Q3 2024 Fluence Energy Inc Earnings Call

August 8, 2024

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Operator: and Thank you for standing by.

Operator: Thank you for standing by. Welcome to the Fluence second quarter conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone, and you will then hear an automated message at the bottom of your hand when it is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. Lexington May, VP of Finance and Investor Relations

gooda and thank you for sing b

Speaker Change: Welcome to the Fluence second quarter conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone.

And you will then hear an automated message and find that your hand is raised.

Speaker Change: To withdraw your question, please press star 1 again. Please stand by as today's conference is being recorded. I would now like to hand the conference over to your first speaker today.

Unknown Executive: Thank you. Good morning, and welcome to Fluence Energy's third quarter 2024 earnings conference call. Joining me on this morning's call are Julien Nebreda, our President and Chief Executive Officer; Ahmed Pasha, our Chief Financial Officer; and Rebecca Boll, our Chief Products Officer. During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Also, please note that the company undertakes no duty to update or revise forward-looking statements based on new information.

Lexington May: Thank you. Good morning, and welcome to Fluence Energy's third 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 our 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 Nebreda, our President and Chief Executive Officer. Ahmed Pasha, our Chief Financial Officer, and Rebecca Boll, our Chief Products Officer.

Speaker Change: Thank you, good morning, and welcome to Fluence Energy's 3rd Quarter 2024 Earnings Conference Call.

Speaker Change: A copy of our earnings presentation press release

Speaker Change: Supplementary Metric Sheet covering financial results along with supporting statements and schedules including reconciliations and disclosures regarding our non-GAAP financial measures are posted on the investor relations section of our website at FluenceEnergy.com

Unknown Executive: 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.

Speaker Change: Joining me on this morning's call are Julien Nebreda, our President and Chief Executive Officer.

Speaker Change: on that basasha our chief financial officer and rebecable our chief products officer

Speaker Change: During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters related 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

Unknown Executive: 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 forward-looking statements in light of new information. 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.

Speaker Change: 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.

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

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

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.

Unknown Executive: 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. I'll now turn the call over to Julien.

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.

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

Julien Nebreda: I would like to send a warm welcome to our investors, analysts, and employees who are participating on today's call. I will cover a few three results briefly and then provide an update on our business, and the strong growth prospects will continue. Ahmed will then give more details on our financial results and updates.

Julien: I would like to extend a warm welcome to our investors, analysts, and employees who are participating on today's call.

Ahmed Pasha: I will cover a few three results briefly, an unearned 17.5% adjusted gross margin, which brings our year today's gross margin slightly ahead of the 10 to 12 target, which puts us on track to deliver profitable growth for our shareholders. Sir, we added 1.3 billion of new content, reaching the level a quarter earlier than our target. And finally, to our proactive approach to cost and working capital management. We generated 64 million in free cash flow for the first nine months.

Julien: i will go our q three results briefly and then provide an update on our business and the strong grow prospect we continue to see

Julien Nebreda: Beginning of slide four, we deliver strong financial performance, for Pacific, will recognize $483 million of revenue, and an unearned 17.5% adjusted gross margin, which brings our year today's gross margin slightly ahead of the 10 to 12 target. Second, we recorded adjusted EBITDA of 15.6 million, which puts us on track to deliver profitable growth for our shareholders. Sir, we added 1.3 billion new companies, setting a new quarterly record for us and bringing our backlog to an all-time high level of 4.5%.

Julien: Ahmed will then give more details on our financial results and outlook.

Ahmed: beginning on slide four with deliver strong financial performan or specically

Ahmed: We recognize 483 million dollars of revenue and earn 17.5% adjusted gross margin.

Ahmed: which brings our year-to-date gross margin slightly ahead of the 10 to 12 target.

Speaker Change: Second, we recorded adjusted EPITA of 15.6 MHz.

Speaker Change: which puts us on track to deliever profitable growth bar shareholders

Speaker Change: Sir, we added 1.3 billion of new contracts.

Speaker Change: setting a new quarterly record for us and bringing our backlog to an all-time high, an all-time high level of 4.5 billion.

Julien Nebreda: Fourth, we finish the quarter with $80 million of annual recurring revenue for our services and digital business, reaching the level a quarter earlier than our target. And finally, to our proactive approach to cost and working capital management. We generated $64 million of free cash flow for the first nine months and ended the current quarter with $513 million in capital. Turning to slide five.

Speaker Change: for we finish a quarter with aing need of annual recurring revenue for our services and digital business

Speaker Change: whichin thedele a quarter we of lanortarget

Speaker Change: And finally, to our proactive approach to cost and working capital management.

Speaker Change: We generated 64 million free cash flow for the first nine months.

Speaker Change: and ended the current quarter with $513 million in cash.

Unknown Executive: Turning to slide five, we continue to see improvements in our growth market, from a gross margin of about negative 5% to a positive 12% margin in the 12 months and the due third. The strength of our pipeline is a key reason for our high confidence in our expected revenue, of 35 to 40% growth, from our original fiscal 24 revenue guidance midpoint of 3B. Turn it to slide seven. Similar to a pipe.

Julien Nebreda: We continue to see improvements in our growth market, driven by our excellent performance on cost management and, We have had four consecutive quarters of double-digit growth. We're looking at our growth markets on a trailing 12-month rolling basis. We are back, from a gross margin of about negative 5%, to a positive 12% margin in the 12 months and the new term. This has been an outstanding transformation in London.

Speaker Change: Turning to slide five.

Speaker Change: We continue to see improvements in our gross market.

Speaker Change: driven by our excellent performance on cost management and execution.

Speaker Change: we have had four consecutive quarter a dou ble digd grrossmarket

Speaker Change: We're looking at our growth markets on a trailing 12-month rolling basis.

Speaker Change: We advanced from a gross margin of about negative 5% to a positive 12% margin in the 12 months and the youth area.

Speaker Change: This has been an outstanding transformation in less than two years.

Julien Nebreda: We expect this trend to continue to improve, pulling off on a path to achieve sustainable growth margins of 10 to 15 percent. Turning to slide six, for an update on our buy. As a reminder, our pipeline is a rolling 24-month view, thus giving us confidence in our ability to continue our growth trajectory. Our 20 billion pipeline has increased 65% from this time last year, which reflects the rapid growth prospects for LED storage. As I will discuss a bit more in a moment,

Speaker Change: We expect this trend to continue to improve, pulling us on a path to achieve sustainable growth margins in the 10-15% range.

Speaker Change: Turn to slide 6 for an update on our pipeline.

Speaker Change: As a reminder, our pipeline is a rolling 24-month view, thus giving us confidence in our ability to continue our growth trajectory.

Speaker Change: Our 20 billion pipeline has increased 65% from this time last year.

Speaker Change: which reflects rappid gth prospect for any storage flower

Julien Nebreda: All in all, we continue to see a very robust international business. We should further diversify our geographic mix in the coming years. Almost half of our $20 billion pipeline is in the Americas region, and the rest is in international. The strength of our pipeline is a key reason for our high confidence in our expected revenue. We are reaffirming our fiscal year 25 revenue output of 35 to 40% growth of our original Fiscal 24 Revenue Guidance midpoint of 3B. Turning to slide seven, which is similar to a pipe.

Speaker Change: as i will this course ' been more in the moment

Speaker Change: All in all, we continue to see a very robust international market.

Speaker Change: We should further diversify our geographic mix in the coming years.

Speaker Change: Almost half of our 20 billion dollar pipeline is in the Americas region and the rest is in the international market.

Speaker Change: The strength of our pipeline is a key reason for our high confidence in our expected revenue growth.

Speaker Change: we are we are ping our fiscal year twentyif-five revenue outlook

Speaker Change: of 35 to 40% growth of our original fiscal 24 revenue guidance midpoint of 3B.

Julien Nebreda: We're also seeing remarkable growth in our. The third quarter was our 11th consecutive quarter of ordering state outpacing revenue record, showcasing their above growth in utility scale, bad blogging. Demonstrating our leading competitive position and the significant growth for utility scale. Now I would like to provide an update on the most relevant markets we serve. Beginning with the United States, which continues to be the largest market we operate in the world.

Speaker Change: Turn it to slide seven.

Speaker Change: similar to our piner we also see in remarkable growth in our

Speaker Change: the third quarter while her ele consecutive quarter of ordering st outbasac ing revenue recognized

Speaker Change: jois in their revol growth in your de to scale and distorage

Unknown Executive: Demonstrating our leading competitive position. Learning to Fly Day. This is our last conference call. Those enabling our customers to capture, Our proactive approach to securing U.S. sales from ASC has resulted in a first-movement advantage in delivering domestic content, which also applies to battery storage. Today, the desired tariff is set at 7.5%, and it will increase to 25% beginning in 2020. The demand for battery storage systems in the U.S. is supported by the growing need for new capacity. Great Excellency, I'm receiving it.

Speaker Change: Our bag logging crew.

Speaker Change: Demonstrating our leading competitive position and the significant growth for utility-scale energy storage.

Speaker Change: I would like to provide an update on the most relevant markets we serve.

Speaker Change: beginning with the united states which continues to be in the largest market we o inlower

Julien Nebreda: Recent regulatory developments in the U.S., as well as the progress we have made in strengthening our competitive position with an early to market domestic manufacturing strategy, put us in a unique position to capitalize on this substantial growth. 13th to Friday. This is our last conference call.

Speaker Change: Recent regulatory developments in the U.S., as well as the progress we have made in strengthening our competitive position to an early-to-market domestic manufacturing strategy.

Speaker Change: puts us in a unique position to capitalize on this substantial growth opportunity.

Julien Nebreda: There have been a couple of payroll policies. First, the US Treasury released guidelines on the 40% domestic content requirements under the Inflation Reduction Act or IRA. The Treasury provided an elective safe harbor table that sets a percentage of value for each battery storage component when manufacturing in the U.S. can contribute towards the 40% threshold at Garcia. The highest category is battery cells at 38%, which favors our domestic strategy of securing battery cells manufactured in the U.S. And you may recall, we started the process of procuring USL capacity before the IRA came out and signed an agreement more than a year ago with ASC to purchase USL from Tennessee.

Speaker Change: the orranges like a

Speaker Change: these are last confidentence goal

Speaker Change: There have been a couple of payroll policy developments.

Speaker Change: first the u s treasury releasase guidance on the forty percent domestic content requirement on the inflation reuction ap or ira

Speaker Change: the treasury provided an elected sahar table that sets a percent of a value each by to thestorage component when manufacturer in the u s can country and contribute towards a forty percent preswell

Speaker Change: Abdu'l-Karsi

Speaker Change: The highest category is battery cells at 38%.

Speaker Change: which fav on our domestic strategy of securing bad ceales manpartter in the u s

Speaker Change: As you may recall, we started the process of procuring USL capacity before the IRA came out.

Speaker Change: and finally agree with more than a year ago with the f to purchase arese on the tenennesy cus

Julien Nebreda: The U.S. manufacturer sales will go into a battery mode, which I will touch on more in a moment. By combining U.S. sales and US modules, we believe that we will easily meet the 40% domestic content threshold.

Speaker Change: the u s on a factor fell will going into our batterleymodel

Speaker Change: which i will start on more in a more

Speaker Change: By combining U.S. sales and U.S. modules, we believe that we will easily meet the 40% domestic content threshold.

Julien Nebreda: Those enabling our customers to capture the incremental 10% investment tax credit on the, Our proactive approach to securing U.S. sales from ASE has resulted in a first-movement advance in delivering domestic content. The Biden administration issued a proclamation to increase Section 301 tariffs on batteries imported from China, which also applies to battery storage. Today, the desired tariff is set at 7.5%, and it will increase to 25% beginning in 20

Speaker Change: Those enabling our customers to capture the incremental 10% investment tax credit on their projects.

Speaker Change: our proadtive approach to secure the usles from a have resulted in our personal momentment advantage in the leg domestic comp

Speaker Change: second the buyen ministration issue a procltoammation to increase section three or one di on b is import from china

Speaker Change: which also applies to battery storage systems.

Speaker Change: today desire tap said at seven point typer sttrenth

Speaker Change: and he only agrerief to twenty-five percent in in into thousand and polenefit

Julien Nebreda: We believe this tariff regime could significantly affect the competitive landscape of the U.S. market to the benefit of domestic buyers. I would like to touch briefly on the political environment and its implications. The demand for battery storage systems in the U.S. is supported by the growing need for new capacity.

Speaker Change: we believe the carvery gi could significantly affect the competitive landscape of the u s market to the benefit of domestic supply

Speaker Change: i'would like to touch my on their political environment and implication for flure

Speaker Change: The demand for battery storage systems in the U.S. is supported by the growing need for new capacity.

Julien Nebreda: It is well known that renewables plus storage is a fact, the most economical way to serve this growing. None of this can be due to a potential change in America. Our business model in the U.S. should also be resilient to changes in political life. Current Dozer Policy favors using tax credits to promote domestic, However, we believe that our U.S. business model will also work effectively if a new administration were to change the industrial policy away from tax incentives in favor of, Don't need to glide now. I'm pleased to report that we're on track for initial production of the Fluence battery module in late September of this year. The model production line was successfully tested by the manufacturers.

Speaker Change: May, Lex May, Julien Dumoulin, Ahmed Pasha, Julian Marquez

Speaker Change: It is well known that renewables plus storage is the fastest and most economic way to serve this growing need.

Speaker Change: None of this is due to a potential change in administration.

Speaker Change: Our business model in the U.S. should also be resilient to changes in the political landscape.

Speaker Change: Curran does their policy in favor using tax credits to promote domestic production.

Unknown Executive: However, we believe that our U.S. business model will also work effectively if a new administration were to change the industrial policy away from tax incentives. We anticipate starting production with a number of battery modules and gradually ramping up to servers, with resulting increases in electricity and capacity. Mostly in the form of storage for the renewal PPA, regardless of political means. For example, in the airport market in Texas, a traditional, and the reception of our U.S. business model to policy change makes us confident in our outlook for the U.S. market and its contribution to our growth.

Speaker Change: However, we believe that our U.S. business model will also work effectively.

Speaker Change: If a new administration were to change the industrial policy away from tax incentives in favor of tariffs.

Speaker Change: Turning to slide 9, I am pleased to report that we are on track for initial production of the Fluence battery module in late September of this year.

Speaker Change: The model production line was successfully tested in the manufacturer's facility.

Julien Nebreda: The production line is now in the final stages of installation and initial commissioning in our Utah facility. We anticipate starting production with a number of battery modules and gradually ramping up to server. Turning to additional discussions on the U.S. market, on the slide, an estimate for the size of the US utility scale market continues to show growing adoption of energy storage. Bye guys.

Speaker Change: The production line is now in the final stages of installation and initial commissioning in our Utah facility.

Speaker Change: we anticipates ant anticippate sting produoption with a number of battterle moes and graduallyly ramping up to serve our me

Speaker Change: Turn to additional discussions on the U.S. market on slide 10.

Speaker Change: estimate for the size of u s ability strll market continues to show growing option of energy store by adding

Julien Nebreda: Roughly 40 gigawatts in 2000. The significant demand has been fueled by corporate customers seeking clean, low-cost, and reliable renewable energy. Part of this growth in the U.S. has been driven by the rise of Jed AI, which requires a tremendous number of new data, with resulting increases in electricity and capacity. We're seeing more and more opportunities coming to our pipeline associated with data, molding the form of storage for the renewal PPA that large tech companies are procuring to meet their growing demand and carbon-free goals.

Speaker Change: roughly 40 gigawatts in 2025.

Speaker Change: The significant demand has been fueled by corporate customers seeking clean, low-cost, and reliable renewables.

Speaker Change: Part of this growth in the U.S. has been driven by the rise of Gen-AI.

Speaker Change: which requires a tremendous number of new data centers.

Speaker Change: with resulting increases in electricity and capacity.

Speaker Change: we're seeing more and more opportunities comp to our pi and associated ated we datafeffect

Speaker Change: Mostly in the form of storage for the renewal PPAs that large tech companies are procuring to meet their growing demand and carbon free goals.

Julien Nebreda: About 40% of our U.S. pipeline is indirectly associated with that data. We would also note that the great majority of the clean energy investment associated with the IRA and the resulting job creation are appearing in Republican letters.

Speaker Change: Currently,

Speaker Change: About 40% of our U.S. pipeline is indirectly associated with that data center.

Speaker Change: we will also note that the great majority of the clean energy investment

Speaker Change: Associated with the IRA and the resulting job creation are occurring in Republican-led districts.

Julien Nebreda: Furthermore, energy storage is becoming a critical part of an increasing number of grids across the country, regardless of political means. For example, in the airport market in Texas, [inaudible] The crucial role that energy storage plays in the grid is evident when you consider interconnection. We chose nearly 132 gigawatts of battery storage projects, of nearly 35% from this time last year. Some, the U.S. market, increasing demand for electricity and capacity. The James A.I. industry's growing need for renewal power, and the responses of our U.S. business model to policy change, makes us confident in our outlook for the U.S. market and its contribution to our growth. Turning to slide 11.

Speaker Change: fur ther more

Speaker Change: Energy storage is becoming a critical part of an increasing number of grids across the country, regardless of political means. For example, in the airport market in Texas, a traditional red state.

Speaker Change: The expanding role that energy storage plays in the grid is evident when you consider the interconnection field.

Speaker Change: We chose nearly 132 gigawatts of battery storage projects of nearly 35% from this time last year.

Speaker Change: In sum, the U.S. market increasing demand for electricity and capacity.

Speaker Change: The James AI industry's growing need for renewal power.

Speaker Change: and the receiving of our U.S. business model to policy changes makes us confident in our outlook for the U.S. market and its contribution to our growth plan.

Unknown Executive: Turning to slide 11, and our resurgence in the U.S., where the National Battery Strategy continues to provide opportunities for us, I'm pleased to report that we recently launched our new digital service center in India, providing insight for the company's research and development and services, the co-location in Bangalore, India of the Service Center, with the new remote monitoring and diagnostics capability. Product Development Capabilities.

Julien Nebreda: Alongside the attractiveness of the U.S. market, in the Europe, Middle East, and Africa region. I'm happy to say we are seeing a growing number of opportunities in Germany and that resurgence in the U.S. Ireland intends to operate its electrical grid with 95% renewable energy generation. This level of renewable generation will require significant battery storage to provide a higher level of grid stability and reliability for this radio. 2024 Annual Utility Scale Capacity Additions are expected to be north of 11 gigawatts, which is more than 100% increase from the 2024 forecast.

Speaker Change: Turning to slide 11.

Speaker Change: Alongside the attractiveness of the U.S. market,

Speaker Change: In the Europe , Middle East and Africa region, I am happy to say we are seeing a growing number of opportunities in Germany.

Speaker Change: and our resurgence in the European area.

Speaker Change: Ireland intends to operate its electrical grid with 95% renewable.

Speaker Change: This level of renewable generation.

Speaker Change: will require significant battery storage to provide a higher level of grid stability and reliability.

Today, and thank you for standing by.

Unknown Executive: Welcome to the Fluence second quarter conference call. At this time, all participants are in listen only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. And as you will see here, an automated message invites your hand is raised. To withdraw your question, please press star 1-1 again. Please be invited.

Speaker Change: for this reason two thousand and twenty-four our unual utility scale capacity addition are expected to reno of eleven de orhour

Speaker Change: which is more than a hundred percent increase from the 2024 forecasted level.

Julien Nebreda: We see a similar story of robust growth in other regions. In the Asia-Pacific and Australia region, we have seen tremendous growth over the past few years, with annual utility-scale capacity emissions approaching nearly 8 gigawatts this year, driven largely by Australia, where the National Battery Strategy continues to provide opportunities for our Turning to slide 12. I'm pleased to report that we recently launched our new digital service center in India, which will serve as a central hub for applying operational data intelligence to the global fleet of assets managed by Fluence, and provide insight for the company's research and development and services.

Speaker Change: we see a similar story of theroabove growth in all regions

Unknown Executive: Today's conference is being recorded.

Speaker Change: In the Asia-Pacific and Australia region, we have seen tremendous growth over the past few years, with annual utility-scale capacity additions approaching nearly 8 GW this year.

Unknown Executive: I would not let the end of conference over to your first speaker today, but to May, VP finance and investor relations. Thank you.

Speaker Change: Driven largely by Australia, where the National Battery Strategy continues to provide opportunities for our province.

Ahmed Pasha: Good morning, and welcome to Fluence Energy's third 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 reconciliation and disclosures regarding our non-gap financial measures are posted on the investor relations section of our website at Fluence Energy.com. Joining me on this morning's call are Julian Nibrata, our president and chief executive officer, Ahmed Pasha, our chief financial officer, and Rebecca Bull, our chief product officer.

Speaker Change: Turning to slide 12.

Speaker Change: i'm pleased to report that will recently launch our new d digital service center in

Speaker Change: which will serve as a central hub for applying operational data intelligence to the global fleet of assets managed by Fluence.

Speaker Change: Provided insight for the company's research and development and service functions.

Julien Nebreda: We expect that these efforts will provide more value to our customers by optimizing the performance of their storage, the co-location in Bangalore, India, of the service center, with its new remote monitoring and diagnostics capability, and our technology center. Product Development Capabilities provides a platform that is intended to allow for efficiency and speedy response in both. I will now turn the call to Ahmed to discuss our financial results.

Speaker Change: We expect that this effort will provide more value to our customers by optimizing the performance of their storage assets.

Unknown Executive: During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon the 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 caution to not 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 forward-looking statements for new information.

Speaker Change: The co-location in Bangalore, India, of the Service Center.

Speaker Change: with its new remote monitoring and diagnostics capabilities.

Speaker Change: and our technology centers, Product Development and Capability.

Speaker Change: provides a platform that is intended to allow for efficiency and speedy response in Bosnia.

Speaker Change: I will now turn the call to Ahmed to discuss our financial results.

Ahmed Pasha: Thank you, Julien, and good morning, everyone. Today, I will review our third quarter financial results, our strong cash position, and our near-term, beginning with third quarter 2024 desserts on slide 14. We generated $483 million in revenue, which was 20% higher than our expectations discussed on our last panel. This was primarily attributable to completing certain project milestones ahead of schedule.

Ahmed Pasha: Thank you, Julien, and good morning, everyone. Today, I will review our third quarter financial results, our strong cash position, and our near-term, beginning with third quarter 2024 desserts on slide 14. We generated $483 million in revenue, which was 20% higher than our expectations discussed in our last panel. Furthermore, we generated $85 million of adjusted gross profit, representing a 17.5% adjusted gross margin, which was the fourth consecutive quarter of double-digit gross profit margin.

Ahmed Pasha: Thank you, Julien, and good morning, everyone. Today, I will review our third quarter financial results, our strong cash position, and our near-term outlook.

Ahmed Pasha: Beginning with third quarter 2024 desserts on slide 14.

Ahmed Pasha: We generated $483 million in revenue, which was 20% higher than our expectations discussed on our last earnings call.

Ahmed Pasha: This was primarily attributable to completing certain project's milestones ahead of schedule.

Ahmed Pasha: Furthermore, we generated $85 million of adjusted gross profit, representing a 17.5% adjusted gross margin, which was the fourth consecutive quarter of double-digit gross profit margin. Including the third quarter results, we delivered a year-to-date adjusted gross margin of 12.8 percent. We expect to achieve Q4 adjusted gross margin within our previously communicated range of 10 to 12% and for the full year to be at the high end of that range. This performance reflects our focus on achieving operational efficiencies that have been translated to improve profitability of projects.

Unknown Executive: 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.

Ahmed Pasha: including the third quarter results we delivered year-to-date adjusted gross margin of four point eight percent

Ahmed Pasha: We expect to achieve Q4 Adjusted Gross Margin within our previously communicated range of 10-12% and for the full year to be at the high end of that range.

Ahmed Pasha: This performance reflects our focus on achieving operational efficiencies that have been translated to improve profitability of projects. During Q3, after operating expenses, we generated $16 million of adjusted EBITDA with the assistance of an outside counsel and forensic accountant. I am pleased to share that this investigation concluded that the allegations contained in the short report are without merit.

Julian Nibrata: I'll now turn the call over to Julian.

Ahmed Pasha: This performance reflects our focus on achieving operational efficiencies that have been translated to improve profitability on projects.

Julian Nibrata: I would like to turn one world to our investors, analysts, and employees who are participating on today's call. I will cover our future results briefly, and then provide an update on our business, and the strong-those prospects will continue, to see. Ahmed will then give more details on our financial results and outlook. Beginning of slide four, with a lever-strumped financial performance, or specifically, we'll recognize $483 million of revenue, earned 17.5% agro-adjusted growth margin, which brings our year-to-day growth margin slightly ahead of the 10-12 target.

Ahmed Pasha: During Q3, after operating expenses, we generated $16 million of adjusted EBITDA, which puts our trailing 12-month EBITDA in positive territory for the first time. Overall, these results illustrate our commitment to delivering profitable growth to our shareholders. Before turning to a discussion of our liquidity and guidance, I will briefly review a disclosure included in our 10Q that was filed just recently. As you may know, a short salary report was published on us back in February of this year.

Ahmed Pasha: During Q3, after operating expenses, we generated 16 million of adjusted EBITDA.

Ahmed Pasha: which puts our trailing 12-month EBITDA in positive territory for the first time.

Ahmed Pasha: overall these resulves illustrate our commitment to delivering profitable growth to our shareholders

Speaker Change: Before turning to a discussion of our liquidity and guidance, I will briefly review a disclosure included in our 10Q that was filed yesterday.

Speaker Change: As you may know, a short seller report was published on us back in February of this year.

Ahmed Pasha: In response to the allegations made in the short report, our Board's Audit Committee conducted an investigation, with the assistance of an outside counsel and forensic accountant. I am pleased to share that this investigation concluded that the allegations contained in the short report are without merit.

Speaker Change: in response to the allegations made in the short report our board's orittiity conadvicted an investigation

Julian Nibrata: Second, we recorded adjusted EBITDA of 15.6 million, which puts us on track to the lever-profenable growth margin. Sir, we added 1.3 billion of new contracts, setting a new quarterly record for us and bringing our value to an all-time high, all-time high level of 4.5 billion. Fourth, we finished the quarter with 80 million of annual recurring revenue for our services and digital business, reaching the level a quarter earlier than our target. And finally, to our proactive approach to cost and working capital management, we generated 64 million pre-cast look for the first nine months and ended the current quarter with 530 million in-cast.

Speaker Change: with the assistance of an outside counsel and forensic accountants.

Speaker Change: i am pleased to share that this investigation concluded that the allegations contained in the short report are without yett

Ahmed Pasha: Recently, however, the SEC notified us that they are investigating certain matters pertaining to the company. Based on the information the FEC has requested, we believe they are examining some of the topics raised in the short service, such as revenue recognition policies and our previously disclosed material. We are fully cooperating with the SEC.

Speaker Change: Recently, however, the SEC notified us that they are investigating certain matters pertaining to the company.

Ahmed Pasha: We believe we are examining some of the topics raised in the short set of documents, such as revenue recognition policies and our previously disclosed material. We are fully cooperating with the SEC. Although we cannot predict the timing or the outcome, based on the nature of these matters and information requested by the SEC, we do not expect them to have a material impact on our financial situation. We continue to bolster our liquidity to support our industry-leading growth.

Speaker Change: Based on the information the FEC has requested, we believe they are examining some of the topics raised in the short service report.

Speaker Change: such as revenue recognition policies and our previously disclosed material weakness.

Ahmed Pasha: Although we cannot predict the timing or the outcome, based on the nature of these matters and the information requested by the SEC, we do not expect them to have a material impact on our financial situation. Turning to slide 15, with an update on our liquidity. We continue to bolster our liquidity to support our industry-leading growth. To that end, I am pleased to report that we ended the third quarter with nearly $600 million in total revenue.

Speaker Change: We are fully cooperating with the SEC.

Speaker Change: Although we cannot predict the timing or the outcome, based on the nature of these matters and information requested by the SEC, we do not expect it to have a material impact on our financial condition.

Julian Nibrata: Turning to slide five, we continue to see improvements in our growth margin, driven by our excellent performance on cost management and execution. We have had four consecutive quarters of double-digit growth margin. We're looking at our growth margin on a trading-to-off-month roll-in base. We have banned from a cost-gross margin of about negative 5% to a positive 12% margin in the 2-month and the due-30. This has been an outstanding transformation in less than two years. We expect this trend to continue to improve, pulling our zone of path to achieve sustainable growth margin in the 10 to 15% range.

Speaker Change: turn to slide fifteen we then update on our liquidity

Ahmed Pasha: To that end, I am pleased to report that we ended the third quarter with nearly $600 million in total investment. I'm also happy to share that this week we replaced our ABL credit facility with a traditional revolver to further enhance our, As you may recall, our $400 million EDL facility was collateralized by the level of our U.S. inventory, which has had a lower balance, thus limiting the availability under this facility to not more than $100 million since its inception.

Speaker Change: We continue to bolster our liquidity to support our industry-leading growth objectives.

Speaker Change: To that end, I am pleased to report that we ended the third quarter with nearly $600 million of total liquidity.

Ahmed Pasha: I'm also happy to share that this week we replaced our ABL credit facility with a traditional revolver to further enhance our, As you may recall, our $400 million ABL facility was collateralized by the level of our U.S. inventory, which has had a lower balance, thus limiting the availability under this facility to not more than $100 million since its inception. The New Covenant Light Revolving Credit Facility contributes $500 million in commitments from an expanded bank group. With this facility, on a pro forma basis, our total liquidity is now more than $1 billion, which puts us in an excellent position to capitalize on the growing energy storage market. Moving to slide 16.

Speaker Change: i'm also happy to share that this week we placed our idio cred facility with a traditional re onework to further enhance on theliid

Speaker Change: As you may recall, our $400 million of EDL facility was scaritized by the level of our U.S. inventory, which has had a lower balance, thus limiting the availability under this facility to not more than $100 million since its inception.

Ahmed Pasha: The new Covenant Light revolving credit facility contributes $500 billion of commitments from an expanded bank group. Moving to slide 16, for multiple years, and although disappointing, we expect to recognize the majority of this delayed revenue in fiscal. In fact, Turning to slide 17, I will briefly review our other guidance. This revised guidance midpoint of $60 million is only $5 million below our prior guidance. In terms of our long-term outlook, we continue to expect our gross profit margins to be. Finally, looking ahead to fiscal 25, we continue to expect strong growth, as Julien just mentioned.

Julian Nibrata: Turning to slide six for another on our pipeline. As a reminder, our pipeline is a rolling 24-month view, thus giving us confidence in our ability to continue our growth project. Our 20 billion Biden has increased 65% from this time last year, which reflects rapid growth prospect for any storage flow. As I will discuss a bit more in a moment, all in all, we continue to see a very robust international market. We choose further diversified our geographic mix in the coming years.

Speaker Change: the new conment line evvolving fa facility contributes five hundred day hourars or commitments fromom an expanded bank drve

Speaker Change: with this facility on a proforma gessins our total liquidity is more than one billion dollars

Speaker Change: which puts us in an excellent position to capitalize on the growing energy storage market

Ahmed Pasha: We have narrowed our full year 24 revenue guidance range to $2.7 to $2.8 billion, with a midpoint of $2.75 billion. This is $250 million lower than our prior revenue guidance. This reduction is mostly due to two factors. There were two specific projects accounting for approximately 100 million of expected revenue that had been postponed by the customer for multiple years. Second, the signing of certain projects into our backlog was delayed for a variety of reasons that included site readiness, civil works, permitting, and customer decision processes. None of these delays were related to interconnection.

Speaker Change: Moving to slide 16.

Speaker Change: We have narrowed our 24-year revenue guidance range to $2.7 to $2.8 billion.

Speaker Change: With a midpoint of $2.75 billion, this is $250 million lower than our prior revenue guidance.

Julian Nibrata: Almost half of our 20 billion dollar pipeline is in the America's region, and the rest is in the international market. The strength of our pipeline is a key reason for our high confidence in our expected revenues.

Speaker Change: this reduction is mostly due to two vectors

Speaker Change: There were two specific projects accounting for approximately $100 million of expected revenue that had been postponed by the customer for multiple years.

Julian Nibrata: Road. We are reaffirming our fiscal year 25 revenue outlook of 35 to 40% growth of our original fiscal 24 revenue guidance midpoint of 3D.

Speaker Change: and

Speaker Change: Second, the signing of certain projects into our backlog was delayed for a variety of reasons that include site readiness, civil works, permitting, and customer decision process.

Ahmed Pasha: These projects were signed and moved into our backlog admittedly later than NPCC. Although disappointing, we expect to recognize the majority of this delayed revenue in fiscal. As Julien noted, our fiscal 24 guidance implies a Q4 result that would be the highest in our company's history. We have strong confidence in our ability to deliver on this goal, as 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 batteries, manufacturing slots, and logistics.

Julian Nibrata: Turn it to slide 7. Similar to our pipeline, we're also seeing remarkable growth in our fiscal year. The third quarter was our 11 constructive quarter of ordering state outpacing revenue recommendations. Cho case is the robust growth in utility scale and the historic. Our backlog increase in the fiscal year, demonstrating our leading competitive position and the significant growth for utility scale energy storage.

Speaker Change: None of these delays were related to interconnection issues.

Speaker Change: These projects were signed and moved into our backlog admittedly later than anticipated.

Speaker Change: yeah

Speaker Change: Although disappointing, we expect to recognize the majority of this delayed revenue in FY25.

Speaker Change: as fullylier noted our fiscal forty four guidance implies a q four result that would be the highest in our company's history

Speaker Change: We have strong confidence in our ability to deliver on this goal, as the majority of our Q4 project milestones are for production and delivery of cubes, which is within our control.

Julian Nibrata: Now we'd like to update, to provide an update on the most relevant markets with our beginning with the United States, which continues to be the largest market we operate in global. Recent regulatory developments in the US, as well as the progress we have made in strengthening our competitive position to an early to market domestic manufacturing strategy. Food source in a unique position to capitalize on the substantial growth of opportunities.

Speaker Change: To that end, we have secured the necessary batteries, manufacturing slots, and logistics.

Ahmed Pasha: In fact, with respect to our expected Q4 revenue, in the first five weeks of the quarter, we have delivered or put in transit 46% of the required tubes, thus securing our revenue for almost half of our expected Q4 revenue. In summary, our quarter-to-date performance and our outlook for the remaining two months of the year gives us confidence in our ability to deliver on our Q4 customer commitments and our devised full-year revenue guide.

Speaker Change: In fact, with respect to our expected Q4 revenue, in the first five weeks of the quarter, we have delivered or put in transit 46% of required cubes, thus securing our revenue for almost half of our expected Q4 revenue.

Speaker Change: In summary, our quarter-to-date performance and our outlook for the remaining two months of the year gives us confidence in our ability to deliver on our Q4 customer commitments and our devised full-year 24 revenue guidance.

Julian Nibrata: Turn it to slide 8. Things are less confident in coal. There have been a couple of favorable policies. First, the US Treasury released guidelines on the 40% domestic content requirement under the inflation reduction act, or IRA. The Treasury provided an elected safe harbor table that sets a percentage of value each battery storage component when manufacturing the US can contribute towards the 40% threshold. As you can see, the highest category is battery sales of 38%.

Ahmed Pasha: Turning to slide 17, I will briefly review our other guidance. Loading the midpoint of our full year 24 revenue guidance by $250 million would be expected to have a cross profit impact of at least $25 million. However, we have taken proactive actions to mitigate the impact on our profitability target. To that end, we are expecting to achieve a gross profit margin at the upper end of the 10 to 12% expected range for this year and deliver adjusted EBITDA of $55 to $65 million. This revised title's midpoint of $60 million is only $5 million below our prior title.

Speaker Change: Turning to slide 17, I will briefly review our other guidance matrix.

Speaker Change: lowing the midpoint of our full year twenty four revenue guidance by two million and fifty million dollars would be expected to have a across profit impact of at least twenty five million dollars

Speaker Change: However, we have taken proactive actions to mitigate the impact on our profitability targets.

Speaker Change: To that end, we are expecting to achieve a gross profit margin at the upper end of 10-12% expected range for this year and deliver adjusted EBITDA of $55-65 million.

Julian Nibrata: Which favors our domestic strategy of securing battery sales manufacturers in the US. As you may recall, we started the process of procuring the US health capacity before the IRA came out. I'm signing agreement more than a year ago with the ESC to purchase the US health from the tenancy capacity. If US manufacture sales will go into our battery module, which I will touch on more in a moment. By combining the US sales and US modules, we believe that we will easily meet the 40% domestic content threshold.

Speaker Change: This revised guidance midpoint of $60 million is only $5 million below our prior guidance.

Ahmed Pasha: In terms of our long-term outlook, we continue to expect our gross profit margins in the 10 to 15. Furthermore, we are raising our ARR guidance and now expect to achieve ARR of approximately 100 million by the end of fiscal 24, up from our previous guidance of approximately 80 million. This increase is the result of the continued growth we are seeing from our services. Finally, looking ahead to fiscal 25, we continue to expect strong growth, as Julien just mentioned.

Julian Nibrata: Though the enabling our customers to capture the incremental 10% investment tax credit on the product. Our proactive approach to securing the US health from a FD have resulted in a first-moving advantage in the immediate domestic content.

Speaker Change: In terms of our long-term outlook, we continue to expect our gross profit margins to be

Speaker Change: in the 10% to 15% range.

Speaker Change: Furthermore, we are raising our ARR guidance.

Speaker Change: and now expects to achieve prr approximately haokded million by the end of fiscal forty four up from our previous guidance of approximately eighty million this increase is the result of the thirty- growth we are seeing from our services business

Speaker Change: Finally, looking ahead to Fiscal 25, we continue to expect strong growth as Julien discussed.

Ahmed Pasha: Using our original fiscal 24 revenue guidance with a point of $3 billion, at the base, we reaffirm our expected fiscal 2025 revenue growth of 35% to 40%. With that, let me turn the call back to Julien for his closing remarks.

Julien: Using our original fiscal 24 revenue guidance break point of $3 billion as a base, we reaffirmed our expected fiscal 25 revenue growth of 35% to 40%.

Julien: With that, let me turn the call back to Julien for his closing remarks.

Julian Nibrata: Second, the Biden administration issued a proclamation to increase Section 301 dive on battery support that comes down. Bond, which also applies to fabric storage systems. Today, desired tyrophics sell at 7.5% and it will increase to 25% beginning in 2020. We believe this tyrophry gene could significantly affect the competitive landscape of the US market to the benefit of domestic supply.

Julien Nebreda: Turn it to slide 18 and, in conclusion. I want to emphasize the key takeaway from this quarter's results. First,

Julien: Thank you, Ahmed.

Speaker Change: turning slide eighteen and inconclusion i want to emphasize the key take away from this quarter's results

Julien Nebreda: Our year-to-date performance demonstrates our ability to deliver profitable, important growth. We're on track to deliver 12% growth margins and positive full year adjusted EBITDA in fiscal year 2021. Second, we have started to see the benefits of our U.S. domestic content strategy that was put in motion well before the IRA was enacted.

Speaker Change: First.

Julien: Our year-to-date performance demonstrates our ability to deliver profitable growth.

Speaker Change: important

Speaker Change: We are on track to deliver 12% growth margins and positive full-year adjusted EBITDA in fiscal year 2024.

Unknown Executive: Second, we have started to see the benefits of our U.S. domestic content strategy that was put in motion well before the IRA was enacted. The outlook for utility-scale storage is very robust, and we are well positioned to capitalize on this growing market growth.

Speaker Change: Second, we have started to see the benefits of our U.S. domestic content strategy that was put in motion well before the IRA was enacted.

Julian Nibrata: I would like to touch briefly on the political environment and implications of the world. The demand for water storage systems in the US is supported by the growing needs for new capacity, with accessibility and resilience. It is well known that renewals' storage is a faster and more economic way to serve is growing. None of this, due to a potential change in administration. Our business model in the US, to also be resilient to change this in the political landscape.

Julien Nebreda: We're seeing strong customer interest, which is converted to initial orders. We have ample liquidity to support our growth plan. We successfully amended and upsized our credit facility, which now puts our liquidity at more than a billion dollars. The outlook for utility-scale storage is very robust. And we are well positioned to capitalize on this growing market growth, as evidenced by the strong growth of our pipeline and our bank. With that, I would like to open the call.

Speaker Change: We are seeing a strong customer interest which is converted to initial order.

Speaker Change: Sir.

Speaker Change: We have ample liquidity to support our growth plan. We successfully amended and upsized our credit facility, which now puts our liquidity at more than a billion dollars.

Speaker Change: and four

Speaker Change: The outlook for utility-scale storage is very robust.

Speaker Change: and we are well positioned to capitalize on this growing market lower

Speaker Change: As evidenced by the strong growth of our pipeline and our backlog.

Julian Nibrata: According to those third policy papers, you think that credit to promote domestic production. However, we believe that our US business model will also work effectively if a new administration were to change the industrial policy away from tax incentives in favor of tariffs.

Speaker Change: withthat i would like to openup the goal progress

Speaker Change: Thank you.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A list.

Speaker Change: Thank you. At this time we will conduct a question and answer session. As a reminder, to ask a question you will need to press star 1-1 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 1 again. Please stand by while we compile the Q&A roster.

Julian Nibrata: Sorry to slide down and please to report that we are on track for initial production of the blue and battery module in late September of this year. The model production line was successfully tested in the manufactures facility. The production line is now in the final stages of installation and initial commission in our Utah facility. We anticipate starting production with a number of battery modules and gradually ramping up to serve our needs.

Speaker Change: oh

Speaker Change: Our first question comes from Christine Cho at Barclays.

Christine Cho: Good morning. Good morning, Christine.

Unknown Executive: Over 60% of your revenues this quarter were from Rest of World, which, you know, also coincided with the very high ASPs and high margins.

Julien Nebreda: Over 60% of your revenues this quarter were from Rest of World, which also coincided with the very high ASPs and high margins. Is this just a function of more of your projects outside the U.S. requiring EPC? Just any color on the geographic breakdown this quarter, how that correlates with top-line margins, and how we should think about, you know, how this should trend next year. Maybe also an update on the geographic breakdown of your current backlog. I know it was historically 70-30, but it sounds like you're diversifying.

Speaker Change: Good morning. Good morning, Christine.

Christine Cho: Over 60% of your revenues this quarter was from Rest of World, which, you know, also coincided with the very high ASPs and high margins.

Christine Cho: Is this just a function of more of your projects outside the U.S. requiring EPC? Just any color on the geographic breakdown this quarter, how that correlates with top-line margins?

Julian Nibrata: Turn into additional discussions on the US market, on slide 10. Estimate for the size of US utility scale market continues to show growing adoption of energy storage by adding roughly 40 gigawatts into 2025. The significant demand has been fueled by corporate customers seeking clean, low cost and renewable when you live. Part of this growth in the US has been driven by the rise of Gen AI, which requires a tremendous number of new data services, which resulted in increasing electricity and capacity.

Speaker Change: and how we should think about you know how this should trend next year maybe also anupdate on the geographic breakdown of your current backlog i know it was historically sey thirtybut it sounds like your diververs find more

Christine Cho: Good morning, Christine. Yes, our international markets tend to have more EPCs, you know; they tend to be so that our solutions, and our offerings are a lot broader than what we do in the US. And second, as you know, we have been selling our ultra-stack offering in Europe, and our transmission assets. So you generally will see higher ASPs on the international market. In terms of the composition of our backlog, I think one third, two thirds is kind of where it's going right now.

Speaker Change: Good morning, Christine. Yes, our international markets tend to have more EPCs, you know, they tend to be, so our solutions, our offerings are a lot broader than what we do in the U.S.

Speaker Change: And second, as you know, we have been selling our UltraStack offering in Europe, you know, our transmission assets. So you generally will see higher ASPs on the international markets.

Speaker Change: In terms of the composition of our backlog, I think that one-third, two-thirds is kind of where it's going right now.

Julian Nibrata: We are seeing more and more opportunities coming to our pipeline associated with data sales. Volving the form of storage for the renewable PPAs that large-state companies are procuring to meet the growing demand and target recall. Currently, about 40% of our US pipeline is indirectly associated with data. We will also note that the great majority of the clean energy investments associated with the IRA and the resulting job creation are occurring in Republican ledges.

Christine Cho: We have seen a lot of progress in the international market. So when you look at the pipeline, it's more like 50-50. What I will say today when we look at our backlog is essentially, search, you know, I will be saying roughly, to search in the US. That's the way to look at it. The last point is that this is one of the drivers of the lumpiness in terms of our margins and our ASPs as we move forward. What type of projects come into revenue, for which type of project will recognize revenue on a quarterly basis, and that lumpiness will stay. Not all projects are the same.

Christine Cho: So, we have seen a lot of progress in the international market, so when you look at the pipeline, more like 50-50. What I'll say today when we look at our backlog is essentially, you know, two-thirds, you know, as we've been saying roughly, two-thirds in the U.S., one-third internationally.

Unknown Executive: search, you know, I will be saying roughly, to search in the US. That's the way to look at it. The last point is that this is one of the drivers of the lumpiness in terms of our margins and our ASPs as we move forward. What type of projects come into revenue, for which type of project will recognize revenue on a quarterly basis, and that lumpiness will stay.

Christine Cho: So, that's the way you should look at it.

Christine Cho: i'

Speaker Change: The third, the last point is that...

Speaker Change: This is one of the drivers of the lumpiness in terms of our margins and our ASPs as we move forward, what type of projects come into revenue, for which type of projects will recognize revenue on a quarterly basis. And that lumpiness will stay.

Julian Nibrata: Furthermore, any historic if we come in a critical part of an increasing numbers of grids across the country regardless of political needs. For example, in the agricultural market in Texas, a traditional red state, the standing role that any historic plays in the great activity, when you consider the impact connection to you. We chose nearly 132 GW of battery storage projects of nearly 35% from this time last year. In some, the US market increasing demand for electricity and capacity.

Julien Nebreda: Okay. And then for my follow-up question, is there a way to give us a sense of how much of your current backlog for U.S. projects requires U.S. sales? I know you've mentioned that you could eventually supply all of U.S. demand with the AESC contract, but I'd be curious to know if the majority of your U.S. customers were mandating that in the contract before the domestic content and Section 301 updates came out a couple of months ago, how those conversations have evolved since that update, and is there some sort of rule of thumb that we can use around how much higher the ASPs are, I would say that, you know, you have seen a lot of it.

Speaker Change: Not all projects are the same.

Speaker Change: Okay.

Speaker Change: And then for my follow-up, is there a way to give us a sense of how much of your current backlog for U.S. projects require U.S. cells?

Speaker Change: I know you've mentioned that you could eventually supply all of U.S. demand with the AESC contract, but curious to know

Speaker Change: if the majority of your u s customers were mandating that in the contracts before the domestic content and section three o one update came out a couple of months ago

Speaker Change: how those conversations have evolved since that update. And is there some sort of rule of thumb that we can use around how much higher the ASPs are, maybe percentage wise for your batteries that use domestic cells versus imported cells for your US customers for bookings going forward?

Julian Nibrata: The James AI industry is growing in need for renewable power, and the receiving of our US business model to policy changes makes us confident in our outlook for the US market and its contribution to our growth plan.

Unknown Executive: I would say that, you know, you have seen a lot of it.

Julien Nebreda: I would say that, you know, you have seen a lot of interest come up as people realize the, you know, with the new IRA guidelines and the new tariffs, you know, and I think that, generally, now everybody realizes this is the right move and we're ahead of everybody. So you see it a lot more than we have seen before. I prefer not to go into how that plays out because then, you know, we'll get into a rabbit hole of, you know, that I think will not help anybody.

Speaker Change: I would say that, you know, you have seen a lot of interns come up.

Julian Nibrata: Turning to slide 11. Alongside the attractiveness of the US market, in the Europe, Milanese and Africa region, I'm happy to say we are seeing a growing number of opportunities in Germany. And I'm resurgent in the UK and Ireland. Ireland intends to operate its electrical grid with 95% renewable. This level of renewable generation will require significant battery storage to provide a higher level of grid stability and reliability. For this reason, 2024 annual utility scale capacity addition are expected to be north of 11 GW which is more than 100% increase from the 2024 for customer. We see a similar story of robust growth in our region. In the Asia-Pacific and Australia region, we have seen tremendous growth over the past few years.

Speaker Change: as people have realized they

Speaker Change: with the new IRA guidelines and the new tariff. And I think that generally now everybody realizes this is the right move and we're ahead of everybody. So you'll see it a lot more.

Speaker Change: that what we have seen before. I prefer not to go into how that plays out because then, you know, we'll get into a rabbit hole of, you know, that I think will not help anybody.

Julien Nebreda: In terms of cost, what I can tell you, and this is very, very competitive information for us, so what I can tell you is that the costs are very competitive and very, very good, even though they include, you know, some costs some, some additional costs by producing them. They are very, very competitive, and our customers do very, very well when they contract with us. You know, that's the best way I can tell you. But at this stage, I would prefer not to disclose information on the actual price.

Unknown Executive: In terms of cost, what I can tell you, and this is very, very competitive information for us, so what I can tell you is that the costs are very competitive and very attractive. University of New York. I can tell you what, at this stage, I would prefer not to disclose information on the actual price.

Speaker Change: In terms of cost, what I can tell you, and this is very competitive information for us, so what I can tell you is that the costs are very competitive and very attractive.

Speaker Change: Executive. You know, even though they include, you know, some cost, some additional cost by producing in the U.S.

Speaker Change: So they are very, very competitive. And our customers do very, very well when they contract with us, the U.S.

Speaker Change: I can tell you at this stage I would prefer not to disclose information on the actual pricing.

Speaker Change: and content offering.

Dylan Nassano: Our next question comes from Dylan Nassano at Wolfe Research.

Operator: Our next question comes from Dylan Nassano at Wolf Research.

Julian Nibrata: With annual utility scale capacity additions, approaching nearly 8 GW this year, driven largely by Australia, where the national battery strategy continues to provide opportunity for our problems. Turning to slide 12. And please to report that we recently launched a new digital service center in India, which will serve as a center hub for our plan in operation in India, intelligence to develop a clean of assets managed by fluid, providing insights for the company's research and development and service options.

Speaker Change: Lex May, Julien Dumoulin, Ahmed Pasha, Julian Marquez

Dylan Nassano: Good morning, everybody.

Speaker Change: our nextper comes from de thestyle at will research

Julien Nebreda: Good morning, my friend. So, I'm just doing the math on the updated guidance here. So, it looks like you're taking $250 million out of the midpoint this year. You're holding 2025. A hundred million of what came out of this year is delayed by multiple years, so that seems to suggest up to 150 million shifted from this year to next year. So I guess if that map is correct, did anything shift out of your prior 2025 outlook? Because if you're adding 150 this year, wouldn't that put you at the top end or above the 35 to 40 percent growth?

Unknown Executive: So, just doing the math on the updated guidance here. So, it looks like you're taking $250 million out of the midpoint this year. You're holding 2025. So I guess if that map is correct, did anything shift out of your prior 2025 outlook? Because if you're adding 150 this year, wouldn't that put you at the top end or above the 35 to 40 percent growth?

Speaker Change: a every morning the morning my question

Speaker Change: So just doing the math on the updated guidance here, it looks like you're taking $250 million out of the midpoint this year. You're holding 2025.

Speaker Change: A hundred million of what came out of this year is delayed multiple years, so that seems to suggest up to 150 million shifted from this year to next year.

Speaker Change: so i guess if that map is correct did anything shift out of your prior two thousand and twenty five outlook because if you're adding on hundred and fifty this year when that put you at the top end or above the thirty five forty percent growth

Dylan Nassano: Well, I would say it's the funnel. We are, we're working on a $25, you know, budget for next year, and we'll give you more details on how 25 looks. But today, what we can, what we can confirm is that we can confirm 35 to 40 percent growth out of our original target of midpoint of tribute. That's what I will say. We'll give you more details when we, when we, on our next Ernie's call. Eric Layneau,

Julian Nibrata: We expect that these efforts will provide more value to our customers by optimizing the performance of their storage time. The co-location in Banderer, India, of the service center with his new remote monitoring and diagnostics capability. And our technology centers, product development capability provides a platform that is intended to allow for efficiency and experience response in both ways.

Speaker Change: Well, I would say, Stefano, we are working on a 25...

Speaker Change: You know, what for next year? And we'll give you more details of how 25 looks. But today, what we can confirm is that we can confirm 35 to 40% growth out of our original target of midpoint of 3 billion. So

Unknown Executive: That's what I will say. We'll give you more details when we, when we, on our next Ernie's call.

Speaker Change: That's what I will say. We'll give you more details when we, in our next earnings call in late November .

Julien Nebreda: Okay, and then as a follow-up to the board investigation that you spoke about, can you just speak to kind of what the scope of that investigation was? Which specific claim from the shore report were you guys looking into? Our, our, our committee hired a, a, you know,

Ahmed Pasha: I will now turn the call to Ahmed to discuss our financial results.

Speaker Change: okay and then as the follow up on the board investigation that we spoke about can you just speak to kind of what was the scope of that investigation in which specific claims from the shore report where you guys looking into

Unknown Executive: from the Shore Report, What are you guys looking into?

Ahmed Pasha: Thank you, Julian, and good morning, everyone. Today, I will review our third quarter financial results, our strong cash position and our new term outlook. Beginning with third quarter 2024 results on flight 14, we generated 483 million dollars in revenue, which was 20% higher than our expectations discussed on our last earnings call. This was primarily attributable to completing certain projects minestones ahead of schedule. Furthermore, we generated 85 million of adjusted gross profit, representing a 17.5% adjusted gross margin, which was the fourth consecutive quarter of double digit gross profit margins.

Julien Nebreda: Our other committee hired, you know, an independent law firm and brought in a forensic auditor, a forensic accounting firm, and they looked at everything that was there, irrelevant stuff that had no, you know, all the elements there and found that all of them had zero marriage Field. We're Clean Beetle Health.

Speaker Change: Our other committee hired, you know, an independent law firm and brought in a forensic auditor, a forensic accounting firm.

Unknown Executive: irrelevant stuff that has no, you know, all the elements there and found that all of them had zero Field. We're clean below health. That was, you know, and that's what we can say. It was really, really a very detailed investigation, looking at all this, everything that's there, even things that were implied but that were not necessarily written. And both the independent law firm, with the support of the accountants, came out with, you know, that all of that stuff has zero value.

Speaker Change: and they looked at every company.

Speaker Change: Everything that was there.

Speaker Change: Irrelevant stuff that has no, you know, all the elements there and found that all of them had zero merit.

Julien Nebreda: That was, you know, and that's what we can say. It was really, really a very detailed investigation, looking at all this, everything that was there, even things that were implied, that were not necessarily written. And both the independent law firm, with the support of the accountants, came out with, you know, that all of that stuff had zero.

Speaker Change: No Meredith in any of them.

Speaker Change: so we feel we clean beetle health

Speaker Change: That was a, you know, and that's what we can say, it was really, really a very detailed investigation. Looking at all this, everything that's there, even things that were implied.

Ahmed Pasha: Including the third quarter results, we delivered year-to-date adjusted gross margin of 12.8%. We expect to achieve Q4 adjusted gross margin within our previously communicated range of 10 to 12% and for the pullier to be at the higher end of that range. This performance reflects our focus on achieving operational efficiencies that have been translated to improve profitability or projects. During Q3, after operating expenses, we generated 16 million of adjusted EBDA, which puts our training for month EBDA in positive territory for the first time.

Speaker Change: that were not necessarily reading and both the independent off and where the support of the accounants came out with that all of that sof has zero merit

Speaker Change: Great, thank you very much. You're welcome.

Andrew Percoco: Our next question comes from Andrew Percoco and Morgan Stanley.

Andrew Percoco: Good morning. Thanks. Thanks for taking the question. I just want to come back to the domestic content piece for a second.

Unknown Executive: Good morning. Thanks. Thanks for taking the question. I just want to come back to the domestic content piece for a second.

Speaker Change: Our next question comes from Andrew Percoco and Morgan Stanley .

Andrew Percoco: Good morning, thanks for taking the question. I want to come back to the domestic content piece for a second. Just curious, there's obviously strong demand.

Unknown Executive: Just curious, obviously, strong demand for those products. How do you feel in terms of the capacity that you're getting from AESC? Do you see a need to expand that agreement anytime soon, just given the level of demand you're seeing? And just kind of curious about maybe how pricing conversations with AESC have shifted, just given, obviously, the higher demand for domestic sales over the last three months or so.

Julien Nebreda: Just curious, there's obviously strong demand for those products. How do you feel in terms of the capacity that you're getting from AESC? Do you see a need to expand that agreement anytime soon, just given the level of demand you're seeing? And just kind of curious about maybe how pricing conversations with AESC have shifted, just given, obviously, the higher demand for domestic sales over the last three months or so.

Andrew Percoco: for those products um how do you feel in terms of the capacity that you're getting from a ec

Ahmed Pasha: Overall, these results illustrate our commitment to delivering profitable growth to our shareholders.

Speaker Change: do you see a need to expand that agreement anytime soon just given the level of demand you're ing and kind of curious on maybe how pricing conversations with a e c have shifted to given obviously the higher demand for domestic cells over the last three months or self

Ahmed Pasha: Before turning to a discussion of our liquidity and guidance, I will briefly review a disclosure included in our 10Q that was filed yesterday. As you may know, a short seller report was published on us back in February of this year. In response to the allegations made in the short report, our boards audit committee conducted an investigation with the assistance of an outside council and forensic accountants. I am pleased to share that this investigation concluded that the allegations contained in the short report are without merit.

Andrew Percoco: Good, very good question. So we have contracted two lines with ASC, one that is coming, will start producing in late 2024, so deliveries in early 2025, and another one that will come into operation in 2025. And we have a right of first refusal for any additional lines for an additional line we bring. So we have ample capacity to meet the demand that we see today and clearly meet our commitments to the street.

Speaker Change: go very questions so we have we contracted two lines with a c one that is coming ar producing in late twotwentthousand and twenty four to thedeliververs in early twenty five and another one that will come into operation in in twenty five

Andrew Percoco: And we have a right of first refusal for any additional lines, for an additional line if they bring it up.

Unknown Executive: So we have ample capacity to meet the demand that we see today and clearly to meet our commitments to the street. So we're very happy. In terms of the deal with ASC, we remember we had to pay for this. We had to make that prepayment that we disclosed to all of you. So it's a firm deal on prices, and we haven't seen any discussion on pricing, or ASC is not requesting any addition, a regional prize, from the fact that this is becoming much more. We are very happy with that. And now our view is to accelerate this as much as possible.

Speaker Change: So we have ample capacity to meet the demand that we see today and clearly to meet our commitments to the street. So we are very happy.

Julien Nebreda: So we're very happy. In terms of the deal with ASC, we remember we had to pay for this. We had to make that prepayment that we disclosed to all of you. So it's a firm deal on prices, and we haven't seen any discussion on pricing, or ASC is not requesting any addition, a regional prize from the fact that this is becoming much, much more. What I will say is that, you know, we were convinced that this was the way to go. And I think the reality and the reaction of our customers have proven us right. We are very happy with that. And now our view is to accelerate this as possible, solidifying our first move with an advantage.

Ahmed Pasha: Recently, however, the SEC notified us that they are investigating certain matters pertaining to the company. Based on the information the SEC has requested, we believe they are examining some of the topics raised in the short service report. Such as revenue recognition policies and our previously disclosed material weakness. We are fully cooperating with the SEC. Although we cannot predict the timing of or the outcome, based on the nature of these matters and information requested by the SEC, we do not expect it to have a material impact on our financial.

Speaker Change: in terms of the deal with with the c we are ready we remember we we had to bray for this who have to make them we make that prepayment that we disclosed to all of you so 's affirm deal with prices and we haven't seen any discussion on on pricing r is not requested any additional

Ahmed Pasha: Foundation.

Speaker Change: igional price from the fact but this is becoming more much more popular

Speaker Change: what i will say that

Speaker Change: You know, we were convinced that this was the way to go, and I think the reality and the reaction of our customers has proven us right, and we are very happy with that. And now our view is to accelerate this as possible and solidify our first move with advantage in domestic content.

Unknown Executive: Okay, perfect. And then, maybe as a follow-up question, you mentioned AI and tech as a driver of demand. I'm just curious if there's any difference in attributes in terms of duration or sizing that you're seeing from maybe some of those conversations and maybe how that's impacting your offering or the pricing that you're achieving in the market. Thank you. No, no, no real difference from a technical point of view. What I will say is the level of urgency. I understand. Thanks so much.

Andrew Percoco: Okay, perfect. And then maybe as a follow-up question, you mentioned AI and tech as a driver of demand. I'm just curious if there's any difference in attributes in terms of duration, sizing that you're seeing from maybe some of those conversations, and maybe how that's impacting your offering or the pricing that you're achieving in the market. Thank you.

Ahmed Pasha: Turning to slide 15, we then update on our liquidity. We continue to bolster our liquidity to support our industry leading growth objectives. To that end, I am pleased to report that we ended the third quarter with nearly $600 million of total liquidity. I'm also happy to share that this week we replaced our ABL credit facility with a traditional revolver to further enhance our liquidity. As you may recall, our $400 million of ABL facility was carried by the level of our U.S, inventory, which has had a lower balance, thus limiting the availability under this facility to not more than $100 million since its inception.

Speaker Change: Okay, perfect. And then maybe as a follow up question, you mentioned AI and tech as a driver of demand. I'm just curious if there's any difference in in attributes in terms of duration, sizing that you're seeing from maybe some some of those conversations.

Julien Nebreda: No, no, no real difference from a technical point of view. What I will say is a level of urgency, our, you know, that's why I'll say the need for speed, which is also something that we have invested in. It is coming, you know, we're also seeing that that's becoming a need of the market; we need to do this fast. That's where, you know, I think that's a little bit of a difference from the past, where when we were not, you know, we were projects which are not necessarily data centers. I understand. Thanks so much.

Speaker Change: And maybe how that's impacting your offering or the pricing that you're achieving in the market. Thank you. No, not a real difference from a technical point of view. What I will say is a level of urgency.

Speaker Change: That's what I would say, the need for speed, which is also something that we have invested on. We're also seeing that. That's becoming a need of the market. We need to do this faster.

Speaker Change: That's where, you know, I think that's a little bit of a difference from from the past where when we were not, you know, we're projects which are not necessarily data center related.

Ahmed Pasha: The new government-like revolving credit facility contributes $500 million of commitments from an expanded bank growth. With this facility, on a performance basis, our total liquidity is now more than $1 billion, which puts us in an excellent position to capitalize on the growing energy storage market.

Speaker Change: understood thank so much

Justin Clare: Our next question comes from Justin Clare at World Capital Marketed Partners.

Speaker Change: our next question cuses from just in claire and one capital march partners

Unknown Executive: Hi, thanks for taking our questions.

Justin Clare: Hi, thanks for taking our questions.

Justin Clare: Yeah, good morning, Justin.

Julien Nebreda: Good morning. So I wanted to start off just asking you how you expect the gross margins for your domestic supply chain using U.S. cells to compare to margins when you're using international cells. And then just curious, as you ramp up the domestic supply chain, do you anticipate the margins to initially be lower and then increase as you scale up, or will you be kind of at full potential, you know, right away?

Unknown Executive: Good morning. So I wanted to start off just asking you how you expect the gross margins for your domestic supply chain using U.S. cells to compare to margins when you're using international cells. And then just curious, as you ramp up the domestic supply chain, do you anticipate the margins to initially be lower and then increase as you scale up, or will you be kind of at full potential, you know, right away?

Justin Claire: Hi, thanks for taking our questions.

Ahmed Pasha: Moving to slide 16, we have narrowed our poll year 24 revenue guidance range to 2.7 to 2.8 billion. With a big point of 2.75 billion, this is $250 million lower than our prior revenue guidance. This reduction is mostly due to two factors. First, there were two specific projects accounting for approximately $100 million of expected revenue that had been postponed by the customer for multiple years. Second, the signing of certain projects into our backlog was delayed for a variety of reasons that include site readiness, civil war permitting, and customer decision process.

Justin Claire: Yeah, good morning, Justin.

Justin: Good morning. So I wanted to start off just asking about, you know, how do you expect the gross margins for your domestic supply chain using US cells to compare to margins when you're using international cells?

Speaker Change: And then just curious, as you ramp the domestic supply chain, do you anticipate the margins to initially be lower and then increase as you scale up, or will you be kind of at full potential right away?

Unknown Executive: In terms of the margin on our US domestic offering, you know, I prefer not to go into that detail. As I said, this is very competitive, especially today.

Justin Clare: In terms of the margin on our US domestic offering, you know, I prefer not to go into that detail. As I said, this is very competitive, especially today. But I will say that.

Speaker Change: In terms of margin of our U.S. domestic offering, you know, I prefer not to go into that detail. As I said, this is very competitive, especially today.

Julien Nebreda: What I can say is that our U.S. domestic content makes us even more confident over 10 to 12, at 10 to 15, sorry, you know, the margin guideline that we provided. And if I can add up a little bit of publicity, we went from minus five to 12 today, you know, and I think that a lot of people, you know, are not convinced that we could deliver the 10 to 50 we're telling you today.

Speaker Change: But I will say that...

Ahmed Pasha: None of these delays were related to interconnection issues. These projects were signed and moved into our backlog admittedly later than anticipated. Although disappointing, we expect to recognize the majority of this delayed revenue in fiscal 25. As fully noted, our fiscal 24 guidance implies a Q4 result that would be the highest in our company's history. We have strong confidence in our ability to deliver on this goal as the majority of our Q4 project milestones are for production and the living of cubes, which is within our control.

Speaker Change: Our, what I can say is that our U.S. domestic content makes us even more confident over 10 to 12.

Speaker Change: at 10 to 15, sorry, you know.

Speaker Change: Margin Guidelines that we provided and if I can add up a little bit of a publicity

Speaker Change: We came from minus 5 to 12 today, you know, and I think that a lot of some people, you know, were not convinced that we could deliver the 10 to 50 we're telling you today. Well, I think that today, not only our territory, but where we see coming out, it makes us feel very, very confident.

Julien Nebreda: Well, I think that today, not only our territory but where we see it coming out, it makes us feel very, very part of it. And then, in terms of our ability to realize margins on the initial offering, we have put in significant investments. First, we're bringing the module line earlier to ensure that it runs very well. And we have put in investments in our labs to test our new products ahead of going public in a way that ensures that we can realize our margins from day one.

Speaker Change: So on that part, and then in terms of our ability to realize margins on the initial offering, we have put in a significant investment.

Ahmed Pasha: To that end, we have secured the necessary batteries, manufacturing slots, and logistics. In fact, with respect to our expected Q4 revenue, in the first five weeks of the quarter, we have delivered or put in transit 46% of required cubes, thus securing our revenue for almost half of our expected Q4 revenue. In summary, our quarter-to-date performance and our outlook for the remaining two months of the year gives us confidence in our ability to deliver on our Q4 customer commitments and our devised full year 24 revenue.

Speaker Change: First, we're bringing the line, the module line earlier to ensure that it runs very well and we have put in investments in our labs.

Speaker Change: to test our new products ahead of going publicly in a way to ensure that we can realize our margins from day one.

Julien Nebreda: So we feel very confident that both our U.S. domestic content with a new line, with a new module line being fully tested for a period of time, and our new labs give us the confidence that we're gonna be able to monetize on the margins on U.S. domestic content, our new products from day one.

Speaker Change: So, we feel very confident that both our U.S. domestic content with a new line, with a new module line being fully tested for a period of time.

Speaker Change: And our new labs give us the confidence that we're going to be able to monetize on the margins of U.S. domestic content our new products from day one.

Ahmed Pasha: Finance. Turning to slide 17, I will briefly review our other guidance metrics. Lowering the big point of our 4.24 revenue guidance by $250 million would be expected to have a cross-profit impact of at least $25 million. However, we have taken proactive actions to mitigate the impact on our profitability targets. To that end, we are expecting to achieve a cross-profit margin at the upper end of 10 to 12 percent expected range for this year, and delivered a adjusted EBDA of $55 million to $65 million.

Justin Clare: Okay, got it. That's, that's really helpful. And then just on your backlog, curious, how much of the backlog do you anticipate recognizing in fiscal 25 at this point? And if you could just comment on project timelines, how they're evolving, and then just the anticipated average timeline from when you book a project to when you're able to complete a project. And then maybe you could comment on just the bottlenecks that you're seeing and whether you can pull timelines forward.

Unknown Executive: Okay, got it. That's, that's really helpful. And then just on your backlog, curious, how much of the backlog do you anticipate recognizing in fiscal 25 at this point? And if you could just comment on project timelines, how they're evolving, and then just the anticipated average timeline from when you book a project to when you're able to complete a project. And then maybe if you could comment on just the bottlenecks that you're seeing and whether you can pull timelines forward. Yeah.

Speaker Change: Okay, got it. That's really helpful.

Speaker Change: And then just on your on your backlog curious how much

Speaker Change: of the backlog do you anticipate recognizing in fiscal 25 at this point? And if you could just comment on

Speaker Change: project timelines, how they're evolving, and then just the anticipated average timeline from when you book a project to when you're able to complete a project. And then maybe if you could comment on just the bottlenecks that you're seeing, and whether you can pull timelines forward.

Julien Nebreda: Great. In terms of our $25 revenue, what we have in our backlog for $25 revenue, it's roughly a third. So in line with what we had last year, we feel, you know, very well about it. Terms of our projects, you know, our projects, our project timelines, we have invested a lot in accelerating our capability of delivering, and that, I think, has given us a competitive position when customers are in a hurry. Or, you know, as I mentioned, data centers, they want things very, very quickly. No, that gives us a competitive position.

Ahmed Pasha: This revised guidance would point of $60 million is only $5 million below our prior guidance. In terms of our long-term outlook, we continue to expect our cross-profit margins to be in the 10 to 15 percent range. Furthermore, we are raising our ARR guidance and now expect to achieve ARR of approximately $100 million by the end of fiscal 24th up from our previous guidance of approximately $80 million. This increase is the result of the 13th growth we are seeing from our services business.

Speaker Change: Great. In terms of our 25 revenue, what we have in our backlog for 25 revenue, it's roughly a third. So in line with what we had last year and we feel, you know, very well about it, looks great.

Speaker Change: In terms of our projects timeline, we have invested a lot in accelerating our capability of delivering projects.

Speaker Change: You know, and that, I think, has given us a competitive position when customers are in a hurry, or, you know, as I mentioned, data centers, they want things very, very quickly. You know, that gives us a competitive position.

Justin Clare: However, you know, what has become, I mean, a little bit clearer now is that some of the time it is not necessarily set by us but set by, you know, other external factors. However, our shortened project timelines allow for much more, from an economic point of view, much more efficient. In terms of projects, project timelines, I think we should continue to use the 18 months that we told you. We brought it down, we have been bringing it down, but I think that's a good guideline for our financial projections and a good guideline for you to look to. Our background. We'll let you know if things, you know, improve, you know, change material. Okay, I appreciate it.

Speaker Change: however what what has we come i mean a little bit clear and now that some of the time it is not necessarily said by us

Ahmed Pasha: Finally, looking ahead to fiscal 25, we continue to expect strong growth as Julian discussed. Using our original fiscal 24 revenue guidance great point of 3 billion at the days, we reaffirm our expected fiscal 25 when we grow up 35 to 20 percent.

Speaker Change: but set by you know other external factors. However, our shortened project timelines allows a much more, from an economic point of view, a much more efficient project.

Unknown Executive: In terms of projects, project timelines, I think we should continue to use the 18 months that we told you. We brought it down, we have been bringing it down, but I think that's a good guideline for our financial projections and a good guideline for you to look to.

Julian Nibrata: With that, let me turn the call back to Julian for exclusive remarks. Thank you, Ahmed.

Speaker Change: In terms of project timelines, I think we should continue to use the 18 months that we told you.

Julian Nibrata: Turning to slide 18 and in conclusion, I want to emphasize the key takeaways from this quarter's results. First, our year-to-day performance demonstrates our ability to deliver profitable. Importantly, we are on track to deliver 12 percent growth margins and positive food yield adjusted EBDA in fiscal 24th. Second, we have started to see the benefits of our U.S, domestic content strategies that were put in motion well before the IRA was enacted. We are seeing a strong customer interest which is converted to initial growth. Third, we have ample equity to support our growth plan. We successfully amended an upside our credit facility, which now puts our liquidity and more than a billion dollars.

Speaker Change: We brought it, we have been bringing it down, but I think that's a good guideline for, it's a good guideline for our financial projections and a good guideline for you to look at our, our...

Julian Nibrata: And fourth, the outlook for utility scale storage is very robust and we are well positioned to capitalize on this growing market global, as evidenced by the strong growth of our pipeline and our backlog.

Speaker Change: We'll let you know if things, you know, improve, you know, change materially.

Speaker Change: Okay, appreciate it. Thank you.

Leanne Hayden: Okay, I appreciate it. Thank you. Our next question comes from Leanne Hayden at Kennecourt Genuity.

Operator: Our next question comes from Leanne Hayden at Kennecourt Genuity.

Speaker Change: May, Julien Dumoulin, Ahmed Pasha, Julian Marquez

Speaker Change: Our next question comes from Leanne Hayden at Kennecourt Genuity.

Leanne Hayden: Morning, everyone. Congratulations on the quarter. And thanks so much for taking my question, start. I know you're repeating yourself.

Leanne Hayden: Morning, everyone. Congrats on the quarter. And thanks so much for taking my question. To start, I know you reiterated 2025 revenue growth expectations. I was just wondering if you still expect to see the same profitability as previously guided. I believe it was a 10 to 15% gross margin.

Unknown Executive: Yes, we do expect the same profitability of 10 to 15, and I will tell you that our performance this year gives us even more confidence that we will be able to deliver in the 10 to 15. We are very happy. This was our transformation when we took over the company to today, you know, from minus five to now being able to feel very confident in the 10 to 15. We're all very proud of the work that we've done.

Julien Nebreda: Yes, we do expect the same profitability of 10 to 15, and I will tell you that our performance this year gives us even more confidence that we will be able to deliver in the 10 to 15. We are very happy. This was our transformation when we took over the company to today, you know, from minus five to now being able to feel very confident in the 10 to 15. We're all very proud of the work that we've done.

Speaker Change: Yes, we do expect the same profitability of 10 to 15 and I will tell you that performance this year give us even more confidence that we will be able to deliver in the 10 to 15 percent range.

Speaker Change: You know, so we are very happy. This was our transformation when we took over the company to today, you know, from minus five to now being able to feel very confident in the 10 to 15. We are all very proud of the work that we have done here.

Unknown Executive: Great, thanks. And then just one more for me on increasing data center demand. Are your data center discussions focused mostly on hyperscalers or small providers as well? Or any color you could provide on that would be great. You know, as you know, we work with top-tier developers in the US, so it's mostly hyperscalers, you know, a, there might be a one or two that are midsize, but generally hyper. Thank you.

Leanne Hayden: Great, thanks. And then just one more question on increasing data center demand. Are your data center discussions focused mostly on hyperscalers or small providers as well? Or any color you could provide on that would be great. You know, as you know, we work with top-tier developers in the US, so it's mostly hyperscalers, you know, a, you know, there might be a one or two that are midsize, but generally hyper.

Unknown Executive: With that, I would like to open up the call for questions. Thank you. At this time, we welcome that the question and answer session as a reminder to ask the question, you will need to press startle one on your phone and wait for your answer to be announced.

Speaker Change: Great, thanks. And then just one more for me on increasing data center demand. Are your data center discussions focused mostly on hyperscalers or small providers as well or any color you could provide on that would be great.

Speaker Change: As you know, we work with top-tier developers in the U.S., so it's mostly hyperscalers, you know. You know, there might be a one or two that are mid-sized, but generally hyperscalers. That's what we do.

Unknown Executive: To withdraw your questions, please press start one one again. Please stand by what become part of the Q&A roster.

Julien Nebreda: Understandable. Great. Thanks so much. I'll jump back in queue. Thank you.

Speaker Change: Thank you for listening. Have a great day.

Speaker Change: Understood. Great. Thanks so much. I'll jump back in queue.

Operator: Our next question comes from Jordan Levy at Truist Security.

Jordan Levy: Our next question comes from Jordan Levy at Truist Security.

Speaker Change: helthank you thankyouen

Christine Cho: Our first question comes from Christine Cho, Edward Wates. Good morning. Good morning, Christine. Over 60% of your revenues, this quarter was from rest of the world, which also coincided with the very high ASPs and high margins.

Jordan Levy: Morning all, and I just wanted to get a sense of what you're seeing specifically in the international market from a competition perspective with a large entrant kind of entering that market earlier this year, I think, particularly in Europe.

Speaker Change: Our next question comes from Jordan Levy at Truist Securities.

Jordan Levy: Good morning all and appreciate you taking my questions. I just wanted to get a sense of what you're seeing specifically in the international market from a competition perspective with a large entrant kind of into that market earlier this year I think in particularly in Europe.

Julian Nibrata: Is this just a function of more of your projects outside the U.S, requiring EPC, just any color on the geographic breakdown this quarter, how that correlates with top-line margins, and how we should think about, you know, how this should trend next year, maybe also an update on the geographic breakdown of your current backlog. I know it was historically 7030, but it sounds like you're diversifying more. Good morning, Christine. Yes, our international markets tend to have more EPCs, you know, they tend to be, so that our solutions are offering a lot broader than what we do in the U.S. And second, as you know, we have been selling a rule track offering in Europe, you know, our transmission assets.

Julien Nebreda: Yes, as you know, each market is different. I'm being very clear that our markets are with some of the players we see in the US are not active. However, I will say about the European market, it tends to be especially the UK more than Europe. Let's say start; let's talk about the UK. The UK is probably the most competitive. You know, and it's a market we are very, very happy that we can win and we continue progressing because it is a very competitive market because it is very open to a lot of entrants. And it's also a market that requires, you know, very good capabilities in terms of delivery. So, you know, that combination makes it interesting.

Speaker Change: Yes, you know that each market is different. I'm being very clear that our markets are, but some of the players we see in the U.S. do not.

Speaker Change: are not active. However, I will say about the European market, it tends to be, especially the UK, more than Europe , let's talk about the UK. The UK is probably the most competitive market.

Unknown Executive: a lot because it is a very competitive market because it is very open to a lot of entrants. And it's also a market that requires, you know, very good capabilities in terms of delivery. So you know, that combination makes it an interesting market, because it's a new market, they have one hour, and not all players offer one hour; it tends to be less than that.

Unknown Executive: It's a market we are very, very happy that we can win and we continue progressing.

Speaker Change: a lot because it is a very competitive, it is a very competitive market because it is very open to a lot of entrants. And it's also, it's a market that requires, you know, very good capabilities in terms of delivery. So, you know, that combination makes it an interesting market to work.

Julian Nibrata: So you generally would see high SAP ASPs on the international markets. In terms of the composition of our backlog, I think that, you know, 60, at 1.3.2.3, it's kind of where it's going right now. So we would tend, we have seen a lot of progress in the international markets. When you looked at the pipeline, more like 50.50. What I would say today when we looked at a backlog is essentially, you know, two-thirds, you know, I've really been saying roughly two-thirds in the U.S, one-third international.

Jordan Levy: The rest of Europe, I would say the intensity of competition in Europe is also a little bit higher, however. Because it's a new market, they have one hour, and not all players offer one hour. It tends to be less than that. It's a little bit less than the UK.

Speaker Change: The rest of Europe , I would say the intensity of competition in Europe is also a little bit higher, however, because it's a new market, it has one hour, you know, and not all players offer one hour, it tends to be not that, you know, it's a little bit less than the UK.

Julien Nebreda: Appreciate it, and then maybe just kind of a follow up. I know you've probably had a lot of conversations. I'm just curious if those conversations from your commentary last quarter have evolved at all in terms of what customers might be looking for in the Direct Storage Solution as it relates to duration or anything like that.

Unknown Executive: and then maybe just kind of a follow-up on what customers might be looking for.

Speaker Change: Appreciate that and then maybe just kind of a follow-up on your prior question on the data center market. I know y'all have had probably a lot of conversations in the space with

Julian Nibrata: So that's a way just to look at it. And, you know, the third, the last point is that this is one of the drivers of the lumpiness in terms of, you know, our margins and our ASPs as we move forward. You know, how they, what type of projects coming to, from which type of projects will recognize revenue on a quarterly basis? And that lumpiness will stay, not because not all projects are the same. Okay.

Speaker Change: with key players. And I'm just curious if those conversations from your commentary last quarter, if those conversations have evolved at all in terms of what customers might be looking for, for a more direct storage solution as it relates to duration or anything like that. Yeah.

Jordan Levy: Most of our, you know, our, our

Julien Nebreda: Most of our data center demand comes indirectly. We support PPAs that the big top-tier developers offer data centers and large tech companies. I will say the great majority of it is indirectly.

Unknown Executive: Most of our, you know, our data center demand is indirect. It comes indirectly. We support PPAs that the big, you know, top tier developers offer data centers for big and large tech companies. So I will say the great majority of it is indirectly. There's very little that we do directly, and that doesn't seem to be a market that is opening up. We'll continue. We believe that most of us that are connected to data centers will go through large, PPAs, you know, with the big tech.

Unknown Executive: Most of our, you know, our data center demand is indirect, it comes indirectly.

Unknown Executive: is we support PPAs that the big, you know, top tier developers offer data centers for some big and large tech companies for us.

Julian Nibrata: And then for my follow-up, is there a way to give us a sense of how much of your current backlog for U.S, projects require U.S, cells? I know you've mentioned that you could eventually supply all of U.S, demand with the AESC contract, but curious to know, if the majority of your U.S, customers were mandating that in the contract before the domestic content and Section 301 update came out a couple of months ago, how those conversations have evolved since that update.

Jordan Levy: There's very little that we do directly, and that doesn't seem to be a market that is opening up. We believe that most of us that are connected to data centers will go through PPAs with the large tech companies. Our next question comes from Ameet Thakkar at BMO Capital Markets.

Speaker Change: i would say the grade minority it is indirectly there's very little that we will ctly and that alsot seenm to be a market that that is openpping it up well we'll continue we believe that most of ourselves

Speaker Change: to that connected to our centers will go through large to through pppa to with the large st companies

Julian Nibrata: And is there some sort of rule of thumb that we can use around how much higher the ASPs are, maybe percentage-wise, for your batteries that use domestic cells versus imported cells for your U.S, customers for booking going forward? I would say that, you know, you will, you have seen a lot of interest come up as people have realized the, you know, with the new, with the new IRA guidelines and the new tariffs. You know, and I think that generally now everybody realizes this is the right move and where I don't worry about it. So you see a lot more than what we have seen before.

Speaker Change: Thanks so much.

Speaker Change: Our next question comes from Ameet Thakkar at BMO Capital Markets.

Unknown Executive: Hi. Good morning. Good morning.

Ameet Thakkar: Good morning.

Speaker Change: I am warming up.

Unknown Executive: Good morning, Julien, good morning. Just real quick, it looked like the implied ASPs this quarter were, I think, like around $430 at KWH.

Ameet Thakkar: I was just wondering if you could kind of speak to, were there any kind of one-off factors that kind of drove that? Or are we looking at it maybe not, perhaps not the right way? Thanks.

Unknown Executive: Hey Ameet, this is Ameet. So yes, I think if you're looking just for the quarter, you're right. And I think that has more to do with the mix of the contracts, because we had more international contracts during the quarter where we have EPC elements embedded in those contracts. But I think if you look at for the year, year-to-date versus year-to-date, ESPs are roughly 25% less. And that reflects the pricing, you know, what we have seen in the commodity prices. So that is the right way to think about, you know, year-to-date basis is pretty, is declining, but that reflects, you know, the lithium-ion prices.

Ameet Thakkar: Hey Ameet, this is Ameet. So yes, I think if you're looking just for the quarter, you're right. And I think that has more to do with the mix of the contracts, because we had more international contracts during the quarter where we have EPC elements embedded in those contracts. But I think if you look at for the year, year to date versus year to date, ESPs are roughly 25% less. And that reflects the pricing, you know, what we have seen in commodity prices. But so that is the right way to think about, you know, year to date basis is pretty much declining. But that reflects, you know, the lithium ion prices.

Julian Nibrata: I prefer not to go into how that plays out because then, you know, we'll get into a rabbit hole of, you know, that I think will not happen. Valley, in terms of cost, what I can tell you, and this is very, very competitive information for us. So, what I can tell you is that the costs are very competitive and very attractive, you know, even though they include, you know, some cost, some, some additional costs by producing in the US.

Unknown Executive: Yeah.

Speaker Change: Hey Ameet, this is Ameet. So yes, I think if you're looking just for the quarter, you're right. And I think that is more to do with the mix of the contracts, because we have more international during the quarter, where we have EPC elements embedded in those contracts.

Unknown Executive: But I think if you look at for the year, year-to-date versus year-to-date, ESPs are roughly 25% less.

Julian Nibrata: So, they are very, very competitive and our customers do very, very well, when they contract with us, the US and Mexico, that's the best way. I can tell you what, at this stage, I will prefer not to disclose information on, on the actual pricing, the content, offering.

Unknown Executive: And that reflects the pricing, you know, what we have seen in the commodity prices. So that is the right way to think about, you know, on a year-to-date basis. It's declining, but that reflects, you know, the lithium-ion prices.

Speaker Change: Great, thank you.

Julien Nebreda: Our next question comes from Kashi Harrison at Piper Sandler.

Kashi Harrison: Good morning, guys. Good morning. Hey, good morning, Julien, and thanks for taking my questions.

Dylan Nassano: Our next question comes from Dylan Nassano, and we'll research. So, just on the math on the updated guidance here, it looks like you're taking 250 million out of the midpoint this year, you're holding 2025, 100 million of what came out of this year is blade multi-year, so that seems to suggest up to 150 million shifted from this year to next year. So, I guess if that map is correct, did anything shift out of your prior 2025 outlook, because if you're adding 150 this year, wouldn't that put you at the top end or above the 35% to 40% growth?

Kashi Harrison: Congratulations on the impressive bookings backlog and also the execution. So I wanted to focus on the backlog and bookings. You know, I noticed that the total backlog increased significantly in 3Q, but the implied 12 months from the Q was flat, a quarter of a quarter, around $2.3 billion. It is a 12-month look, so it's only good through June 30 of next year. I was just wondering if you were to extend that to September, can you give us a sense of, you know, what would happen to that, you know, implied $2.3 billion estimate? I'm just wondering if there's another big jump in 4Q of next year just because of the general waiting and 4Q waiting of the business.

Unknown Executive: Good morning, guys. Good morning. Hey, good morning, Julien, and thanks for taking my questions. Congrats on the impressive bookings, backlog, and also the execution. So I wanted to focus on the backlog and bookings. You know, I noticed that the total backlog increased significantly in 3Q.

Speaker Change: But the implied 12 months from the Q is, you know, flat quarter of a quarter around, you know, 2.3 billion. It is a 12 month look. So you know, it's only good through June 30 of next year. And I was just wondering if you were to extend that to September

Can you give us a sense of what would happen to that implied $2.3 billion estimate? I'm just wondering if there's another big jump in 4Q of next year just because of the general 4Q weighting of the business.

Julian Nibrata: Well, I would say it's the final. We are working on 25, you know, budgets for next year, and we'll give you more details on how 25 looks, but today, what we can, what we can confirm is that we can confirm 35 to 40% growth out of our original target of midpoint of 3. So, that's what I would say. We'll give you more details when we, in our next earnings call in late November.

Julien Nebreda: So yes, you're right. I think this is the nature of our business, where revenues are lumpy. And frankly, that is partly driven by the nature of the contracts that we have and the customers who want their deliveries during the summer peak months. So yes, I think we, I mean, I think probably 60-70% of our revenue is second half back unloaded this year. And we think that probably will be the case next year as well.

Speaker Change: So yes, you're right. I think this is the nature of our business where the revenues are lumpy and frankly that is partly driven by the nature of the contracts that we have and the customers who want their deliveries during the summer peak months.

Speaker Change: So yes, I think we, I mean, I think probably 60-70% of our revenue is second half back-end loaded this year, and we think probably that would be the case next year as well.

Ahmed Pasha: Okay, and then as a follow up on the board investigation that you spoke about, can you just speak to kind of what was the scope of that investigation, which specific claims from the short report where you guys looking into? Our committee hired an independent law firm and brought in a forensic auditor, a forensic accountant firm, and they looked at every comment, everything that was there. Irrelevant stuff that has no, you know, all the elements there and found that all of them had zero merit. There's no merit in anything.

Kashi Harrison: Scott, so the $2.3 billion would be probably significantly higher if I were to include $4.3 billion.

Unknown Executive: Scott, so the 2.3 billion would be probably significantly higher if I were to include 14.

Unknown Executive: Scott, so the $2.3 billion is probably significantly higher if you were to include 4Q next year.

Julien Nebreda: So yeah, but I think that the key there is the percentage of completion. I think as we sign more contracts, we, as we execute on those contracts, we will continue to realize, but net net, you will see, you know, more back-end loaded. That's the lumpiness that we have in our business.

Unknown Executive: So yeah, but I think that the key there is the percentage of completion. I think as we sign more contracts, we, as we execute on those contracts, we will continue to realize, but net net, you will see, you know, more back end loaded. That's the lumpiness that we have.

Ahmed Pasha: So, we feel we're clean below health, that was, you know, and that's what we can say. It was really, really a very detailed investigation, looking at all this, everything that's there, even things that were implied. That were not necessarily reading. And both the independent law firm with the support of the accountants came out with that, you know, that all of us of us zero merit.

Unknown Executive: Yeah, but I think that the key there is the percentage of completion. I think as we sign more contracts, we, as we execute on those contracts, we will continue to realize, but net net, you will see, you know, more back end loaded. That's the lumpiness that we have in our business.

Unknown Executive: Got it. I appreciate that. And then for my follow-up question, I know it's tough to guide to forward bookings, but I wanted to try to ask this question anyway. Do you think you can hold that $4 or $5 billion flat through the year? I only ask since next quarter is a very big revenue quarter, and so I was just trying to get a sense of if you could hold $4 or $5 through year end.

Kashi Harrison: Got it. I appreciate it. I appreciate that.

Unknown Executive: Got it. I appreciate that. And then for my follow-up question, I know it's tough to guide to forward bookings, but I wanted to try to ask this question anyway.

Unknown Executive: Do you think you can hold that $4-5 billion flat exiting the year? I only ask since next quarter is a very big revenue quarter, and so I was just trying to get a sense of if you can hold $4-5 billion through year-end. Thank you.

Julien Nebreda: Yeah, I think that is the expectation like we did last year. You know, I mean, I think we are pretty much in the same position where we were last year at this stage. Q3 call, we were about one third of our revenue for 24 locked in our backlog, and we are at the same place, and the expectation is, as we sign more and more contracts, I think we will be in a similar situation.

Kashi Harrison: And then for my follow-up question, I know it's tough to guide the forward booking, but I wanted to try to ask this question anyway. Do you think you can hold that four or five billion flat through the year? I only ask since next quarter is, you know, a very big revenue quarter, and so I was trying to get a sense of if you could hold four or five through year-end. Yeah, I think that is what the expectations are.

Speaker Change: Yeah, I think that is the expectations like we did last year, you know, I mean, I think we are pretty much in the same position where we were last year at this stage.

Unknown Executive: Great, thank you very much. Welcome.

Andrew Percoco: Our next question comes from Andrew for Coco and Morgan Stanley. Good morning, thanks for taking the question. I just, I want to come back to the domestic content piece for a second. Just curious, this obviously strong demand for those products. How do you feel in terms of the capacity that you're getting from AESC? Do you see a need to expand that agreement anytime soon, just given the level of demand you're seeing? And just kind of curious on maybe how pricing conversations with AESC have shifted, just given obviously the higher demand for domestic sales over the last three months or so.

Speaker Change: Q3 call we were about one-third of our revenue for 24 locked in in our backlog and we are at the same place and expectation is as we sign more and more contracts.

Julien Nebreda: I mean, this last quarter we signed five gigawatt hours, as you saw, and frankly, that is equivalent to the full year 23 deliveries. So we are seeing significant growth in volume, and hopefully that trend will continue.

Speaker Change: I think we will be in a similar situation. I mean, this last quarter we signed five gigawatt hours, as you saw, and frankly, that is equivalent to the full year 23 deliveries. So we are seeing significant growth in volume, and hopefully that trend will continue.

Unknown Executive: Thank you.

Operator: Our next question comes from Ben Kallo at Baird.

Ben Kallo: Our next question comes from Ben Kallo at Baird.

Ben Kallo: Hey, good morning, guys. Thank you for taking my question. My first question, thank you. My first question was just about the pricing environment; you guys talked about the ASPs and, you know, where they've trended this year. As you look out to next year, could you maybe talk to us about how, you know, we square the 12 to 15% gross margin with, you know, pricing, if you expect it to be continuing to go down, maybe what your levers for decreasing costs are, I know, as you transition to, you know, US manufacturing.

Operator: Our next question comes from Ben Kallo at Baird.

Ben Kallo: Hey, good morning, guys. Thank you for taking my question. Good morning. Thank you. My first question was just on, you know, pricing environment. You guys talked about the ASPs and, you know, where they've trended this year. As you look out to next year, could you just maybe talk to us about how, you know, we square the 12% to 15% gross margin with, you know, pricing if, you know, if you expect it to continue to go down, maybe what your levers for decreasing costs, I know, as you transition to, you know, U.S. manufacturing. So if I put all that together, maybe just the levers on bringing down costs so you can keep up with price declines. And then my second question is just what you're seeing in competition.

Julian Nibrata: Good, very good questions. So we contracted two lines with the ASC one that is coming, start producing in late 2024 for deliveries in early 25s, and another one that will come into operation in 25. And we have a right-of-first refusal for any additional lines, for an additional line is they bring it up. So we have ample capacity to meet the demand that we see today. And our are clearly to meet our commitments to the to the streets.

Ben Kallo: So if I put all that together, maybe just the levers on bringing down costs, so you can you can keep up with price declines. And then my second question is just what you're seeing in competition in the US in terms of international players, and specifically, you know, Chinese, Korean players coming to the US for to produce the US and, you know, how competitive they are in pricing right now, and if that's impacting any of your business as you look out into next year. Thank you. Great.

Julian Nibrata: So we're very happy. In terms of the deal with the ASC, we had a we remember we we we have to pay for this. We have to make them we make that pre-payment that we disclose to all of you. So it's a firm deal with prices. And we haven't seen any discussion on on pricing or ASC is not requesting any additional a regional price from from the fact that this is becoming more much more popular.

Speaker Change: tin the u us in terms of international players and specifically chinese korean players coming to the u s for to produce the u s and you how competitive they are in pricing right now and if that's the impacting any of your business as you look out into next year thank you

Julien Nebreda: Great. Thank you, Ben. On the prize. What do we see today? You know, maybe, maybe go back one step.

Julian Nibrata: What I will say is that, you know, we were we were convinced that this was the way to go. And I think that reality and the reaction of our customers is proving us right. And we are we are very happy with that. And now our view is to accelerate this as possible and solidified our first move with advantage in domestic content.

Andrew Percoco: Okay, perfect.

Speaker Change: Great. Thank you, Ben. On the pricing.

Ben Kallo: Lithium carbonate was stable up to May, but it came down around 10 to 15, around 20, let's say, since May. So it is getting softer, that gives you a sign that the battery storage market is getting softer. The price of lithium has become a lot less relevant in terms of how this is priced.

Speaker Change: Why don't we sit through that, you know, maybe go back one step.

Speaker Change: Lithium carbonate, which has been stable up to May, came down around 10 to 15, around 20, let's say, since May. So it is getting softer. That gives you a sign that somehow the battery storage market is getting softer.

Julian Nibrata: And then maybe it's a follow-up question you mentioned AI and tech as a driver of demand. I'm just curious if there's any difference in in attributes in terms of duration sizing that you're seeing from maybe some of those conversations. And maybe how that's impacting your offering or the pricing that you're achieving in the market. Thank you. No, not real difference from a technical point of view. What I will say is a level of urgency.

Unknown Executive: either the little car or the price of lithium has become a lot less relevant in terms of how this is priced. So that's an important point, and having said that, we do believe that we will continue seeing some price reductions going forward, and we plan for it, and we work for it, and our guidance takes into consideration the fact that our pricing was going to, it's going to, you know, will continue coming strong.

Unknown Executive: The price of lithium has become a lot less relevant in terms of how this is priced. So that's an important point to add.

Julien Nebreda: So that's an important point, and having said that, we do believe that we will continue seeing some price reductions going forward, and we plan for it, and we work for it, and our guidance takes into consideration the fact that our pricing was going to, and it's going to, you know, will continue coming. We see strong elasticity of the mass. You see it in our, see it in our, in our pipe, know 65% growth in less than a year.

Unknown Executive: Having said that, we do believe that we will continue seeing some price reductions going forward, and we plan for it, and we work for it, and our guidance takes into consideration the fact that our pricing will continue coming down.

Julian Nibrata: Our, you know, that's what I said, the need for speed, which is also something that we have invested on. It is coming, you know, we're also seeing that that that's becoming a need of the market. We need to do this faster. So that's where, you know, I think that's a little bit of a difference from from the past where when we were not, you know, we're projects which are not necessarily. The data center related. Understood.

Unknown Executive: You see it in our, see it in our, in our pipe. I mean, this has always been a very competitive market. It is not getting more competitive. It is essentially, you know, maybe the names change, you know, because people realize that they cannot deliver what they say they can deliver and they cannot go away. But the competition has not given up. But when we talk to our customers, you know, these are mirages.

Andrew Percoco: Thanks so much. Yeah, Andrew.

Unknown Executive: We see strong elasticity of demand in the economy.

Julien Nebreda: See it in our backlog, just look at our orders this year. This year, we were able to contract the same volume we recognized last year just in a, So that tells you the tremendous... So we're, you know, as I said, the prices are not, we're not going to see a repetition of 24, we will see prices continue to soften, you know, and we're ready for it. We have a view of how it will work.

Unknown Executive: Marquez. Strong. You see it in our pipeline.

Unknown Executive: Thank you.

Speaker Change: You know, 65% growth in less than a year. See it in our backlog, just looked at our orders this year, we were able to contract the same volume we recognized last year, just in a quarter.

Unknown Executive: So that tells you the tremendous elasticity of it.

Unknown Executive: May, Lex May, Julien Dumoulin, Ahmed Pasha, Lex May, Julien Dumoulin, Ahmed Pasha, Julian

Unknown Executive: So where are we now?

Justin Clare: Our next question comes from Justin Claire and one capital, more partners. Hi. Thanks for taking our questions. Yeah, good morning, Justin. Good morning.

Unknown Executive: As I said, the prizes are not, we're not going to see a repetition of 24. We will see...

Ben Kallo: And we can commit to our 35 to 40% growth out of our 3 billion midpoint, you know, our prior midpoint with that, in terms of competition. I mean, this has always been a very competitive market. It is not getting more competitive.

Unknown Executive: Prices continue to soften.

Unknown Executive: You know, and we're ready for it. We have a view of how it will work.

Unknown Executive: And we can commit to our 35% to 40% growth out of our $3 billion midpoint, you know, our prior midpoint with that information.

Julian Nibrata: So I wanted to start off just asking about, you know, how do you expect the gross margins for your domestic supply chain using US cells to compare to margins when you're using international cells. And then just curious, as you ramp the domestic supply chain, do you anticipate the margins to initially be lower and then increase as you scale up or will you be kind of at full potential, you know, right away.

Unknown Executive: In terms of competition.

Julien Nebreda: It is essentially, you know, maybe the names will change, you know, because people realize that they cannot deliver what they say they can deliver and they cannot go away. But the competition has not given up. I haven't seen, you know, there are a lot of players that are talking about stuff. But when we talk to our customers, you know, these are mirages. There's nothing there. You know, we're gonna do these in Dallas and in Arizona.

Unknown Executive: This has always been a very competitive market. It is not getting more competitive. It is essentially, you know, maybe the names change.

Unknown Executive: You know because people realize that they cannot deliver what they say they can deliver and they cannot go away But but the competition has not give down. I haven't seen you know, there are a lot of Players are talking about stuff

Julian Nibrata: In terms of margins of our US domestic offering, you know, prefer not to go into that detail as I said, this is very competitive, especially today. But I will say that our what I can say is that our US domestic content makes us even more confident over 10 to 12, of 10 to 15, sorry, you know, a margin guideline that we provided. And if I can add up a little bit of a publicity, we came from minus five to 12 today, you know, and I think that, and a lot of some people come, you know, we're not convinced that we could deliver the 10 to 50, we're telling you today, well, I think that today, not only our territory, but where we see coming out, we know it makes us feel very, very confident.

Julien Nebreda: And when I've, you know, clearly, I don't, a lot of these competitors, I do not get the information. But when I talk to my customers, I think we went there, there's nothing, you know, you cannot touch it, you can't, you know, it sounds very, very good does not exist.

Unknown Executive: But when we talk to our customers, you know, these are mirages. There's nothing behind it.

Unknown Executive: There's nothing. We are going to do this in Dallas, in Arizona. When I talk to my customers, they say that they went there, that it's nothing, you cannot touch it. Saul sounds very, very good. It does not exist.

Unknown Executive: We're going to do this in Dallas, in Arizona, and clearly a lot of these competitors, I do not get the information. But when I talk to my customers, hey, we went there, there's nothing. You cannot touch it. It all sounds very, very good, does not exist. So hey.

Unknown Executive: So, hey, we do expect more competition in the US market. We are ready for it. And we love competition. So, we are ready for that. But I do not think that it will take a while for a lot of these companies to get there.

Ben Kallo: So hey, we do expect more competition in the US market, and we are ready for it. And we love competition. So, you know, we're ready for that. But I do not think that it will take a while for a lot of these dreams to become reality on their part. Great, thank you, I appreciate it.

Unknown Executive: We do expect more competition in the US market and we are ready for it and we love competition So, you know, we're ready for that for that, but I do not think that it will take a while for a lot of these, you know

Unknown Executive: dreams to become reality.

Speaker Change: You know from from their part of it

Speaker Change: Great, thank you, I appreciate it.

Joseph Osha: Our next question comes from Joseph Osha of Aguba High Partners.

Julian Nibrata: So on that part, and then in terms of our ability to realize margins on the initial offering, we have put in a significant investments, first we're bringing the line, the module line earlier to ensure that it runs very well. And we have put in investments in our labs to test our new products ahead of going publicly in a way that to ensure that we do not, we can realize our margins from they work.

Joseph Osha: Good morning, everybody. Congratulations. Good morning, Joe.

Unknown Executive: Heather, good morning, everybody. Congratulations. Good morning, Joe.

Unknown Executive: Our next question comes from Joseph Osha at Guggenheim Partners.

Unknown Executive: Heather, good morning everybody. Congratulations.

Joseph Osha: My first question relates to domestic cell supply. I was at an industry event a while ago, and saw some numbers suggesting that, you know, by 2026, when this 301 tariff comes into effect, the industry is only going to be able to meet maybe a quarter to a third of demand with domestically sourced cells. I'm wondering if you have a reaction to that, and if you're seeing kind of the same numbers.

Heather: My first question relates to domestic cell supply. I was at an industry event a while ago, saw some numbers suggesting that by 2026, when this 301 tariff comes into effect, the industry is only going to be able to meet maybe a quarter to a third of demand.

Julian Nibrata: So we feel very confident that both our US domestic content with a new lab, with a new module line being fully tested for a period of time. And our new labs are give us a confidence that we're going to be able to monetize on the margins on US domestic content our new products from from they want. Okay, got it. That's really helpful.

Heather: Demand, with domestically sourced cells. I'm wondering if you have a reaction to that and if you're seeing kind of the same numbers.

Unknown Executive: We heard, you know, that all. There are people who said we're going to be a surplus. And there are people who say, if you looked at all the products that are around and people who have the view you have, that this is going to be this, this market is going to have a huge debt. Probably somewhere in the middle is going to be a tight market, I believe, but I think that there will be enough to cover, you know, I don't know about 26. That's a little bit.

Julien Nebreda: We heard, you know, they're all. There are people who said we're going to be a surplus. And there are people who say, if you looked at all the products that are around and people who have the view you have, that this is going to be this, this market is going to have a huge debt. Probably somewhere in the middle is going to be a tight market, I believe, but I think that there will be enough to cover, you know, I don't know about 26. That's a little bit.

Unknown Executive: We heard, you know, they're all...

Unknown Executive: There are people who said that there was going to be a surplus, and there are people, if you looked at all the projects that are around, and people that have the views you have, that this is going to be, this market is going to have a huge deficit.

Julian Nibrata: And then just on your on your backlog, curious how much of the backlog do you anticipate recognizing in fiscal 25 at this point? And if you could just comment on, you know, project timelines, how they're evolving, and then just the anticipated average timeline from when you book a project to when you're able to complete a project. And then maybe if you could comment on just the bottlenecks that you're seeing and whether you can call timelines forward.

Unknown Executive: Probably somewhere in the middle. It's gonna be a tight market, I believe, but I think that there will be enough to cover, you know, I don't know about 26, that's a little bit, but, you know, over time we'll have enough to cover the demand in the U.S.

Unknown Executive: But you know, over time, we'll have enough to cover them. This is very important, and it will happen. We will work to meet that demand from our side. So I think that there will be more players. So we don't expect a market where we'll be so tight, as you probably have read some of the reports.

Joseph Osha: But you know, over time, we'll have enough to cover them. This is very important, and it will happen. We will work to meet that demand from our side. So I think that there will be more players. So we don't expect a market where we'll be so tight, as you probably have read some of the reports.

Unknown Executive: U.S.

Unknown Executive: You know, this is very important and it will happen. We will work.

Unknown Executive: to meet that demand. So from our part, so I think that, and you know, that there will be more players. So I we don't expect a market where we'll be, we'll be so, so, so tight, as you know, you probably have read some of the reports around.

Julien Nebreda: Okay, thanks. And then my follow-up question: lots of chatter out there about project timing. I'm wondering if you look at your storage-only business relative to your storage plus solar business, if you're seeing perhaps any greater level of volatility or movement and uncertainty in the solar plus storage business, because it certainly seems like we're picking up those signals from some of the other folks in the solar world. Thank you.

Julian Nibrata: Yeah. Great. In terms of our 25 revenue, what we have in in our backlog for 25 revenue, roughly a third. So in line with what we have last year, we feel, you know, very well about it. Good way. Tense of our projects, you know, our projects, a project timeline, we have invested a lot in accelerating our capability of delivering projects. You know, and that I think has given us a competitive position when customers are in a hurry or you know, just a mention, data centers, the one thing very, very quickly.

Speaker Change: Okay, thanks. And then my follow-up, I'm just wondering, lots of chatter out there about project timing. I'm wondering if you look at if your storage-only business

Speaker Change: Relative to your storage plus solar business.

Speaker Change: If you're seeing perhaps any greater level of volatility or movement and uncertainty in the solar plus storage business, because it certainly seems like we're picking up those signals from some of the other folks in solar world. Thank you.

Julien Nebreda: I mean, the reality is we haven't seen anything get any worse or deteriorate in any way. Normal project delays occur when we get involved, and a transformer is late. But it's all counted in weight, you know, or not in years or in months, you know; it is the normal delays you get in a project that need a permit to move things through a street or things of that sort. So we do not, we haven't seen, and it's not any different between the projects that we do. Batteries, standalone, which is mostly in our international markets than the one. Batteries and Solder.

Unknown Executive: I mean, the reality is we haven't seen anything get any worse or deteriorate in any way. Normal project delays, when we get involved, normal project delays, that a transformer is late. But it's all counted in weight, a permit to move things through a street or things of that sort, so we do not haven't seen, and it's not any different between the projects that we do. Batteries and Solder

Joseph Osha: I mean, the reality is we haven't seen any yet.

Unknown Executive: I mean, the reality is we haven't seen anything get any worse or deteriorate in any way. Normal project, when we get involved, normal project delays at a transformer is late. But it's all counted in weeks.

Julian Nibrata: No, that gives us a competitive position. However, you know, what is what has become, I mean, a little bit clearer now that some of the the time it is not necessarily set by us, what's set by, you know, other certain factors. However, our short and a project timelines allows a much more from an economic point of view, a much more efficient project. In terms of of a project project timelines, I think we should continue to use the 18 months that we told you.

Unknown Executive: You know or you know not not in years or in months, you know, it is the normal delays you get in a project that

Unknown Executive: a permit to move things through a street or things of that sort. So I we do not we haven't seen and it's not any different between the projects that we do.

Julian Nibrata: We brought it. We have been bringing it down, but I think that's a good guideline for, it's a good like guideline for our financial projections and a good guideline for you to look at our, our, our, our background. We'll let you know if things, you know, improve, you know, change material. Okay, appreciate it. Thank you.

Joseph Osha: It's the same type of delay. But as we have said, we get into this project, you know, a lot later in the process. So when we're there, our customers, you know, have signed PPAs, they have financing, they have all the permits in place. So the stuff that gets these things delayed are things that are delayed by weeks, never.

Unknown Executive: It's the same type of delay. But as we have said, we get into this project, you know, a lot later in the process. So when we're there, our customers, you know, have signed PPAs, they have financing, they have all the permits in place. So the stuff that gets these things delayed are things that delay them by weeks, never mind.

Speaker Change: Batteries, standalone, which is mostly in our international markets and than the ones we do.

Speaker Change: May, Julien Dumoulin, Ahmed Pasha, Julian Marquez

Unknown Executive: And we get into this project a lot later. So when we're there, they are.

Unknown Executive: Customers have, you know, have signed PPAs, they have financing, they have all the permits in place. So the stuff that gets these things delayed are things that delays by weeks, never by months.

Julian Nibrata: Our next question comes from Leigh Ann Hayden, at Ken Accordionary. Morning everyone, congrats on the quarter and thanks so much for taking my question. To start, I know you've reiterated 2025 revenue growth expectations, I was just wondering if you still expect to see the same profitability as previously guided, I believe it was a 10 to 15% growth margin. Yes, we do expect the same profitability of 10 to 15 and I will tell you that performance this year gives us even more confidence that we would be able to deliver in the 10 to 15% range.

Unknown Executive: Thank you.

Julien Nebreda: Our next question comes from Brian Lee at Goldman Sachs.

Unknown Executive: Hey guys, this is Tyler Bissett. I'm for Brian. Thank you for taking our questions and congratulations on the solid results here.

Brian Lee: Hey guys, this is Tyler Bissett. I'm on behalf of Brian.

Unknown Executive: Our next question comes from Brian Lee at Goldman Sachs.

Unknown Executive: Hey guys, this is Tyler Bissett on for Bryan. Thank you for taking our questions and congrats on the solid results here.

Brian Lee: Thank you for taking our questions and congratulations on the solid results here. Your pipeline appears to have grown the strongest in APAC and EMEA, but I guess I would have expected to see continued strength in the Americas, given growth from data centers as well as domestic content. I see the CAGR growth is higher in both regions, but from a lower base. You called out growth in Germany and Australia, so are you seeing certain products getting better than expected traction there, or are there any other markets where you're seeing outsized growth?

Tyler Bissett: Your pipeline appears to have grown the strongest in APEC and EMEA, but I guess I would have expected to see continued strength in the Americas, given growth from data centers as well as domestic content. I see the CAGR growth is higher in both regions, but from a lower base.

Julian Nibrata: You know, so we are very happy. This was our transformation when we took over the company today, you know from minus 5 to now being able to feel very confident in the 10 to 15, we are all very proud of the work that we have done here.

Tyler Bissett: You called out growth in Germany and Australia. So are you seeing certain products getting better than expected traction there, or are there any other markets where you're seeing outsized growth?

Julien Nebreda: I think that once we talk to Germany, it's a new nascent market that is very, very attractive. Australia has been growing, and we see big prospects for continuous growth. As you said, we have seen the growth rate out of a much lower base, but the growth rate in our international market is growing more strongly. And the thing is that, because our international markets are a mix, things move here or there differently, and they're not affected.

Julian Nibrata: Great, thanks. And then just one more for me on increasing data center demand. Are your data center discussions focused mostly on hyperscalers or small providers as well or any color you could provide on that would be great. As you know, we work with top tier developers in the US, so it's mostly hyperscalers. You know, you know, there might be a one or two that are midsize but generally hyperscalers.

Speaker Change: I think the ones we talked about, Germany is a new nascent market that is very, very attractive.

Speaker Change: You know, Australia has been growing and we see big prospects for continuous growth. So, you know, as you said, we have seen the growth rate out of a much lower base, but the growth rate in our international market.

Unknown Executive: That's what I will say. Understood.

Unknown Executive: Great. Thanks so much. I'll jump back into you. Thank you.

Speaker Change: You know, growing more strongly and the thing is that because our international markets are a mix. Things move here or there differently and they're not affected. So, you know, very, very, you know, very, very happy with our global strategy. I think that's kind of what I would like maybe highlight.

Unknown Executive: Very, very, you know, very, very happy with our global strategy. I think that's kind of what I would like maybe highlight. Concentrating globally and working with you know globally gives us an ability to manage headwinds that you might get here or there much more effectively than if we were only a company working in a few markets, you know, or in a couple of markets.

Julien Nebreda: So, you know, very, very, you know, very, very happy with our global strategy. I think that's kind of what I would like maybe to highlight. Concentrating globally and working globally gives us an ability to manage headwinds that you might get here or there much more effectively than if we were only a company working in a few markets.

Unknown Executive: Thank you, Leanne.

Joy Levy: Our next question comes from Joy Levy. It's your security. Morning all and appreciate you taking my questions. I just wanted to get a sense of what you're seeing, specifically in the international market from a competition perspective with a large entrance kind of into that market earlier this year, particularly in Europe. Yes. You know, each market is different. I'm being very clear. There are markets are with some other players we see in the US do not are not active. However, I'll say about the European market. It tends to be especially the UK more than Europe.

Unknown Executive: This concentrating globally and working globally gives us an ability to manage headwinds that you might get here or there much more effectively than if we were only a company working in a few markets, or only a couple of markets.

Unknown Executive: And then you guys called out 40% of your US pipeline data senders. How do you expect that number to trend going forward? Yeah, I hope I think it will continue to grow.

Brian Lee: And then you guys called out 40% of your US pipeline data senders. How do you expect that number to trend going forward? Yeah, hey, I hope that I think it will continue to grow.

Speaker Change: You know.

Speaker Change: And then you guys called out 40% of your US pipeline data senders. How do you expect that number to trend going forward?

Julien Nebreda: I think it will continue to grow. I think it will continue to grow, but it's difficult to know.

Unknown Executive: I think it will continue to grow. It's difficult to know, As you know, we get this demand indirectly, so we don't involve the data centers; we involve the developers who talk to the data centers. But talking, as we all listen to the calls of all our customers and we know what they're doing, they are talking about a game in the data center, all of them, about a game in the data center market. I think it will be, you know, a multiple of what we have seen up until now.

Unknown Executive: Yeah!

Brian Lee: As you know, we get this demand indirectly. So we don't involve involve the data centers; we involve involve the developers who talk to the data centers. But talking, as we all listen to the calls of all our customers, and we know what they're doing. They are talking about a game in the data center, all of them, about a game in the data center market that I think will be, you know, a multiple of what we have seen so far. I expect that number to grow.

Unknown Executive: I think it will continue to grow, I think it will continue to grow.

Julian Nibrata: Let's talk about the UK. The UK is probably the most competitive market. You know, and it's a market we are very, very happy that we can win and we continue progressing a lot because it is a very competitive. It is a very competitive market because it is very open to a lot of entrance. And it's also is a market that requires, you know, very good capabilities in terms of delivery. So, you know, that combination makes it an interesting market to work.

Unknown Executive: difficult to know as you know that we get this demand indirectly

Unknown Executive: So we don't involve with the data centers, we involve with the developers who talk to the data centers.

Unknown Executive: But talking leeches, as we always listen to the calls of all our customers and we know what they're doing, they are talking about a game in the data center, all of them, about a game in the data center market that I think it will be a multiple of what we have seen up to date.

Julian Nibrata: The rest of Europe, I will say the intensity of competition in Europe is also a little bit higher, however, because it has, you know, a new market. It has one hour, you know, a not all players offer one hour. It tends to be not that, you know, it's a little bit less than the UK. Appreciate that.

Unknown Executive: I expect that number to grow.

Speaker Change: Perfect, thank you very much.

Operator: Our last call comes from Biju Perincheril at Susquehanna Financial Group. Hey, good morning. Thanks for taking my question. I wanted to

Biju Perincheril: Our last call comes from Biju Perincheril at Susquehanna Financial Group. Hey, Biju. Good morning. Hey, good morning. Thanks for taking my question. I wanted to, I wanted to ask about the opportunity to use batteries for

Biju Perincheril: Hey, Biju. Good morning. Hey, good morning.

Speaker Change: Our last call comes from Biju, Pierre, and Cheryl at Susquehanna Financial Group.

Biju Perincheril: Thanks for taking my question. I wanted to, I wanted to ask about sort of the opportunity to use batteries for transmission applications in the US, sort of especially coupling that with DLR technologies. And also, I want to see if there are any sort of regulatory changes that need to take place for that to be deployed. Good point. We continue.

Biju Perincheril: Hey Abigail, good morning.

Julian Nibrata: And then maybe just kind of a follow up on your prior question on the data center market. I know you all have probably a lot of conversations in the space with key players. And I'm just curious if those conversations, you know, from your commentary last quarter, if those conversations have evolved at all in terms of what customers might be looking for for a more direct storage solution as a related duration or anything like that.

Biju Perincheril: Hey, good morning. Thanks for taking my question. I wanted to

Biju Perincheril: I want to ask about the opportunities to use batteries for transmission applications in the US, especially coupling that with DLR technologies.

Biju Perincheril: and also want to see if there is sort of any regulatory changes that need to take place for that to be deployed here.

Julien Nebreda: This is a great technology that has been very successful in Europe. We are promoting that technology in the U.S. I would say that the main... And as you know, or you probably know, FERC allows batteries to be a transmission asset. So, you know, that's good.

Julian Nibrata: Yeah. Most of our, you know, our data center demand is indirect. It comes indirectly is we support ppa is that the big, you know, top tier developers offer the data centers for some big and large tech companies. So I will say the great majority it is indirectly. There's very little that we do directly. And that doesn't seem to be a market that is opening up. We'll continue. We believe that most of ourselves to that connected to our centers will go through large tool through ppa's, you know, to with the large tech. Company. Thanks so much.

Speaker Change: Good point. We continue, this is a great technology that has been very successful in Europe . We are promoting that technology in the U.S.

Unknown Executive: I would say that the main... And as you know, or you probably know, FERC allows batteries to be a transmission asset. So, you know, that's good. We're working on it, and I think that it has become more and more of a success in Europe. We'll see it happening in the U.S., so we're confident that it will.

Unknown Executive: I will say that the main...

Unknown Executive: And as you know, or you probably know, FERC allows batteries to be a transmission asset. So, you know, that's good.

Biju Perincheril: A lot of the system operators are allowing it in their systems. You know, MISO came up with the rules in the Northeastern system allowing it, so there are some rules. However, what we see is that there are restrictions on the ownership of the batteries by the owners of the transmission assets. You can put them in, but they cannot be owned by the same person or by the same entity. And that, I think, is a restriction that needs to be, and that comes out of the view that a transmission operator or owner cannot dispatch the generation or call it in on demand.

Biju Perincheril: And that's what Navatory essentially does. So that creates a regulatory hurdle that we've been trying to explain. You need to allow the same owners, the same owner of the transmission asset to own the batteries, you know, for the We're working on it, and I think that it has become more and more of a success in Europe. We'll see it happening in the U.S., so we're confident that it will.

Unknown Executive: A lot of the system operators are allowing it in their systems, you know, MISO came up with the rules, the Northeastern system allowed it, so there are some rules. However, what we see is that there are restrictions.

Speaker Change: on the ownership of the batteries by the owners of the transmission assets. You know, you can put them, but they cannot be owned by the same person, by the same entity.

Unknown Executive: Our next question comes from the lead sector at BMO Capital Markets.

Unknown Executive: And that, I think, is a restriction that needs to be, and that comes out of the view that a transmission operator or owner cannot dispatch a generation or call in demand. And that's what, you know, Navatory essentially does that. So that creates a regulatory hurdle that we've been trying to overcome.

Ameet Thakkar: Hi, good morning, good morning, good morning. Just real quick, it looked like the implied ASP's this quarter were, I think, like, $3.00 a KWH. I was just wondering if you could kind of speak to whether any kind of one-off factors that kind of kind of drove that, or are we looking at it maybe perhaps not the right way? Thanks.

Unknown Executive: to, you know, explain to regulators.

Unknown Executive: You need to allow the same owners, the same owner of the transmission asset to own the batteries in order for this to work.

Unknown Executive: And we're working on it, and I think that it has become more and more of a success in Europe . We'll see it happening in the U.S., so we're confident that it will happen.

Ahmed Pasha: Hey, Ameet. This is Ahmed. So yes, I think the, if you're looking just for the quarter, you're right. And I think that is more to do with the mix of the contracts because we have more international doing the quarter, where we have EPC elements embedded in those contracts. But I think if you look at for the year, year to date versus year to date, ESPs are roughly 25% less. And that reflects the pricing, you know, but we have seen in the commodity prices. But so that is the right way to think about, you know, year to date basis is pretty declining, but that reflects, you know, the, you can mind prices.

Unknown Executive: Great. Thank you.

Lexington May: This concludes the question and answer session. I would now like to turn it back to Lexington for closing remarks.

Speaker Change: Okay, thanks.

Speaker Change: This concludes the question and answer session. I will now like to turn it back to Lexington for closing remarks.

Operator: Thank you for participating in today's call. If you have any additional questions, feel free to reach out to me. We look forward to speaking with you again when we report our fourth quarter results. Have a good day.

Unknown Executive: Thank you for participating in today's call. If you have any additional questions, feel free to reach out to me. We look forward to speaking with you again when we report our fourth quarter results. Have a good day.

Unknown Executive: Thank you for participating on today's call. If you have any additional questions, feel free to reach out to me. We look forward to speaking with you again when we report our fourth quarter results. Have a good day.

Operator: This does conclude the program. You may now disconnect.

Cashy: Our next question comes from Cashy here at Piper Sandler. Good morning, Cashy. Good morning. Hey, good morning, Julian. And thanks for taking my questions. Congrats on the impressive bookings backlog and also the execution. So I wanted to focus on the backlog and bookings. You know, I noticed that the, you know, the total backlog increased significantly in 3Q. But the implied 12 month from the Q was, you know, flat quarter of a quarter around 2.3 billion.

Cashy: It is a 12 month look. So, you know, it's only good through June 30 of next year. And I was just wondering if you were to extend that to September, can you give us a sense of, you know, what would happen to that, you know, implied 2.3 billion estimate. I'm just wondering if there's another big jump in 4Q of next year, just because of the, just the general waiting for you waiting up the business.

Julian Nibrata: So, so yes, you're right. I think this is the nature of our business where the revenues are lumpy. And frankly, that is partly driven by the nature of the contracts that we have and the customers who want their deliveries during the summer peak, peak months. So yes, I think we, I mean, I think probably 60, 70% of our revenue is second half back and loaded this year. And we think probably that would be the case next next year as well.

Julian Nibrata: Scott, so the 2.3 billion would is probably significantly higher if I, if you were to include 4Q next year. Yeah, but I think that the key there is the percentage of completion. I think as we sign more contracts, we, as we execute on those contracts, we will continue to realize. But net, net, you will see, you know, more back and loaded. That's the lumpiness that we have, and our business. Got it. I appreciate that.

Julian Nibrata: And then for my follow-up question, I know it's tough to guide to forward bookings, but I wanted to try to ask this question anyway. Do you think you can hold that $45 billion flat exiting the year? I only ask since next quarter is a very big revenue quarter. And so I was trying to get a census if you could hold $45-3 billion. Thank you. Yeah, I think that is the expectations. Like we did last year, you know, I mean, I think we are pretty much in the same position where we were last year at this stage.

Julian Nibrata: Q3 call, we were about one-third of our revenue for 24, locked in in our backlog and we are the same place and expectation is as we sign more and more contracts. I think we will be in the similar situation. I mean, this last quarter, we signed five gigawatt hours, as you saw. And frankly, that is equivalent to the full year, 23 deliveries. So we are seeing significant growth in volume and hopefully that trend will continue.

Dan Cattle: Thank you. Our next question comes from Dan Cattle at Bayard. Hey, good morning, guys. Thank you for taking my question. My first question was just on pricing environment. You guys talked about the ASPs and where they trended this year. As you look out to next year, could you just maybe talk to us about how we squared the 12 to 15% gross margin with pricing. If you expect it to be continued to go down, maybe what your levers for decreasing costs, I know as you transition to U.S, manufacturing.

Dan Cattle: So if I put all that together, maybe just the levers on bringing down costs so you can keep up with price declines. And then my second question is just what you are seeing in competition in the U.S, in terms of international players and specifically Chinese Korean players coming to the U.S, to produce the U.S, and how competitive they are in pricing right now. And if that's impacting any of your businesses, you look out into next year.

Dan Cattle: Thank you. Great. Thank you, Ben. On the pricing, why don't we see two there? Maybe go back one step. Lithium carbonate has been stable up to May, came down around 10 to 15, around 20, let's say since May. So it is getting softer. That gives you a sign that somehow the battery store's market is getting softer. Lithium or the price of Lithium has become a lot less relevant in terms of how this is priced.

Dan Cattle: So that's an important point to add. Having said that, we do believe that we will continue seeing some price reductions going forward and we plan for it and we work for it. And our guidance takes into consideration the fact that our pricing is going to, you know, will continue coming down. We see strong elasticity of demand in this market. Strong. You see it in Plan, you know, 65% growth in less than a year.

Dan Cattle: See it in our backlog, just looked at our order this year, this year, we were able to contract the same volume we recognized last year, just in a quarter. So that tells you the tremendous elasticity of that. So where, you know, as I said, the prices are not, we're not going to see a repetition of 24. We will see prices continue to soften, you know, and we're ready for it. We have a view of what how they will work.

Dan Cattle: And we can commit to our 35 to 40% growth out of our 3 billion midpoint, you know, our prior midpoint without information. In terms of competition, I mean, this has been always been a very competitive market. It is it is not getting more competitive. It is essentially, you know, maybe the names change, you know, because people realize that they cannot deliver what they say they can deliver and they can't go away.

Dan Cattle: But for the competition has not been down. I haven't seen, you know, a lot of the players are talking about stuff. But when we talk to our customers, you know, these are midrages. There's no semi-hide. You know, we're going to do this in Dallas, in Arizona. And when you when I, you know, clearly, I don't a lot of these competitors, I do not get the information. Well, when I talk to my customers, I think we went there.

Dan Cattle: There's nothing, you know, you cannot touch it. You know, it all sounds very, very good. Does not exist. So, hey, we do expect more competition in the US market. And we are ready for it. And we love competition. So, you know, we're ready for that for that. But I do not think that it will take a while for a lot of these, you know, the dreams to become reality, you know, from from their part of it. Great. Thank you. I appreciate it.

Joseph Osha: Our next question comes from Joseph. I'll show you that behind partners.

Julian Nibrata: Good morning, everybody. Congratulations. Good morning, Joe. My first question relates to domestic cell supply was in an industry event a while ago. So some numbers suggesting that by 2026, when this 301 terror comes into effect, the industry is only going to be able to meet maybe a quarter to a third of demand with domestic resource cells. I'm wondering if you have a reaction to that and if you're seeing kind of the same numbers.

Julian Nibrata: We heard, you know, there are people who are going to be a surplus and there are people who say if you looked at all the points that are around and people that have a view that this is going to be this market is going to have a huge deficit. Probably somewhere in the middle is going to be a tight market, I believe, but I think that they will be enough to cover.

Julian Nibrata: You know, I don't know about 26 that a little bit, but you know, over time, we'll have enough to cover the demand in the US. You know, this is very important and it will happen. We will work to meet that demand from our part. So I think that, and you know, that there will be more players. We don't expect a market where we will be will be sold so tight as, you know, you probably have read some of the reports around. Okay. Thanks.

Julian Nibrata: And then my follow up. I'm just wondering if lots of chatter out there about project timing. I'm wondering if you look at if your storage only business relative to your storage plus solar business. If you're seeing perhaps any greater level of volatility or movement and uncertainty in the solar plus storage business, because it certainly seems like we're picking up those signals from some of the other folks in solar world. Thank you.

Julian Nibrata: I mean, the reality is we haven't seen anything, anything get any worse or deteriorated in any way, normal project, when we get involved, normal project delays that are performing late, how counted in weeks, you know, or, you know, not in years or in month, you know, it is the normal delays you get in a project that Appear me to move things through a street or things of that sort, so we do not we haven't seen and it's not any different between the projects that we do batteries, standalone, which are mostly non-international markets and than the ones we do, batteries and so on, it's the same type of delay, but as we have said, and then we get into this project, you know, a lot later in the process, when we're there, the pro they are Costumers have, you know, assigned PBAs, they have finance and they have all the permits in place are so the stuff that gets these things delayed are things that delays by weeks, never mind, so Thank you.

Tyler Bissett: Our next question comes from Brian Lee and Goldman Sachs. Hey guys, this is Tyler Bissett on for Brian. Thank you for taking our questions and congrats on the solid results here.

Julian Nibrata: Your pipeline appearance have grown the strongest in APAC and in the, but I guess I would have expected to seek and sent to you strength in the Americas, given growth from data centers, as well as domestic content. I see the Kager growth is higher in both regions, but from the lower base. You call that growth in Germany and Australia, so you've seen certain products getting better than expected traction there or are there any other markets that you're seeing outside of growth?

Julian Nibrata: I think the ones we talked about Germany is a new nascent market that is very, very attractive, you know, Australia has been growing and we see a big prospect for for continuous growth. So, you know, as you said, we have seen the growth rate out of a much lower base, but the growth rates in our international market, you know, growing more strongly and the thing is that because our international markets are a mix, things move here or they're differently and they're not affected. So, you know, very, very, you know, very, very happy with our global strategy.

Julian Nibrata: I think that's kind of when I will add maybe highlight. This a concentrating globally and working with, you know, globally gives us an ability to manage, you know, headwinds that you might get here there much more effectively that if we were only a company working in a few markets, you know, or only a couple of markets.

Julian Nibrata: And then you guys called out 40% of your US pipeline data centers. How do you expect that number to turn going forward? Yeah. Hey, I hope that I think we'll continue to grow. I think we'll continue to grow and it's difficult to know as you know, we get this demand indirectly. So, we don't involve with the data centers. We involve with the developers who talk to data centers, but talking glitches as we always listen to the cause of all our competitors and we know what they're doing.

Julian Nibrata: They are talking about a game in the data center market that I think it will be, you know, a multiple of what we have seen up, to A, so I expect that number to grow. Perfect, thank you very much. Great.

Biju Perincheril: Our one call comes from Biju Perincheril, Joseph Curran, financial group.

Julian Nibrata: Good morning. Good morning, thanks for taking my question. I wanted to ask about the opportunities to use batteries for transmission applications in the US, sort of especially coupling that with DLR technologies. And also one, if there is sort of any regulatory changes that need to take place for that to be deployed here. Good point. We continue, this is a great technology that has been very successful in Europe. We are promoting that technology in the US.

Julian Nibrata: I will say that the main, and as you know, or you probably know, the FERC allows batteries to be a transmission asset. So, you know, that's good. A lot of the system operators are allowing it in their systems, you know, my so came up with the rules in the New York, the Northern system allow it for their personal group. However, what we see is that there are restrictions on the ownership of the batteries by the owners of the transmission assets.

Julian Nibrata: You know, they, they, you can put them, but they cannot be owned by the same person, by the same entity. And that I think is a restriction that needs to be, and that comes out of the view that a transmission operator or a owner cannot dispatch the generation or or calling demand. And that's what, you know, and a battery essentially does that. So that creates a regulatory hurdle that we've been trying to, to, you know, explain to regulators.

Julian Nibrata: You need to allow the same owner, the same owner of the transmission asset to own the batteries in order for these to work. And we're working on it. And I think that, yeah, these we call more and more of a success in Europe. We'll see it happening in the U.S. So we're confident that it will happen.

Biju Perincheril: Okay. Thanks.

Unknown Executive: This includes the question and the session. I would now like to turn it back to Lexington. Thank you for participating on today's call. If you have any additional questions, feel free to reach out to me. We look forward to speaking with you again when we report our fourth quarter results. Have a good day.

Unknown Executive: Does that include the program you may now disconnect?

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