Q2 2024 Fluence Energy Inc Earnings Call

Operator: Good day, and thank you for standing by, and welcome to Fluence Energy Inc.'s Q2 2024 Earnings Conference. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by and welcome to fluids Energy Inc.

Speaker Change: Q2, 2024 earnings conference call at this time, all participants are in a listen only mode to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised.

Operator: To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lex May, Vice President of Finance and Investor Relations. Please go ahead.

Speaker Change: Your question. Please press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today like many vice President Finance and Investor Relations. Please go ahead.

Lex May: Thank you. Good morning, and welcome to Fluence Energy's second quarter 2024 earnings conference call. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, is posted on the investor relations section of our website at FluenceEnergy.com. Joining me on this morning's call is Julien Nabreda, our President and Chief Executive Officer. Ahmed Pasha, our Chief Financial Officer, and Rebecca Boll, our Chief Products Officer.

Speaker Change: Thank you.

Speaker Change: Good morning, and welcome to fluids Energy's second quarter 'twenty 'twenty four earnings conference call.

Speaker Change: A copy of our earnings presentation press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures are posted on the Investor Relations section of our website at Fluence energy.

Speaker Change: Com.

Speaker Change: Joining me on this morning's call are fueling the breeder, our president and Chief Executive Officer.

Speaker Change: Ahmed Pasha, our Chief Financial Officer, and Rebecca Ball, our Chief products Officer.

Lex May: During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters relating to our business and company that are not historical facts. Such statements are based upon current expectations and certain assumptions and are, therefore, subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise such forward-looking statements in light of new information.

Speaker Change: During the course of this call Fluence management may make certain forward looking statements regarding various matters relating to our business and company that are not historical facts.

Speaker Change: Such statements are based upon the current expectations and certain assumptions and are therefore subject to certain risks and uncertainties.

Speaker Change: Many factors could cause actual results to differ materially.

Speaker Change: Please refer to our SEC filings for our forward looking statements and for more information regarding certain risks and uncertainties that could impact our future results.

Speaker Change: You are cautioned to not place undue reliance on these forward looking statements, which speak only as of today.

Speaker Change: So please note that the company undertakes no duty to update or revise forward looking statements for new information.

Lex May: This call will also reference non-gap measures that we view as important in assessing the performance of our business. A reconciliation of these non-gap measures to the most comparable gap measure is available in our earnings materials on the company's investor relations website. Following our prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Thank you very much.

Speaker Change: This call will also reference non-GAAP measures that we view as important in assessing the performance of our business.

Speaker Change: A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the company's Investor Relations website.

Speaker Change: Following our prepared comments, we will conduct a question and answer session with our team.

Speaker Change: During this time to give more participants an opportunity to speak on this call. Please limit yourself to one initial question and one follow up thank.

Lex May: I'll now turn the call over to Julien. Thank you, Lex. I would like to send a warm welcome to our investors, analysts, and employees who are participating on today's call. I will provide a brief update on our business and then review progress on our strategic objective. Ameet will then give more details on our financial results and other. Beginning of slide four with a key highlight.

Speaker Change: Thank you very much I'll now turn the call over to who land.

Who Land: Thank you Alex I would like to stay in a warm welcome to our investors analysts and employees who are participating on today's call.

Who Land: I will provide a brief update on our business and then review progress on our strategic objectives.

Speaker Change: <unk> will then give more details on our financial results and outlook.

Speaker Change: Beginning on slide four with our key highlights I'm pleased to report that in the second quarter, we had a strong financial performance as we recognized $623 million of priority.

Julien Nabreda: I'm pleased to report that in the second quarter, we had a strong financial performance as we recognized $623 million of revenue and increased our gross margin and cash flow generation. We delivered our third consecutive quarter of double-digit gross margin. Our adjusted EBITDA for the second quarter was approximately negative $6 million, significantly improved from the same period last year. We ended the quarter with $541 million in cash, an increase of $65 million from December 31st.

Speaker Change: And increase our gross margin and cash flow generation.

Speaker Change: With a lever our third consecutive quarter of double digit gross margin.

Speaker Change: Our adjusted EBITDA for the second quarter was approximately <unk>.

Speaker Change: The $6 million significantly improved from the same period last year.

Speaker Change: We ended the quarter with $541 million of cash an increase of 65 million from December 31.

Julien Nabreda: Additionally, we recognize more than $700 million of new orders, our solution business contracted 2.2 gigawatt hours, our services business added 900 megawatt hours, and our digital business added 3.1 gigawatt of new hours. Our signed contract backlog as of March 31st was $3.7 billion, which was in line with our December 31st level. As revenue recognizes quarter, and a couple of small adjustments offset the additional ordering.

Speaker Change: Additionally, we recognized more than $700 million of new orders.

Speaker Change: Our solution basis contracted 2.2 gigawatt hours or services with us.

Speaker Change: <unk> added 900 megawatt hours on our <unk> business added 3.1 gigawatt of new orders.

Speaker Change: Our signed contract backlog as of March 31 was three <unk> was $3 $7 billion, which was in line with our December 31st level.

Speaker Change: As revenue recognized this quarter on a couple of small adjustments offset the additional order intake.

Julien Nabreda: The increasing number of opportunities was reflected in the growth of our pipeline, which increased by $2.9 billion to $16.3 billion, thus giving us additional confidence in our revenue growth outlook for fiscal year 25 and beyond. We had a strong quarter in our digital business, adding 3.1 contracted gigawatts to our backlog. Our digital assets under management increased by 200 megawatts to 17.2 gigawatts as of March 30.

Speaker Change: The increasing number of opportunities was reflected in the growth of our pipeline.

Speaker Change: Which increased by $2 $9 billion to $60 3 billion.

Speaker Change: Thus, giving us additional confidence in our revenue growth outlook for fiscal year, 'twenty five and beyond.

Speaker Change: We had a strong quarter in our digital business hiring 3.1 contracted gigawatts to our backlog at.

Speaker Change: Our digital assets under management increased by 200 megawatts to 17.2 Gigawatts as of March 31.

Julien Nabreda: In summary, our combined services and digital annual recurring revenue, or AR, improved approximately 68 million as of March. Turning to slide five, I'd like to discuss our progress on the five strategic objectives that guide our decisions in action. It's also important, Mark, that investors can monitor and measure our performance. First on Delivering Profitable Growth. I'm pleased to report that we have generated a record amount of free cash flow of approximately $88 million for the first half of our fiscal year.

Speaker Change: In summary, our combined services and digital annual recurring revenue or <unk>.

Speaker Change: <unk> improved to approximately $68 million as of March 31.

Speaker Change: Turning to slide five I'd like to discuss our progress on the five strategic objectives.

Speaker Change: That guide our decisions and actions there.

Speaker Change: They are also important markers that investors can monitor and measure our performance against.

Speaker Change: First on delivering profitable growth.

Speaker Change: <unk> to report that we have generated a record amount of free cash flow of approximately $88 million.

Speaker Change: For the first half of our fiscal year.

Julien Nabreda: This is a proof point of the success of our business model and working capital management capability, which resulted in a significant amount of cash in it. Second, we will continue to develop products and solutions that our customers need. As such, I am pleased to report that during the quarter, we expanded our GRICSAC Pro line to include the 5,000 series, which is a larger and more energy-dense 5-megawatt 20-foot enclosure, which I will discuss in more detail. Additionally, we signed our first domestic content contract that will allow our customers to benefit from incremental incentives under the Inflation Reduction Act, or IRA.

Speaker Change: This is a proof point of their success of our business model.

Speaker Change: Working capital management capability.

Speaker Change: That result in a significant amount of cash generation.

Speaker Change: Second we will continue to develop products and solutions our customers need.

Speaker Change: As such I am pleased to report that during the quarter. We expanded our we expect pro line to include the 5000 series, which is our larger and more energy dense five may or what 'twenty food and closure, which I will discuss in more detail.

Speaker Change: Additionally, we signed our first domestic content contract that will allow our customers to benefit from incremental incentives of the inflationary auction Mac or IRA.

Julien Nabreda: We are seeing tremendous interest from customers for U.S. domestic content products. We believe we are well positioned to capitalize on this momentum, as we are one of the first companies capable of providing customers with products that we expect to qualify for domestic content under the IRA. Third, we are on track for a U.S. battery module manufacturing to begin initial production at our facility later this year. This battery module is a key piece that will enable us to provide a product that meets the U.S. domestic content requirements for battery energy.

Speaker Change: We're seeing tremendous interest from customers for U S domestic content products.

Speaker Change: We believe we are well positioned to capitalize on this momentum as we are one of the first companies capable of providing customers with problems that we expect to qualify for the domestic content on there they are already.

Speaker Change: Third we're on track for our U S battery module manufacturing to begin initial production at our facility later this year.

Speaker Change: Battery module is a key piece that will enable us to provide a probe that needs. The U S domestic contact requirements for battery storage.

Julien Nabreda: Fourth, we will use Fluence Digital as a competitive differentiator and a margin driver. I am pleased to report that our digital contract backlog increased by about 75% on a dollar basis from this time last year. And our fifth objective is to work better. I'm proud to state that in April, Fluence released its second annual sustainability report, which builds upon the sustainability disclosures from my inaugural report published on April 23, and provides updates on Fluence's sustainability strategy, which I will touch on more in a minute. Turn onto slide six.

Speaker Change: Fourth we will use fluids digital as a competitive differentiator and a margin driver.

Speaker Change: I am pleased to report that our digital contract backlog increased by about 75% on a dollar basis from this year's from from this time last year.

Speaker Change: And our FIFA objective is to work better.

Speaker Change: I'm proud to state that in April flu is really to second.

Speaker Change: No sustainability report, which builds upon the sustainability disclosures for my inaugural report published in April 23.

Speaker Change: Provides updates on fluid sustainability strategy, which I will touch on more in a moment.

Speaker Change: Turning to slide six.

Julien Nabreda: We continue to see strong growth in demand for utility-scale energy stores. This is the 10th consecutive quarter of order intake on Pace Revenue Records, showcasing the robust growth in utility-scale energy storage.

Speaker Change: We continue to see strong growth in demand for utility scale energy storage systems.

Speaker Change: This is our 10th consecutive quarter of order intake outpacing revenue recognize showcasing their robust growth in utility scale energy storage.

Julien Nabreda: Our backlog of $3.7 billion provides strong visibility into future revenue. As Ahmed will discuss in more detail, we are reaffirming our guidance ranges for both revenue and adjusted equity. To that end, we have approximately 90% of the midpoint of our revenue guidance covered by our backlog plus revenue recognized here, based on the conversations we are having with our customers and potential customers. We're expecting to see continuous strong revenue growth in Fiscal 25 of approximately 35 to 40% from Fiscal 24 Guidance Meetings. Our 25th Outlook is underpinned by our partners, which sits at approximately $16.3 billion and grew $2.9 billion from last quarter. Our expectation for pipeline conversion is at a 50% probability over the next 24 months.

Speaker Change: Backlog of $3 7 billion provides strong visibility to future revenue.

Speaker Change: As I will discuss in more detail, we're reaffirming our guidance ranges for both revenue and adjusted EBITDA.

Speaker Change: To that Ed we have approximately 90% of the midpoint of our revenue guidance covered by our backlog plus revenue recognized year to date.

Speaker Change: Based on the conversations, we're hiring where customers and potential customers. We're expecting to see continued strong revenue growth in fiscal 'twenty five of our broke similarly, 35% to 40% from fiscal 'twenty four guidance midpoint.

Speaker Change: Our 25 outlook is underpinned by our pipeline, which sits at approximately $16 3 billion.

Speaker Change: Grew $2 9 billion from last quarter.

Speaker Change: Our expectations for pipeline comparison is at a 50% probability over the next 24 months.

Julien Nabreda: I am increasingly encouraged by the growing number of opportunities we see around the world. As you can see from the chart on the slide, BNEF has forecasted between now and 2030 global new capacity additions for utility-scale storage of nearly 670 gigawatt hours. This is a major opportunity for us to continue our growth. We have a significant presence in some of the markets outside the United States where we expect to see the strongest growth, for example, Germany, our third largest market and biggest European market. Battery energy storage is gaining increasing significance in Germany as the country accelerates its transition towards renewable energy sources and aims to phase out nuclear power and reduce reliance on fossil fuels.

Speaker Change: I am increasingly encouraged by the growing number of opportunities we see around the world.

Speaker Change: As you can see from the chart on this slide B E F. I forecasted between now and 2000 and theory global new capacity additions for utility scale storage.

Speaker Change: Nearly 670 gigawatt hours through in China.

Speaker Change: This is a major opportunity for us to continue our growth.

Speaker Change: We have a significant breadth as in some other markets outside the United States, where we expect to see the strongest growth for example, Germany.

Speaker Change: Our third largest market and biggest European market.

Speaker Change: Battery storage is gaining increasing significantly in Germany.

Speaker Change: As a country accelerated transition towards renewable energy sources and aims to phase out nuclear power and reduce reliance on fossil fuels.

Julien Nabreda: As a result... DNEF sees this market adding nearly 23 gigawatt hours of new capacity between now and 2000. Additionally, Germany is a growing market for Ultrastag, our transmission solution. And we have been very, very successful in capturing opportunities as they come to us. Australia has quickly become our second largest market.

Speaker Change: As a result.

Speaker Change: <unk> market.

Speaker Change: Nearly nearly 23 gigawatt hours of new capacity, we do now.

Speaker Change: 2000 <unk>.

Speaker Change: Germany is a growing market for ultra stock our transmission solution and we have been very very successful capturing opportunities as they come to market.

Speaker Change: <unk> has quickly become our second largest mark.

Julien Nabreda: BNAF sees this market adding nearly 25 gigawatt hours of new capacity between now and 2000, as Australia continues to transition towards a more sustainable energy future. The battery storage market is experiencing significant growth. We have been successful in capturing a good portion of this opportunity, and we are committed to expanding our presence in this market as we move forward. The United States is our largest market. Battery and energy storage is playing an increasingly vital role in the US as the nation seeks to modernize its energy infrastructure and enhance Grid Resilience, a transition towards cleaner and more sustainable sources of power. Furthermore, the IRA has spurred a significant number of them.

Speaker Change: <unk> sees this market nearly 25 gigawatt hours of new capacity, we are doing now in 2000 authority.

Speaker Change: As Australia continues to transition towards a more sustainable energy future.

Speaker Change: The battery storage market is experiencing significant growth we have been success successful capturing a good portion of these opportunities.

Speaker Change: We are committed to expand our presence in this market.

Speaker Change: We move forward.

Speaker Change: The United States is our largest mark.

Speaker Change: Voluntary any storage is playing an increasingly beetle role in the U S. As the nation seeks to modernize its energy infrastructure.

Speaker Change: Enhanced grid resilience.

Speaker Change: Rotation towards cleaner and more sustainable sources of power.

Speaker Change: Furthermore, the IAA has spurred a significant amount of demand.

Julien Nabreda: BNEF sees nearly 350 gigawatt hours of new capacity added between now and 2020. This is a tremendous amount and represents a huge opportunity for us to capitalize on with our expanded product offering, such as our GridStack Pro line, which includes our U.S. domestic content. More importantly, the utility-scale battery storage sector in the United States has demonstrated remarkable resilience to political shifts and changes in administration, largely due to its strong economic foundations and bipartisan support for grid modernization and clean energy.

Speaker Change: B E.

Speaker Change: <unk> ceased nearly 350 gigawatt hours of new capacity capacity added between now and 2000 and a third.

Speaker Change: This is a tremendous amount and represents a huge opportunity for us to capitalize on them with our expanded product offering. So charter we expect pro line, which includes our U S domestic content offer.

Speaker Change: More importantly, the utility scale battery storage sector in the United States has demonstrated remarkable resilience to political chief.

Speaker Change: <unk> seen administrations.

Speaker Change: Largely due to strong economic foundations and bipartisan support for grid modernization in clean energy infrastructure.

Julien Nabreda: The success of utility-scale battery storage projects in the United States is driven by economic factors, such as the declining cost of battery technology, its technological advantage against other capacity-firming solutions, and the increasing and urgent need for grid flexibility and resilience. The need continues to increase as renewable energy continues to improve its cost and becomes the most economical energy source even for states that traditionally have relied on fossil fuels. Overall, the US energy storage outlook remains very robust, and The Intertwining of Economic Opportunities and Technological Advancement has positioned the utility-scale battery storage sector as a resilient and thriving component of the American energy landscape with support all around the political spectrum. Turn to slide 7.

Speaker Change: The success of utility scale battery storage projects in the United States is driven by economic factors, Joe So the declining cost of battery technology.

Speaker Change: This technological advantage against OLED capacity solutions, and the increasing an urgent need for grid flexibility and resilience.

Speaker Change: The need continues to increase as the new Orla energy continues to improve its cost and becomes the most economical energy source even for states that traditionally had relied on fossil fuels.

Speaker Change: Overall, the U S any storage outlooks remain very robust and they've they're trained enough economic opportunity.

Speaker Change: Technological advancements have positioned that utility scale battery storage sector outside of resilient and driving component.

Speaker Change: American energy landscape, we support all around the political spectrum.

Speaker Change: Turning to slide seven.

Julien Nabreda: Fluence has significantly expanded its GridStack Pro line to serve a wide range of project needs and enhance the versatility of energy storage solutions. The line comprises three enclosure sizes, namely the 1,000, the 2000, and the 5000 series, each sharing core components, certifications, and operating systems to ensure Fluence consistent domain expertise across the board. This modular approach enables different configurations, allowing for mixing and matching of enclosures to precisely meet the requirements of specific projects while maintaining competitive usable energy by offering a variety of social capacity.

Speaker Change: Florida has significantly expanded its great stack pro line to serve a wide range of project needs and enhance the versatility of energy storage solution.

Speaker Change: The line comprise comprises three enclosure sizes, namely the 1000.

Speaker Change: The 2000, and the 5000 series.

Speaker Change: Sharing core components certifications and operating systems to ensure fluence consistent domain expertise across the board.

Speaker Change: This model our approach enables different configurations.

Speaker Change: Last one for mixing and matching of enclosure to precisely meet their requirements specific projects, while maintaining competitive user will energy price.

Speaker Change: By offering a variety of social capacity.

Julien Nabreda: The Great Stack Pro line effectively addresses the issue of system overbuilding and contributes to reducing the cost per kilo. The highlight of the Graysac Pro line expansion is our ability to utilize one platform to seamlessly and fast. Integrate New Cell Technology without modifications to the [inaudible] The 5,000 series has remarkable energy, offering an impressive 5 to 6 megawatt hours in a single 20-foot enclosure. This high energy density not only optimizes land usage of projects but also enhances overall efficiency. Making an Attractive Solution for Space Constraints. Moreover, the GRIPSA Pro-Line prioritizes safety.

Speaker Change: They're great stack Pro line effectively addresses the issue of system overbuilding and contribute to reducing the cost per kilowatt hour.

Speaker Change: The highlight of the Greif third pro line expansion is our ability to utilize one platform to seamlessly and faster.

Speaker Change: Integrate new cells that knowledge without modifications to the plant.

Speaker Change: Additionally.

Speaker Change: <unk> 5000 theories as remarkable energy thanks.

Speaker Change: Offering an impressive five two megawatt hours in a single 20 food and clothes.

Speaker Change: These high energy density not only optimizes land usage of project size, but also enhance its overall efficiency, making it an attractive solution for space constrained installations.

Speaker Change: Moreover, the great saprolite prioritize safety, surpassing industry standards by successfully passing fluids internally developed big John Bourne Test this commitment to safety.

Julien Nabreda: surpassing the industry standard by successfully passing Fluence's internally-developed Vigeron board. This commitment to faith ensures peace of mind for customers and stakeholders alike, reinforcing Fluence's reputation as a reliable provider of energy storage. Furthermore, the GridStack Pro line is built with Fluence modules, battery management systems, electronics, and software, all developed or fully controlled by Fluence to mitigate any concerns related to cyber security or policy, to better serve its U.S. customers. Fluence offers the Fluence battery pack with domestically manufactured sales and modules, making the GridStack Pro line one of the first storage solutions eligible for the 10% investment tax credit bonus under the IR. This initiative not only supports the domestic manufacturing sector but also incentivizes the adoption of energy storage technologies in the United States, contributing to the nation's energy security and sustainability. Turn it to slide 8.

Speaker Change: Insurers peace of mind for customers and stakeholders alike reinforce influence reputation.

Speaker Change: A reliable provider of Ami storage solutions.

Speaker Change: Furthermore.

Speaker Change: They're great stack Pro line. This bill was fluids molecules battery management systems electronic turns software.

Speaker Change: All liver or fully controlled by fluids to mitigate any concerns related to cyber security policies.

Speaker Change: To better serve its U S customers fluent software as the fluids battery pack with domestically manufactured cells and modules, making the great stack Pro line one of the first storage solutions eligible for the 10% investment tax credit bonds, although there right.

Speaker Change: This initiative not only supports the domestic manufacturing sector.

Speaker Change: It also incentivize the adoption of any storage technologies in the United States.

Speaker Change: Contributing to our nation's energy security.

Speaker Change: Generality goals.

Speaker Change: Turning to slide eight.

Julien Nabreda: As I mentioned earlier, we recently signed our first contract for a product that qualifies for domestic content, allowing our customers to capture an incremental 10% investment tax. We're seeing tremendous interest from customers for our domestic content. And we expect to sign additional contracts in the coming quarters, as it is competitively priced against non-U.S. alternatives that do not include the additional 10%. Our proprietary battery module is at the heart of our domestic content, and it is key to meeting the criteria established by the U.S. Treasury Department.

Speaker Change: I mentioned earlier, we recently signed our first contract for a product that qualifies for domestic content, allowing our customers to capture an incremental 10% impact investment tax credits.

Speaker Change: We're seeing tremendous interest from customers for our domestic content offering.

Speaker Change: And we expect to sign additional contracts in the coming quarters.

Speaker Change: As it is competitively priced against non U S health entities that do not include that.

Speaker Change: But do not include the additional 10% ITC.

Speaker Change: Our proprietary bathroom module set the heart of our domestic content offer.

Speaker Change: And it is key to meeting the criteria established by the U S Treasury Department.

Julien Nabreda: By manufacturing our own battery modules, we will also qualify for IRS Section 45x Venice, which includes an incentive payment of $10 per kilowatt for battery modules produced in the U.S. We're currently on schedule to begin our initial production later this year, gradually ramping up over the subsequent, Tournament of Line 9. I'm proud to report that in April, Fluence released its second annual sustainability report, which builds upon the sustainability disclosures from my inaugural report published in Some of the highlights from the report include: expanded We expanded our green gas footprint analysis into scope three and clarified reported boundaries.

Speaker Change: By manufacturing our own battery modules. We will also qualify for IRS section 45 X benefits, which includes an incentive payment of $10 per kilo watt for battery modules produced in the U S.

Speaker Change: Were currently on schedule to begin our initial production later this year.

Speaker Change: We're really ramping up or this will secret mcwaters.

Speaker Change: Turning to slide nine and.

Speaker Change: Im proud to report that in April fluids released its second annual sustainability report, which builds upon the sustainability disclosures for my inaugural report published in April 23.

Speaker Change: Provides updates on fluid sustainability strategy.

Speaker Change: Some other highlights from the report include.

Speaker Change: Pandar with pad that are green gas footprint analysis into scope III and clarified reported blenders.

Julien Nabreda: We offset 60% of our global business travel emissions from flights, and we kicked off a scope two emissions reduction effort for Fluence facilities, including switching our air lagging facility in Germany to 100% renewable electricity. In conclusion, I'm pleased with the achievements of the second quarter. Although we are mindful there is still work to be done, we will look to continue this momentum as we progress through 2020. I will now turn the call over to Thank you, Julien, and good morning, everyone.

Speaker Change: We offset 60% of our global business travel and mutual from flights and we kickoff scope two emissions reduction therefore fluids facility.

Speaker Change: Clothing switching or are lagging facility in Germany to a 100% renewal.

Speaker Change: Tracy.

Speaker Change: In conclusion, I'm pleased with the achievements of the second quarter, Although we're mindful theres still work to be done we will look to continue this momentum as we progress through 'twenty four I will now turn the call over to Amit.

Ahmed Pasha: Today, I will review our second quarter financial results and then discuss our 2024 guidance, beginning with our second quarter 2024 results on slide 11. We generated $623 million in revenue, which puts us at $1 billion, or 33% of the midpoint of our full year guidance of $3 billion. I would like to note that year-to-date revenue is approximately $100 million ahead of prior expectations of 30% or $900 million of annual revenue in the first quarter, as we were able to complete certain projects in Americas earlier than the third.

Speaker Change: Thank you Julian and good morning, everyone. Today, I will review, our second quarter financial results and then discuss our 2020 for guidance.

Amit: Beginning with our second quarter 2020 for reserves on slide 11.

Amit: We generated $623 million in revenue, which puts us at 1 billion or 33% of the midpoint of our full year guidance.

Amit: <unk> 3 billion.

Ahmed Pasha: I would like to note that year to date revenue is approximately $100 million ahead of prior expectations of 30% or $900 million of annual revenue in the first half as we were able to complete certain projects in Americas earlier than the third quarter.

Ahmed Pasha: In terms of profitability, we generated approximately 66 million adjusted gross margin, or 10.6%, representing the third consecutive quarter of generating double-digit gross margin. These results also include a modest expense from settling, and pending litigation with Siemens Energy. Our continued execution further demonstrates that our legacy backlog issues are behind us, and we are benefiting from our higher-margin backlog. Our operating expenses were $74 million, representing 11.9% of quarterly revenue, which is down from 17% in the first quarter.

Ahmed Pasha: In terms of profitability, we generated approximately $66 million adjusted gross margin or 10, 6%, representing the third consecutive quarter of generating double digit gross margin.

Amit: These results also include a modest expense from settling.

Ahmed Pasha: Our pending litigation with Simmons energy.

Ahmed Pasha: Our continued execution further demonstrates that our legacy backlog issues are behind us.

Ahmed Pasha: And we are benefiting from our higher margin backlog.

Julien Nabreda: Our operating expenses were $74 million, representing 11, 9% of quarterly revenue, which is down from 17% in the first quarter.

Ahmed Pasha: This continued momentum also reflects in our improving EBITDA; more specifically, this quarter EBITDA materially improved to negative 6 million versus negative 28 million in Q2-23 and negative 18 million in Q1-24. Overall, we believe these results reflect our disciplined approach to grow our top line and improve our bottom line to deliver on our financial targets. Turning to slide 12. Before I talk about our liquidity, I would like to share that our continued focus on profitability and proactive working capital management has yielded positive results, which is reflected in our positive year-to-date free cash flow performance of $88 million. In terms of cash,

Ahmed Pasha: This continued momentum also reflects in our improving EBITDA more specifically this quarter EBITDA materially improved to negative $6 million versus negative $28 million in Q2, 'twenty three and negative $18 million in Q1 24.

Ahmed Pasha: Overall, we believe these results reflect our disciplined approach to grow our topline and improve our bottom line to deliver on our financial commitments.

Ahmed Pasha: Turning to slide four before I talk our liquidity I would like to share that our continued focus on profitability and proactive working capital management has yielded positive results. This reflects in our positive year to date free cash flow performance of $88 million.

Ahmed Pasha: In terms of cash.

Ahmed Pasha: I am pleased to report that we ended the second quarter with $541 million in total cash, an increase of approximately $65 million since last quarter and the fourth consecutive quarter that we increased our total cash position. In summary... We have total liquidity of nearly $590 million, which we believe puts us in an excellent position to capitalize on the growing energy storage market. Moving to slide 13.

Ahmed Pasha: I am pleased to report that we ended the second quarter with $541 million of total cash an increase of approximately $65 million since last quarter.

Ahmed Pasha: And the fourth consecutive quarter that we increased our total cash position.

Ahmed Pasha: In summary.

Ahmed Pasha: We have total liquidity of nearly $590 million, which we believe puts us in an excellent position to capitalize on the growing energy storage market.

Ahmed Pasha: Moving to slide 13.

Ahmed Pasha: As Julien noted, based on our year-to-date performance and outlook for the second half, we are reaffirming our guidance ranges for both revenue and adjusted EBITDA for 2024 at a midpoint of $3 billion and $65 million, respectively, at this point in the year. We have approximately 90% of the midpoint of our revenue guidance covered by awarded projects plus actual revenue recognized in the first half. Furthermore, we are on track to achieve an ARR of approximately $80 million by the end of fiscal 2024.

Ahmed Pasha: Julian noted based on our year to date performance and outlook for the second half we are reaffirming our guidance ranges for both revenue and adjusted EBITDA for 2024, and at midpoint of $3 billion and 65 million respectively.

Ahmed Pasha: At this point in the year.

Ahmed Pasha: We have approximately 90% of the midpoint of our revenue guidance covered by awarded projects plus actual revenue recognized in the first half.

Ahmed Pasha: I would also like to spend a moment on our year-to-go expectations. Specifically, we expect approximately 20% of our second half revenue to be realized in the third quarter and 80% in the fourth quarter. This split reflects two factors.

Ahmed Pasha: First, the timing of projects in our backlog, which are largely scheduled to be delivered in Q4 this year. As a reminder, our revenue is recognized as we hit certain milestones. For example, the majority of our Q4 project milestones are for production and delivery of cubes, which is within our control. To that end, we have secured the necessary, These factors provide us with confidence in our ability to deliver on our revenue targets. And second, as I previously mentioned, we had approximately $100 million of revenue pulled into Q2 from Q3.

Ahmed Pasha: That's confidence in our ability to deliver on our revenue topics.

Ahmed Pasha: And second as I previously mentioned, we had approximately $100 million of revenue pulled into Q2 from Q3.

Ahmed Pasha: Finally, looking ahead to fiscal year 25, we continue to believe that we will achieve approximately 35 to 40% year-over-year revenue growth from the midpoint of our fiscal 24 guidance range. With that, let me turn the call back to Julien for his closing remarks. Thank you, Ahmed.

Ahmed Pasha: Finally, looking ahead to fiscal year 25, we continue to believe that we will achieve approximately 35% to 40% year over year revenue growth from the mid point of our fiscal twenty-four guidance range with.

Julien Nabreda: With that let me turn the call back to <unk> for his closing remarks.

Julien Nabreda: Thank you on it.

Julien Nabreda: Turning to slide 14, and in conclusion, I want to emphasize the key takeaways from this quarter. First, we had a record-setting free cash flow generation of approximately $88 million for the first half of. This is a proof point for the success of our business model and the free cash flow economy. This cast generation also contributed to our strong liquidity position of nearly 590 million. Second, the outlook for utility-scale storage is very robust.

Julien Nabreda: <unk> <unk> and <unk> I want to emphasize the key take away from this quarter for results.

Julien Nabreda: First we had a record set <unk> free cashflow generation of approximately $88 million for the first half of this year.

Julien Nabreda: This is a proof point for the success of our business model.

Julien Nabreda: And the free cash flow it can generate.

Julien Nabreda: Discuss generation also contributed to our strong liquid the precision of nearly 590 million.

Julien Nabreda: Second the outlook for it utility scale storage is very robust and there is a great opportunity for our new <unk> value to our customers more importantly.

Julien Nabreda: There is a great opportunity for our new products to deliver value to our customers. But more importantly, Our space is well insulated from the upcoming U.S. election, and we do not anticipate any significant impacts on demand as a result. Sir, we are on track to begin our U.S. module manufacturing later this year. Together with our customers, we believe we are in a prime position to capture demand for products that qualify for U.S. domestic content. And finally...

Julien Nabreda: Our space as well insulated from the <unk> call Me U S elections, and we do not anticipate any significant impacts to the man as a result.

Julien Nabreda: So we're on track to begin R. U S model zoom in a factor in later this year too.

Julien Nabreda: Together with our customers, we believe that Brian position to capture their mind for prose that qualify for the U S domestic content bottles.

Julien Nabreda: This is our third consecutive quarter of double-digit gross margin, which reflects our continuous commitment to deliver attractive returns to our shareholders. This concludes my prepared remarks. Operator, we're now ready. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Julien Nabreda: And finally.

Julien Nabreda: This is our circumstance could acquire of double digit gross margins, which reflects our continuous commitment to deliver a doctorate or in a store shareholders.

Julien Nabreda: This concludes my prepared remarks, operator, we're not ready to take questions.

Julien Nabreda: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please stand by will be compiled the two and a roster and we ask that you limit yourself to one question and one follow up again, that's one question and one follow up one.

Operator: Please stand by while we compile the Q&A roster, and we ask that you limit yourself to one question and one follow-up. Again, that's one question and one follow-up. One moment for our first question, and our first question comes from George Gianarikas, from Canaccord Genuity. Your line is now open. Hi everyone. Thank you for taking the time to answer my question. Good morning George, how are you? Doing great. How are you?

Operator: One moment that first question.

George Gianarikas: I was wondering if you could maybe discuss the data center opportunity and how much traction you've seen there and how your conversations have changed, if at all. Great. Thank you very much, George. And so what's happening with data centers in, you know, as we've seen, GNI has become more of a commonplace technology, and all the technology providers are coming up with a GNI solution. The GNI, or General Artificial Intelligence Technology, requires these GPU graphics processing units, which are the chips that allow for parallel computing.

George Gianarikas: And our first question comes from Georgia, and Iraqis from Canaccord January really.

Speaker Change: Line is now open.

Speaker Change: Hi, everyone. Thank you for taking my questions. Good morning, George how are Ya.

George Gianarikas: Doing great How're you doing great.

George Gianarikas: I was wondering if you can maybe discuss the data center opportunity and and how much traction you've seen there and how your conversations have changed if at all recently. Thank you great <unk>. Thank you very much George and so what's happening with that offenders in O S as <unk>.

George Gianarikas: Seen Jen I become more of a commonplace technology and all that they can order your provider was coming up with a J N I solution.

George Gianarikas: The U N I, a a general deficient intelligence technology requires the you know.

George Gianarikas: G B U graphic you know processing units, which are the the the the tubes that allow for parallel computing.

Julien Nabreda: And what happens with the chips is that they require a lot more energy, you know, five times what the old technology required. What we see is that, you know, data centers are scrambling for energy. And they have been looking at, you know, as you know, most of the solutions they have seen today are that they've been looking for renewable, firm, renewable energy, you know, 24 seven renewable energy that they can source from.

George Gianarikas: And what happened to the cheapest they require a lot more than five times what is the old technology need. So what we see that you know that offenders are scrambling for energy energy.

Julien Nabreda: And they have been looking at you know as you know most of the solutions athletes today is that baby looking for renewal <unk> renewal Lennar, you know 24, seven renewable energy that they can sores from degreed and.

Julien Nabreda: And we have been, you know, very, very successful through our customers, you know, the IPPs of the world that serve these players here with AES, or, helping them to firm their offers. No, and that's, you know, our normal business.

Julien Nabreda: <unk> you know very very successful through our customers you know.

Julien Nabreda: I'd be beautiful in the world that serve these players you know.

Julien Nabreda: To your way, yes, you know a <unk>.

Julien Nabreda: Helping them firm, they're offering no and that's you know our normal business and and and and that has gone very very well and we see tremendous.

Julien Nabreda: And that has gone very, very well, and we see tremendous demand. And you'll see some of the announcements that these companies put out. And we are behind some of these announcements with our technology. But as data centers, and this is where I think it's becoming more interesting for us and it's opening up, as data centers are looking for other solutions, not because they are realizing that probably, especially the time they need to meet their needs through the grid with renewable energy, is becoming a little bit more difficult or a little bit strained or they have some challenges.

Julien Nabreda: <unk> and you'll see someone that announcement is that these companies put out we are behind some of these announcements with our technology.

Julien Nabreda: But as <unk> as soon as we come in more interesting for all of a sudden he's opening it up after that offenders are looking for all their solutions not because they they've got realizing that it probably especially the time they need to meet their needs.

Julien Nabreda: Through the agreed we were Newell N easily come in a little bit more difficult or a little bit strain or or they have to have some challenges they're looking for solutions. They can <unk> outside of the great you know either connecting and just hold it big deal constellation on there more things around or they're looking for solutions outside of the greed, but they still need to <unk>.

Julien Nabreda: They are looking for solutions they can get outside of the grid, you know, either connecting, and you saw the big deal constellation, and there are more things around that they're looking for solutions outside. But they still need the same capacity.

Julien Nabreda: So they are looking to see what they can do outside the grid with frame capacity. What we have done is that we started looking at what we can do to support that effort. How can we do, you know? We've been very, very successful supporting the on-grid solution. What can we do to support the off-grid solutions, either with renewables?

Julien Nabreda: In four to see what kind of a lopsided agreed with <unk>. What we have done is that we started to look at night, what can we do to.

Julien Nabreda: <unk> you know we've been very very successful so bored and they all greed you know solution what can we do support and they offer it sold which was either with renewables are terrible.

Julien Nabreda: And we will have that amplify several needs that.

Julien Nabreda: That we believe our our technology is very well positioned to resolve especially I think they'll tell you what while we face what you know what helps US here is that we.

Julien Nabreda: and we will have identified several that we believe our technology is very good at. Especially, I think that will tell you what we see is what you know. Helpful series that, We are, our technology is the fastest way of firming capacity in the power sector. If you need a whole 24 of any capacity, either, you know, any capacity, the fastest way to firm in that capacity and ensure, you know, 24 seven 100% availability, if you are off the grid or on the grid, battery technology is the best way to do it. There's nothing that is anywhere near as close.

Speaker Change: We are.

Julien Nabreda: Our technology is the fastest way or <unk> capacity in their powers, if you'll need out 24 <unk> either.

Julien Nabreda: Neither of you know.

Julien Nabreda: Any capacity the fastest way too firm in that capacity than ensuring.

Julien Nabreda: You know 24 700 per cent of availability you are off the agreed our own degree <unk>.

Julien Nabreda: Battery technology is the best way to lose nothing that is anywhere near and that's what we we know you know working on ways. We we've been talking to the available that offensive to some of the companies that help them resolve almost problem to identify those needs and you know <unk> those solutions than we have we have we.

Julien Nabreda: And that's what we've been now, you know, working on; we've been talking to the developers of data centers, to some of the companies that help them resolve some of these problems, to identify those needs and, you know, prioritize those solutions. And we don't have the products today to announce, but we have identified, I think, a very, you know, big territory where we can, you know, where our capacity and I say the same speed is what I think, at the end of the day, resolves this.

Julien Nabreda: We don't have the problems that led to announce but we have identified as saying it very big.

Julien Nabreda: <unk> territory, where we can you know where our capacity <unk> speed is what I've seen at the end of the day to resolve these the speed or not <unk> <unk>.

Julien Nabreda: The speed and our cost clearly, our speed and cost will allow us to help them with some of the stuff. And yes, I'll say more to come. You know, we are in the initial, you know, starting phase. We have not, we have not been able to prioritize it to announce it today at this stage, but we hope to continue working on this and coming up. Great.

Julien Nabreda: Our speed on cough, a lot will allow us to help them months almost alright, yeah, I'll say more to come you know <unk>.

Julien Nabreda: We already did using the initial starting to have not we have not been able to <unk> to announce it today I got these days, but we hope to continue working with decent coming up with a solution.

Julien Nabreda: This is clearly a great opportunity in front of us. We're excited about it. And we see, as I said, this is something that a year ago wasn't on our radar. We were working with all these companies and doing these 24-7 renewals. Now it opens a new set of solutions that is bringing us into a new territory. That's exciting and industry changing. Thanks. Thanks, Dirk.

Julien Nabreda: All right you know this is clearly a great opportunity in front of all we're excited with it and and we see as I said, you see something that you're gonna have I'll watch any of our router. You know we were working with all these companies and doing this 24 seven renewal now it opens a new set of solutions that is bringing off into <unk>.

Speaker Change: A new territory that's exciting.

Speaker Change: Uhm industry changing then so <unk>.

George Gianarikas: Thank you. As a follow-up to that, are you seeing increased interest in Long-Duration Energy Storage Solutions?

Dirk: Thank you is there anything as a follow up to that are you seeing increased interests.

Speaker Change: For long duration energy storage solution, because that's something that's on your radar.

Julien Nabreda: Is that something that's on your radar? Thanks. I think that when we looked at the soft... of these great solutions, clearly, a longer duration is part of it, you know, so the way we think is, you know, our technology can do more than the four hours we use. We usually, we tend to offer the customer. The reason why four hours has been kind of a sweet spot is because the market, you know, there's an economic value for a four hour system that kind of disappears once you go to six, eight, 12, you know, eight, nine.

Julien Nabreda: I think that when we looked at a sort of a.

Julien Nabreda: Obviously of Great solutions, clearly longer durations sparrow of it you know so why don't we the way. We think you know our technology can do more than the four hours. We usually we usually do we we tend to offer the go through the reason why four hour has been kind of the sweet spot because Denmark.

Julien Nabreda: You know there's an economic.

Julien Nabreda: Value for a four hour faced and that kinda disappears. Once you go to six eight dwell you know a nine so I'll go to the nation will play a role and and we are that's one of the things. We're looking at how much can we send what we can do to ensure that weekend support.

Julien Nabreda: So longer duration will play a role. And we are, that's one of the things we're looking at. How much can we send? What we can do to ensure that we can, to support these solutions. With our technology, doing more than 12 is more difficult because of economic constraints. How does it work?

Julien Nabreda: <unk> <unk> the solution was App, you know without a technology you.

Julien Nabreda: You know doing you know more than 12 is more of the vehicle.

Julien Nabreda: But, you know, we believe that there's a switch point that we can meet very, very easily, or not very easily, but we can meet to support this technology. A long, longer duration than the four hours will be part of what we need to work on. Thank you. And, and thank you.

Julien Nabreda: <unk> because I'm an economic it how how this will work, but you know we believe that there's a switchboard or we can meet very very easily or not very soon about a week I made to support at least acknowledge a long longer duration 94 hours will be part of what we need to work on.

Julien Nabreda: Thank you.

Julien Nabreda: The N and thank you.

Operator: And one moment for our next question. And our next question comes from Brian Lee from Goldman Sachs and Company. Your line is now. Good morning, Brian. Good morning, Julien.

Speaker Change: And one moment for our next question.

Operator: And our next question comes from Brian Lee from Goldman Sachs and company. Your line is now open.

Brian K. Lee: Thanks for taking the questions and kudos on the solid execution continuing here. You know, the question I had had two parts to it, but one was just on the cadence of revenue, you know, you're talking about the revenue pull forward. And then, you know, the quite significant weighting into 4Q versus 3Q.

Brian K. Lee: Good morning, Brian.

Speaker Change: Good morning, and thanks for taking the questions and kudos on the the solid execution continuing here.

Brian K. Lee: Uhm.

Brian K. Lee: You know the the question I had two of them, but one was just on the cadence of revenue you know you're talking about the revenue poor for and then yeah. That's quite significant waiting into for Keeler says three Q. So it sounds like you have a high degree of coughing.

Julien Nabreda: So it sounds like you have a high degree of confidence, you know, around the timing of these projects, but can you speak to sort of, you know, visibility? I know sometimes the market gets antsy about really backend weighted cadences, and that's happening here with the 3Q, 4Q that you're outlining. So what's your confidence level about visibility into those projects turning over in that timeframe and not having any potential risk of slipping out? Just any kind of color you can provide there would be helpful.

Julien Nabreda: <unk> you know around the timing of these projects, but can you speak to sort of visibility.

Julien Nabreda: I noticed some times the market gets antsy about Britney back and waited cadences and that's happening here with the three key for key that you're outlining so what what's what's kind of your confidence level of visibility into those project's turning over in in that timeframe and not having any potential risk to <unk>.

Julien Nabreda: Slipping out just any any kind of color you can provide there would be helpful.

Julien Nabreda: So, you know, first, I think we should talk about revenue recognition because I think it's important to get to know. So what what are we? What do we have? We have the way we work, the way our revenue recognition formula, You know, there's some recognition at the beginning, when we sign the contract, do the engineering, order the equipment, then there is a significant, and this is the bulk of our revenue recognition, is when we transfer title of the equipment to the customer, and then, you know, additional revenue recognition at substantial completion and financing.

Speaker Change: So you know first I think let's talk.

Julien Nabreda: Revenue recognition because I think it's important to get to know so what what are we whether we have we have the way we work the way our revenue recognition Formula works you know, there's some recognition of their again and when we signed the contract do the engineering and order. The equipment. There then there is a significant and this is the bulk of.

Julien Nabreda: Revenue recognition is when we transfer title of the equipment to the customer and then you know additional revenue recognition that substantial completion then final computers.

Julien Nabreda: The great bulk of it is transfer entitlement of the equipment once it's manufactured to the customers. When you looked at the fourth quarter, which is your question, okay, now you have all this significant fourth quarter revenue. What, you know, can you deliver on this? And when you looked at it, you know, A big portion of it, not to give you an exact number, but a significant amount, more than the majority.

Julien Nabreda: The great bulk of <unk> transferring title of the of the equipment. Once it is manufactured <unk>.

Julien Nabreda: When you looked at the fourth quarter, which is request. Some guys. Now you have all these significant fourth quarter revenue why you know <unk> and when you looked at it you know.

Julien Nabreda: <unk>.

Julien Nabreda: <unk>, a big portion or whether or not to give you a ticket number to bump on <unk> you up more than the majority of it.

Julien Nabreda: Also, you know, the process of transferring title of equipment. So equipment we need to build, manufacture, and we need to transfer title to our customers. We have the supply, we have the slots in the manufacturing, we've been manufacturing the stuff very, very well. We see very, you know, very, very little risk that we will not be able to do that on the time frame. We can, you know, we have our logistics working very well, so there isn't very, very little risk that that will happen.

Julien Nabreda: <unk> you know the it is transferring a diet of equipment, so quickly, but when it will be a benefactor and we need to transfer that'll dark customer. So we have that supply. We have this loss in the amount of <unk> women matter of fact, when this stuff very very well, we see very you know very very little waste that we will not be able to.

Julien Nabreda: Do that on the timeframe you know a <unk>.

Julien Nabreda: <unk>, we have our logistics working very well that there there isn't very very little reset that will happen and that will cover a.

Julien Nabreda: And that will cover a significant portion of the revenue that we had for. Then the number of, you know, say, well, okay, great, wonderful, it is, you know, manufacturing and moving things around. You can do that.

Julien Nabreda: Significant portion of their revenue a word for the four squad.

Julien Nabreda: <unk> said well get great wonderful relief, you know manufacturing and moving things around you can do that you'll be <unk>, you'll be you know you've shown that you are now doing that very very well that one will be about the only issue is that there is a limit the number of customers, even though it sounds like a huge amount of money at least you know 20 to 25 projects I will need to Lulu.

Julien Nabreda: You've been, you know, you've shown that you are now doing that very, very well; that should not be a problem. The only issue is that there are a limited number of customers, even though it sounds like a huge amount of money, it is, you know, 20 to 25 projects that we need to do with, and you know, with a productized solution. This is something that we can do very, very easily. So, you know, we feel very confident about this. What drives this?

Julien Nabreda: With them you know with a prototype solutions.

Julien Nabreda: Something that we can do very very easily. So you know we feel very confident that <unk> <unk> <unk> <unk> you know it you'll say well why are you why are you so backend.

Julien Nabreda: Which is the other point, you know, which would you say, well, why are you, why are you so back-end? At the end of the day, the back end that is set by the fact that our customers wanted those projects delivered on time. We will try to work with our customers to accelerate it, you know, and ensure that when we do the EPC, when we do the site preparation for receiving this equipment, we are trying to accelerate it as much as we can to try to move it closer, and we have had some success.

Julien Nabreda: At the end of the day at the back and that he said by the fact that our customers one the those projects deliver on those sites.

Julien Nabreda: You know, we will try to work with our customers to accelerate it you know and ensure that word when we when we do the B C, where we will the the the you know the side preparation for their receive receiving these the equipment that we have tried to find out as much as we can to try to move it closer than we would have.

Julien Nabreda: But at the end of the day, it is driven by that point. When do our customers want their products in their facilities and on their transport? And that's what sets very much what this is. So some people had asked me, well, is this seasonality gonna repeat itself?

Julien Nabreda: Social fast, but at the end of the at least driven by that point when do our costumers, one half their products <unk> <unk> and <unk>.

Julien Nabreda: And that's what types very much what what D. C. So a some people had asked me well <unk> is gonna repeat itself.

Julien Nabreda: You know, it's difficult to see it because when you look, when we go back and look at our history, it moves around. You know, so this year is a lot more back-ended. Last year was very, very, very, very divided equally around each quarter of the year before the, it was, you know, it was. It was in the center of the center of our fiscal year, where most of the revenue was.

Julien Nabreda: Difficult to see it because when you <unk> when we go back a loop that our our history. He moves around you know all these years old I logged back ended Latvia was very very very very divided equally around each squad or the year before the U S. You know it was.

Julien Nabreda: It was in the center, where most of the of the center of our fiscal deal or Muslim that revenue us. So he moves around and he moves around because it is raymond by our customer projects time, which in a way also dreaming by what they signed with their own BBA, so going back.

Julien Nabreda: So it moves around and it moves around because it is driven by our customer's project times, which in a way also is driven by what they signed with their own PPA. So, going back. This, you know, mostly driven by delivery or transfer and title of manufactured cubes to our customers, limited number of projects 20 to 25, not that we're not talking here about a huge amount. We've been very, very good at doing this.

Julien Nabreda: These you know these mosley driven by delivery of transferring title off <unk>.

Julien Nabreda: <unk> cubes to our customers.

Julien Nabreda: Limit the number of projects 20 to 25, not we're not talking here huge amount waving very very good at doing. This so we are very very good K P eyes.

Julien Nabreda: So we had very, very good KPIs in the, you know, close to 100% in terms of delivery capability. So we believe, so, you know, unless there's a global disruption that stops world trade, we should be able to... So, you know, we have very, very high confidence in our Q4, and we are very, that's why we reaffirm guidance. We see very, very slow, we have been, and we're very, very confident in it. I will let Ahmed add a little bit here, more color.

Ahmed Pasha: You know close to 100 per cent anytime's overly worried capability. So we believe so you know <unk>.

Julien Nabreda: <unk> global disruption that stops the Warped World trade, which will be able to leave it where we don't we have very very high coffees on a Q4 and and we are very that's why we reaffirm guidance, we see very very slow.

Ahmed Pasha: <unk>, we're very very coffee in on it I would <unk> I might add a lead over here.

Julien Nabreda: And I think the only thing I would add to what Julien had just mentioned is if you look at our last 12 months' performance. We have been executing on every project, you know, on time and on. I think that gives us additional confidence in our ability to deliver, particularly when we have all those cubes and equipment and logistics lined up for delivery in case. Okay. I appreciate all that additional color, guys.

Ahmed Pasha: Alright, Great question, and I think the only thing I <unk>.

Julien Nabreda: Holy on it just mentioned is if you look at the last 12 months performance. We have been executing on every project you know on time and on budget I think that's gives us traditional ah confidence in the ability to deliver.

Julien Nabreda: Particularly when we have all those cubes and equipment and logistics lined up for delivery and <unk>.

Julien Nabreda: Right.

Brian K. Lee: Maybe one more, if I could squeeze in a gross margin one. You also have the high end of the range you're talking about of the 10% to 12% gross margins in 4Q. I know you're not big fans of speaking to all the gross margin targets. It's more about EBITDA, but if you've got that sort of momentum exiting the year, you still have this 35% to 40% revenue growth outlook for fiscal 25.

Speaker Change: Okay. I appreciate all that additional collar guys, maybe one more if I could squeeze in a gross margin one.

Brian K. Lee: You also have.

Brian K. Lee: The high end of the range, you're talking about the 10% to 12% gross margins and four Q I know you're not big fans of speaking tell the the gross margin targets. It's more about EBIT <unk>, if you've got that sort of momentum exiting the year you still have this 35% to 40%.

Brian K. Lee: Revenue growth outlook for physical twenty-five kind of give us a sense of <unk>.

Brian K. Lee: Kind of give us a sense of, you know, should we be starting off kind of in that range, call it the high end of the 10% to 12% as we look into fiscal 25. I know the longer-term margin targets are into the mid-teens.

Brian K. Lee: Should we be starting off kind of in that in that range. You know call at high end of the 10 to 12 as we look into physical twenty-five just I know the the the longer term margin targets or instead of 19, just wondering if if he started to approach those even into physical twenty-five given the year at momentum plus the revenue.

Julien Nabreda: Just wondering if you start to approach those even into fiscal 25, given the year-end momentum plus the additional revenue growth that you're expecting for next year. Thanks, guys. So let me first say this year, 10% to 12% is a gross margin, even though, as you said, I wanted all of you to come with me to adjust it. I know you'll feel like that very much. So we are, we've been, you know, being clear on this. So for this year, 10% to 12%. So 11 should be the midpoint.

Julien Nabreda: <unk>.

Julien Nabreda: <unk> all that you're expecting for next year. Thanks, guys.

Julien Nabreda: So let let me first one this year you know 10 to 12 girls even though.

Julien Nabreda: Said I wanted all of you to go with me to adjusted area I know, you'll you'll feel a little like gross margin very much. So we are women you it'll be.

Julien Nabreda: Clear on the <unk> 10 to 12.

Julien Nabreda: So 11 should be the midpoint, we should we will get that we will be there, but when you load D C or the I know that you know the end of the year and you look you look back so you know very coffin.

Julien Nabreda: We should, we will get, we will be there. But when you look back this year at the end of the year, you know, at the end of the year, and you look back, you will see. So, you know, very much. On 25, what we had said, even though we have not provided, you know, a, you know, guidance for 25, what I said is the following. For top line growth, 35 to 40% over this year's midpoint guidance. So out of the 3 billion that we have at the midpoint, 35 to 40%, that kind of puts it at 4 billion or, you know, if you put the middle of that range.

Julien Nabreda: On 25, but we had said even though we have not provided you know a <unk>.

Julien Nabreda: No guidance on 25 that is a following for top line growth 35 to 40 per cent over all these years Middle-born Guy that's all out of the <unk> that we have they made point 35 to 40 per cent that kind of boat said at 4 billion or you know if you put the middle of that range is 4 billion.

Julien Nabreda: $4 billion for red top line growth. Then from gross margin, we believe 10 to 15, so the middle of the range is 12 and a half, and that's where we are today. You know, I don't think I can tell you today that we will get a tailwind that will put us anywhere else for next year.

Julien Nabreda: A four wrapped up line girlfriend.

Julien Nabreda: Different girls Margot said, we believe 10 10 to 210 to <unk> 10 to 15, so they made over a straw off and have and that's why we are to it you know I don't think we gotta tell you today that we will get a tailwind that would put us anywhere else for next year that what what I'm, telling you do S. D. C said very much by the order.

Julien Nabreda: That's what I'm telling you today. This is said very much by the order intake. But we will clearly, if we can offer you something better, we will. But today, our view for 25 is a 10 to 15, which will put it up at 12 and a half.

Julien Nabreda: Are there any <unk> or we will clearly we can we can offer you something better we will but do they argue for 25 is it 10 to 15, but you would put it at at 12 and a half and then before I just say that'd be the.

Julien Nabreda: And therefore, I just say that. You know, when I said our OPEX, you know, our operating leverage, we believe that we, our OPEX will not grow, will not grow at more than 50% of our top line. So that will give you kind of a picture of where we should be for 2025. And that's kind of where we are today.

Julien Nabreda: <unk>.

Julien Nabreda: You know our operating leverage we believe that we are all picks will not grow will not rule that I'm more than 50 per cent of our top line.

Julien Nabreda: So you'll get that will give you a kind of a <unk> aware, which was what should we be four 424, 25, and that's kind of where we are clearly yeah. As I said, a year progress and we see and we have more and more of the of the of the revenue for 25 in our backlog we.

Julien Nabreda: As we clearly, as the year progresses, and we see, and we have more and more of the revenue for 2025 in our backlog, we will confirm these numbers and, you know, walk you through them. And if there is an opportunity to do better, we'll let you know. But today, our view confirms our 10 to 10 to 15 gross margin in 2025. All right. Thanks, guys. I'll pass it on.

Julien Nabreda: We will confirm these numbers and <unk> you know a walk you through any if there's an opportunity to be more <unk> will go better. We'll let you know bought today our view it confirmed zara than to 10 to 15 gross margin of 25.

Speaker Change: Alright, Thanks, guys I'll pass it all I appreciate it.

Brian K. Lee: I appreciate it. Thanks, Brian, and thank you. And one moment for our next question. And our next question comes from Dylan Asano from Wolf Research. Your line is now open. Hey, good morning, everyone. How are you?

Speaker Change: Thanks, Brian and thank you.

Dylan Asano: And one moment for our next question.

Dylan Asano: And our next question comes from dealing Maisano from Wolf Research. Your line is now open.

Dylan Asano: A good morning, everyone.

Brian K. Lee: <unk>.

Dylan Thomas Nassano: So just wanted to check, there's been a lot of talk recently about solar projects getting delayed, interconnection issues, equipment shortages, etc. Is this something you guys are exposed to at all?

Dylan Asano: Good. Thank you for taking my question. So just wanted to check there's been a lot talk recently about solar project getting delayed interconnection issues, claiming shortages et cetera.

Dylan Asano: Is this something you guys are exposed to all is there any read through to your answered Brian question about the back and waiting to hear.

Julien Nabreda: Is there any read through to your answer to Brian's question about the back end waiting a year? Not, you know, not really. I mean, as I said, a lot of our back end that is delivery of manufactured products to our site or transferring title to be very clear what drives the transfer title, usually very much it happens at the site in most cases and when the sites are ready.

Dylan Asano: Not you know.

Julien Nabreda: Not really I mean, what we as I said, a lot of our back and that his delivery of <unk>, two or two <unk> title to be very clear what the rifle Bradford I don't usually very much we'd hop inside the site in most cases on when besides alrighty.

Julien Nabreda: As you know, we had a rule in our contracts where customers are required to take title in cases where they have some delays, you know, in cases where our backlog is usually more connected to EPC stuff, you know, things that are not built on time, usually weeks more rather than months. But you know, in, So when we have seen delays, what we have in our contracts, the customers are required to take title, you know, at a specific point.

Julien Nabreda: As you know we had had a rule and in our contracts where customers are required to take title in cases, where they have some delays in cases, where where in our in our <unk> is usually more connected to a P. C. Staff you know things that are not built on time, usually <unk>.

Julien Nabreda: But you know <unk>.

Julien Nabreda: So when we have seen delays.

Julien Nabreda: Well, we have we have enough <unk>. The the the customers are required to take title <unk> at a specific point in time.

Julien Nabreda: So that's generally how it works. What we see for 25, sorry, for 24, what we see in the fourth quarter are projects that are already, we're still in the civil works, you know? Can you imagine?

Julien Nabreda: <unk> generally how it works well, we see for 25 <unk> sorry for 24, what we see in the fourth squad. These have.

Julien Nabreda: Projects that are alright weren't feeling to see if it works you know can you imagine we we have to get them ready. So we know exactly where they are we know we have we working with our customers that we do not foresee any delays in the you know <unk>.

Unknown Executive: We have to get them ready so we know exactly where they are. We know we have been working with the customers, and we do not foresee any delays in, you know, related projects or related elements that could disrupt our delivery. And at the end of the day, we have the safeguard that if things get delayed beyond a certain point, customers are required to take title. Unknown Executive, George Gianarikas, Maheep Mandloi, Lex May, Julian Marquez, Manavendra, And when we sign a contract or start construction, I think, generally, the customers already have all those permits in place.

Unknown Executive: Related projects are related a elements that could be.

Unknown Executive: <unk> hour that'd be reproached.

Unknown Executive: At the end of the day, we have the safeguards that as things get delayed you on a certain point customers are required to take title after.

Speaker Change: <unk> no I think the only thing I <unk> signed these contracts 12, 18 months ago, and when we sign a contract.

Unknown Executive: Start construction I think generally the the customers have already all those pretty much in place and that's when the issue and noticed you proceed.

Dylan Thomas Nassano: And that's when they issue notice to a person. So we feel pretty good about our execution because there's nothing pending as such that could derail, particularly with reference to your question, which is the interconnection issue. Got it.

Dylan Thomas Nassano: So we feel pretty good about our execution because they have there's nothing pending as such that that detail.

Dylan Thomas Nassano: Particularly with reference to your question, which is said the interconnection issues.

Dylan Thomas Nassano: Thank you. Then just a quick follow up. Any recent developments with any of the outstanding litigation?

Speaker Change: Got it. Thank you then just quick follow up any recent developments with any of the outstanding litigation <unk> that can be kind of red.

Julien Nabreda: or the other anytime soon; anything you can say there would be helpful. Thank you. Oh, great. Thanks, Julian. I think Ahmed mentioned it during the call. We settled the Siemens Energy litigation.

Speaker Change: The other anytime soon.

Julien Nabreda: Hey, there would be helpful. Thank you Oh, great <unk> so we.

Julien Nabreda: I think <unk>.

Speaker Change: I'm in <unk> during the call we saddle the Siemens energy litigation and just to remind everybody who my relief they need Siemens energy is not seem as a G. R. <unk> customer related elect our older but not not Artur holder. We we settled that litigation as you as we have told.

Julien Nabreda: And just to remind everybody who might be listening, Siemens Energy is not Siemens AG, our shareholder. Siemens Energy is a customer related to our shareholder, but not our shareholder. We settled that litigation, as we have told you in the past, that was an immaterial litigation, the normal course of business litigation, immaterial. We settled it on terms that were even more immaterial than the litigation, and it's a fraction of the claims that the customer had.

Julien Nabreda: <unk> litigation normal <unk> material, we saddle it in terms that is even more and material that the litigation that needs you know a fraction of the the claims that the the customer had an appetite in the Bath Siemens energy is not a customer.

Julien Nabreda: And as I have said in the past, Siemens Energy is not a customer, a significant one. We have done very, very little with them. So you know, when we started the litigation, you lose litigation, but in the normal course of business, it's part of how you resolve a problem. I think at the end of the day, we resolve that in a way that is satisfactory for both Siemens Energy and us. The other two, nothing really, nothing really material to inform you at this stage, you know. The other two, the other one, which is the Diablo litigation, nothing really that, you know, nothing has moved significantly there.

Julien Nabreda: See if we can customers on what we have done very very little.

Julien Nabreda: <unk> you know a.

Julien Nabreda: When we started at the <unk> normal <unk>, how do you resolve that problem I think you know they will resolve that in a way that oh. So that's a different story for both Siemens energy and ourselves.

Julien Nabreda: They all have to nothing really nothing really material to inform you of the state you know they they know <unk> what would you say the the <unk> <unk> nothing really that you don't.

Julien Nabreda: And the most recent landing incident, which is something that was also referred to, we have talked in the past, there's no litigation, there's no pending litigation on that. And at this stage, there's nothing really material to communicate. Siemens Energy, as I mentioned, Siemens Energy, and we'll repeat it again, is not a case, was settled in conditions that are, you know, beneficial to both parties. And as I said, the litigation was immaterial; the settlement agreement is.

Julien Nabreda: And also have more significantly there and the <unk> <unk> <unk>, which is something that was also referred to we have dumped in the past there's no litigation, there's no pending litigation on that.

Julien Nabreda: These days, there's nothing really material to communicate but see them as energy as I mentioned, we Siemens energy in me to repeat it again, it's not a <unk> a.

Julien Nabreda: Conditions that are <unk>.

Julien Nabreda: Beneficial to both parties on <unk>, there was litigation with <unk> settlement agreement is I'll send letters.

Operator: Got it. Thank you. And congratulations on putting that Siemens issue behind you. Yeah, thank you, and thank you. And one moment for our next question. And our next question comes from Mark Strouse from J.P. Morgan. Your line is now open. Hey, Mark. Yes, good morning. Hey, Julien.

Speaker Change: Got it thank you and congrats on putting that Siemens issue by now yeah. Thank you.

Mark Wesley Strouse: And thank you.

Mark Wesley Strouse: And one moment for our next question.

Mark Wesley Strouse: And our next question comes from Mark Strauss from J P. Morgan Your line is now open.

Mark Wesley Strouse: Good morning. Thank you very much for taking our questions. So, following up on Dylan there, so appreciate, appreciate you're not seeing delays in your backlog projects. But I guess my question would be just when you're looking at your pipeline, is there anything that you're seeing there as far as kind of the, maybe an elongation of the timing between when you're issuing a quote to when you're getting a final order? You know, any kind of qualitative conversations you're having with folks about the next several years' projects potentially getting delayed?

Mark Wesley Strouse: <unk>, yes.

Speaker Change: Hey, good morning, Thank you very much for taking our questions. So following up on on Dylan. There. So appreciate appreciate your not saying delays and your backlog projects, but I I guess my question would be just when you're looking at your pipeline is there anything that you're saying there as far as kind of the the.

Mark Wesley Strouse: Maybe an elongation of the timing between when you're issuing a quote so when you're getting a final order you know any kind of qualitative conversations you're having with folks about the next several years projects potentially getting to learn.

Mark Wesley Strouse: What comes into our pipeline are usually, but not usually, projects that are very mature in the InterconnectionQ, because you know, these are products that we see you can deliver that we can convert into backlog within the next 24 months. So generally, you don't see that, by the way, you know, delay type of problem there because they're already, you know, when they come to us, they've already been three years in there, in the queue. So they know exactly how they connect. They know what they need to do. It is very, very, that one, and it becomes more of an execution more than anything.

Mark Wesley Strouse: <unk> comes into our <unk> are usually are not unusual projects that are very mature in the in the you know.

Mark Wesley Strouse: Interconnection too because you know they surprised at <unk> you can deliver is that we can be converted into battle within the next 24 months old <unk> you will see that.

Mark Wesley Strouse: <unk> you know delay type of problem there because they are already you know when would that come to us <unk> three years in there.

Mark Wesley Strouse: In the queue. So they know exactly how they connect they know what they need to do is very very <unk>.

Mark Wesley Strouse: It becomes more of an execution more than anything we have something that we don't disclose that much to all of you <unk> <unk>. They all the projects will look tied with our customers that are not necessarily you know ready for pipeline.

Julien Nabreda: We have something that we don't disclose that much to all of you, which is LEEDs, which is all the projects we looked at with our cost that are not necessarily, you know, ready for pipe. But there are projects that we believe are, you know, will work as we look at the long-term planning of some of our customers. Those are more, you know, less mature.

Julien Nabreda: But that are projects that we believe are you know we will will work as we looked at the long term plan you know some of our customers. Those are more you know less mature.

Julien Nabreda: <unk>.

Julien Nabreda: And those probably, you know, I'll tell you that we have a conservative view of them. So, you know, already, I don't know whether it has been a deterioration in terms of timing from what we were seeing a year ago, you know; it is the same. We see a lot more coming into that group and a lot more players. And if you looked at the pipeline for the queue in the US, it's almost a terabyte of battery storage that is getting into the queue. It's huge.

Julien Nabreda: And those probably you know a I'll tell you that we have a concern about the view of love then so I'll be in already so I don't know whether you have been a <unk> any <unk> nation in terms of timing from while we were seeing a year ago. You know at least the same you know.

Julien Nabreda: What we see a lot more coming into that group and a lot more players I may have you looked at the the pipeline at the <unk> in the U S is almost terrible off a battery storage that it's getting into a <unk> not all over the world <unk> <unk>. So I will say that code or I can give you on that.

Julien Nabreda: Not all of it will convert. So I'll say the color I can give you on that is that those leads, the things that are early in the queue and are going, what we have seen is an explosion, a lot and a lot more projects of those. You know, we are that that's not where we spend most of our time. But we are, and that makes us very, very confident that we know that this business has, you know, a huge tailwind, you know, very, very strong tailwinds.

Julien Nabreda: That is that that those leads the things that are <unk> that you and I are going why do we have any <unk> mmm Lauder and a lot more projects over those you know we are that that's not where we spend most of our time, but we that makes us very very confident that we you know that this business as you know a huge.

Julien Nabreda: <unk> you know very very strong always going for.

Julien Nabreda: In terms of our pipeline, as I said, we usually have very mature projects that have been there for almost two, three years already in the queue. They know when they're going to happen, and we have a view, I haven't seen any deterioration in the last year. And these few issues, mostly a US issue, no, the other countries, even though even though they have, you know, transmission queues and delays, they manage it very, very differently.

Julien Nabreda: In terms of <unk> said, we you know.

Julien Nabreda: Usually very much about your projects that I've been there almost all three years already in the queue. They know when they're gonna happen and we have you I haven't seen any of these irritation of any sort in the loss in the last year.

Julien Nabreda: These two issues Mosley at USA issue.

Julien Nabreda: <unk> <unk>, even though even though they have you know confirmation <unk> and delays they manage it very very friendly so <unk> northern Mark is that a lot more certain.

Julien Nabreda: So systems in other markets are a lot more certain. What I mean by a lot more certain is once you get into a line, you know that something's going to happen by a certain date, and so they work differently. So you don't see the situation that you see in the U.S., where you have these six-year, five-year queues on the line.

Julien Nabreda: <unk>, you'll get any per line, you know that something's gonna happen by a certain date and so it won't be friendly so you'll see the the situation that you've seen that you asked what do you have the six years five years a Q a.

Mark Wesley Strouse: But I think the great news this quarter, if you ask me, to highlight, and I'm going to repeat a point, is this, you know, one tera of, you know, when you look at the Q nationally in the US, it's almost one, almost one tera of 1000 gigawatts of Capacity. We're looking to connect to the grid, which is, you know, Mind Blowing, and a Yeah, yeah, that's great to hear. Thank you, Julien.

Julien Nabreda: On on the line, but I've seen the great meals you squatter. If you asked me we've do highlighted and then we're gonna repeat appointment, but if.

Mark Wesley Strouse: <unk> off you know.

Mark Wesley Strouse: When you looked at it you nationally and in the U S is almost <unk> almost winter awesome 1000 gigawatts.

Mark Wesley Strouse: Of a of capacity will look into connect to the grid, which is you know.

Speaker Change: Mindblowing number then.

Speaker Change: And a great opportunity.

Julien Nabreda: A quick follow-up. Congratulations on signing your first domestic content contract. I'm not necessarily looking for specifics on that contract, but I imagine you're having quite a few conversations with other folks there. You've said in the past that the 45x manufacturing tax credits would still kind of put you in your target gross margin range. Just curious, now that we're getting closer to more and more of these contracts hitting, if you can provide an update on that commentary about gross margin impact.

Speaker Change: Yeah, Yeah, that's great to hear thank you and just a quick follow up yeah. Congrats on finding your your first domestic content contract.

Julien Nabreda: Not necessarily looking for specifics on that contract, but imagine you're having quite a few conversations with other folks there you've said in the past that the the 45 X manufacturing tax credits would still kind of put you in your your target gross margin range.

Julien Nabreda: Curious you know now that we're getting closer to to more and more of this contract hitting if he can provide an update on that that commentary about gross margin impact.

Julien Nabreda: You know, as I said, the 45x $10 per module manufacturing in the US, we have said that's going to be within our 10 to 15, and it should not move us up. What we have said in the past is that we believe in our domestic content because of the First Movement Advantage. You know, we have been able to sign the first. We are the, and Ben Polis.

Julien Nabreda: You know the 45 X $10 per <unk>. The U S. We have said that's gonna be with an hour within 10 to 15 <unk>. What we have said in the past is that we believe.

Julien Nabreda: Our <unk> because of the first move it advantage because you know we haven't been able to find the first one and we are they.

Julien Nabreda: <unk> <unk>.

Julien Nabreda: We are there, the most secure way for any customer who wants to capture domestic content to capture all the offerings around. Not only do we have a first mover advantage, but their ability to deliver is significantly at risk from what some other players are, you know, trying to offer. Because of that, we believe there is an opportunity to potentially expand our market. We're working on it. I think it's still too early to communicate it.

Julien Nabreda: More secure way of any customer who wants to domestic <unk> to capture of all the offerings around that's you know not only we are first <unk> <unk> <unk>. They <unk> they are ability to earlier significantly the reef from what some other players are <unk>.

Julien Nabreda: You know trying to offer because of that we believe there is an opportunity to potentially fine are marches in <unk>.

Julien Nabreda: Working on it I think it's <unk> C O two communicate it as I.

Julien Nabreda: I said I don't want to negotiate against myself announced to solve that then comes on and it needs to me, but you know we believe because of that point because I'll wait <unk> is not only the first mover advantage, which is it something that we have made some many times in the past what is because when we have looked in detail at web they all our our competitors are offering.

Julien Nabreda: As I said, I don't want to negotiate against myself by announcing stuff that then comes and hits me. But, you know, we believe because of that point, because of what is not only the first mover advantage, which is something that we have mentioned many times in the past, but it's because when we have looked in detail and what the other, our competitors are offering. We are by far the most secure way, the less risky way, to capture. Our offering is the most robust, the one that will provide higher service, you know, that customers will be able to capture that. And I think that is also competitive.

Julien Nabreda: We are by far the more secure way the less risky way to capture that are all for any of the <unk>. The one that will provide higher certainty you know that customers will be able to capture that and I think that he's also a competitive advantage milk, though so I hope we are <unk>.

Julien Nabreda: So that's where we are; stay tuned. We have always said just to go back, this is an order intake for 24, generally domestic content, mostly revenue in 25 and 26 and going forward. But we will not; none of our 24 revenue is dependent on domestic content or any of it.

Julien Nabreda: June we have always that chest will go bad disease order intake for 24 generally go <unk> Mosley revenue in 25, and 20 seats and going forward, but Buddy will not we will not know know about 24, a revenue is dependent on domestic continental they know at least 25 onward.

Julien Nabreda: This is a 25 onward revenue, revenue more so. Thank you, and thank you. And one moment for our next question. And our next question comes from Justin Clare from Roth MKM. Your line is now open. Good morning. Good morning, Justin. How are you?

Justin Lars Clare: Revenue revenue more so.

Justin Lars Clare: Okay. Thank you.

Justin Lars Clare: And thank you.

Justin Lars Clare: And one moment for our next question.

Justin Lars Clare: And our next question comes from Justin clear from Roth M. K M. Your line is now open.

Justin Lars Clare: I'm doing well. So just to follow up on the domestic content here, it sounds like you're seeing very strong demand for products that will qualify for the domestic content adder. So just wondering, you know, as we head into 2025 and then even into 2026, how much of your total sales in the US do you think will include, you know, domestically produced battery cells and battery modules? Could this be a considerable portion of your sales in the US market?

Speaker Change: Hi, good morning.

Speaker Change: Good morning, Justin how are Ya.

Justin Lars Clare: I'm doing well so just to just to follow up on the domestic content here. It sounds like you're saying very strong demand for a product that will qualify for the domestic content at her. So just wondering you know as we head into 2025 and then even in the 20th 26, how much of your total sales.

Justin Lars Clare: And the U S. Do you think will include you know domestically produced battery cells and battery modules could this be a considerable portion of your sales in the U S market.

Justin Lars Clare: Yeah, I'll say that over time, this will be the main thing, you know, we believe this is going to be table stakes in the stakes in the US that U.S. players will demand domestic content at our tables. But it will not happen immediately. So, you know, 25 and 26 and it will move forward as we get along. It's difficult to know exactly what the distribution of revenue in 25 will be, how much will be, you know, domestic content, and how much will be because of the lonely time of some of these projects. But our view and the way we have designed our plan is that, over time, this will be the only—most domestic content will represent the great majority of the U.S. market. Got it.

Justin Lars Clare: Yeah, I'll say that all the time these will be the main you know we we leave this is gonna be stable states in the states in the U S that you will.

Justin Lars Clare: U S players will demand domestic onto the nurse and they will take all the time.

Justin Lars Clare: <unk> you will not happen immediately so you know 25 there'll be a good combination than 26 and they will move forward as we get along.

Justin Lars Clare: We got to know to tell you exactly what will be the D. C version of revenue in twenty-five how much will be you know the message got to know how much will be and go home they'll only time was almost projects bought <unk> than the way we have the sign up <unk> over time this will be the the only the most at the domestic <unk>.

Justin Lars Clare: Will represent the <unk> of the U S U S Mark.

Julien Nabreda: Okay. And then, and then just given that, can you just update us on your plans to potentially expand your manufacturing footprints either in the US or internationally? You know, what the timing could potentially be, and then the magnitude of the potential expansion.

Speaker Change: Got it Okay, and then and then just given that can you just update us on your plans to potentially expand your manufacturing footprint either in the U S or internationally.

Julien Nabreda: What could the timing potentially be and then the magnitude of potential expansion.

Julien Nabreda: Yeah, we continue to work at our facility in Utah in the US. We have looked at some plans for moving some closer to the production of the battery cells. But today we have those dates have not been set. So for now, we'll you know, our current, in the US, a state in Utah, I think where most of you know, our biggest markets are still in the western side of the US. And because that facility has the capability to expand, we can double the expansion quickly.

Julien Nabreda: Yeah, we continued to work at all of our facility in Utah in the U S. A we have looked at some plans of moving some nears the production over there about three sales, but today, we have those dates have not been set so for now will you know our current plan in the U S. You stayed in Utah.

Julien Nabreda: <unk> you know our biggest markets are in the western side of the U S steel today.

Julien Nabreda: <unk>, we can go with the French and quickly so not not have any real plans, even though we are not any we have not had any dates for the for the potential expansion on the eastern side of you know closer to the eastern side of the U S. In terms of Europe, we continue.

Julien Nabreda: So not any real plans, even though we haven't set any dates for the potential expansion on the eastern side of, you know, closer to the Eastern side of. In terms of Europe, we continue to look at it, so that continues to be an opportunity that we are evaluating. We haven't set dates yet. We are, it requires building an ecosystem.

Julien Nabreda: Two looked at it so that's that continuously <unk>.

Julien Nabreda: <unk> that we we are able waited we haven't said that you had a we are.

Julien Nabreda: So we are, that's what we're looking for. And as we build those ecosystems and reach the economy, higher the economy, a bigger economy scale, we will set dates and commitments. And then for APAC, you know, we build and manufacture out of Vietnam. We're looking at India, I will say in more detail today. And not only to serve that Indian market, but we believe that India will be, could be a great place to manufacture our products. And there are, you know, great manufacturing companies that we can partner with. We can create an ecosystem, probably faster than we can create an ecosystem in Europe.

Julien Nabreda: It requires there'll be an ecosystem. This whole we that's what we're looking for and that's we build that <unk> gonna be good economy scale, we will we will set dates and commitment.

Julien Nabreda: And then for a pack, even though we build <unk> it'll be and we're looking at India.

Julien Nabreda: A more detail today.

Julien Nabreda: And not only to serve that easier market, but we would need that India will be it could be a great.

Julien Nabreda: Place to manufacture products on their side, you know great manufacturing companies and then we can combine we can create an ecosystem probably faster that way, we can create a nice <unk> in in in Europe. So that if I, if I were to <unk>, probably our first <unk>.

Julien Nabreda: So if I were to tell you where we are today, probably our first, you know, our, next announcements in terms of manufacturing capabilities will probably be in India rather than in the eastern U.S. Okay, thank you, and thank you. And our final question comes from Kashi Harrison on behalf of Piper Sandler. Your line is now, Good morning, all, and thanks for taking the questions. Hey Kashi, how are you?

Julien Nabreda: The next announcements and turns on manufacturing <unk>, probably be in India, rather than in the eastern U S or western Europe.

Kasope Oladipo Harrison: Okay. Thank you.

Kasope Oladipo Harrison: And thank you.

Kasope Oladipo Harrison: And one moment for our final question.

Julien Nabreda: And our final question comes from Kashi Harrison from Piper Sandler Your line is now open.

Kasope Oladipo Harrison: Good morning, all and thanks for taking the questions.

Kasope Oladipo Harrison: Gotcha, how are Ya.

Operator: Good, thank you. You know, just a clarifying question for you, Julien. Were you saying that even if your customers have issues securing critical equipment, that the contracts still require them to take title? And then, you know, just outside of force majeure events, is there any scenario in which there could be a delay in them taking title from you?

Kasope Oladipo Harrison: Good thank you.

Operator: Just a clarifying question for your whole in what are you, saying that even if your customers have issue securing a critical equipment that'd be contracts still require them to take title.

Operator: And then you know just outside of force measure events is there any scenario in which there could be a delay and them taking title from Ya.

Kasope Oladipo Harrison: You know what I said. If our contracts require our customers to take title, if there are significant delays, so there's a safeguard, at the end. If by a certain date, when the customer doesn't have the site ready or wants to have Senegal, they take title out of our equipment, you know, usually enough, a warehouse close to the site, no? So, but that's a safeguard.

Operator: You know what why does <unk>.

Kasope Oladipo Harrison: Eve or context require our customers to take title is there a significant delay so there's a fave guard at the end of the process.

Kasope Oladipo Harrison: <unk> the customer doesn't have the <unk> they take title our auto auto of our equipment you know usually in.

Kasope Oladipo Harrison: Warehouse close to the fight nope.

Julien Nabreda: I'll tell you, seldom used, doesn't happen all the time, but it's a safeguard that makes me feel more confident that, you know, which is the message I was trying to communicate, that our 24th quarter revenue is very much, Now that even if our customers had a problem, you know, putting in the padlocks or doing anything, we would be able to take care of one customer. Well, where we are today, you know that for the last years, we've been very, very good. Our customers have been very, very good. We have not seen any major ones, you know. Delays Delays, maybe a week here or there, a week there, but, you know, nothing that's in any way significant.

Kasope Oladipo Harrison: And so but that's a safeguard I'll tell ya <unk> northern up in all the time, but he has a safeguard that makes me feel more confident that you know would would you sell what would their messages I was trying to communicate our 24 fourth quarter revenue is very much secure not that <unk> are <unk>.

Julien Nabreda: <unk> heart problems and you know put it in the Bud blocks or doing anything we will be able to take it one customer what where we are today you know said.

Julien Nabreda: For the last few years, we've been very very good at customer that'd be very very good we have not seen any <unk>. The you know.

Julien Nabreda: Delays, maybe a week here or there a week there, but you know in Austin that that's in any way significant so that that's that's how the contract to work and I was <unk> and this is not something that we as I said, a provision or contact that we do not <unk>, we exercise Austin.

Julien Nabreda: So that's how the contracts do work, and this is not something that we, as I said, a provisional contract that we use constantly, but it's something that, if things are complicated, you can always use. And generally, we do this in a very, very amicable way with our clients. University of Michigan.

Julien Nabreda: But it's something that if their things were complicated you can always use and I generally with all these you know very very amicable way with our customers on may your issue. So.

Julien Nabreda: It was more to give, to provide confidence to all of you, because I understand all this revenue in the fourth quarter. Hey, you can do it, you know. Ahmed mentioned, we've been doing this very, very well for the last year or a year and a half. Great. You know, it is essentially manufacturing and logistics. wonderful. Not that many customers. 20 to 25.

Speaker Change: Uhm any super helpful. Yeah.

Julien Nabreda: Yeah. It was more to gave me to provide confidence to all of you cause I on the fence. All this revenue in the fourth quarter, a you can do at noon.

Julien Nabreda: I'm had mentioned we've been doing this very very well for the last year for Ya and have great. You know maybe some essentially mono.

Julien Nabreda: <unk> logistics wonderful not that many customers 20 to 25, one therefore and it seems to get back you know.

Julien Nabreda: And if things get bad, you know, for any reason. You know, we still have the safeguard, no? That's the way I will put it at, yeah, except, I think you mentioned it, except for Fort Mayor, you know, something that, then that, that's a very different world, you know, but even today with the situation in the Red Sea, you know, we don't have a lot through the Red Sea. As we said, you know, 1515 of our volume passes through the But even that added, you know, a couple of weeks more to the transit time of our equipment, we were able to manage it with it.

Julien Nabreda: For any reason.

Julien Nabreda: You know, we still have the safeguarding though.

Julien Nabreda: So that that's the way I will I will put it at Yeah February I think you mentioned that set for for my yard you know something that.

Julien Nabreda: That's that's a very different world now, but even today with the situation in the ROTC.

Julien Nabreda: We don't have an audit through Arezzo, Yahoo said Reno 15, one five of our volume buses for the Red Sea very very low what have you been that that added you know in a couple of weeks more to the to the to the <unk> equipment, we weren't able to manage it with you know that's what <unk> in the middle East.

Julien Nabreda: So even in a situation, let's say a war in the Middle East, we can manage it very, very well. So it will have to be something really, really, disrupted in order to disrupt our capability. It could happen, unfortunately, but

Julien Nabreda: <unk>, we can manage it very very well so it will have to be something really really dizzy.

Julien Nabreda: Disruptive to.

Julien Nabreda: <unk>.

Julien Nabreda: Could happen Unfortunately bud.

Julien Nabreda: That's where we're supposed to end. Yeah, that's all very, very helpful. You know, as you pointed out, the 80% is a big number, and maybe for my follow-up question, more so about comments in the slide deck. You know, you highlight demand is growing, specifically in ERCOT, KISO, and MISO. I'm just wondering if you have a sense of what proportion of your customers, you know, are signing PP&As versus just selling merchant energy, and whether, in your discussions with your customers, there's any difference in their ability to secure financing, depending on which approach they take. Yeah. On the financing, generally, we in the U.S. have worked with, and globally, I think it's the same with, you know, tier one. So financing hasn't been a peer issue.

Julien Nabreda: <unk>.

Julien Nabreda: Yeah. That's that's all very very helpful. You know as you pointed out the 80 per cent of the big number and and there's maybe for my my follow up question Uhm more so about comments and the and the slide back you know you highlight <unk> demand is growing specifically in <unk>. So.

Julien Nabreda: I'm just wondering if you have a sense of what proportion of your customers. You know have are signing P. P and as versus just selling merchant and whether in your discussions with our customer is there any difference in their ability to secure financing, depending on which which approached right there.

Julien Nabreda: Or the financing generally we we in the U S is <unk> have worked with God Glory I think it's the same with you know.

Julien Nabreda: Here, one so financing hasn't been appear in issue.

Kasope Oladipo Harrison: I don't really have a view in the U.S. on how much PPA versus merchant, but I will tell you. For my conversations, mostly PPAs, but I don't have exactly the number. I don't want, I cannot tell you 95, but mostly PPAs. And I know that, how I know about it, it's because of what they ask for in my, you know, world what they want from the KPIs they want, are PPA connected, are connected to the KPIs they are committing to to their counterparty, so that's how I get a sense I don't really know the number; we'll PP firm with PPF versus, you know, what's a merchant, but I'll say the great majority. I just don't know the number from the top of that. That's still helpful.

Julien Nabreda: I don't really have I have you in the U S. How much is b b, a <unk>, but I will tell you.

Kasope Oladipo Harrison: From my conversations Moseley B B, a but I you know I don't have exactly the norm or another one I cannot value 95, but mosley b b a S and I know that you know how I know about it because of the why they asked for my you know.

Kasope Oladipo Harrison: <unk> <unk>.

Kasope Oladipo Harrison: <unk> why do they want from my the gay P is a one from me you know.

Kasope Oladipo Harrison: V B a code connected connected to the <unk> to the counterparty. So that's how I got a sense I I don't really know the number will get a number that's a good way.

Kasope Oladipo Harrison: To to make a point of how much of the of what we have all of our there and take it is you know.

Kasope Oladipo Harrison: <unk> <unk>, but I will say the grandma you already be a chess on northern <unk> from the top of my head.

Speaker Change: That's that's still helpful. Thank you.

Kasope Oladipo Harrison: Alright.

Speaker Change: And thank you.

Julien Nabreda: Thank you, and thank you. And I would now like to turn the call back over to Lex May. Closing comments.

Kasope Oladipo Harrison: And I would now like to turn the call back over to Lex may.

Lex May: Closing comment.

Lex May: Thank you, Justin. And thank you everyone for participating on today's call. If you have any questions, please feel free to reach out to me. We look forward to speaking with you again when we report our third quarter results. Have a good day. This concludes today's conference call. Thank you for participating. You may now go.

Lex May: Thank you Justin and thank you everyone for participating on today's call. If you have any questions. Please feel free to reach out to me. We look forward to speaking with you again, when we report our third quarter results have a good day.

Lex May: This concludes today's conference call. Thanks for participating you may now disconnect.

Lex May: Mmm.