on. So not only about having very innovative

Speaker 3: solutions from a technology perspective, obviously having a team that can go execute those scalable, repeatable, but very focused about being known for our ability to execute and execute well, which just has tremendous value. There's no shortage of demand in our market, as we know, in energy storage, but what can be a variable in some cases are things like managing complex supply chains.

Being known for our ability to execute and execute well, which just has tremendous value. There's no shortage of demand in our market as we know in energy storage, but what can be a variable in some cases are things like managing complex supply chains.

Speaker 3: And when problems come up, and they always do, when you're managing different suppliers, how you deal with that problem, how you come up with solutions, work with partners, involve the customer, be transparent, and really attack it operationally with a daily management approach.

And when problems come up and they always do when you're managing different suppliers. How you deal with that problem. How you come up with solutions work with partners involved the customer be transparent.

And really attack it operationally with a daily management approach and that is something that is a justice I think an important differentiating factor.

Speaker 3: That is something that is just as, I think, an important differentiating factor as having the best technology or a very economical solution.

Having the best technology or a very economical solution. So.

Speaker 3: So we're looking forward to the formal onsite ribbon cutting on December 6th and hope some of you on this call that are looking in will be able to attend. And I guess just to finish and it is our first project we're turning over here in the US from the press release, I really can't say any better.

So we're looking forward to the formal onsite ribbon cutting on December six and hope some of you on this call that are listening in and we'll be able to attend and I guess just to finish and it is our first project returning over here in the U S from.

From the press release, I really can't say it any better than to have the words of our customer that was quoted that CEO well how to held that Merck has just a tremendous operator tremendous gentlemen, a very experienced a 40 to 50 years in the California market I think one of the most respected people in the market in <unk>.

Speaker 3: than to have the words of our customer that was quoted. The CEO of Well Hat held it merges just a tremendous.

Speaker 3: operator, tremendous gentleman, very experienced.

Speaker 3: 40 to 50 years in the California market. I think one of the most respected people in the market in particular in California. And just to quote what he said, and I quote here, only a few days after mechanical completion, the system delivered full power to the grid, validating the quality of the design and execution.

Particularly in California.

And just to quote what he said and I quote here are only a few days after mechanical completion that system delivered full power to the grid validating the quality of the design and execution.

Speaker 3: Energy Vault did an excellent job of providing a solution that met both the challenging energy density requirements and the equipment delivery time frame to enable the project to go forward. We are a satisfied customer.

Al did an excellent job of providing a solution that met both the challenging energy density requirements and the equipment delivery timeframe to enable the project to go forward. We are a satisfied customer and we appreciate their new defaults expertise creative thinking and collaborative partnership and bringing its project to fruition.

Speaker 3: and we appreciate our new default expertise, creative thinking, and collaborative partnership in bringing its project.

Speaker 3: And I'll unquote that, but I really couldn't imagine a better outcome for our first project turnover. Not surprised, given the deep industry execution and technology development experience of our team. We do not limit our thinking in what we're capable to do. And I think in posting the number we did this quarter and only our second year, hopefully reflects that. Special thanks to the leadership provided here. Actually, Lou Guam, Marco Keditzen and the teams across the board and all the support teams here that helped us through the way in supply chain as well.

Oh, unquote that but I really couldn't imagine a better outcome for our first project turnover I'm not surprised given the deep industry execution and technology development experience of our team, we do not limit our thinking and what we're capable to do and I think in posting the number we did this quarter and only our second year of hopefully reflects that a special thanks to the leadership.

Provided here Akshay Leutwiler Mark located in and the teams are.

Across the board in all of the support teams here are that helped us through the way in supply chain as well.

We continue to execute on our other projects that are underway. If you and I know all of you have done the math on our guidance and looking at we have to achieve I think posting what we did shows we're on our way to doing that but we have some very tight compressed schedules to deliver while in some cases some of our customers has have delayed site access and mobilization.

Speaker 3: We continued to execute on our other projects that are underway if you've, and I know all of you have done the math on our guidance and looking at we have to achieve, I think posting what we did shows we're on our way to doing that. But we have some very tight compressed schedules to deliver while in some cases some of our customers has...

Speaker 3: have delayed site access and mobilization. They have not changed their expectations on delivery time. And we work with them very well to come up with plans in commercial ways to deal with that. So we can meet those timelines. Our system with Jupiter, we have two that are underway, our approaching mechanical completion. That energy has actually one of the largest systems they have ever delivered underway, 440 megawatt hour. That is.

And they have not changed their expectations upon delivery time, and we worked with them very well to come up with plans and commercial ways to deal with that so we can we can meet those timelines.

Our system with Jupiter, our we have two that are underway are approaching mechanical completion of energy has actually one of the largest system. They have ever delivered underweight 440 megawatt hour.

That oh.

Speaker 3: We're going to be doing it in record timeframe here and we'll talk more about that after we do it.

We're gonna be doing it in record time frame here and we'll talk more about that there are after we do it.

Speaker 3: In addition, we have our first green hydrogen project underway with specific gas and electric. Recall that's one of the largest ones, is the largest one announced.

In addition, we have our first green hydrogen project underway with Pacific gas and electric recall, that's one of the largest ones is the largest one announced in the U S. A which provide 48 hour can provide up to 72 hour are there that we have capabilities do using green hydrogen and we've integrated a little bit of lithium ion there to support it.

Speaker 3: in the US, which provides 48 hours and provide up to 72 hours there that we have capabilities to using green hydrogen. We've integrated a little bit of lithium-ion there to support grid forming and some auxiliary services there. But real excited about that, that also has a very tight turnaround schedule to be live in June of next year, 2024.

They'd forming.

And some ancillary services there.

Really excited about that that also has a very tight turnaround scheduled to be live in June of next year 2024.

Speaker 3: Just to mention about the DOE here in shifting gears, they're placing a heavy emphasis as we're talking about green hydrogen on the whole...

Just to mention about the Doa here and shifting gears, they're placing a heavy emphasis as we're talking about green hydrogen on the whole supply and value chain recently announcing awards.

Speaker 3: and value chain at recently announcing awards of $7 billion to build these green hydrogen hubs.

7 billion to build these green hydrogen has some of the people named in those include some of our partners in the green hydrogen ecosystem.

Speaker 3: Some of the people named in those include some of our partners in the Green Hydrogen Ecosystem. In our PG&E project is an example of where the DEULE is playing their next focus, which is on the demand side and deriving that demand side. There's already a billion announced for some demand side initiatives that's going to be underway and we will be looking at how we can take advantage of those things as they develop.

Our P. Genie project is an example of.

Where the deal. He has claimed their next focus which is on the demand side and driving that demand side theres already a $1 billion an ounce for some demand side initiatives, that's gonna be underway.

And we will be.

Looking at how we can take advantage of those things as they develop.

Speaker 3: So just closing in here on PG&E is a...

So just closing in here on P. Genie at that sort of a tip of spear for us as we look at these opportunities or building out economical micro grids to support backup power not only backing out backing up utilities that are have commitments to supply our homes, but also looking at mission critical.

Speaker 3: that sort of a tip of spear for us as we look at these opportunities.

Speaker 3: for building out economical micro grids to support backup power, not only backing up utilities that have commitments to supply our homes, but also looking at mission critical needs for energy whether that be in the data centers and new hyper scalers that are taking off here with Bitcoin mining and things. And just other larger commercial and industrial energy users that cannot risk even short-duration

Needs for energy, whether that be in the data centers and new hyperscale or is that are taken off here with bitcoin mining and things and just other larger commercial and industrial energy users.

Cannot risk, even short durations and power very difficult to do economically given existing tech. However.

Speaker 3: very difficult to do economically, given existing tech. However, as we have always done in some of these opportunities, we're using our technology and integrating other things very creatively.

However, as we have always done in some of these opportunities were using our technology and integrating other things very creatively to put in place things that can be economical to essentially.

Speaker 3: to put in place things that can be economical to essentially.

Put something together to drive and meet this what today is an unmet need given some of the economics.

Speaker 3: put something together to drive and meet this, what today is an unmet need given some of the economic.

Speaker 3: Moving to some of the commercial side, I've mentioned some of the additional gravity and storage systems that were announced. That was our announcement yesterday, specifically in the China market. Overall, our near-term opportunities continue to grow at a good pace this year. Our awards have expanded by over 153 percent. That's a little over 9 gigawatt hours or about...

Moving to some of the commercial side I've mentioned some of the additional gravity and or storage systems that were announced that with our announcement yesterday, specifically in the China market and overall, our near term opportunities continue to grow at a good pace. This year. Our awards have expanded by over 153% that's a little over nine gigawatt hours or about you know roughly $3 three.

Speaker 3: and you're day bookings and signed contracts of 800 megawatt hour bringing that total to just over 840 million. So a big book of business there to execute on and in particular to highlight that awards category, you know, that means that's our project as a matter of getting that converted into formal contracts and NTPs. So a lot there to mine and convert, would like to be converting that here as quickly as we can and the team's focused on that.

3 billion and year to date bookings and signed contracts with 800 megawatt hour, bringing that total to just over $840 million.

So a big book of business there to execute on any particular to highlight that awards category. You know that means that's our project. It's a matter of getting that converted into a formal contract in N. T. P. So a lot there to mine and convert a we'd like to be converting that I hear it as quickly as we can and that the team is focused on that.

Speaker 3: Going forward a bit as we progress through the fourth quarter and entering 2024, we are focused on turning that growing commercial funnel into contract.

Going forward a bit as we progressed through the fourth quarter and entering 2024, we are focused on turning that growing commercial funnel into contracts and will help build our revenue in our backlog.

Speaker 3: and will help build our revenue and our backlog. We continue with a focus on on Pregnant Financial and Pricing Discipline as to generate value for the company, for our shareholders, and really over a long term. So we take a very long term lens on that while is a new company. We are susceptible to some lumpiness. Let's call it as we know, especially when we're doing projects with where we're performing the EPC role. Also there's...

We continue with a focus on stringent financial and pricing discipline to generate value for the company for our shareholders and really over a long term. So we take a very long term lens on that well as a new company we are susceptible to.

Some lumpiness, let's call it as we know, especially when were doing projects with where we're performing the EPC role. So there is a fluctuation.

Speaker 3: fluctuations both in revenue based on revenue recognition rules under POC accounting. There's also fluctuations in working capital based on those cash flows. But one thing that's not changing is the demand in the energy storage industry and the domestic demand here, there, I should say there, in the U.S. and that was accelerated post the IRA gives us a lot of flexibility in the projects, contracts in which we sign, to drive both revenue and gross margin growth.

<unk> both in revenue based on revenue recognition rules under POC accounting Theres also fluctuations in working capital based on those cash flows.

But one thing that's not changing at the demand in the energy storage industry.

And the domestic demand here there I should say there in the U S. A and that was accelerated post the IRA gives us a lot of flexibility in the projects contract in which we signed to drive both revenue and gross margin growth as many of our previously announced investments in partnerships both commercially and for example.

Speaker 3: as many of our previously announced investments in partnerships, both commercially, and for example, for domestic U.S. battery content reinforced its approach.

Our domestic U S battery content reinforced its approach.

Speaker 3: We remain committed to this. Obviously it's super critical as we go forward. It is a very competitive market. It puts a lot of onus on us to continue to innovate, to be differentiated, to differentiate also by our execution and delivering for customers. Always great to have projects under our belt so we can have any prospective customers talk to some of the customers that have worked with us. Hal Dittmer and Wellhead will be one of those, of course, going forward, and we look forward to continuing on that.

We remain committed to this obviously, it's super critical as we go forward. It is a very competitive market. It puts a lot of own assigned out to continue to innovate to be differentiated.

To differentiate also by our execution and delivering for customers.

Always great to have projects under our belt. So we can have any perspective customers talk to some of the customers that have worked with us.

Detmer and wellhead will be one of those of course going forward and we look forward to continuing on that.

Speaker 3: focus on high growth, high margin commercial opportunities.

It gets on high growth high margin commercial opportunities.

Speaker 3: Before getting and filing to the financials here, I'm very proud to report that after filing and going through a first third party process in 2022, in our first year of revenue of an S&P process, looking at our sustainability score. In 2023, we just received the results and our score increased.

Before getting in finally into the financials here.

Very proud to report that after our filing and going through our first third party process in 2022 in our first year of revenue and S&P process looking at our sustainability score.

In 2023, we just received the results and our score increased from a rating of 17 up to 51.

Speaker 3: from a rating of 17 up to 51 in 2023. That is not necessarily a percentage rating, but let you know where that stands that ranks us number two in our market and clean energy transition companies. And we finished 33rd out of a total of 551 companies overall. It puts us roughly in about the 94th percentile. So, you know, we aren't spiking any footballs here on this. We're happy with our progress.

In 2023 that is not a necessarily a percentage rating.

But let you know where that stands that ranked us number two.

Our market and clean energy transition companies and we finished 33rd out of a total of 551 companies overall.

Puts us roughly in about the 94th percentile so.

You know, we arent spiking any footballs here on nets were happy with our progress we have more work to do as we develop and evolve and just like we seek to do in in everything we do in terms of technology development.

Speaker 3: we have more work to do as we develop and evolve. And just like we seek to do in everything we do in terms of technology development, how we develop our people in the company, also in our sustainability, we seek to be a leader here in how we're thinking about our carbon footprint across all of our solutions.

How we develop our people in the company are also in our sustainability, we seek to be a leader here and how we were thinking about our carbon footprint across all of our solutions.

Speaker 3: So we'll kind of be continuing to update this annually on our progress, but suffice to say happy with our improvement here, here, here, we're continuing to put a lot of focus there, give it an expectations, both that I think others have of us, but that we have of ourselves most importantly. So I want to thank the entire NGVAL team for this significant accomplishment and our continued work to improve here in the broader global goals toward net carbon neutrality.

So we'll be continuing to update that annually on our progress, but suffice to say happy with our improvement here year over year, and we're continuing to put a lot of focus there.

Given the expectations, both that I think others have it but we have of ourselves. Most importantly, so I want to thank the entire NV vault team.

This significant accomplishment and our continued work to improve here in the broader global goes toward net carbon neutrality.

Speaker 3: Okay, with that, the water and I turn over to Young Case who will now go over some of the details that we just announced in our financials. Okay?

Okay with that why don't I turn it over to young case, who will now go over some of the details that we just announced in our financials. Okay.

Thank you, Rob and good afternoon everybody.

Speaker 4: Thank you Rob, and good afternoon everybody. Our financial results are highlighted by our record third quarter revenue of more than 172 million.

Financial results are highlighted by a record third quarter revenue of more than 172 million.

Speaker 4: more than three times sequential quarter to quarter growth after more than the prior four times sequential between Q1 and Q2.

More than three times sequential quarter to quarter growth after more than the prior four times sequentially between Q1 and Q2.

This revenue reflects continued construction progress and execution across our battery projects in the United States under our built commission and transfer model as you can see from the earnings release, we maintain our full year revenue guidance.

Speaker 4: This revenue reflects continued construction progress, an execution across our battery projects in the United States, under a build, commission, and financial model. As you can see from the earnings release, we maintain our full-year revenue guidance of 325 million to 425 million and remain confident in achieving it.

325 million to $425 million and we remain confident in achieving it.

Our gross margin was four 2% in the third quarter.

Speaker 4: A gross margin was 4.2% in the third motor, impacted by some temporary unfaible timing in two regards. First, we delivered a lot of hardware in Q3 that we will be realizing is value app margin from in Q4 and the POC accounting.

In fact by some temporary unfavorable timing in two regards first we.

We delivered a lot of hardware in Q3 that we will be realizing design lab module from in Q4, and the POC accounting.

And second.

Speaker 4: Some high margin licensing transactions shifted out from the third quarter to the fourth quarter.

Some high margin licensing transactions shifted out from the third quarter to the fourth quarter.

Speaker 4: However, as you can see from the earnings release, we maintain our four-year gross margin guidance of 10 to 15% and remain confident we can achieve.

However, as you can see from the earnings release, we maintain our full year gross margin guidance of 10% to 15%.

We remain confident we can achieve it.

Speaker 4: Our adjusted EBITDA is trending well, as it has improved 43% sequentially to a negative 10.3 million.

Our adjusted EBITDA is trending well.

It has improved 43% sequentially to a negative $10 3 million.

Speaker 4: The key non-cash items that we added back were 10.7 million of stock-based compensation and 1.9 million in net interest income.

Key noncash items that we added back.

$10 7 million of stock based compensation and $1 9 million.

Net interest income.

We continue to anticipate adjusted EBITDA and operating expenses to stay within our guidance range as we remain acutely focused on managing cost.

Speaker 4: We continue to anticipate adjusted EBITDA, and operating expenses to stay within our guidance range, as we remain acutely focused on managing costs.

Speaker 4: We are driven to optimize our construction to realize profitability as soon as possible. As the business continues to scale up and we remain very optimistic regarding our progress towards positive adjusted EBIT.

We have driven two off.

<unk>, our cost structure to realize profitability.

Soon as possible as the business continues to scale up and we remain very optimistic regarding our progress towards positive adjusted EBITDA.

Operating loss was $22 7 million an improvement over the second quarter of 2023 of $5 7 million driven by continued focus on operating expenses and business costs.

Speaker 4: Operating loss was 22.7 million. An improvement over the second quarter of 2023 or 5.7 million driven by continued focus on operating expenses and business costs.

Speaker 4: As of September 30, 2023, we had 132.2 million cash, cash equivalents and restrictive cash, leading us well-position to continue our growth strategy and execute on up.

As of September 32023, we had $232 2 million in cash cash equivalents and restricted cash.

Leaving us well positioned to continue our growth strategy and execute on our projects.

Speaker 4: The primary uses of cash, our cash operating expenses and working capital needs associated with equipment purchases for our energy storage budget.

The primary uses of cash our cash operating expenses and working capital needs associated with equipment purchases for our energy storage projects.

Speaker 4: As these projects achieve milestones, and ultimately begin to generate revenue across margin, some of that cash will return to our balance sheet.

As these projects achieve milestones and ultimately begin to generate revenue and gross margin.

Some of that cash will return to our balance sheet.

Considering these factors for the year end 2023, we expect our cash to remain at similar levels that we exited in Q3 or $132 million, giving the expected project turnovers.

Speaker 4: for the year end 2023. We expect our cash to remain at similar levels that we exited in 2023 or 132 million given the expected project turnout.

Speaker 4: In addition to this strong cache position, we expect to reduce the restricted cache portion significantly before the end of the fault

In addition to the strong cash position, we expect to reduce the restricted cash portion significantly before the end of the fourth quarter.

Please keep in mind that we maintain a bonding capacity in excess of $1 billion to facilitate additional growth projects as we desire.

Speaker 4: Please keep in mind that we maintain a bonding capacity and access of $1 billion to facilitate additional growth-price projects as we desire. And with that,

And with that.

Back to room.

Okay. Thanks Yankees.

Speaker 3: Great, thanks, John Keith. Just in closing here, and before we get to some questions and just reflecting as you do, I think every quarter and look back and we're getting here to the end of our year, really just encouraging to see our strategy and how it's playing out, I think, successfully across the world, especially in light of some of the other newer energy storage companies and some of the things that are coming out here just recently.

Just in closing here and before we get to some questions and just reflecting.

As you do I think every quarter and look back and were getting here to the end of our year.

Really just encouraging to see our strategy and how it's playing out I think successfully across the world, especially in light of some of the other newer energy storage companies.

Some of the things that are coming out here just recently.

Speaker 3: But if you keep points, I want to highlight here for investors and for those that'll be listening in.

But a few key points I want to highlight here for investors and for those that'll be listening in.

Speaker 3: I guess the first one, and to remind everyone, we are the only and remain the only in a storage company that's executing and implementing a portfolio of short, long, and ultra-long duration technologies.

The first one and to remind everyone. We are the only in Romania storage company, it's executing and implementing a portfolio of short long an ultra long duration technologies across some of the largest utilities in the IP piece in the world and I think that that point of our customer sets and who we're focused on and the people choosing us.

Speaker 3: across some of the largest utilities in IPPs in the world, and I think that...

Speaker 3: that point of our customer sets and who were focused on and that people choosing us is fundamental and important. This is a manifestation of our strategy in the real world and expanding our

It's fundamental and important.

This is a manifestation of our strategy in the real world and expanding our ability to address the largest scope.

Speaker 3: address the largest scope of this energy storage market opportunity, obviously participating in various segments because of our multi-technology, multi-duration focus given the strong capabilities we have on the team. And thus, in participating in those with a very resilient profitability as a portfolio of solutions.

With energy storage market opportunity, obviously participating in various segments because of our multi technology multi duration focus given the strong capabilities, we have on the team.

And thus in participating in those with a very resilient profitability as a portfolio of solutions.

Speaker 3: that spans these most important durations right now and some of the new applications that skill.

Span. These most important durations right now in and some of the new applications that still need to have economical solutions that were very very focused on it very mission critical.

Speaker 3: need to have economical solutions that we're very, very focused on and very mission critical.

Speaker 3: Second, we're being chosen not only for our technology differentiation economics, but for the deep industry experience of our people and our team. And really, as we saw even in this last quarter, moving heaven and earth to deliver for our customers and the large revenue requiad in the quarter and taking delivery, as Young Kate mentioned, a lot of the hardware that's going to

Second we're being choice not only for our technology differentiation economics, but for the deep industry experience of our people and our team and.

And really as we saw even in this last quarter, moving Heaven and Earth to.

To deliver for our customers and.

The large revenue Rec, we had in the quarter and taking delivery is young Kate mentioned a lot of the hardware that's going to.

Speaker 3: Front up, all the execution were in the middle of now for this quarter, which is significant.

Brian up all the execution, we're in the middle of now for this quarter, which is significant.

We're also thirdly uniquely monetizing our technology and in particular innovative gravity technology in ways No. Other energy storage company is doing in the market for a long duration, which as I mentioned earlier is still developing with a few alternatives.

Speaker 3: We're also thirdly uniquely monetizing our technology and in particular innovative gravity technology in ways no other energy storage company is doing in the market for a long duration, which as I mentioned earlier is still developing with a few alternative.

Speaker 3: I would say very few alternatives that are technology ready in the market. We continue to need, I think as an industry, a lot of focus here in development and I'm the biggest fan of all of our energy storage colleagues here that are working on new technologies to help with our clean energy transition around the world.

I would say very few alternatives that are technology ready in.

In the market, we continue to need I think as an industry a lot of focus here in development and I'm. The biggest fan of all of our energy storage colleagues here that are working on new technologies to help with our clean energy transition around the world.

Fourth we are uniquely also claimed broadly on a global stage no coincidence that I'm, calling in here from China, given everything we have going on and what's been recently announced.

Speaker 3: Fourth, we are uniquely also playing broadly on a global stage. No coincidence that I'm calling in here from China, given everything we have going on and what's been recently announced. And in this case, participating in the largest market in the world with a long-term royalty structure here that we established over a year ago and a first mover advantage is a government approved technology to complement PalmTigro here and lithium ion.

And in this case participating in the largest market in the world.

With a long term royalty structure here that we established over a year ago and a first mover advantage as a government approved technology complement pumped hydro year in lithium ion.

Speaker 3: and with a earlier investor base from the likes of Saudi Aramco, obviously from the Middle East, the BHP for Australia and Korea's Incas well, Alice Renewable, who partnered with us here, and also for the China market. I'm very excited by the upcoming regional developments that we're seeing and involved in and supported by these same investors.

And with the earlier Investor base from the likes of Saudi Aramco, obviously from the Middle East the BHP for Australia, and Korea, zinc as well Atlas renewable who partnered with us here.

Also for the China market I'm very excited by the upcoming regional developments that were seen in involved in and supported by these same investors.

Speaker 3: I'd also say from a fifth perspective, our energy solutions approach to solving customer problems is playing out as we did and providing the only sustainable solution for the multi-day application that Pacific Gas and Electric was trying to solve for the 48-hour backup system and the microgrid. It was required. They did not want to continue to use diesel gen, not only for the GHG, but for the noise and just the disruption it caused.

I'd also say from.

From a fit perspective, our energy solutions approach to solving customer problems is playing out as we did in providing the only sustainable solution for the multi day application that Pacific gas and electric was trying to solve.

For the 48 hour backup system in the micro grid that was required they did not want to continue to use diesel gen not only for the GH, Keith but for the noise and and just the disruption it caused.

Speaker 3: and in our in process now of bringing them a unique green hydrogen hybrid solution enabled through a hardware and our software expertise in our energy management.

Our in process now of bringing them.

Need green hydrogen hybrid solution enabled through our hardware and our software expertise.

In our energy management system.

Speaker 3: And then finally, and as I do here on these calls, our most important factor in differentiation that we now see manifesting itself as we turn over our first energy systems

And then finally in as I do here on these calls our most important factor and differentiation that we now see manifesting itself as we turnover or firstenergy systems to customers on time and meeting or exceeding expectations as our people.

Speaker 3: Innovation Creativity, the customer focus that passion really to deliver for our customers. It can continue to come through. I continue to be impressed.

Innovation creativity, the customer focus that that passion really to deliver.

For our customers. They can continue to come through I continue to be impressed but also with critical core values around our culture, which are number one on our list is humility as we work as a team work with our customers.

Speaker 3: but also with critical core values around our culture, which number one on our list is humility, as we work as a team, work with our customers, understanding that there's a lot we can still learn, understanding a lot that we can bring in, that maybe doesn't exist here, and reflect as we improve, and continuously improve ourselves.

Understanding that there's a lot we can still learn understanding a lot and that we can bring in that maybe doesn't exist here and reflect as we improve continuously improve ourselves.

Speaker 3: That is a core value of the company, as I mentioned, and one that we continue to...

That is a core value of the company as I mentioned in and one that we continue to leverage here as we get them with the stretch here as we're getting into the final of our Q4.

Speaker 3: leverage here as we get with the stretch here as we're getting into the final of R24.

Speaker 3: In the end, these results with our customers will tell our story, which will reward our investors for larger and more predictable caseloads. I know we're all interested in those as we continue our growth and development as a global leader in energy storage. So that operator.

And he and deep results with our customers, we'll tell our story, which will reward our investors for larger and more predictable cash flows I know, we're all interested in those as we continue our growth and development as a global leader in energy storage.

Operator, we're now ready for questions.

Thank you we will now begin the question and answer session.

Speaker 1: Thank you. We will now begin the question and answer session. To ask a question, you may press star than one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed, please press star than two. At this time,

Ask a question you May press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

Anytime your question has been addressed please.

Please press Star then two.

At this time, we'll pause momentarily to assemble our roster.

Speaker 1: And the first question will come from Steven Jigaro with Steeple. Please go ahead.

And the first question will come from Stephens, Inc. <unk> with Stifel. Please go ahead.

Speaker 5: Good evening or good morning maybe, well, I'm not sure. Thanks for taking your questions.

Good evening or good morning, maybe Raj.

I'm not sure but.

Thanks for taking the questions.

Speaker 5: So I think first, the interesting from my perspective is when you think about the projects that you've announced and kind of wasn't your backlog, I know, I know some of these recent projects are our world to slash licensing arrangements, right? But when we think about that, is there a way to sort of think about how the current backlog unfolds as far as the type of

So is it fair.

First the interesting from my perspective is when you think about the projects that you've announced and kind of what's in your backlog I know I know some of these recent projects are our world congratulations and arrangements right, but when we think about that.

Is there a way to sort of think about how the current backlog unfolds.

As far as the type of revenues you could see next year.

Speaker 3: Yeah, it's by the way, it is the question as you look at our backlog in particular, Stephen, that awards category. So I think our speed to convert those will shed more light if we've got the 800 megawatt hour there.

Yeah by the way. It is the question as you look at our backlog in particular, Steven that awards category. So.

I think our speed to convert those.

We will shed more light if we've got the 800 megawatt hour there, but we have a lot of other awards in there that are in process various stages of contracting.

Speaker 3: But we have a lot of other awards in there that are in process, various phases of contracting. And some of those with CODs next year, some of them with CODs.

And some of those with Cod's next year some of them with C. O DS into 2025 that will have revenue recognition.

Speaker 3: in the 2025 that will have revenue recognition. So I think the first thing I would look at there is just the size of that bucket of awards. I think is a...

So I think the first thing I would look at there is just the size of that bucket of awards I think is an important one. We also saw I think a big conversion from our Shortlisting bucket into awards that we've added to that and as well as converting an additional project for Texas into.

Speaker 3: important one. We also saw, I think, a big conversion from our shortlistings bucket into a board. So we've added

Speaker 3: for that and as well as converting additional projects for Texas in two ways.

A.

Speaker 3: into a booking as well. So I think that is the space to focus on in terms of awards and then the timing of that conversion. We're in the process of putting that together for our 2024.

Our booking as well so.

I think that is the space to focus on in terms of awards and then the timing of that conversion. We're in the process of putting that together for our 2024, our budgeting process, which is internal and then will be external and we'll be sharing and setting those expectations.

Speaker 3: budgeting process which is internal and then will be external, will be sharing and setting those expectations at our two four earnings which will be in February .

At our Q4 earnings which will be in February.

Can you you mentioned on the call progress toward.

Speaker 5: reach the EBITDA positive. Is that a four year 24 goal or is it going to happen in a court?

Reaching EBITDA positive is that a is that a full year 'twenty four goal or is it going to happen.

Sure.

Speaker 3: Oh, well, we're absolutely expecting some quarterly hits of adjusted EBITDA positive. And what we're working on is just based on revenue recognition. So it's really just a. POC accounting of and then timing of those projects to see if the full year 2024. Can actually also be adjusted EBITDA positive. We are working on that and if you look at. You know, our optics even so I'd ask you to take a look at that.

Oh, well, we're absolutely expecting.

Quarterly hits of adjusted EBITDA positive and what we're working on is just based on revenue recognition. So it's really just the.

POC accounting of Rev. Rec, and then timing of those.

Those projects to see if the full year of 2024 can actually also be adjusted EBITDA positive. We are working on that and if you look at our Opex, even so I'd ask you to if you take a look at that.

Speaker 3: We're not sort of sitting idly here waiting for growth to happen and that we're going to somehow grow our way to profitability that was never sort of our plan in a sense. And we are always looking at as we're executing this royalty, this light and the royalty model for gravity, for example. And as we're looking at our learnings from our first...

We're not sort of sitting idly here waiting for growth to happen in that we're gonna somehow grow our way to profitability that was never sort.

Sort of our plan in a sense and we are always looking at them as we're executing this royalty licensing royalty model for gravity for example, and as we're looking at our learnings from our first let's say 18 months of operation and delivering our first project as you see there in the Opex we are optimized.

Speaker 3: say 18 months of operation and delivering our first project. As you see there in the optics, we are optimizing and driving efficiency. And that's part of our clear driver to get to Casual positive here, even a little bit earlier, than we may have been thinking about at the beginning of the year. And that's just a reflective...

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Driving efficiency and that's part of our a clear driver to get to cash flow positive here are even a little bit earlier than we may have been thinking about at the beginning of the year and that's just a reflective.

Speaker 3: our focus on delivering for investors, but also on getting creative with cash flow. We feel very good about our cash position. No debt, we're getting rid of all the final restrictions. Most of which should be done by the end of the year that are just a reflection of the first projects where we restricted a little bit of that cash, but we have a great modern place. Now is young case reference, we have over a billion in non-collateralized.

Our focus on delivering for investors, but also on getting accretive with cash flow, we feel very good about our cash position no debt, we're getting rid of all the final restrictions.

Most of which should be done by the end of the year that are just a reflection of.

The first projects, where we restricted a little bit of that cash, but we have a great model in place.

Now as young Kate referenced we have over 1 billion in non collateralized project.

Speaker 3: project bonding or performance bonding capabilities now that we built up. So that just enables us to execute our projects without having to tie up a cache, release associated with any letters of credit or other mechanisms.

Project bonding or performance bonding capability now that we built up so that just enables us to.

Execute our projects without having to tie up the casualties associated with any letters of credit or or other mechanisms.

Hopefully that's helpful.

Speaker 5: That's helpful. And just one more for me if you don't mind. As the first EVX system goes close to a kind of full completion operation in China.

And just one more for me if you don't mind.

<unk> is the first system goes.

Close to a kind of full completion operation in China do you have any.

Speaker 5: Do you have any kind of conversations with potential customers and other parts of the world or are trying to that?

Any kind of conversations with potential customers in other parts of the world. We're in China that Theres, a little bit is there any kind of a wait and see like I want to see one of these up and operating and functioning as was there any of that when you talk to customers or is it or is it more just on you've obviously had success already with New awards.

Speaker 5: There's a little bit, is there any kind of weight and see like I want to see one of these up and operating and functioning? Is there any of that when you talk to customers or is it more just?

Speaker 5: and you've obviously had success already with new awards. But is there any of that in conversations with potential customers for the technology?

Was there any of that in your conversations with potential.

Customers for this technology.

Speaker 3: Oh, absolutely. Absolutely. And I would say despite even these announcements, which are massive, right over three gigawatt hour in China alone.

Oh, absolutely, absolutely and I would say that.

Fight, even these announcements which are massive right over three gigawatt hour in China alone.

Speaker 3: You can imagine there's a set of customers that want to see Rudang up and operating and get some of the first performance metrics.

You can imagine there's a set of customers that want a T route on up and operating and get some of the first performance metrics and that's not just in China I would say that that's.

Speaker 3: And that's not just in China, I would say that's globally.

That's globally.

Speaker 3: So it's a great question and it is, I think, in a lot of cases, there's customers doing their planning right now for some of their longer duration needs. As you're aware, there's

So it's a it's a great question and it is I think in a lot of cases, there is customers doing their planning right now for some of their longer duration needs as you're aware.

There is.

Speaker 3: The long duration market generally is still developing it at a

The long duration market the market generally is still developing it.

Speaker 3: at a much different type of pace where the short duration wears a lot of the economics are right now. But generally, we have customers that...

At a much different type of pace, where the short duration, whereas a lot of the economics are right now, but that generally we have customers that.

Our.

Speaker 3: Absolutely looking at some of the initial performance metrics that are going to come out. However we do have others that are progressing and I mentioned in my comments South Africa, India and even in the US where we're progressing things along and we are seeing, I'd say in particular in the plus quarter.

Absolutely I'm looking at some of the initial performance metrics that are going to come out. However, we do have others that are progressing and I mentioned in my comments.

South Africa, India, and even in the U S, where we're progressing things along and we are seeing I'd say in particular in the last quarter.

Speaker 3: us having the discussions and getting to proposals now and costing out systems that I expect to be announcing here in the near term. So that's very, very encouraging on the gravity side, but absolutely there is a segment of customers that we're in discussions with that want us to share the metrics, the performance metrics as they come up there. Excellent. Thank you for the question.

It's having the discussions and getting two proposals now and costing out system that I expect to be announcing here in the in the near term. So that's very very encouraging on the gravity side, but but absolutely. There is a segment of customers that we're in discussions with that want us to share the metrics performance metrics as they come.

Up there.

Excellent. Thank you for the color.

Yep. Thank you.

Yeah.

The next question will come from Chris Elling halls, with cyber William and Schenk. Please go ahead.

Speaker 1: The next question will come from Chris Ellinghals with Cyber William & Chink. Please go ahead.

Hey, everybody how are you.

Speaker 6: Thank you. Thank you. The revenues were surprisingly good, but you know, Jan is talking about the margins. Can you give us any more color on the shifting and, you know, what does this tell us anything about the well-head margin, for instance?

Thanks, Chris.

Revenues were surprisingly good but.

No.

I'm just talking about the margins can.

Can you give us any more color on the shifting and.

Does this tell us anything about the wellhead margin for instance.

Sure Yeah, let me comment on that and I think.

Speaker 3: Sure, yeah, let me comment on that. And I think, in the case mentioned this, but in any quarter, we're gonna be taking deliveries and in particular, if you do the math on the second half ramp for us.

Young kids mentioned, it but in any quarter, we're gonna be taking deliveries and in particular, if you do the math on the second half ramp for us and the fact that we're reaffirming our guidance and we took deliveries of a lot of material in Q3 and under POC.

Speaker 3: fact that we're reaffirming our guidance, we took deliveries of a lot of material in Q3 and under POC accounting and GAAP accounting, until we add value to some of that material, some of the profit on it does not get recognized. So hence there's some delay as we're going to be now in the middle of adding value.

<unk> accounting GAAP accounting.

Until we add value to some of that material some of the profit on it does not get recognized.

Recognized so hence there is some delay as we're gonna be now and are in the middle of adding value as.

Speaker 3: as we're integrating equipment, for example, and doing more of the services on site, which as you saw in some of the earlier quarters drove some of the higher double digit margins. So it is a little bit lumpy, Chris, and as you can expect, it's a little bit lumpy.

As we're integrating our equipment for example, and doing more of the services on site, which as you saw in some of the earlier quarters drove some of the higher double digit margin. So it is a little bit lumpy, Chris it and and as you can expect.

Speaker 3: in an EPC type of business for the shorter duration type of solutions we're providing. But I also want to make sure you're aware that none of that quarter's gross margin is going to be a problem.

In a in an EPC type of business per the shorter duration type of solutions, we're providing but I also want to make sure you're aware that none of that none of that quarter's gross margin.

Speaker 3: has anything to do with anything on well-head. So, well-head was a successful project that we implemented. We did it on time. There were no LDs impacting gross margin. And so that's not a reflection on the well-head piece. It's more reflection of we have a 440 megawatt hour project.

Has anything to do with anything on wellhead so wellhead.

A successful project that we implemented we did it on time there were no no LDS impacting gross margin.

And so that's not a reflection of.

On on the wellhead piece, it's more of a reflection of.

We have a 440 megawatt hour project.

Speaker 3: of which there's a very large substantial component of that project, almost 70% of it's related to the battery portion alone, which that is going through, going through the overall project because we're integrating the entire thing. So it's more, I'd look at this more of timing of where we are in the second half ramp. And I think we can expect these things to smooth out a bit more as we go forward.

Which there's a very large substantial component of that projected almost 70% of it.

<unk> to the <unk>.

Battery portion alone.

That is going through and going through the overall project because we are a we're integrating the entire thing. So it's more I'd look at this more of timing of where we are and are in the second half ramp.

And I think we can expect these things to smooth out a bit more as we go forward.

Okay great.

Speaker 6: Okay, great. I think the press really sort of suggests there are additional projects in Nevada. Can you give us any color on what you've added to the pipeline there?

I think the press release sort of suggest there are additional projects in Nevada can you give us any color.

Color on what you've added to the pipeline there.

Well, we have I don't know how specific on Nevada, we were in the release, but we've added more.

Speaker 3: But we have, I don't know how specific on the data we were in the release, but we've added more projects.

More projects and in the U S for sure as part of our as part of our bookings growth and in addition.

Speaker 3: in the US for sure as part of our bookings growth. And in addition, I had mentioned this before, we're seeing a very interesting uptake in our gravity applying from our gravity technology to some very specific...

I had mentioned this before we're seeing very interesting uptake in.

In our gravity applying some of our gravity technology to some very specific customer.

Speaker 3: customer needs and specifically in the utility space in the west. So we're going to be, you know, saying more about those things as we progress those.

Customer needs and specifically in the in the utility space in the West So we're gonna be saying more about those things as we progress those through definitive agreements with customers, but just suffice to say.

Speaker 3: through definitive agreements with customers, but this applies to say, very impressive by what I'm seeing in terms of market, both development, adoption and discussions around applying our various technologies. And that includes, by the way, the backup systems and approach that we started with in the first project with PG&E.

We're encouraged by what I'm seeing in terms of.

Market, both development adoption and discussions around applying our various technologies and that includes by the way the backup.

Systems and approach that that we started with in the first project with P. J D.

Okay.

Speaker 6: Okay. Just look at the income statement. SGNA and R&D lines specifically, you know, are either of those two sort of starting to hit their normalized run rates for the near term.

I'm just looking at the income statement.

SG&A and R&D lines, specifically, you know are either of those two sorry.

Starting to hit their normalized run rates for the near term.

Yeah by the way Great question and observation I would say that we're generally there are meeting we've if.

Speaker 3: Yeah, by the way, great question and observation. I would say that we're generally there, meaning we've, if you take our Q4 times 4.

If you take our Q4 times four.

Speaker 3: laughed here. You'll see that we're quite a bit below that.

Last year, you'll see that we're we're quite a bit below that.

Speaker 3: Obviously, the Q4 has some one-time items, but even if you normalize it, we're actually running flattish to slightly even down from

Obviously, the Q4 has some one time items, but if you even if you normalize it.

We're actually running flattish to slightly even down from Q4 times, where last year now we had initially had a a.

Speaker 3: Q4 times for last year. Now we had initially had a

Speaker 3: growth investment plan even on optics this year. And we've adjusted that just by nature of

Growth investment plan, even on Opex this year and we've adjusted that just by nature of where the markets are obviously, given what we're seeing on the both the macro and and I think given our investor requirements here and a higher inflation environment. So we have we got in front of that the first half of the year, we're seeing some.

Speaker 3: where the markets are, obviously, given what we're seeing on both the macro and, I think, given investor requirements here in a higher inflation environment.

Speaker 3: gotten in front of that the first half of the year. We're seeing some of those results now and we're continuing to look at that as we look at next year because we're very focused on

Those results now and where we're continuing to look at that as we look at next year, because we're very focused on.

Speaker 3: Not only any one quarter of cash flow or just EBITDA, I guess positive, but doing that for the full year and we'll be able to update that as we give guidance at the next quarterly yearning. Okay, great. Hi.

Not only any one quarter of cash flow or adjusted EBITDA, I guess positive, but but doing that for the full year and we'll be able to update that and as we gave guidance at the next quarterly earnings.

Okay, Great I appreciate the color thanks, Rob.

Thank you Chris.

The next question will come from Thomas Boyes with TD Cowen. Please go ahead.

Speaker 1: The next question will come from Thomas Boyce with TD Cowan. Please go ahead.

Speaker 7: Thanks for taking the questions, appreciate it. I was hoping we could provide some insight on the company's vault-bitter solution that was introduced at R.E. Plus. So it was customer feedback been like there. And then maybe what's kind of the time frame to have that solution deployed with customers?

Thanks for taking my questions I appreciate it I was hoping maybe you could provide some insight on the company's fault bidder solution that was introduced at that already plus liquid is customer feedback been like there and then maybe what's kind of the timeframe to have the solution deployed with customers.

Great and good to hear your comments.

Speaker 3: Yeah, look, this is really exciting and a part of the development of our software platform and investments we've been making really the last.

Yeah look this is really exciting and a part of the development of our software platform and our investments we've been making really the last.

Speaker 3: 24 months, but this is giving additional capabilities.

24 months, but this is giving additional capabilities to.

Speaker 3: to customers to look at optimizing their economic both charging and discharging of electricity in some unique ways. Just to remind everyone, we have a team made up of, you know, well, energy evolved to newer companies.

Customers to look at opt.

Optimizing their economic boat.

<unk> and discharging of electricity in some unique ways just to remind everyone that we have a team made up of.

And you bought the newer company. Our team is made up of people that whereas some of the leading companies in the software and the integrator space through essentially the periods from 2012 and beyond and so we've essentially taken a lot of that experience and looked at how we can help customers optimize.

Speaker 3: Our team has made up of people that were at some of the leading companies in the software and the integrator space through essentially the periods from 2012 and beyond. And so we've essentially taken a lot of that experience and looked at how we can help customers optimize.

Speaker 3: how they're going to get more out of their systems, in particular in the shorter duration, side where they're charging and discharging and leveraging time of day and variations of volatility and time of day pricing. So that is a product that we've begun to implement with some customers so we can get some good history with it from looking backwards and looking what and how we could have helped them versus the results they've achieved.

How theyre going to get more out of their.

Their systems in particular on the shorter duration.

<unk>, where they're charging and discharging and leveraging.

Time of day, and variations of volatility and time of day pricing. So.

So that is a product that we've begun to implement with some customers. So we can get some good history with it sort of from a looking backwards and looking what and how we could have helped them versus the results they've achieved.

Speaker 3: and then going forward, it's a, essentially a module as a part of our broader energy management.

And then going forward, it's a essentially a module as a part of our broader energy management system that includes other asset management and other optimization capability. So in terms of the second part of your question.

Speaker 3: system that includes other asset management and other optimization capability. So in terms of the second part of your question, I would characterize this as something that is in live testing phase at some customers now. And it will be something that I think can help you a differentiator for people that want to turn on certain capabilities over time as we complement our innovation on the hardware side with software.

I would say I would characterize this as something that is in a live testing phase at some customers now and it'll be something that.

I think can help be a differentiator for people that want to turn on that.

Certain capabilities over time as.

As we.

Complement our innovation on the hardware side with software.

Speaker 7: appreciate the color there. And then just maybe one on some of the other partners that you have announced are kind of licensing and royalty agreement in Europe and Cypress. So just, if any kind of timing there, what you think is maybe holding back some momentum in those markets.

I appreciate the color there and then just maybe one on some of the other partners that you have announced your kind of that licensing and royalty agreement.

In Europe in Cyprus, So just any kind of timing there where do you think is maybe holding back.

Some momentum in those markets.

Speaker 3: Yeah, well, we just announced those, you know, just within, I guess about nine months ago, so typically, just like with China that we announced right away, as we...

Yeah, well, we just announced those.

Just within our I guess about nine months ago nine months ago. So typically just like with China that we announced right away as we as we went went public.

Speaker 3: as we went public, they're just now announcing, just now.

You know, they're just now announcing just now announcing development and projects and then there'll be no royalty streams that would start to come as they get built out. So you can on those things.

Speaker 3: and then there'll be royalty streams that would start to come as they could build out. So you can assume that from announcement,

You know you can assume that from announcement that you would be looking at a minimum of 18 to 24 months type of timeframe of when.

Speaker 3: that you would be looking at a minimum of 18 to 24 months type of time frame of when.

Speaker 3: both first projects would be get announced and some royalties would begin.

Both first projects would be get announced and some royalties would begin.

Speaker 3: And if I said if you look at those announcements that were made, they're essentially about nine months through year behind the China timeline. So I would say we'd be looking at impact.

And as I said, if you look at those announcements that were made there essentially about nine months to a year behind the China timeline, So I would say we'd be looking at impact.

Speaker 3: of some of these things toward the second half of 24, but more, I think, in better volume in 2025. And we're going to try to give you some good guidance on that as we...

Some of these things towards the second half of 'twenty, four, but more I think than and better volume in 2025, and we're going to try to give you. Some good guidance on that as we.

Speaker 3: I'm working toward providing to investors and our investor day sort of a three year plan on the various parts of our business because I think uniquely I imagine create a challenge for some of you given the different streams of business we have in terms of the EPC side of the business, the licensing side of the business and even some of the other unique solutions that we're doing and in how we're monetizing.

Work toward a providing to investors in our Investor day, our a sort of a three year plan on the various parts of our business. Because we are I think uniquely I imagine create a challenge for for some of you given the different streams of business, we have in terms of.

The EPC side of the business the licensing side of the business.

And even some of the other unique solutions that we're doing and how we're monetizing our gravity for example, and other services. So we're going to we're going to provide I think some updated more segment type of guidance over a three year period here.

Speaker 3: gravity, for example, in other services. So we're going to provide, I think, some updated more segment type of guidance over a three-year period here as we get closer in the coming months, and providing guidance for our 2024 at our next journey.

As we get closer in the coming months also in providing guidance for them for our 2024 at our next journey.

Perfect. Thanks, again, I'll jump back in queue.

Thank you.

Speaker 1: The next question will come from Stephen with CIFUL.

The next question will come from Stephen <unk> with <unk>.

Please go ahead.

Speaker 5: Thanks for taking a few more questions. So, I guess a couple things. One is, maybe,

Thanks, Thanks for taking a few more questions. So.

One I.

I guess a couple of things one is it maybe.

Speaker 5: It's easier to ask you this way. When we think about your quarterly revenue, I know it's gonna be lumpy and there's a lot of moving pieces.

Maybe it's easier to ask it this way when we think about your quarterly revenue and I know, it's gonna be lumpy and there's a lot of moving pieces.

Speaker 5: Is there any way to think about a baseline number? I mean, obviously, we're from 11 to 40 to 170, right? So try to model it. It's really hard. I mean, is there any kind of baseline number from revenue recognition we can think about? I mean, even if you're a fourth quarter guy and try to, if you're at a little $100 million window there based on the flow you're dyed, is there anything you can add there, either specifically the fourth quarter or just in general?

Is there any way to think about a baseline number I mean, obviously went from 11% to 40 to 170 right. So trying to model it is really hard.

Is there any kind of baseline number from revenue recognition, we could we can think about them, even if your fourth quarter guidance right I mean theoretically over $100 million window there.

Based on the full year guide is there anything you can add there either specifically in the fourth quarter or just in general.

I would say generally on the shorter duration projects, so whether to the hybrid hydrogen battery.

Speaker 3: I would say generally on the shorter duration project, so whether the hybrid, a hybrid's in battery, even we're executing those, and if you look at wellhead, which we announced, I think it's fine that the end of August last year, September , and had it in a mechanically term.

We're executing those and if you look at wellhead, which we announced I think signed at the end of August last year September and had it.

Many of them mechanically turned over in June.

Speaker 3: So I'd say on the shorter duration in terms of RevRec, it's anywhere from nine to 15 months. It depends in some cases on some customer control timing. And yeah, I know it's difficult because these things are lumpy from a formal accounting RevRec perspective. Is you look at the project and look at our RevRec this year, for example.

I'd say on the shorter duration in terms of Rev. Rec it's.

You know anywhere from nine to 15 months it depends in some cases on some customer control timing and yeah. I know it's difficult because these things are lumpy from a formal accounting Rev. Rec perspective is as you look at the project and look at our Rev. Rec. This year for example were Rev. Rec Ing a lot of the.

Speaker 3: We're rewracking a lot of the, some of the initial services and value add that, the payment milestones to customers differ a little bit than the POC accounting. And then as we get closer to the CODs, that final six months is where most of that, we chunk to the revenue will come because that's tied to larger deliveries at the site and things where we begin to add value to equipment. So I would say that,

Some of the initial services and value add that the payment milestones of customers defer a little bit then then the POC accounting.

Then as we get closer to the C. O DS that final six months is where most of that a good chunk of that revenue will come because its tied to larger deliveries at the site and things, where we begin to add value to equipment. So I would say that.

Speaker 3: What's important to pay attention to is the COD, the customer COD, and that we would share, and typically we do share those unexpected timing of when we'll be turning over. And if you do the math on the rev rec and turning coming back between nine to 15 months from that project, we typically like we've done.

What's important to pay attention to is the C. O D. The customer C. O D. Net debt that we would share and typically we do share those unexpected timing of when we will be turning over and if you do the math on that on the Rev Rec and turning coming back between nine to 15 months from that project and what we typically like we've done for.

Speaker 3: for PG&E. We've given guidance, because it's public information, PG&E on their hydrogen project where it's, you know, publicly should be delivered in June of next year. So I think that's a way to do it. But one action I'll take...

P G knee, we giving guidance because it's public information.

Jamie on there.

Hydrogen project, where it's publicly should be delivered in June of next year. So I think that's a way to do it but one action I'll take that we'll take with you is we will get offline and maybe into next week I'll be happy to participate and win them back in the up and coming back on Friday, and let's get a call next week and we can.

Provide a little better guidance to make it a potential little easier for you on that in terms of assumptions.

That's helpful. That's helpful. And then just one more quick one.

Speaker 5: If just a triangle, your gross margin gains for the year suggests something for the fourth quarter.

Just to triangulate your gross margin guidance for the year.

Suggests something for the fourth quarter.

Speaker 5: which could get you pretty close to Eretabric even if things go well. Am I thinking about that right?

Which could get you pretty close to EBITDA breakeven if things go well am I thinking about that right.

Speaker 5: You are. OK, OK, good. OK. Thanks for the color on all of that.

You are.

Okay, well that's good okay.

Thanks, Thanks for the color on all of that.

No problem Sir.

The next question will come from Noel Parks with Tuohy Brothers. Please go ahead.

Speaker 1: The next question will come from Noel Parks with Tui Brothers. Please go ahead.

Hi, good afternoon.

No.

Speaker 8: I just had a couple. I had a couple about China in particular, and I was wondering.

I just had a couple.

I have a couple of times about.

About China in particular and I was wondering.

Speaker 8: Would the most recent announcement that specified the five new plans in various regions in China?

The most recent announcement that specified.

The five new plants in various regions in China.

With that level of detail now disclosing just curious.

Speaker 8: With that level of detail now, this goes as a security hit. Was that with Chen Yang planning these different projects? It's pretty much a centralized negotiation, all of these sort of coming together or sort of being planned out, contracted simultaneously, or sort of where they all in independent streams and just sort of got bunched together at the time of an hour.

Was that with China Chan young.

Planting these different projects.

Was that pretty much a centralized negotiate negotiation.

All of these sort of coming together.

Or sort of.

Being planned out.

Contracted simultaneously or sort of where they are an independent screams I'm just sort of got bunched together at the time of announcements.

Speaker 3: Yeah, by the way, it's a great question given the nature of the regulatory structure and even the government structure here, but it's not what you would think, meaning there's

Yeah by the way, it's a great question, given the nature of the regulatory structure and even the government structure here, but it's not what you would think meaning theirs.

Speaker 3: These aren't things driven necessarily by a central plan.

These aren't things driven necessarily by a central plan.

And then C N T Y sort of just bolting into theme to why is doing its own development and leading development in different provinces of China.

Speaker 3: CNTY is sort of just bolting into. CNTY is doing its own development and leading development in different provinces of China.

Speaker 3: with this technology because it is new. As I mentioned in my comment, and these are things that hopefully aren't lost on people because it's not easy to do, but we've been approved in China as a technology already, which if you looked at the installed base here, you've got Plum Tidro, the TMI on, and then as far as energy storage goes.

With this technology because it is new as I mentioned in my comment.

And these are things that.

Hopefully aren't lost on people, because it's not easy to do but.

We've been approved in China as a technology already which is if you looked at the installed base here, you've got pumped hydro lithium ion and then there's really as far as energy storage goes with the 20% mandate.

Speaker 3: with the 20% mandate, there's really nothing else to deploy.

There's really nothing else to deploy.

Speaker 3: and hence you're seeing these announcements of project signing.

Hence these you're seeing these announcements of project signing with C. N T y.

Speaker 3: to see into why it multi-gigawatt hours and we're not even up and operating yet as full capacity here in Ruedong. So, but to specifically answer your question.

It multi gigawatt hours and we're not even up and operating yet at full capacity here in Rudolf.

But to specifically answer your question.

Speaker 3: This isn't being driven out of a single office in Beijing and we're just sort of bidding into some central. We're going province by province because the decision making, while the overall goals obviously on the country are at a Beijing, the provinces decide. So we're seeing to why is doing the development work and very impressively.

This isn't being driven out of a single office in Beijing, and we're just sort of bidding into some central where we're going province by province, because the decision, making while the overall goals obviously on the country are out of Beijing, but the provinces.

Decide.

So we're seeing T Y is doing the development work and very impressively doing the development work sharing the technology sharing how they've optimized specifically for China needs and and driving that development that you're seeing does that makes sense.

Speaker 3: doing the development work, sharing the technology, sharing how they've optimized it specifically for Chinese and driving that development that you're seeing. Does that make sense?

Totally.

Okay.

Speaker 8: Great. Thanks. It's just what I was wondering. And as you look into the royalty revenue stream, I guess not taking anything for granted with revenue recognition, is that pretty straightforward from an accounting perspective? Like you're just going to be booking a receivable, the overtime is going to get sort of smoothly move over into...

Great.

It takes I was just yes, that's where I was wondering.

And.

As you look into the the royalty revenue stream.

I guess not taking anything for granted with revenue recognition.

Is that pretty straightforward.

Hunting perspective like you're just.

Just gonna be booking a receivable at overtime, it's going to get.

Sort of smoothing move over into cash.

Yeah, Yeah, let me, let me explain how that works, we and under under GAAP accounting and also specific as you can see guidelines here on royalties, we we don't really create a receivable for them just because.

Speaker 3: Yeah, let me let me explain how that works. We and under under GAAP accounting and also specific SEC guidelines here on royalties, we don't really create a receivable for them just because.

Speaker 3: you know, until they actually start building projects.

Until they actually start building projects.

Speaker 3: We don't have that exact visibility when it's coming in now once.

We don't have that exact visibility when it's coming in now once.

Speaker 3: Once there's a project that's defined under if they're going to own it and operate it, which will mean a certain timing of the rev-rec, or if they're going to be building them and handing them over, that would be under a more accelerated type of recognition. So I think one.

Once there is a project that's defined under if theyre going to own it and operate it which will mean, a certain timing of the Rev rec or if they're going to be building them and handing them over that would be under a more accelerated type of recognition. So I think once those things are contracted it away, where we get timing visibility.

Speaker 3: Those things are contracted in a way where we get timing visibility. We might create a receivable for that. Generally, we're rev-recing these as they come, so as the royalties will be paid, and they will become more predictable, and we can sort of build them in and share with you what we're seeing. As you've seen, there's these – you've got about 3.2 gigawatt hours of projects announced here.

We might create a receivable for that generally where Rev. Rec in knees as they come so as the royalties will be paid.

And they will become more predictable and we can sort of build them in and share with you what we're seeing as if you've seen their seats.

You've got about 3.2 gigawatt hours of projects announced here.

Speaker 3: And those are going to be built out now over time and depend on the business model, we'll be receiving royalties on those projects and we can build those in to the timing. So that'll get more predictable. But this is, I'd say, something from a modeling perspective, it will come into, on the royalty side, typically come into the other income line item or the royalty revenue just depending on the type.

And those are going to be built out now over time and depending on the business model will be receiving royalties on those projects and we can build those in to the timing so that'll get more more predictable, but this is I'd say something from a modeling perspective, it will come into.

On the royalty side typically come into the other income line item or the royalty revenue just depending on the type.

Speaker 3: of income it's going to hit and if it's recognized over time or in a lump sum. So we'll be able to provide some more guidance now as these projects are getting built out. I know it's a little frustrating as people look at us understanding, hey what's the timing, what's the margin impact. Obviously these are...

Of income, it's going to hit and if it is recognized over time or in a lump sum. So we'll be able to provide some more guidance now as these projects are getting built out I know, it's a little frustrating.

As people look at is understanding hey, what's the timing and what the margin impact. Obviously these are essentially 95%.

Speaker 3: Essentially 95% is basically pure profit that comes in because we recognize the cost through the R&D or to the license already. So they're great streams to have and giving some guidance on the timing of those. We will be doing with investors as we get into our Q4 results. I will say that I think the good news is you look at it and as people look at it is.

You know basically pure profit that comes in because we recognize that the.

The costs through the R&D or to the license already so.

They're great streams to have and giving some guidance on the timing of those we will be doing with investors as we get into our Q4 results I will say that I think the good news is you look at it then as people look at US as we're gonna have these streams are coming for it for people that are hopefully long term investors looking at energy Volte.

Speaker 3: We're going to have these streams come in for people that are hopefully long-term investors looking at energy of all the fact that we're monetizing this.

The fact that we're monetizing that that will result in the projects that were just announced.

Speaker 3: that will result in, as these projects that were just announced, large and profitable streams of royalties that will become a larger percentage of our revenue. I think that is all a good thing. It's just a matter of timing as we build these things out. We'll be able to shed more light on how that timing is going to work into the second half of 2024 and into 2025.

Large and profitable.

Screams of royalties that will become a larger percentage of our revenue I think that is all a good thing, it's just a matter of timing.

We build these things out we will be able to shed more light on how that time, he's going to work into the second half of 'twenty four.

And into 2025.

Terrific. Thanks, a lot.

Yep Thanks, Don.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Mr. Robert Puccone for any closing remarks. Please go ahead.

This concludes our question and answer session I would like to turn the conference back over to Mr. Robert <unk> for any closing remarks. Please go ahead.

Speaker 3: Just to thank everyone for your time. We have a very intense quarter in the middle of here, given multiple customer sites.

Just to thank everyone for your time, and we have a very intense quarter in the middle of here given multiple customer sites.

Speaker 3: and supporting customers here. So a lot of focus continues. There, as I mentioned, I think that is absolutely job one. As is our ability here on continuing to convert.

And and supporting customers here. So a lot of focus continues there as I mentioned I think that is.

It will be job one as is our ability here on continuing to convert them.

Speaker 3: from our large awards bucket there and the bookings and as we go into 2024. So I appreciate everybody's time and support through this, Andrew feedback, and we'll be back to you here and be looking forward to more interactions here in the coming months. Thank you very much.

From our large awards bucket, there and dig into bookings and as we go into 2024.

So I appreciate everybody's time and support through this and your feedback.

And we will.

I'll be back to you here I'd be looking forward to more interactions here in the coming months. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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Yeah.

Yeah.

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