Q4 2023 Energy Vault Holdings Inc Earnings Call

Operator: Greetings, and welcome to Energy Vault's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to energy bolts fourth quarter and full year of 2023 earnings conference call.

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

Operator: Q&A Session. We'll follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone.

And answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bernie Kullsen, Vice President of Investor Relations. Please go ahead.

As a reminder, this conference is being recorded its now my pleasure to introduce your host Bernie Colson, Vice President of Investor Relations. Please go ahead.

Bernie Kullsen: Thank you. Hello, and welcome to Energy Vault's fourth quarter and full year 2023 financial results conference call. As a reminder, Energy Vault's fourth quarter earnings press release and presentation are available now on our investor website, and we will be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations page of our website. This call is now being recorded.

Thank you Hello, and welcome to energy volts fourth quarter and full year 2023 financial results Conference call.

As a reminder, energy bolts fourth quarter earnings press release and presentation is available now on our Investor website, and we will be referring to the presentation. During this call.

A replay of this call will be available later today on the Investor Relations page of our website. This call is now being recorded if you object in any way. Please disconnect now.

Operator: If you object in any way, please disconnect now. Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainty. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. We caution everyone to be guided in their analysis of Energy Vault by referring to our 10-K filing for a list of factors that may cause our results to differ from those anticipated in any forward-looking statement. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer, and Jan Kees van Gaalen, our Chief Financial Officer. At this time, I'd like to hand the call over to Robert Piconi.

Please note that energy volts earnings release, and this call contains forward looking statements that are subject to risks and uncertainties. These forward looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors, we caution everyone to be guided in their analysis of energy ball by referring to our <unk>.

10-K filings for a list of factors that may 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. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe Harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation.

To comparable GAAP measures joining me on the call today is Robert Makoni, Our chairman and Chief Executive Officer, and Jan case on gallon, our Chief Financial Officer at this time I'd like to hand, the call over to Robert accounting.

Robert Allen Piconi: Great, thank you, Bernie. And I'd like to welcome everyone to our fourth quarter and full year 2023 earnings call. We're announcing results for our second year now as a public company, which happens to be also our second year of revenue. As you tend to do sometimes, it can be helpful to step back, zoom out, if you will, and look at how we've progressed these past two years, as I did after our first year.

Great. Thank you Bernie and I'd like to welcome everyone to our fourth quarter and full year 2023 earnings call.

Were announcing results on our second year now as a public company.

Which happens to be also our second year of revenue.

As you tend to do sometimes it can be helpful to step back through them out if you will and look at how we progress. These past two years as I did after our first year.

Robert Allen Piconi: We've grown this company as a public company globally in unprecedented ways across multiple continents, multiple technologies, while serving different customer segments, public utilities, independent power players, and large industrial energy use. The result has been the fastest growing company in energy storage in only our first two years. We continue to monetize our long-duration gravity technology via regional license and royalty agreements that will pay long-term dividends and royalties and capped a tremendous second half of 2023, executing multiple battery energy storage projects across the U.S. market with a newly developed energy management software platform that is winning rave reviews from customers and has been a key differentiator in our rapid commissioning timeframes and ability to quickly get through commissioning and site We began construction on a first-of-its-kind green-hydrogen hybrid energy storage system to provide multi-day storage to the City of Calistoga, California, for Pacific Gas and Electric, California's largest utility.

We've grown this company as a public company globally and unprecedented ways across multiple continents multiple technologies, while serving different customer segments public utilities independent power players and large industrial energy users.

The result has been the fastest growing company in energy storage in only our first two years.

We continue to monetize our long duration gravity technology be a regional license and royalty agreements that will pay long term dividends in royalties and capped a tremendous second half of 2023 executing multiple battery energy storage projects across the U S market with the newly developed energy management software platform.

They're just winning rave reviews from customers and has been a key differentiator and a rapid commissioning time frames and ability to quickly get through commissioning inside energy station, regardless of the underlying hardware.

I think finally and is a testament to our strategy of solving customer problems as an energy storage solutions provider.

We began construction on a first of its kind green hydrogen hybrid energy storage system to provide multi day storage to the city of Calistoga, California for Pacific gas and electric California's largest utility.

Robert Allen Piconi: Energy Vault uniquely will own this system under a tolling agreement to PG&E, as we also presented the only fully sustainable solution to replace their prior diesel generation systems historically used to secure continuous power, and it will be operational in the mid part of this year. So there are some of the key highlights. I'm very proud of our progress, our delivery in our first two years, and have never been more excited about what the future holds as I am now, as we continue to push boundaries and innovation while fortifying strong customer relationships that will be the basis of our future. Clearly, we continue to operate in our sector in a very volatile capital market. And despite that, the team has remained focused on the most important.

Energy vault uniquely will own this system under a tolling agreement to Pee Jeanie.

As we also presented the only fully sustainable solution to replace their prior diesel generation systems, historically used to secure continuous power and it will be operational in the mid part of this year.

So theres some of the key highlights very proud of our progress our delivery in our first two years and never been more excited about what the future holds as I am now as we continue to push boundaries and innovation, while fortifying strong customer relationships that will be the basis of our future.

Clearly we continue to operate in our sector in a very volatile capital market.

And despite that the team has remained focused on the most important investor.

Investor Priority, then I would say there are three of those.

First.

Executing.

For our customers and keeping the customer loyalty that are really the key to our future and really the foundation of our house that were building here after getting through two years without those customers and without those future revenue streams and with those customers now uniquely as reference points for future deals.

Robert Allen Piconi: Investor priorities, and I would say there are three of those. First, for our customers, and with those customers now, uniquely as reference points for future deals and future customers, we would not have a bright future. I feel very good about that.

And future customers.

We would not have a bright future I feel very good about that.

Robert Allen Piconi: Second, profitable unit economics as we grow. You can imagine as a new company when you're approaching the likes of some of the largest public utilities and some of the most prominent independent power producers, you don't necessarily have the highest leverage in the contract negotiation, despite us having, I think, one of the most experienced teams in the industry, which is what led some of the largest customers to have the confidence and faith in us to deliver for them on very critical projects we negotiated. They put their faith in us, and we've delivered quarter-for-quarter with profitable unit economics. And finally, and I think this is definitely not least from an investor perspective, we have protected our balance sheet and liquidity as a company to allow us to control our destiny to invest in growth and eliminate any dilutive types of financing to shareholders.

Second profitable unit economics, as we grow.

You can imagine as a new company, we're near appraised approaching the likes of some of the largest public utilities and some of the most prominent independent power producers you don't necessarily have the highest leverage and the contract negotiation.

Despite us having I think one of the most experienced team in the industry, which is what led some of these largest customers to have the confidence and faith in us to deliver for them on very critical projects we negotiated.

We put they put their faith in us and we delivered quarter over quarter with profitable unit economics.

And finally and I think this is definitely not least from an investor perspective, we have protected our balance sheet and liquidity as a company to allow us to control our destiny two invest in growth.

And eliminate any dilutive types of financing to shareholders.

Robert Allen Piconi: I think this, and as you've seen in our results, if you happen to read through them, which I'll highlight here in just a minute, this has been an important aspect, in particular in Q4, where we took some proactive actions as it is clear the market has spoken on the desire for even new young companies in a very high growth and necessary market for the future of the planet must get to cash flow positive. With that, I want to begin by covering some of the highlights from our release with some more color, and then we'll turn it over to Jan-Kees, our CFO, to review the detailed financials and get to questions. On the top, our revenue finished in the range that we've been reaffirming all year. $341.5 million, which is up over 130% year over year and 18% quarter over quarter.

I think this and as you've seen if our results if you happen to read through that much I'll highlight them here in just a minute. This has been an important aspect in particular in Q4, where we took some proactive actions as it's clear the market has spoken on the desire for even new young companies in a very high growth and nest.

Surrey market for the future of the planet must get to cash flow positive.

With that I want to begin by covering some of the highlights from our release with some more color.

And then we'll turn it over to young case, our CFO to review detailed financials and get to questions.

Off the top of our revenue finished in the range that we'd been reaffirming all year.

$341 5 million, which is up over 130% year over year and 18% quarter over quarter.

Robert Allen Piconi: Within our annual range, due to some shifts of revenue at the end of Q4 that will take place in Q1 and in 2024, it's toward the lower end of that range. We ended the year, however, with an increased cash position of $146 million and with no debt, which is above our prior guidance of $132 million from Q3 2023 earnings and projections. This is pretty noteworthy as we have kept and funded projects in California, for example, the Calistoga project for PG&E, and Texas on our balance sheet so we can participate in these projects in the longer term with more predictable and less lumpy cash flows and revenue streams from these tolling agreements. Yet we were still able to grow CAST quarter-over-quarter as we began to turn some of our first projects in the second half of the year to substantial completion and final

Within our annual range due to some shifts of revenue at the end of Q4 that will take place in Q1 and in 2024, it's toward the lower end of that range.

We ended the year, however, with an increased cash position of $146 million.

And with no debt, which is above our prior guidance of 132 million from Q3, 'twenty twenty-three earnings and projections.

This is a pretty noteworthy as we have kept in funded projects in California. For example to Calistoga project for P. Jeannie and Texas on our balance sheet. So we can participate in these projects in the longer term predictable and less lumpy cash flows and revenue streams from these tolling agreement yet we were still.

Able to grow cash quarter over quarter as we began to turn some of our first projects in the second half of the year to substantial completion and final completion.

Able to grow cash quarter over quarter as we began to turn some of our first projects in the second half of the year to substantial completion and final completion.

Okay.

Robert Allen Piconi: Very importantly, we also reduced our quarterly cash operating expense run rate by 25 to 30% through actions taken in Q4 2023. This should enable a 2024 reduced quarterly cash OPEX of a range of 13 to 15 million. We expect these actions to help us accelerate our shift to cash flow positive as we exit 2024 and for full year 2025 results, which we'll be sharing more about during our Announce Investor Day, which I'll be talking about shortly. Thank you. Thank you. Thank you.

Very importantly, we also reduced our quarterly cash operating expense run rate by 25%, 30% through actions taken in Q4 2023.

This should enable a 'twenty 'twenty four reduced quarterly cash opex of a range of $13 million to $15 million we.

We expect these actions to help us accelerate our shift to cash flow positive as we exit 2024 and for full year 2025 results, which will be sharing more about during our announced investor day, which I'll be talking about shortly.

Robert Allen Piconi: For the year on gross margin, we delivered a positive gross margin of 5.1%. While reflecting a portion of that, a lower than expected Q4 gross margin due only to the timing of revenue and associated gross profit recognition that shifted from Q4 into Q1 in 2024 for gravity licenses and also some battery projects. As I will discuss, gross margins will improve significantly in the first quarter of 2024, benefiting from this shift from Q4, but also due to the mix of revenue with gravity and battery project time. Nevertheless, this did impact QFAR for both revenue and final EBITDA and EPS.

For the year on gross margin, we delivered a positive gross margin of five 1%.

Reflecting a portion of that are lower than expected Q4 gross margin due only to timing of revenue and associated gross profit recognition that shifted from Q4 into Q1 in 'twenty 'twenty four for gravity license and also some battery projects.

As I will discuss gross margins will improve significantly in the first quarter of 2024.

Getting from this shift from Q4, but also due to the mix of revenue with gravity and battery project timing.

While this did impact Q far for both revenue and final EBITDA and EPS.

Robert Allen Piconi: This represents only a timing shift, which will be recognized under U.S. GAAP accounting in 2024. And finally, our commercial pipeline continues to expand with annual year-over-year growth of 24.5 gigawatt hours to a total of 52 gigawatt hours, or almost 90 percent growth. It also expanded sequentially, quarter over quarter, by 5.8 gigawatt hours, up 13%.

This represents only a timing shift which will be recognized under U S. GAAP accounting in 2024.

Okay.

And finally, our commercial pipeline continues to expand with annual year over year growth of 24, and a half gigawatt hours to a total of 52 gigawatt hours or almost 90% growth.

It also expanded sequentially quarter over quarter by 5.8 gigawatt hours up 13%.

Robert Allen Piconi: This shows continued market growth and continued market activity, also with significantly larger projects, two of which we are announcing as new project awards in the U.S. for Gravity and a large 2.5 gigawatt-hour long-duration battery project representing an additional continental expansion with a large global IPP. Well, these larger project awards have large impacts when forecasting revenue recognition and can create more lumpy quarters and annual guidance. They are both quite transformational in size, scope, and technology adoption and both first of a kind because of those attributes. As always, we are focused on converting this growing commercial funnel into contracts that further bolster our revenue and backlog, and we remain committed to continuing our track record of building profitable growth and unit economics with all new projects we choose to take on. We want to work on the velocity through our funnel.

This shows continued market growth.

Market activity.

Also with significantly larger projects two of which we are announcing as new project awards in the U S for gravity and a large two and a half gigawatt hour long duration battery project, representing an additional continental expansion with a large global I P. P.

While these larger projects at boards have large impacts in forecasting revenue recognition.

And can create more lumpy quarters and annual guidance, they're both quite transformational in size scope and technology adoption and both first of a kind because of those attributes.

Sure.

As always we are focused on converting these growing this growing commercial funnel into contracts that further bolster our revenue and backlog and we remain committed to continue our track record of building profitable growth and unit economics with all new projects, we choose to take on.

We want to work on the velocity through our funnel, we post every quarter or four stages of our more near term sales funnel that starts from submitted proposals goes to Shortlisted goes to awarded projects and then to final bookings I encourage you to keep an eye on that and take a look at our latest.

Robert Allen Piconi: We post every quarter the four stages of our more near-term sales funnel that starts from submitted proposals, goes to shortlisted, goes to awarded projects, and then to final bookings. I encourage you to keep an eye on that and take a look at our latest investor website with that update with the numbers that I just reviewed. As you all know from our announced and executed projects so far, we focus on larger and meaningful projects with strong customers that have a funnel of projects where we are developing deep partnerships over time. I realize for many of you in our investor base, Energy Vault is quite a unique animal relative to any other pure play energy storage company, given our unique portfolio of short, long, and even ultra-long duration storage solutions.

Investor website with that update with the numbers that I just reviewed.

As you all know from our announced and executed projects. So far we focus on larger and meaningful projects with strong customers that have a funnel of projects, where we are developing deep partnerships over time.

I realize for many of you in our Investor base energy vault is quite a unique animal relative to any other pure play energy storage company, given our unique portfolio of short long and even ultra long duration storage solutions.

Robert Allen Piconi: But I believe this has also enabled us to be one of the most customer-centric energy storage companies, listening to our customers and solving their problems with a broad portfolio of technology, innovation, and solutions that is unmatched in the market. Looking forward, as we are just a few weeks away from our Q1 2024 finish, we expect revenue to be in line with our prior Q1 2023, given the normal seasonality of revenue recognition and project start, with potential for upside from items that were expected in Q4 2023. We also expect stronger double-digit gross margins in Q1, again given the shift of revenue and gross margin recognition from the prior Q4 2023. I think very importantly, as we go to investor priorities, we expect to exit Q1 2024 with an unrestricted cash balance in a range of $125 to $150 million. Additionally, we've reduced any remaining restrictive cash on the balance sheet to less than $1 million and remain 100% debt free.

But I believe this has also enabled us to be one of the most customer centric energy storage customers listening to our customers in solving their problems with a broad portfolio of technology innovation and solutions is unmatched in the market.

Looking forward as we are just a few weeks away from our Q1 'twenty 'twenty four finish we expect revenue to be in line with our prior Q1 2023, given normal seasonality of revenue recognition and project start with potential for upside from items that were expected in Q4 2023.

We also expect stronger double digit gross margins in Q1 again, given the shift of revenue and gross margin recognition from the prior Q4 2023.

I think very importantly, as we go to Investor priorities, we expect to exit Q1, 2024, with an unrestricted cash balance in a range of $125 million to $150 million.

Additionally, we've reduced any remaining restricted cash on the balance sheet to less than $1 million and remain 100% debt free.

Robert Allen Piconi: Our performance here on cash is a tribute to our focus and tight management of our business, as our growth and our cash balance at the end of the year show. And we project to keep cash levels maintained at these levels without the need for debt or any dilutive equity transactions going forward. As we continue to look at owned projects on our balance sheet, providing predictable, longer-term revenue streams, we may evaluate project financing alternatives if they're attractive. This aspect of cash management, managing our operating expenses, our culture tied to innovation, and focus on customers is all ingrained in the employees of this company, and as demonstrated by the proactive actions we took in Q4 to reduce our quarterly cash op-ex rate by about 30% as we entered into 2024

Our performance here on cash is a tribute to our focus and tight management of our businesses our growth in our cash balance at the end of the year shows and.

And we project to keep cash levels maintained at these levels without the need for that or any dilutive equity transactions going forward.

As we continue to look at owned projects on our balance sheet, providing predictable longer term revenue streams. We may evaluate project financing alternatives. If there are attractive.

This aspect of cash management, managing our operating expense, our culture tied to innovation and focus on customers is all ingrained and the employees of this company and as demonstrated by the proactive actions. We took in Q4 to reduce our quarterly cash opex rate by about.

30% as we entered into 2020 four.

Robert Allen Piconi: We took these actions to continue to provide strong balance sheet flexibility for growth while accelerating our move to operating cash flow positive, which we have guided for our finish in Q4 this year and for the full year of 2025. We understand the nature of the lumpiness in our current business model and are also taking actions to adapt our product mix and business to reduce this volatility over time.

We took these actions to continue to provide strong balance sheet flexibility for growth.

Accelerating our move to operating cash flow positive, which we have guided for finish in Q4 this year and for the full year of 2025.

We understand the nature of the Lumpiness in our current business model and are also taking actions to adapt our product mix and business to reduce this volatility over time.

Robert Allen Piconi: We will be sharing much more detail in this regard in May, formally at our first Investor Analyst Day on May 8. While we are discussing forecasts, I want to mention two projects that were awarded in Q4 that are both multi-gigawatt hours and transformational in technology and territory expansion. We were awarded in Q4 a two and a half gigawatt hour DC long duration battery energy storage project by a leading international IPP that also represents a territorial expansion, and we'll be sharing more details on this project at our investor day. We also announced a new development agreement with a large primary public utility in the state of Washington using our gravity energy storage technology to address another multi-gigawatt hour storage need regionally in the Northwest.

We'll be sharing much more detail on this regard in may formally at our first investor Analyst day on May eight.

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While we're discussing forecasts I Wanna mentioned two projects that were awarded in Q4 that are both multi gigawatt hour and transport transformational and technology and territory expansion.

We were awarded in Q4 of two and a half gigawatt hour D. C long duration battery storage project by a leading international IPP that also represent a territorial expansion and we'll be sharing more details on this project at our Investor day.

We also announced a new development agreement with a large primary public utility.

And the state of Washington, using our gravity energy storage technology to address another multi gigawatt hour of storage need regionally in the northwest.

Robert Allen Piconi: This is so exciting for us, as it represents the first public utility in the U.S. with an agreement of this size and scope for gravity, which complements the previously announced gravity collaboration project with Enel Green Power in Snyder, Texas, which is now up and out of the ground. Most of you are aware that demand for long-duration storage remains more nascent at this stage, although Energy Vault continues to solidify its global leadership role here with various gravity and green hydrogen ultra-long-duration solutions and multi-day storage solutions that are now starting deployment at large scale across three of the largest energy storage markets in the world, in the U.S., China, and Africa, specific to our gravity business. It's important to highlight our territory expansion to Southern Africa, as I just mentioned, across the 16 SADC member countries via a new license and royalty agreement that was executed in Q4. In China and Rudong, we achieved state grid interconnection as planned in December of Q4 2023 for the first 25-megawatt EVX gravity storage system and achieved in-bore power operation. Also in China, there are now three additional gravity energy storage systems of 360 megawatt hours, bringing the total projects underway and announced to over 3.7 gigawatt hours.

This is so exciting for us as it represents the first public utility in the U S. With an agreement of this size and scope for gravity, which complements the previously announced gravity collaboration project with Enel Green Power Insider, Texas, which is now an up up and out of the ground.

Most of you are aware that demand for long duration storage remains more nascent at this stage, although energy vault continues to solidify its global leadership role here with various gravity and green hydrogen ultra long duration solutions and multi day storage solutions that are now starting to deployment in large scale across.

Three of the largest energy storage market in the world in the U S, China and Africa.

Specific to our gravity business.

Important to highlight our territory expansion to Southern Africa as I, just mentioned across a 16 member Sadek member countries via a new license and royalty agreement that was executed in Q4.

And China and Rudolf we achieved state grid interconnection as planned in December of Q4 2023 for the first 25 megawatt E B X gravity towards system and achieved invoice power operation.

Also in China. There are now three additional gravity energy source systems of 360 megawatt hour, bringing the total projects underway and announced to over three seven gigawatt hours.

Robert Allen Piconi: China continues to be an amazing bed of growth, and growth and focus are state-mandated for not only renewable generation projects but also for state-mandated energy storage. We continue to be very excited about the work with China Tien Ying and their active development and expansion in the market locally. As noted above, we have our first USA-based gravity project with a public utility with the announcement of the new development agreement in Washington, and an application of our technology that's being uniquely applied to take advantage of existing topology to maximize efficiency at a reduced CAPEX and thus provide strong economics without the need for any subsidy. We'll be very excited to share more on this project, given its scale, size, and application of new technology. Moving from gravity to our battery businesses, we delivered and progressed final commissioning on our first three battery storage systems, totaling almost one gigawatt hour, specifically with Wellhead Electric, as previously announced, and Nevada Energy. 440 megawatt hours were commissioned on schedule and in record time frames from site mobilization to system energization.

China continues to be an amazing bed of growth.

Growth in focus as state mandated for not only renewable generation projects, but also for the state mandated energy storage.

We continue to be very excited about the work with China tiny Yang and their active development and expansion in the market locally.

As also noted above we have our first USA based gravity project with a public utility with the announcement of the new development agreement in Washington.

And an application of our technology, that's being uniquely applied to take advantage of existing topology to maximize efficiency at a reduced capex and that's providing strong economics without the need for any subsidies.

We'll be very excited to share more on this project given its scale size and application of a new technology.

Moving from gravity to our battery businesses, we delivered in progress final commissioning on our first three battery storage systems totaling almost one gigawatt hour, specifically with wellhead electric as previously announced in Nevada energy.

140 megawatt hour were commissioned on schedule and in record time frame from site mobilization to system <unk>.

Robert Allen Piconi: Also, the project with Jupiter Power is expected to be fully commissioned in the coming weeks here prior to the first quarter close. Regarding our green hydrogen, microgrid, and ultra-long storage duration, we have begun construction on the largest green hydrogen project and microgrid system in the U.S. with California's largest public utility, Pacific Gas and Electric. The project is supported by a ten and a half year tolling agreement with commercial operation expected in mid 2024. This solidifies Energy Vault's global leadership role in green hydrogen technology for long-duration energy storage and specific microgrids for multi-day storage.

Also the project with Jupiter power is expected to be fully commissioned in the coming weeks here prior to the first quarter close.

Yeah.

Regarding our green hydrogen microgrid and ultra long just storage duration, we commenced construction on the largest green hydrogen project and Microgrid system in the U S with California's largest public utility Pacific gas and electric.

The project is supported by a turn and a half year tolling agreement with commercial operation expected in mid 2024.

This solidifies energy vaults global leadership role in Green hydrogen technology for long duration energy storage and specific micro grids for multi day storage.

It's important to note here that while owning this project on our balance sheet will impact near term revenue recognition in favor of long term and predictable revenue streams from the tolling agreement. We believe this will also result in more predictable and less lumpy revenue streams with increased margins over time, which we believe is best for energy volt and our investors as we scale our business.

Robert Allen Piconi: It's important to note here that while owning this project and our balance sheet will impact near-term revenue recognition in favor of long-term and predictable revenue streams from the tolling agreement, we believe this will also result in more predictable and less lumpy revenue streams with increased margins over time, which we believe is best for Energy Vault and our investors as we scale our business. Very excited to share progress now as we've ramped up new systems with our new software platform and energy management system, our proprietary VaultOS energy management software, showing its innovation right out of the gate, enabling efficient commissioning of our first projects that were turned over in the second half of 2023 and will begin contributing SAS-based recurring revenues in 2024.

Yeah.

Very excited to share progress now as we ramped up new systems with our new software platform, an energy management system, our proprietary volatile Wes energy management software showing its innovation right out of the gate, enabling efficient commissioning of our first projects that were turned over in the second half of 2023 and will begin.

Contributing SaaS based recurring revenues in 2024.

Albeit small at the start and will always be a smaller percentage of the overall portfolio, but critical high margin part of the portfolio and our product mix to software portfolio continues to introduce new capabilities, which now includes two additional products that we'll be reviewing in more detail at the upcoming Investor day.

One being vault manager for maximizing project return on investments via optimizing asset performance using enhanced performance analytics and predictive models to provide greater system reliability and visibility and secondly vault bidder to provide competitive dispatch continuous revenue optimization via market.

Robert Allen Piconi: I'll be small at the start and will always be a smaller percentage of the overall portfolio, but a critical, high-margin part of the portfolio and our product mix. The software portfolio continues to introduce new capabilities, which now includes two additional products that we will be reviewing in more detail at the upcoming Investor Day. One being Vault Manager for maximizing project return on investments via optimizing asset performance using enhanced performance analytics and predictive models to provide greater system reliability and visibility.

The patient serving the ISO in IPP market as well as for our own projects that we manage and operate.

Finally, I'd be remiss, if I was not recognizing a great year around our project execution.

This was an important proof at year for us to execute on over one seven gigawatt hour of projects announced in our first year revenue as and as a public company in 2022.

Robert Allen Piconi: And secondly, Vault Bidder, to provide competitive dispatch continuous revenue optimization via market participation serving the ISO and IPP markets as well as for our own projects that we manage and operate. Finally, I'd be remiss if I were not recognizing a great year in terms of our project execution. This was an important prove-it-year for us to execute on over 1.7 gigawatt hours of projects announced in our first year of revenue as and as a public company in 2022, in which we demonstrated that we can deliver on our promises and complete world-class energy storage facilities on time, on budget, and at performance levels at or above expectations of our very challenging customers, although there are many to mention. Here is one example. We built, commissioned, and energized the 440 megawatt-hour system in Nevada Energy's Reed Gardner site, about an hour outside of Las Vegas, within four months of site mobilization, energized the system on December 29th in order to meet the customer's requirement to be online prior to year end.

And which we demonstrated that we can deliver on our promises.

A complete world class energy storage facilities on time on budget, and Ed performance levels at or above expectations of a very challenging customers.

Although there are many to mention one example.

We built commissioned and energized to 440 megawatt hour system in Nevada Energy's REIT Gardner site, it's about an hour outside of Las Vegas within four months of site mobilization.

Energizing the system on December 29th in order to meet the customer's requirement to be online prior to year end.

I spent some time at the site with our team on site. There was working with the local contractors with some of our partners and the tremendous work. They did to do something that as far as we know has never been done before at this size at this scale and within this timeframe.

These are the things that go unseen and unheard about these unprecedented turnaround times and project delivery.

And <unk> are the nights weekends holiday time dedicated by our energy of our team to move Heaven and Earth to deliver for the customer.

Robert Allen Piconi: I spent some time at the site with our team on site that was working with the local contractors, with some of our partners, and the tremendous work they did to do something that, as far as we know, has never been done before at this size, at this scale, and within this time frame. These are the things that go unseen and unheard about these unprecedented turnaround times in project delivery and energization are the nights, weekends, and holiday times dedicated by our Energy Vault teams to move heaven and earth to deliver for the customer. I want to recognize all of our employees that make this happen every day for our customers, as our first projects demonstrated, none of which were without supply chain and supplier delivery issues that needed to be managed, solved, anticipated, and resolved. Just to our employees, I'm happy to be on this call today to stand upon your shoulders on this quarterly report to talk about these results. I do not take it lightly, as you know.

I want to recognize all of our employees that make this happen every day for our customers as our first projects demonstrated none of which were without supply chain and supplier delivery issues that needed to be managed solve anticipated and resolved.

Just to our employees I'm happy to be on this call today to stand upon your shoulders on its quarterly report to talk about these results I do not take it lightly as you know it is a pleasure to be here and support you and what Youre doing every day.

These customer satisfaction.

Areas and testimonials are proving to be some of our best sales tools as we are well positioned now for the next level of success. Both within these customers that we have executed four as well as new customers that observed bar for part of our performance.

We look forward to providing more detail on our Investor day and analyst day that is scheduled for May eight 2024 in New York City. We've relief. We have received a lot of feedback from the Investor base about getting in front of you and Mateo a more detail about our strategy about the evolution of our portfolio and also.

Robert Allen Piconi: It is a pleasure to be here and support you in what you're doing every day. These customer satisfaction areas and testimonials are proving to be some of our best sales tools as we are well positioned now for the next level of success, both within these customers that we've executed for as well as new customers that will observe our performance. We look forward to providing more detail on our Investor Day and Analyst Day, which is scheduled for May 8, 2024, in New York City. We've received a lot of feedback from the investor base about getting in front of you in more detail about our strategy, about the evolution of our portfolio, and also about a view into where we're going as a company in achieving the vision that we set out at the beginning.

About a view into where we're going as a company and it's achieving the vision that we set out at the beginning.

The events can include new product and customer announcements.

Portfolio updates and financial guidance.

It will include customers and partners, who will be speaking.

Customers and partners that have experience with us and delivery, but also new technology and new partners that were working with and expanding our growth across the globe.

I look forward to seeing many of you that can attend at that session.

Robert Allen Piconi: The event is going to include new product and customer announcements, portfolio updates, and Financial Guidance. It will include customers and partners that will be speaking, customers and partners that have experience with us in delivery, but also new technology and new partners that we're working with and expanding our growth across the globe. I look forward to seeing any of you that can attend that session. I'd like to now turn it over to Jan-Kees, who will share some financial details for the quarter. Thank you, Rob. Good afternoon, everybody.

I'd like to now turn it over to young case, who will share some financial details for the quarter. Okay.

Yeah. Thank you Rob.

Good afternoon everybody.

Let's talk about revenue.

Results.

Full year 2023 revenue of more than $340 million.

134% higher than in 2022.

This revenue reflects the successful execution across our project.

Portfolio in the United States.

On the Rebuilds Commission and transfer model.

Jan Kees van Gaalen: Let's talk about revenue; financial results are highlighted by our full year 2023 revenue of more than 340 million, 134% higher than in 2022. This revenue reflects the successful execution across our project portfolio in the United States and the Rebuild, Commission, and Transfer Model. Next, going into gross margin. Our gross margin was 5.1% for the full year of 2023.

Next going into gross margin gross margin was five 1% for the full year of 2023.

Temporarily impacted by unfavorable timing of a few items.

First.

We delivered a significant amount of hardware in the second half of the year that didn't have any margin associated with it due to the POC accounting rules under GAAP.

The value at March alone.

We will be recognized in the first half of 2024.

Okay.

Jan Kees van Gaalen: Although temporarily impacted by the unfavorable timing of a few items, first, we delivered a significant amount of hardware in the second half of the year that didn't have any margin associated with it due to the POC accounting rules and the gap. The value-add margin on that hardware will be recognized in the first half of 2024. And second, a high-margin licensing transaction shifts it out from the fourth quarter of 2023 to 2024, although adjusted to EBITDA. During 2023, our net loss amounted to 98.4 million, reflecting the points I previously mentioned. And for the quarter, our net loss amounted to 22.2 million.

And second.

High margin licensing transaction.

With the help from the fourth quarter of 2023 to 2024.

Adjusted EBITDA.

During 2023, our net loss amounted to 94 point $98 4 million.

Electing to points I previously mentioned and for the quarter net loss amounted to $22 2 million.

For the year ending December 31st 2023.

Our adjusted EBITDA was negative $62 1 million for the fourth quarter adjusted EBIT declined $3 6 million.

Year over year to negative $14, eight reflecting a shift in timing of both naturally and gravity revenue and gross profit from Q4, 2008, 2023 Q1 2024.

Jan Kees van Gaalen: For the year ending December 31st, 2023, our adjusted EBITDA was negative 62.1 million, and for the fourth quarter, adjusted EBITDA declined 3.6 million, year-over-year to negative 14.8 reflecting a shift in timing of both battery and gravity revenue and gross profit from Q4 2023 to Q1 2020, and key non-cash items added back in the fourth quarter were $8.6 million of stock-based compensation expenses and $2 million in We do remain laser focused on optimizing our cost structure to realize profitability as soon as possible as the business continues to scale up, and we remain very encouraged with our progress towards positive adjusted EBIT. Gosh.

The key non cash items.

Added back in the fourth quarter were $8 6 million of stock based compensation expense and $2 million.

Net interest income.

We do remain laser focused on optimizing our cost structure.

To realize profitably.

To realize profitability as soon as possible.

As the business continues to scale up.

Named very encouraged with our progress towards positive adjusted EBITDA.

Yes.

As of December 31, 2023.

We had $145 6 million in cash cash equivalents and restricted cash.

Jan Kees van Gaalen: As of December 31st, 2023, we had $145.6 million in cash, cash equivalents, and restricted cash, leaving us well positioned to continue our growth strategy and execute on our project. Our primary uses of cash are cash operating expenses and working capital needs associated with equipment purchasing for the Energy Storage Project. As the projects achieve milestones and ultimately begin to generate revenue and cross-margin, some of that cash will return to our balance sheet. In addition to this strong cash position, as of today, we have reduced the restricted portion of our cash significantly from $35.6 million to that we had at the end of December 2020. Restricted cash is now down to less than a million as of today.

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

Our primary uses of cash our cash operating expenses.

And working capital needs associated with equipment purchases.

Energy storage projects.

As the projects achieved milestones and ultimately begin to generate revenue and gross margin.

Some of that cash we will return to our balance sheet.

In addition to this strong cash position as of today, we have reduced the restricted portion of our cash significantly from $35 6 million too.

Two that we had at the end of December 2023.

Restricted cash is now down to less than 1 million.

Jan Kees van Gaalen: Please keep in mind that we maintain a bonding capacity in excess of one billion U.S. dollars to facilitate additional growth projects as we desire. Thank you, and with that, I'll hand the call back to Rob. Great. Thank you, Jan-Gaalen. Look, in closing here, before we get into questions, I want to first thank, again, all of our employees who, in only our second year as a public company, delivered quality, with velocity, and profitability across all of our projects. Model behaviors define our culture in customer focus, innovation, and delivery, all underscored by our core values in humility, collaboration, problem solving, and leading as an organization to deliver a more sustainable world for our future.

Today.

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

Thank you and with that I'll hand, the call back to Rob.

Great. Thank you Yung case.

Looking closing here before getting into questions I want to first thank again all of our employees.

And only our second year as a public company delivered with quality with velocity and profitability across all of our projects model behaviors that define our culture and customer focus innovation delivery.

All underscored by our core values and humility collaboration problem solving and leading as an organization to deliver a more sustainable world for our future.

Robert Allen Piconi: A few critical milestones upcoming this year include the full operation of multiple gravity energy storage systems in China, which will generate future royalty streams and help China curtail its current increasing greenhouse gas emissions, which are larger than the next six to seven countries combined. Delivering the commissioning of the first and largest green hydrogen energy storage system in California, to serve as a critical replacement of diesel generation for the residents of Calistoga, California, sustainably, and then territory expansions for our entire storage portfolio, from Southern Africa to new starts in Europe, Australia, and the Middle East. A few things to keep an eye on, their priorities this year; we'll be giving updates on all those areas at our upcoming Investor Day. And then financially, very clear, as you've heard as a theme on this call, setting ourselves up in 2024 as a profitable growth platform while achieving cash flow positive as we exit and for the full year 2025. As you have seen in our results and forecast, we have a strong balance sheet with no debt.

A few critical milestones upcoming this year full operation of multiple gravity energy storage systems in China, which will generate future royalty stream and helped China curtail its current increasing greenhouse gas emissions, which are larger than the next six to seven countries combined.

Delivery and commissioning of the first and largest green hydrogen energy storage system in California.

To serve as a critical replacement of diesel generation for the residents of Calistoga, California sustainably.

And then territory expansions for our entire storage portfolio.

From Southern Africa to new starts in Europe, Australia, and the Middle East.

A few things to keep an eye on their priorities. This year will begin updates on all of those areas at our upcoming Investor day.

And then financially very clear as you've heard as a theme on this call setting ourselves up in 'twenty 'twenty four is a profitable growth platform.

Achieving cash flow positive as we exit and for full year 2025.

As you have seen in our results and forecast we have a strong balance sheet with no debt.

Strong Opex management in place and that's the flexibility to continue to invest in growth.

This is enabling us to invest in our own projects with longer term and more predictable and higher margin cash flows. That's the case and Calistoga for example, with <unk> with a long term pulling agreement.

Robert Allen Piconi: Strong OPEX management in place and thus the flexibility to continue to invest and grow. This has enabled us to invest in and own projects with longer terms and more predictable and higher margin cash flows, as in the case of Calistoga, for example, with PG&E, with a long-term pooling agreement. Will this business model result in less recognized revenue in the near term?

While this business model will result in less recognize revenue in the near term.

On projects that we would otherwise build commission and transfer under an EPC model as previously discussed we believe this can be in the best long term interest of our shareholders and thus energy vault while.

Robert Allen Piconi: on projects that we would otherwise build, commission, and transfer under an EPC model. As previously discussed, we believe this can be in the best long-term interest of our shareholders, and thus Energy Vault, while helping to buffer the quarterly impact of larger projects that are being awarded on a global basis. We look forward to seeing many of you that can join us in New York at our Investor and Analyst Day on May 8.

While helping to buffer the quarterly impacts of larger projects that are being awarded on a global basis.

We look forward to seeing many of you that could join us in New York at our Investor and Analyst day on May eight.

We will be speaking again on may 7th at our Q1 earnings announcement, we have a lot of new and exciting developments to share that will help provide context on the next 12 to 24 months given the magnitude of the project Awards, we've announced here today as well as our ongoing growth of the business with.

With that operator, we're now ready for questions.

Thank you.

Operator: We will be speaking again on May 7th at RQ1's earnings announcement. We have a lot of new and exciting developments to share that will help provide context for the next 12 to 24 months, given the magnitude of the project awards we've announced here today, as well as our ongoing growth of the business. With that operator, we're now ready for questions. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in question. You may press star 2 if you would like to remove your question from the line.

Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

One moment, please where we pull for questions.

And our first question will come from the line of Justin Clare with Roth and Kam. Please proceed.

Yes, hi, thanks for taking my questions here.

So I guess first off I just wanted to see if you could talk a little bit more about the revenue that had shifted from Q4 into Q1, if you could provide a little bit more detail on what led to the shift it sounds like the project's just moved out slightly here.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. And our first question will come from the line of Justin Clare with Roth MKM. Yeah, hi, thanks for taking our questions here. So, I guess, first off, I just wanted to see if you could talk a little bit more about the revenue that had shifted from Q4 into Q1, and if you could provide a little bit more detail on what led to the shift.

And then maybe if you could just speak to how much additional battery revenue and then royalty or license licensing revenue shifted and then is that all going to be in Q1 or mix of Q1 and Q2.

Sure Hey, Justin good to hear you.

Yes, we had a combination of.

As John case mentioned there was.

The hardware deliveries, we took that led to the implementations and does towards substantial completion and in some cases final completion.

Some of the battery projects there is a portion of that that has.

Robert Allen Piconi: It sounds like the project just moved out slightly here. And then maybe if you could just speak to how much additional battery revenue and then royalty or licensing revenue shifted, and then is that all going to be in Q1 or a mix of Q1 and Q2? Sure. Hey Justin.

Double digit margins that just due to POC accounting.

Is shifting into Q1, okay. The other thing as you know, we announced a new gravity energy storage.

Since agreement and that also shifted and revenue recognition that will be shifting into 2024, our expectation is that some of that will be recognized in Q1.

Robert Allen Piconi: Good to hear from you. Yeah, we had a combination of, as Jan-Case mentioned, there was, The hardware deliveries we took that led to the implementations and towards substantial completion and, in some cases, final completion of some of the battery projects, there's a portion of that that has double-digit margins that, just due to POC accounting, is shifting into Q1. The other thing is that we announced a new gravity energy storage license agreement, and that also shifts revenue recognition into 2024. Our expectation is that some of that will be recognized in Q1 and then throughout 2024 as we progress. So those were the two, I think, main items that were just timing-related. Even on the gravity portion alone, had we recognized that, we would have exceeded the adjusted EBITDA EBS numbers as well.

And then throughout 2024 as we progress. So those were the two I think main items that are just timing related.

Even on I think the gravity portion alone.

How do we recognize that we would've exceeded the adjusted EBITDA at UBS.

Numbers as well, but that's the color I'd say on those on the two areas that have shifted and in terms of the amount that shifted.

I can share with you that it's a double digit million amount.

At this point and as I said in the comments, we will be providing.

Clarity around about 2020 forward into 2025 with.

With the updated information that we're going to have regarding our some of these larger project awards and as well as our Investor day in the context of some of the new product announcements that.

Robert Allen Piconi: That's the color, I'd say, on the two areas that have shifted, and in terms of the amount that shifted, I can share with you that it's a double-digit million amount at this point, and as I said in the comments, we'll be providing clarity around both 2024 and into 2025, with the updated information that we're going to have regarding some of these larger project awards and as well as our Investor Day in the I got it.

That I referenced on the release here.

Got it okay. Okay I appreciate that.

And then I was wondering if you could maybe just speak to the visibility that you have into battery projects for 2020 for beyond.

You complete the NV energy project that Jupiter project those are fully operational.

Just whats next in the pipeline and then are there key projects that need to reach NTP before you could see awards get converted into the backlog and then you can start moving forward on projects.

Robert Allen Piconi: Okay. Okay. I appreciate that.

Robert Allen Piconi: And then I was wondering if you could maybe just speak to the visibility that you have into battery projects for 2024 beyond, you know, after you complete the NV Energy project, and the Jupiter project, those are fully operational. Just the, you know, what's next in the pipeline, and then are there key projects that need to reach NTP before you could see awards get converted into the backlog, and then you can start moving forward on projects. Sure. Yeah, a great question.

Sure, Yes, great question.

We have a few projects between awards and bookings that are essentially a notice to proceed date some of which are known and in other cases are being finalized. Some of this has to do with some of the supply chain timelines that are not for our scope around things like Transformers. For example, in the market, which I know is youre probably.

Really aware have some longer lead times breakers is another item.

We also have a set of projects that we can choose to own on our balance sheet that have attractive double digit irr's and so we're working on some of those relative to what I mentioned about potentially continuing to own not necessarily all but part of those projects that has an impact on Rev Rec as well.

Robert Allen Piconi: We have a few projects between awards and bookings that essentially have notice to proceed dates, some of which are known, and in other cases, are being finalized. Some of this has to do with some of the supply chain timelines that are not in our scope but around things like transformers, for example, in the market, which I know, as you're probably aware, have some longer lead times. Breakers is another item. We also have a set of projects that we can choose to own on our balance sheet that have attractive double-digit IRRs, and so we're working on some of those relative to what I mentioned about potentially continuing to own not necessarily all but part of those projects, which has an impact on REVREC as well.

So as you can see from the growth in the funnel itself.

We have a lot of those sitting in that awarded category. We're finalizing the actual starts and therefore will be critical to the 2020 for Rev. Rec number. So we're we'll be in a better position to give an update on that at our Investor day, just after our Q1 earnings.

On may eight.

Got it Okay and then just one more on your gravity solution I was wondering.

Whats the latest on the route on project.

Expect it to be fully operational and in use in the near term here and then any sense for the timing on when you could provide performance metrics, but would that likely be at the analyst day could we see something sooner and then any sense for what might be shared at that time.

Robert Allen Piconi: So as you can see from the growth in the funnel itself, we have a lot of those sitting in that awarded category where we're finalizing the actual starts and, therefore, will be critical to the 2024 REVREC number. So we'll be in a better position to give an update on that at our investor day just after our Q1 earnings on May 8th.

Sure Yeah, we as I mentioned, we were stating our state grid.

Interconnected in December.

Robert Allen Piconi: Okay. And then just one more on your gravity solution. I was wondering, you know, what's the latest on the Rudong project? You know, is that expected to be fully operational and in use in the near term here? And then any sense for the timing of when you could provide performance metrics? Would that likely be at analyst day? Or could we see something sooner? And then there is any sense for what might be shared at that time?

And they are actively commissioning that system, especially now as things are warming up there and route on our CTO was just at the site two and a half weeks ago, and we're expecting per their guidance to have in the second half of this month. So in the coming weeks. Some initial performance data by the time, we get to our Investor day, we should have.

A good set of metrics for you on performance data that system as well as I think as we announced before Theres a second system. That's up out of the ground. We don't expect anything on that system, because it'll be nearing its completion towards the second half of.

Robert Allen Piconi: Sure. Yeah, we were state grid interconnected in December, and they are actively commissioning that system, especially now as things are warming up there in Rudong. Our CTO was just at the site two and a half weeks ago, and we're expecting, per their guidance, to have some initial performance data in the second half of this month, so in the coming weeks.

2024 and into the first quarter 2025, so I would expect more significant updates potentially even some videos of the operations of that system by the Investor day, but as we get performance data more than likely we will be doing.

Robert Allen Piconi: By the time we get to our investor day, we should have a good set of metrics for you on performance data at that system, as well as, as we announced before, there's a second system that's up and running. We don't expect anything from that system because it'll be nearing completion in the second half of 2024 and into the first quarter of 2025. So I would expect more significant updates, potentially even some videos of all the operations of that system by investor day, but as we get performance data, more than likely, we will be making some announcements dependent on the robustness of the data and some of the timeframes for having accurate data in terms of the actual operation of the systems in the slides. Okay, got it.

Probably some announcements dependant on the.

The robustness of the data and some of the Timeframes on having accurate data in terms of the actual operation of the systems and the slices.

Okay got it thank you.

Alright, Thanks Jetson.

Our next question comes from the line of Joseph Osha with Guggenheim Partners. Please proceed.

Hey, everybody thanks for the detail.

To follow up a little bit on Justin's question I believe I heard during your prepared comments, Rob that you said.

Full operation of these other systems following on <unk> this year or did I mishear that I just wanted to make sure I understand what your expectations are for these other systems that are breaking ground.

Well we have.

As I mentioned, one system, that's up out of the ground I think we actually put that in our announcement, we did an update announcement during the quarter.

Robert Allen Piconi: Thank you. All right, thanks, Jeff. Our next question comes from the line of Joseph Osha with Guggenheim Partners. Yeah, hey, everybody.

About five floors right now and Rudolf remains the focus in terms of getting full operational performance data as there have the state grid interconnection theyre going through Joe the Homologation process Theyre now they've demonstrated inverse operation. These are all local announcements they've made publicly there are public.

Joseph Amil Osha: Thanks for the detail. Yeah, just to follow up a little bit on Justin's question. I believe I heard during your prepared comments, Rob, that you said full operation of these other systems following Rudong this year, or did I mishear that? I just wanted to make sure I understood what the expectations are for these other systems that are breaking ground. Well, we have, as I mentioned, one system that's up out of the ground.

China tend to tightening there so what I would expect is but I just outlined to Justin is.

Initial performance data coming out in the coming weeks and months.

Robert Allen Piconi: I think we actually put that in our announcement. We did an update announcement during the quarter. It's up about five floors right now, and Rudong remains the focus in terms of getting full operational performance data as they have the state grid interconnection. They're going through, Joe, the homologation process.

Again, as we get things third party validated we will be sharing that.

And then on the other projects that we've announced one to up and out of the ground and there is two others that have broken ground.

That's up out of the ground they might be able to get started on commissioning in Q4, the others will be 2025 in terms of operation commissioning as.

Robert Allen Piconi: Now, they've demonstrated an inverse operation. These are all local announcements they made publicly. They're a public company, China Tining there. So what I would expect is, what I just outlined to Justin, is initial performance data coming out in the coming weeks and months that, again, as we get things third-party validated, we will be sharing that. And then on the other projects that we've announced, one's up and out of the ground, and there are two others that have broken ground. The one that's up out of the ground, they might be able to get started on commissioning in Q4. The others will be 2025 in terms of operation commissioning as well for those systems. Okay, thank you. The next question, we haven't heard much about Snyder, Texas, for a while. I'm wondering what the story is there.

As well of those systems.

Okay. Thank you.

The next question, we haven't heard much about Snyder, Texas for a while I'm wondering what the story is there.

Yeah, where our collaboration with Enel remains and we're up out of the ground insider. So we will get.

Imagine we get pictures of of.

The site and where we are there we actually have a.

A key customer and international customer that's there at the site with the team as.

As well the other thing Joe I'll share with you we haven't announced this publicly yet, but we are and in the interest of our now utilizing that site to also demonstrate other applications of our gravity technology. So Joe we're going to be sharing more about that at our investor day, but there's no change in the collaboration agreement, we have with Enel and <unk>.

And what we're sharing with them on our progress in building up that site, what I'll anticipate to you as I. Just mentioned is we're going to be sharing what we're doing within other applications of gravity technology at that site.

Robert Allen Piconi: Yeah, our collaboration with Enel remains, and we're up out of the ground in Snyder, so we'll get, I imagine we can get pictures of the site and where we are there. We actually have a key customer, an international customer that's there on the site with the team as well. The other thing, Joel, I'll share with you, we haven't announced this publicly yet, but we are, and in the interest of Enel, utilizing that site to also demonstrate other applications of our gravity technology. So, Joel, we're going to be sharing more about that at our investor day, but there's no change in the collaboration agreement we have with Enel and Enforce and what we're sharing with them about our progress in building up that site.

In line with our discussions with Enel.

Okay. So I guess just to.

Because this is a site that it's going to be easier for some of us to get to any sense as to when we might be able to roll up on that site and you can see it work.

Sure I would say Q3 would be a good time to get to the site and we might have some surprises for you. There when you Okay and then Mike My last question.

Okay.

I'm trying to keep track of all the stuff I apologize.

They've made reference on your.

Robert Allen Piconi: What I'll anticipate for you, as I just mentioned, is that we're going to be sharing what we're doing in other applications of gravity technology at that site and in line with our discussions with Enel. Okay, so I guess just because this is a site that it's going to be easier for some of us to get to any senses as to when we might be able to roll up on that site and see it work. Sure. I would say Q3 would be a good time to get to the site, and we might have some surprises for you there when you come.

Our Q2.

Call in your Q2 press release too.

Project Award with a major southeast Asian, Sustainable Energy company for two energy storage products totaling 500 megawatts to be booked in the second half of 'twenty three blah blah blah.

I'm trying to understand whether that.

<unk> is in Europe, because that's a good chunk of business right, whether that's shown showing up in your 2020 for backlog.

Yes that that project is still in our awarded column. So it's not in a booking column. It's in our ward. It because that project is just awaiting final development and there is a local study that was done on that continent in that country.

Robert Allen Piconi: And then my last question, and I'm trying to keep track of all this stuff, I apologize. You made reference on your Q2 call and your Q2 press release to a project award with a major Southeast Asian sustainable energy company for two energy storage products totaling 500 megawatts to be booked in the second half of 2023, blah, blah, blah. I'm trying to understand whether that is in your backlog because that's a good chunk of business, right? Whether that's showing up in your 2024 backlog. Yeah, that project is still in our awarded column, so it's not in a booking column, it's in our awarded category, because that project is just awaiting final development, and there's a local study that was done on that continent, in that country for that project, so it still remains in our funnel, it remains in the awarded category, and we're looking at trying to convert that within 2024.

For that project. So it still remains in our funnel. It remains in the awarded category and we're looking at trying to convert that.

Within 2024 that may be a project also in one of the ones that we might look to help develop in line with some other comments that I've made.

About us looking at maintaining some equity ownership in some of the projects as they get developed through these tolling agreements.

But there is.

Active work going on in the project the studies that have to be done it's a country where.

The grid operates a little bit differently as some special requirements and studies that have to be.

Are formed and those studies are underway funded and ongoing.

Okay and then finally my last last last last question I do apologize I'm I'm trying to understand it a little bit more detail what.

Robert Allen Piconi: That may be a project also, maybe one of the ones that we might look to help develop, in line with some of the comments that I've made about us looking to maintain some equity ownership in some of the projects as they get developed through these tolling agreements, but there's active work going on in the project, the studies that have to be done. It's a country where the grid operates a little bit differently, has some special requirements, and studies that have to be performed, and those studies are underway, funded, and ongoing. Okay. And then, finally, last, last, last question. I do apologize.

You're always on this PGD project.

Youre not youre Electrolyze yours are you.

Integrating using plugs electrolyzed errors or that your batteries or are you DPC.

Just trying to understand a little bit more what what your role is in this project.

Sure I'll I'll explain it.

Essentially we we designed this micro grid in the energy storage system.

With a.

A combination of.

Yeah.

A hydrogen fuel tank so to be clear, we aren't making the green hydrogen where we're procuring it we designed and sized.

Our hydrogen fuel tank, we announced this we worked with chart on that.

Joseph Amil Osha: I'm trying to understand in a little bit more detail what your role is on this PG&E project. I assume they're not your electrolyzers. Are you integrating using plug-in electrolyzers?

We also as part of the design work with plug on their fuel cells, so not electric <unk>, but with the fuel cells themselves.

So we architected the number of fuel cells, combining with that with the hydrogen tank. We also architected in.

Robert Allen Piconi: Are those your batteries? Are you DPC? I'm just trying to understand a little bit more what your role is in this project. Sure, I'll explain it. Essentially, we designed this microgrid and the energy storage system with a combination of... a hydrogen fuel tank.

One of our bee vaults, so to address the grid, forming and black start capabilities at PGE wanted.

So we architected and designed this entire system brought some pieces to the table.

And then have our energy management systems that orchestrating.

Robert Allen Piconi: So to be clear, we aren't making the green hydrogen. We're procuring it. We designed and sized a hydrogen fuel tank.

The essentially the discharge and charging charging in terms of the small amount theres a single container.

Robert Allen Piconi: We announced this. We worked with Chart on that. We also, as part of the design, worked with Plug on their fuel cells, so not the electrolyzers, but with the fuel cells themselves.

Of our be volt lithium ion.

Combined with the.

The green hydrogen and fuel cell aspect and that is the project that we're building we are the owner and the EPC. So there's a separate company we own it and we have a turn and a half year tolling agreement with.

Robert Allen Piconi: So we architected the number of fuel cells combined with the hydrogen tank. We also architected in one of our B-Vaults to address the grid forming and black start capabilities that PG&E wanted. So we architected and designed this entire system, brought some pieces to the table, and then we have our energy management systems that's orchestrating essentially the discharge and charging, charging in terms of the small amount, there's a single container, of our B Vault lithium ion, combined with the green hydrogen and the fuel cell aspect.

Pacific.

With <unk>.

Okay. Thank you.

I could also the role of asset until we are managing the asset as well is that is that clear and I. Just heard you I just heard you say that the Blackstone capable facility I assume that's part of why that part of the attraction of that yes.

Oh, Yeah for Black start, yes, Paul Black started a portion required is.

This is a micro grid backup systems, so to be clear. The use case here is something thats not going to be discharged frequently probably four to five times a year <unk> can probably speak better to that but it's designed so that in the fire season, you'll you'll know Joe because I think you're up in that area.

Robert Allen Piconi: And that is the project that we're building. We are the owner and the EPC, so there's a separate company. We own it, and we have a 10-and-a-half-year tolling agreement with Pacific and PG&E. So our role is also the role of an asset, and so we're managing the asset as well. Is that clear? And I just heard you say that it's a Blackstar-capable facility. I think that's part of the attraction of this to PG&E. Yeah Oh yeah, for Blackstart. Yeah, well, Blackstart is a portion that is required. This is a microgrid backup system, so to be clear, the use case here is something that's not going to be discharged frequently, probably four to five times a year. PG&E can probably speak better to that, but it's designed so that in the fire season, you'll know, Joe, because I think you're up in that area. You'll remember that Calistoga was hit pretty hard, and they had to shut down the grid, and so this microgrid can work standalone. It is actually also interconnected, but the design of this is to be discharged during events of what they call PSPS, any power shutdown or safety shutdown event.

Youll remember that Calistoga was hit pretty hard and they had to shut down the grid until this micro grid.

It can work stand alone. It actually is also interconnected but the design of this has to be discharged during event of what they call PSP any any power shutdown or safety shutdown event. This thing will kick in they don't need diesel generation anymore.

Lithium ion helps them.

With some specific services and even even ancillary power by the way that they can use daily.

That makes sense, okay. Thank you I understand that much better and I. Appreciate it. Thank you yeah no problem, Okay, and we have about 15 minutes left.

Still have a list of people to get through so if you can limit your questions pleased to one and a follow up that would be great.

Okay.

And the next question will come from the line of Thomas Boyes with TD Cowen. Please proceed.

I appreciate you taking the questions maybe the first is the royalty structure for the gravity deal in South Africa similar to the one in China, where it's like 5% royalty.

Robert Allen Piconi: This thing will kick in. They don't need diesel generation anymore, and the lithium ion helps them with some specific services and even ancillary power, by the way, that they can use daily. Does that make sense? Okay, thank you. I understand that much better.

<unk> and then about 90.

90% gross margins just trying to get a sense of how that.

Joseph Amil Osha: I appreciate it. Thank you. Yeah, no problem.

Situated.

Yes. It is.

Okay.

Thank you and then the.

Operator: Okay, and we have about 15 minutes left, and they'll still have a list of people to get through. So if you can limit your questions, please, to one and a follow-up, that would be great. And the next question will come from the line of Thomas Boyes with TD Calendar. Appreciate you taking the questions. Maybe the first is the royalty structure for the gravity deal in South Africa, similar to the one in China, where it's like 5% royalty on the projects and then about 90% gross margin. Just trying to get a sense of how that is situated. Yeah, it is.

The other question was just obviously great progress in China, I know VEB assistant in Texas is going to or slated to use wind blades and the block constructions I assume is still on the table I'm just wondering if youre seeing that type of demand for solutions in China are they also looking to use waste materials and block <unk>.

Struction.

Yes.

In fact.

Yes, just to share with you.

On what <unk> plans are they are a waste remediation and environmental service company.

So meaning they do a lot of the standard waste management and have an incinerator and they are using.

Thomas Gordon Boyes: And then the other question was just, you know, obviously great to see the progress in China. I know the EVF system in Texas is going to or slated to use wind blades in the block construction, which I assume is still on the table.

That incinerated ash as part of their brick production as a part of our license with gravity. We are collaborating around other forms of waste materials like coal Ash for example.

And even the wind blade.

Robert Allen Piconi: I'm just wondering if you're seeing that type of demand for solutions in China. Are they also looking to use waste materials in block construction? Yeah, correct. In fact, the, Yeah, just to share with you what CNTY or Chinatown Ying's plans are, they are a waste remediation and environmental service company. So, meaning they do a lot of the standard waste management and have an incinerator, and they are using that incinerated ash as part of their brick production. As a part of our license with Gravity, we are collaborating on other forms of waste materials like coal ash, for example, and even the wind blade, the shredded fiberglass wind blade that they can use there as well. As you know, there are massive wind deployments in China, and about every 10 years, those blades suffer what's called fatigue, and the blades have to be replaced.

Shredded fiberglass wind blade.

They can use there as well as you know there is massive when deployments in China in about every 10 years those blades suffer.

<unk> was called fatigue, and the blades have to be replaced.

So that is a large opportunity for them there are in China as well.

The similar types of let's say.

Reuse subsidies there in China timing is.

Player, let's say in that market. So they are they are required in some cases through their core business.

To utilize it but specifically for the energy that was one of the synergies that we have and that they have with our technology and working with them.

Excellent I appreciate it I'll jump back in queue.

Thank you.

Our next question comes from the line of Chris selling House with Siebert Williams Shang. Please proceed.

Hey, everybody how are you.

Chris how are you doing.

Robert.

Whoever wants to talk about this but the efforts that you undertook in the fourth quarter to sort of conserve your cash run rate what sort of line items did you address in terms of reducing costs.

Thomas Gordon Boyes: So that is a large opportunity for them. There are, in China as well, similar types of, let's say, reuse subsidies there, and China Tianying is a player, let's say, in that market. So they are required, in some cases, through their core business, to utilize it, but specifically for energy. That is one of the synergies that we have and that they have with our technology and working with them. Excellent. I appreciate it. I'll jump back in the queue.

Great Great question Chris.

We focused in two areas basically the controllable opex. So that's everything from our internal cost and internal infrastructure.

Things like.

Also our travel all the things that are really controllable in that sense, but also.

Things that are related to our infrastructure as an example, we're consolidating some things inside our Texas as the facility since we actually own that site now and consolidating some infrastructure for example, as we're winding down the.

Robert Allen Piconi: Okay, thank you. Our next question comes from the line of Chris Ellinghaus, with Siebert William Schenck, and everybody. Hey Chris, how are you doing?

R&D facility.

Christopher Ronald Ellinghaus: Robbers, whoever wants to talk, the, Yeah. Great question, Chris. We focus on two areas, basically the controllable op-ex. So that's everything from our internal IT costs, internal infrastructure, things like also our travel, all the things that are really controllable in that sense, but also things that are related to our infrastructure. I mean, as an example, we're consolidating some things in Snyder, Texas, as a facility since we actually own that site now, and consolidating some infrastructure, for example, as we're winding down the R&D facility that had our EVX and still has our EVX system there where we're finalizing some testing. Now, with the buildup now in Snyder, we're going to be doing things there. We had some other things that were somewhat discretionary.

Had our <unk>, our <unk> and still has our AVX system, there, where we're finalizing some testing with the buildup now a site or we're going to be doing things there.

We had some other things that were somewhat discretionary.

We had other.

Projects some of them were related there were some R&D things also that we made some choices based on priorities that we saw in the market, which as you know in this market in terms of looking at different storage duration and different technology mediums were.

Given our expertise across multiple domains.

We invest in and invest in it and I'd say, a strong way in an R&D in future energy storage technology. So there were some optimization I would say around that so so anything that sort of controllable we addressed and we also addressed.

<unk>.

Or given the business model and gravity where were.

Robert Allen Piconi: We had other projects; some of them were IT-related. There were some R&D things also that we made some choices based on priorities that we saw in the market, which, as you know, in this market, in terms of looking at different storage durations and different technology mediums, we're giving our expertise across multiple domains. We invest in, and I'd say in a strong way, in R&D and future energy storage technology. So there was some optimization, I'd say, around that.

Essentially continuing to license the technology that means what does that mean, we don't have to open up offices in places like what we announced for the the <unk> member countries in Southern Africa, or in China and places because we don't have to.

Spend that and we don't have to staff up or keep a certain level of engineering team to go build things directly they are built by other local EPC companies with our our technical support and guidance, but they're basically executing our partners in the region because of that we did adapt.

Robert Allen Piconi: So anything that was sort of controllable, we addressed it. And we also addressed a bit on our – given the business model and gravity where we're, you know, essentially continuing to license the technology, what does that mean? We don't have to open offices in places like what we announced for the SADC, the 16-member countries in southern Africa, or in China, because we don't have to – We spend that, and we don't have to staff up or keep a certain level of engineering team to go build things directly; they're built by other local EPC companies with our technical support and guidance, but they're basically acting as our partners in the region.

Our both our functional and engineering model to that model and I'll translate that because they were an easy decision, but we did.

Optimize and make decisions around some head count level.

That were related to the expansion of our business model, we proactively did that just looking at as you do.

As things evolve in the market and looking at.

Where our direct management is required on projects in particular these complex projects, where we're integrating.

Robert Allen Piconi: Because of that, we did adapt a bit both our functional and engineering model to that model. And I'll translate that because they weren't easy decisions, but we did optimize and make decisions around some headcount levels that were related to the expansion of our business model. We proactively did that, just looking at, as you do, as things evolve in the market and looking at where our direct management is required on projects, in particular these complex projects where we're integrating our own equipment, potentially others' equipment, and doing some new things that do require a little more hands-on areas. We are accelerating some investments in some of the software capabilities. I mentioned that today. So it was a combination of those things in terms of controllable operating costs and some headcount, and it was just essentially an optimization of matching our infrastructure costs to our business model.

Our own equipment potentially others equipment.

And doing some new things that does require a little more hands on areas. We are accelerating some investments.

Some of the software capabilities I mentioned that today. So so it was a combination of those things in terms of controllable.

Opex and some head count related that it was just essentially an optimization of our of matching our infrastructure cost.

To the to our business model and then secondarily, Chris I'd say that it's clear given the market volatility in our sector.

And amazing to me honestly that.

With everything we've delivered in only our first two years and with the revenue growth we've done in positive unit economics.

And making the adjustments we just made it's amazing to me.

We're aware of our stock continues to trade. So it is clear investors have spoken on the desire to see accelerated roadmaps to cash flow positive.

Robert Allen Piconi: And then secondarily, Chris, I'd say that it's clear, given the market volatility in our sector, and amazing to me, honestly, that with everything we've delivered in only our first two years and with the revenue growth we've done on positive unit economics and making the adjustments we just made, it's amazing to me where our stock continues to trade. So it is clear investors have spoken of the desire to see accelerated roadmaps to cashflow positive. So with that also as a backdrop, we wanted to take actions in Q4 to enter 2024 at a lower cash op-ecs rate to enable us to essentially accelerate that timeframe into cashflow positive.

So with that I'll also as a backdrop.

We wanted to take actions in Q4 to enter 2024 and at a lower cash opex rate to enable us to essentially accelerate that timeframe into into cash flow positive and we're going to be sharing much more on that in and by region and some new products and things and providing color on somebody announced.

With me today on May eight.

Okay. Thanks that helps.

Assume that you'll sort.

Just sort of give us some kind of regional.

Overview of where development stands in say domestically or.

You know on gravity storage projects in general at the Investor Day is that sort of where you're headed along with some detailed guidance.

Robert Allen Piconi: And we're going to be sharing much more on that and by region and some new products and things and providing color on some of the announcements we made today on May 8. I assume that you'll give us some kind of regional overview of where development stands domestically on gravity storage projects. Today's that sort of where you're headed along, guys. Yes, correct. Both of those and some other things, too. We have some new product announcements to make tied to some new customer announcements, but yes, correct. Absolutely those two.

Yes, correct both of those and some other things too we have some new product.

Announcements to make tied to some new customer announcements, so, but yes, correct absolutely those too.

If I can give a little follow up on that will you have at the Investor day, the ability to give us a little more color on this Washington state customer.

Yes, we're planning to on that it's we're really excited about it because of the nature of the application of the gravity technologies and Thats tied to Chris one of the new product announcements that we're going to be making.

Christopher Ronald Ellinghaus: And if I can give a little sub follow-up on that. Will you have, at Investor Day, the ability to give us a little more color on this Washington State customer? Yes, we're planning to do that. We're really excited about it because of the nature of the application of the gravity technology.

So we will be adding more.

More color one thing to share on these.

Robert Allen Piconi: And that's tied to, Chris, one of the new product announcements that we're going to be making. So we will be adding more color. One thing to share on these. Some customers, as we're developing projects with them, they have to go acquire land. So it's, they're very sensitive about sharing and naming themselves until they've acquired it so as not to drive up pricing on that land and you know when anytime you speak about gravity you aren't talking about ten acres you're talking about you know large large plots of land and things uh... so because of that we uh... our customers will require we hold confidential their name until such time as they've acquired acquired the land, Does that make sense to you?

Some customers as there as we're developing projects with them. Okay. They have to go acquire land.

So it's.

They're very sensitive about sharing and naming themselves until they've acquired it so as not to drive up pricing on that land and <unk>.

Anytime you speak about gravity, you aren't talking about 10 acres.

Youre talking about large large plots of land and things so because of that we.

Our customers will require we hold confidential their name until such time as they are acquired acquired the land.

Christopher Ronald Ellinghaus: Yes, sure. I'm going to dig into that one myself, but I'm looking forward to the investor day. Thank you, Chris. Appreciate it. Our next question comes from the line of Noel Parks with Toohey Brothers. I just had a couple real quick ones.

That makes sense to you, yes sure absolutely.

Going to dig into that one myself, but I'm looking forward to the Investor day. Thanks for the details.

Thank you Chris I appreciate it.

Our next question comes from the line of Noel Parks with Tuohy Brothers. Please proceed.

I just had a couple quick ones one of them is.

Noel Augustus Parks: One of them is, you know, with the storage market. It does seem that, in the last year in particular, we've seen greater investor awareness, specifically of the role of intermittent power sources, solar, and wind, and their destabilizing effect on the grid. And I just wonder, as a driver of business for you, has that sort of risen in importance? Is it about the same?

With the storage market. It does seem that the last year in particular, we've seen.

Greater investor awareness specifically.

The role of intermittent power sources solar wind.

Destabilizing effect on on the grid and I'm just wondering as a driver of business to you has that sort of a standard in importance is about the same.

Robert Allen Piconi: Yeah, I say that that continues to be I mean, it continues to widen what we're seeing in terms of what used to be a massive, you know, one to two-hour market that shifted to a two to four-hour market, so the longer durations meaning with more intermittencies there, and quite frankly, the severity of the weather patterns are driving some of that. So we're, you know, that's going to continue over time. I would say, as you know, we've seen a tremendous drop in lithium-ion prices, and even then therefore the ability for lithium-ion to, you know, be utilized, you know, definitely at four hours, and depending on where pricing goes or any other new technologies that come, you know, I think there'll be additional flexibility there, but definitely this aspect of addressing intermittency as more renewables come on the grid, and thus the need for storage, we haven't seen any slowdown necessarily there.

Yes, I would say that that continues to be I mean, it continues to widen what we're seeing in terms of what used to be.

Massive.

One to two hour market shifted to a two to four hour market. So the longer durations, meaning where it's more intermittency is there and quite frankly, the severity of the.

The weather patterns.

Are driving some of that so.

That's going to continue over time I would say as you know we've seen a tremendous drop in lithium ion prices.

And and even then therefore the ability.

For lithium ion to be utilized.

Definitely it for hours and dependent on where pricing goes.

Or any other new technologies that come.

There'll be additional flexibility there, but it definitely this aspect of addressing intermittency is more renewables on the grid and thus the.

The need for storage.

Haven't seen any.

Any slowdown necessarily there.

Robert Allen Piconi: You know, we are continuing to see, I think, a strong market for shorter duration tech combined with, very interestingly, needs that are in this eight to twelve our range for some specific applications, and as you know, we can serve those things pretty broadly. Great, thanks. And last month, when you disclosed the self-asking license deal, I believe it was $20 million over 10 years. It was helpful to see that change. Just take a stab at maybe how many similar deals like that you can imagine over the next year or two. Are we talking about a handful? Dozens? Any dozens?

We are continuing to see I think a strong market.

And shorter duration Pac combined with very interestingly.

Needs that are in this eight to 12 hour range for.

Some specific applications and as you know.

We can serve those things.

Pretty pretty broadly.

Yeah.

Great. Thanks, and then.

Last month, when you disclose the South African license deal.

Million over 10 years.

It was <unk>.

For the few that quantification just take a stab at maybe how many similar deals like that you can envision over the next year or two when you're talking about a handful dozens and he doesn't.

Noel Augustus Parks: Yeah, no, it's not dozens; it's under ten. Because if you think about where we do those types of deals, we're going to do them in places where we can find very credible, reliable, large partners, ideally in markets that are experiencing growth, meaning where there's a defined market need. So look at South Africa; I think things are fairly well there. Pablo has said there about what they call load shedding, which in California we sort of call rolling blackouts. And so there's an absolute need for the storage there, and in places where we prefer not to go set up shop. I mean, we're more of a technology provider, I'd say, overall, although we have the ability to asset manage, as we're doing now in Calistoga.

Yes, no it's not doesn't exist at some.

<unk> 10, because if you think about where do we do those types of deals.

We're going to do them in places, where we can find very credible reliable large partners.

Hi, Julian markets, where that are established that are experiencing growth, meaning where theres a defined market need to look at South Africa.

I think that the things are fairly well.

<unk> has said, they're about what they called load shedding, which in California, we sort of call rolling blackouts.

And so there is an absolutely need for the storage.

And in a play in places, where we'd prefer not to go set up shop, I mean, where are we.

We're more of a technology provider I'd say overall, although we have the ability to asset manage as we're doing now in calistoga.

Noel Augustus Parks: So I'd say that there would definitely be something, if you look at the next few years, there are other locations that could be interesting for that model. And in particular, I'd say for gravity, where you're a, if you think about it, that is all a local construction project, can be done mostly locally. Some places don't have the power electronics, or they aren't making the big multi-megawatt motors, so those may have to come in.

So I would say that there would be definitely something if you look at over the next few years theres other locations that that can be interesting for that model.

And in particular, I would say for gravity.

Where you are a if you think about it that all that is all a local construction project can be done mostly locally.

In some places don't have the power electronics or they arent, making the big multi megawatt motors. So those may have to come in but otherwise.

Robert Allen Piconi: But otherwise, because of the nature of it, it's a building and a construction project, it lends itself to these types of business models. I think it's, From an investor's perspective, it's interesting because there are typically licenses that are paid up front, or in some cases, they're paid in cash over time. And then there's the royalties tied to volume, and I know it can be frustrating when you're new and you just do them, and the timing of those royalties, understanding when they are going to come as systems get built and turned over. And specifically with gravity, obviously, we're talking about systems that take 12 to 18 months to build.

Because of the nature of its a building in a construction project. It lends itself to these types of business models I think it's.

From an investor perspective.

It's interesting because there's typically licenses that are paid upfront or in some cases they are paid in cash over time.

And then there is the royalties tied to volume and I know it can be frustrating when you knew when you just do them and the timing of those royalties understanding when are they going to come.

Systems get built and turned over and specifically with gravity. Obviously, we're talking about systems that take 12 to 18 months to build so.

Robert Allen Piconi: So those are coming. They are at quite a significant royalty percentage. I mean, on revenue, 5% is, I'd say, toward the higher end of what you see in royalty agreements.

But those are those are coming in they are at quite a significant ROI.

The royalty percentage I mean on revenue.

Percentage.

I would say towards the higher end of what you see in.

Noel Augustus Parks: So it's something that we're going to be providing some indicators on in terms of when we expect those to kick in on some of the initial agreements going forward. Thanks a lot. All right, thank you. Thank you. There are no further questions at this time. I'd like to turn the call back to Robert Piconi for closing. Just to thank everyone for joining in their time, and again to thank the employees of Energy Vault for what we achieved in 2023 and what we're looking forward to here in 2024 and 2025. So just to thank the employees of the company and those of you that have joined and have been supporters of Energy Vault. We thank you for that, all the investors there. And we'll look forward to hopefully seeing some of you at our Q1 earnings on May 7th. We'll be speaking again then and, potentially, in person on May 8th in New York. Thank you very much. This concludes today's conference. You may now disconnect your lines. Enjoy the rest of your day. www.youtube.com.au Piano music. Thanks for watching! BF-WATCH TV 2021

And and royalty agreements. So it's something that we're going to be providing some indicators on in terms of when we expect those to kick in on some of the initial agreement going forward.

Great. Thanks, a lot.

Alright, thank you.

Thanks, Dan.

Thank you there are no further questions at this time I would like to turn the call back to Robert Bocconi for closing remarks.

Just to thank everyone for joining in and their time and again to thank the employees of energy Volte.

And what we achieved in 2023.

What we're looking forward to hear in 'twenty four 'twenty five so.

Thank you.

The employees of the company and those of you that have joined in have been supporters of the energy Volte. We thank you for that the investors there and we'll look forward to hopefully seeing some of you post our Q1 earnings May seven we will be speaking again then.

And potentially in person on May eight in New York. Thank you very much.

Sure.

This concludes today's conference you may now disconnect your lines and enjoy the rest of your day.

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