Q2 2024 ESS Tech Inc Earnings Call

August 14, 2024

[music]

Operator: Thanks for watching, and don't forget to like, share, and subscribe to our channel. Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode.

. . . . . .

Thank you very much for watching this video.

Operator: Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A session. At that time, if you have a question, you would need to press star one on your push-button phone.

Speaker Change: Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A session. At that time, if you have a question, you will need to press star 1 on your push-button phone.

Operator: I would like to turn the conference over to our host, Eric Bylin.

Operator: Later, we will conduct a Q&A session. At that time, if you have a question, you will need to press star one on your push button. I would now like to turn the conference over to our host, Erik Bylin. Please go ahead.

Operator: Please go ahead, sir.

Eric Bylin: Welcome to United States as the second quarter of fiscal year 2024 financial results conference call. Joining me on the call today from the SS are Erik Dresselhouse, CEO, and Tony Robb.

Erik Bylin: Welcome to ESS's second quarter of fiscal year 2024 financial results conference. Joining me on the call today from ESS are Eric Dresselhuys, CEO, and Tony Rabb, President. Following management's prepared remarks, we will hold a Q&A session. Earlier today, ESS released financial results for the second quarter of fiscal year 2024, earnings releases available in the investor relations section of the company's website. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects, Partnerships, Financial Performance, and Strategy for 2024 and beyond. These forward-looking statements are also subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call.

Operator: Following management's prepared remarks, we will hold the Q&A session. Earlier today, the SS released financial results for the second quarter of fiscal year 2024. Your answer is available in the Investor Relations section of the company's website.

Unknown Executive: As a reminder, the information person to the day will include forward-looking statements, including, without limitation, statements about our growth prospects, partnerships, financial performance, and strategy for 2024. The forward looking statements are also subjected to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during a call. In particular, those described in our respectors set forth more detail in our most recent periodic findings filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business issues with our partnerships, the markets. The economy and the current geopolitical situation.

Unknown Executive: In particular, those described in our risk factors set forth in more detail in our most recent periodic filings filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business, including issues with our partnerships, the markets, the economy, and the current geopolitical situation. You should not rely on our forelooking statements as predictions of future events.

Speaker Change: As a reminder, the information presented today will include forward looking statements, including without limitation.

It's about our growth prospects partnerships financial performance and strategy for 2024 and beyond.

Speaker Change: The forward looking statements are also subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call.

Speaker Change: In particular those described in our risk factors set forth in more detail in our most recent periodic filings filed with the Securities and Exchange Commission as well as the current uncertainty and unpredictability in our business.

Speaker Change: Issues with our partnerships the markets the economy and the current geopolitical situation.

Unknown Executive: You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call today are based on assumptions and beliefs as of the date you're of. And we display many obligations to update any forward-looking statements except as required by law.

Speaker Change: You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call today are based on assumptions and beliefs as of the date hereof and.

Unknown Executive: All foregoing statements that we make on this call today are based on assumptions and beliefs as of the date you listen, and we disclaim any obligation to update any such foregoing statements, except as required by law. During the call, we will also present certain financial information on a non-GAAP basis. Management believes that non-GAAP financial measures taken in conjunction with US GAAP financial measures provide useful information for both management and investors by excluding certain items that are not indicative of our core operating. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions.

Speaker Change: And we disclaim any obligation to update any forward looking statements, except as required by law.

Unknown Executive: During the call, we will also present certain financial information on a non-GAAP basis. Management believes that non-GAAP financial measures, taking in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results. Management users non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Reconciliation between the US gap and non gap results are presented within our.

Speaker Change: During the call. We will also present certain financial information on a non-GAAP basis.

Operator: I would like to turn the conference over to our host, Eric Bylin. Please go ahead, sir.

Speaker Change: Management believes that non-GAAP financial measures taken in conjunction with U S. GAAP financial measures provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results.

Eric Bylin: Welcome to United States as the second quarter of fiscal year 2024 financial results conference call.

Unknown Executive: Joining me on the call today from the SS are Erik Dresselhouse of CEO and Tony Robb. Following management's prepared remarks, we will hold the Q&A session. Earlier today, the SS released financial results for the second quarter of fiscal year 2024. Your answer is available in the investor relations section of the company's website. As a reminder, the information person to the day will include forward looking statements, including without limitation, statements about our growth prospects, partnerships, financial performance, and strategy for 2024.

Speaker Change: Management uses non-GAAP measures internally to understand manage and evaluate our business and make operating decisions.

Speaker Change: Consolidations between U S GAAP and non-GAAP results are presented within our earnings guidance.

Eric Dresselhuys: With that, I'll turn the call over to us as a CEO or just last.

Erik Bylin: Reconciliations between US GAAP and non-GAAP results are presented in our, With that, I'll turn the call over to ESS's CEO, Erik Dresselhuys. Welcome, and thanks for joining us today. Momentum continues to build for our business and for the larger long-duration energy storage market. In the last quarter, we've seen continued regulatory momentum to grow deployments of eight-plus-hour duration storage. Direct Funding Announcement, Projects That Will Accelerate Adoption of Technology

Eric Jussaume: With that I'll turn the call over to <unk> CEO, Eric just allows.

Eric Dresselhuys: Welcome and thanks for joining us today. Well, Minton continues to build for our business and for the larger long duration energy storage market. In the last quarter, we've seen continued regulatory momentum to grow deployments of eight plus our duration storage. And direct funding announcements to projects that will accelerate adoption and continue deployments of our technology, reinforcing our position as a leader in the field.

Unknown Executive: The forward looking statements are also subjected to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during a call. In particular, those described in our respectors set forth more detail in our most recent periodic findings filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business issues with our partnerships, the markets. The economy and the current geopolitical situation.

Eric Jussaume: Welcome and thanks for joining us today.

Eric Jussaume: Momentum continues to build for our business and for the larger long duration energy storage market in.

Speaker Change: In the last quarter, we've seen continued regulatory momentum to grow deployments of eight plus hour duration storage.

Speaker Change: Direct funding announcements to projects that will accelerate adoption and continued deployment of our technology reinforcing our position as a leader in the field.

Eric Dresselhuys: In the second quarter, we have expected to ship more units, but a key partner experienced a delay in final approvals and funding. We have built and had anticipated shipping approximately 12 additional EWs last quarter in support of those projects, but unfortunately they slip. Based on the current information provided by the partner and the end customer, we now expect to ship and recognize revenue for those units in the third quarter, so stay tuned for further enough.

Erik Bylin: In the second quarter, we have expected to ship more units, but a key partner experienced a delay in final approvals and funding. We have built and had anticipated shipping approximately 12 additional EW's last quarter in support of those projects. But unfortunately, they slipped. Based on the current information provided by the partner and the end customer. We now expect to ship and recognize revenue for those units in the third quarter. Stay tuned for further enough. These delays are frustrating.

Speaker Change: In the second quarter, we had expected to ship more units, but a key partner experienced a delay and final approvals and funding.

Speaker Change: We have built and had anticipated shipping approximately 12 additional ew's last quarter in support of those projects, but unfortunately they slipped.

Speaker Change: Based on the current information provided by the partner MTN customer, we now expect to ship and recognize revenue for those units in the third quarter. So stay tuned for further announcements.

Unknown Executive: You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call today are based on assumptions and beliefs as of the date you're of. And we display many obligations to update any forward looking statements except as required by law. During the call, we will also present certain financial information on a non gap basis management believes that non gap financial measures, taking in conjunction with US gap financial measures provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results. Management users non gap measures internally to understand manage and evaluate our business and make operating decisions. Reconciliation between the US gap and non gap results are presented within our.

Eric Dresselhuys: Councilman. These delays are frustrating, and given our early stage, any shift in project timing has a meaningful impact on the results within any given quarter. In any case, we continue to execute on our strategy and expect to ramp revenue in the back half of the year as we lower costs and increase our capacity.

Erik Bylin: And given our early stage, any shift in project timing has a meaningful impact on the results within any given quarter. In any case, we continue to execute on our strategy and expect to ramp revenue in the back half of the year as we lower cost and increase our capacity. Building Triltswann announced that we are finalizing the details to close a transformative agreement with the Export-Import Bank of the United States, or XM, for up to $50 million in funding to help ESS continue to maintain our strong balance sheet while expanding our operations, provided by the Make More in America initiative.

Speaker Change: These delays are frustrating and given our early stage any shift in project timing has a meaningful impact on the results within any given quarter.

Speaker Change: In any case, we continue to execute on our strategy and expect to ramp revenue in the back half of the year as we lower cost and increase our capacity.

Eric Dresselhuys: I'm thrilled to announce that we are finalizing the details to close a transformative agreement with the Export-Import Bank of the United States, or XM, for up to 50 million in funding to help ESS continue to maintain our strong balance sheet while expanding our operations. Provided by the Make More in America initiative, this funding is long-term, low-interest, non-dilutive capital to finance expanding manufacturing capacity. We can use it immediately to add to our cash position, borrowing about $10 million this year, including on a look back basis for previously installed capacity, and for the addition of line two, which is expected to triple our production capacity to over one gigawatt hour of battery capacity.

Speaker Change: I'm thrilled to announce that we are finalizing the details to close a transformative agreement with the export import bank of the United States or Sam for up to $50 million in funding to help USS continue to maintain our strong balance sheet, while expanding our operations.

Eric Dresselhuys: With that, I'll turn the call over to us as a CEO or just last. Welcome and thanks for joining us today. Well, Minton continues to build for our business and for the larger long duration energy storage market in the last quarter, we've seen continued regulatory momentum to grow deployments of eight plus our duration storage. And direct funding announcements to projects that will accelerate adoption and continue deployments of our technology reinforcing our position as a leader in the field.

Speaker Change: Provided by the make more in America initiatives.

Erik Bylin: This funding is long-term, low-interest, non-diluted capital to finance expanding manufacturing capacity. We can use it immediately to add to our cash position, borrowing about $10 million this year, including on a look-back basis for previously installed capacity and for the addition of line two, which is expected to triple our production capacity to over one gigawatt hour of battery capacity annually. Just last week, we were joined by Senator Ron Wyden and XM Vice Chair Judith Pryor and numerous other dignitaries here in Wilsonville to hold a ribbon cutting to celebrate our growing manufacturing capacity.

This funding is long term low interest non dilutive capital to finance expanding manufacturing capacity.

Speaker Change: We can use it immediately to add to our cash position borrowing about $10 million this year, including on a look back basis for previously installed capacity for the addition of line too which is expected to triple our production capacity to over one gigawatt hour of battery capacity annually.

Eric Dresselhuys: Just last week, we were joined by Senator Ron Wyden and XM Vice Chair Judith Pryor, and numerous other dignitaries here on Wilsonville to hold a living cutting to celebrate our growing manufacturing capacity. This groundbreaking follow the visit from the conservative climate caucus, a group of Congress people that works to reduce emissions by educating House Republicans on climate policies and legislation consistent with conservative values. Proving that lowering our carbon footprint through American-made, long-generation energy storage is a bipartisan imperative, something we can all agree upon. We're honored to have gained their support and humbled to hear their praise for what ESS is doing to build storage in the U.S.

Speaker Change: Last week, we were joined by some of the round widening and Exxon Vice chair, Judith Pryor and numerous other dignitaries hereon wilsonville to hold a ribbon cutting to celebrate our growing manufacturing capacity.

Eric Dresselhuys: In the second quarter, we have expected to ship more units, but a key partner experience to delay and final approvals and funding. We have built and had anticipated shipping approximately 12 additional EWs last quarter in support of those projects, but unfortunately they slip. Based on the current information provided by the partner and the end customer, we now expect to ship and recognize revenue for those units in the third quarter, so stay tuned for further enough.

Erik Bylin: This groundbreaking followed a visit from the Conservative Climate Caucus, a group of Congresspeople that works to reduce emissions by educating House Republicans on climate policies and legislation consistent with conservative values, proving that lowering our carbon footprint to American-made long-duration energy storage is a bipartisan imperative, something we can all agree upon. We're honored to have gained their support and humbled to hear their praise for what ESS is doing to build storage in the U.S.

Speaker Change: This groundbreaking followed a visit from the Conservative climate Caucus, a group of Congress people that works to reduce emissions by educating house Republicans on climate policies and legislation consistent with conservative values.

Speaker Change: Proving that lowering our carbon footprint through American made long duration energy storage is a bipartisan imperative something we can all agree upon.

Eric Dresselhuys: Councilman. These delays are frustrating and given our early stage, any shift in project timing has a meaningful impact on the results within any given quarter. In any case, we continue to execute on our strategy and expect to ramp revenue in the back half of the year as we lower cost and increase our capacity. I'm thrilled to announce that we are finalizing the details to close a transformative agreement with the Export-Import Bank of the United States, or XM, for up to 50 million in funding to help ESS continue to maintain our strong balance sheet while expanding our operations.

Speaker Change: We're honored to obtain their support and humbled to hear their praise for what DSS is doing to build storage in the U S.

Eric Dresselhuys: This support for scale is important because we're going to need a lot of long-generation energy storage. As many of you know, electricity demand in the U.S. and around the world is beginning to increase dramatically as we work to electrify everything and support the massive demand from technologies such as Generative AI. After decades of essentially no low growth, the Federal Energy Regulatory Commission referred, now shows the U.S. Electricity demand is expected to grow by 4.7 percent annually. That translates to 38 gigawatts of growth by 2028, and large customers are expecting it to be clean, driving the demand for green energy TPAs and clean base load power.

Erik Bylin: This support for scaling is important because, as many of you know, electricity demand in the US and around the world is beginning to increase dramatically as we work to electrify everything and support the massive demand from technologies such as generative AI. After decades of essentially no growth, the Federal Energy Regulatory Commission, or FERC, now shows that US electricity demand is expected to grow by 4.7% annually, that translates to 38 gigawatts of growth by 2028.

Speaker Change: To support the scale and it is important because we're going to need a lot of long duration energy storage.

Speaker Change: As many of you know electricity demand in the U S and around the world is beginning to increase dramatically as we work to electrify everything and support the massive demand from technologies such as generative AI.

Speaker Change: Yeah.

Speaker Change: After decades of essentially no load growth.

Eric Dresselhuys: Provided by the Make More in America initiative, this funding is long-term, low-interest, non-deluded capital to finance expanding manufacturing capacity. We can use it immediately to add to our cash position, borrowing about $10 million this year, including on a look back basis for previously installed capacity, and for the addition of line two, which is expected to triple our production capacity to over one gigawatt hour of battery capacity. Just last week, we were joined by Senator Ron Wyden and XM Vice Chair Judith Pryor and numerous other dignitaries here on Wilsonville to hold a living cutting to celebrate our growing manufacturing capacity.

Speaker Change: The federal Energy regulatory commission or FERC.

Speaker Change: Now shows that U S electricity demand is expected to grow by four 7% annually.

Speaker Change: That translates to <unk> 38, gigawatts of growth by 2028.

Erik Bylin: Large customers are expecting it to be clean, driving the demand for green energy PPAs. Clean Baseload Power. Legislators and regulators are hearing the call, resulting in new mandates for long-duration energy storage in California, Michigan, New York, and other states and across the globe.

Speaker Change: Large customers are expecting it to be clean.

Speaker Change: Driving the demand for Green energy Ppas.

Speaker Change: Clean Baseload power.

Eric Dresselhuys: Legislators and regular leaders are hearing the call, resulting in new mandates for long-generation energy storage in California, Michigan, New York, and other states, and across the globe.

Speaker Change: Legislators and regulators are hearing the call, resulting in new mandates for long duration energy storage in California, Michigan, New York and other states.

Speaker Change: Cross the globe.

Eric Dresselhuys: Ensuring a reliable, cost-effective, decarbonized electricity system is our mission here at EFS, and we were pleased to be included in a recent New York Times discussion on the need to ensure the reliability of the grid. Our customers are leaving the industry to the future, and their work demonstrates the progress we're making in the market. helping position our iron flow technology as the most proven, long-awaited energy storage technology available. These proofpoints are critical as they demonstrate the value of our solutions across a variety of use cases, on-law future projects with these customers and serve as a critical collateralist to building on an over $1.5 billion in potential projects with our current customers.

Erik Bylin: Ensuring a reliable cost effective decarbonized electricity system is our mission here at ESS. And we were pleased to be included in a recent New York Times discussion on the need to ensure the reliability of the grid. Our customers are leading the industry to the future and their work demonstrates the progress we're making in the market, helping position our iron flow technology as the most proven long duration energy storage technology available. These proof points are critical as they demonstrate the value of our solutions across a variety of use cases.

Speaker Change: Ensuring a reliable cost effective decarbonize electricity system is our mission here at DSS and we were pleased to be included in a recent New York Times discussion.

Eric Dresselhuys: This groundbreaking follow the visit from the conservative climate caucus, a group of Congress people that works to reduce emissions by educating House Republicans on climate policies and legislation consistent with conservative values. Proving that lowering our carbon footprint through American-made, long-geration energy storage is a bipartisan imperative, something we can all agree upon. We're honored to have gained their support and humbled to hear their praise for what ESS is doing to build storage in the U.S.

Speaker Change: Need to ensure the reliability of the grid.

Speaker Change: Our customers are leading the industry into the future and their work demonstrates the progress we're making in the market.

Helping position our iron flow technology as the most proven long duration energy storage technology available.

Speaker Change: These proof points, so critical as they demonstrate the value of our solutions across a variety of use cases.

Speaker Change: Future projects with these customers and serve as a critical catalyst to building on and over $1 $5 billion and potential projects with our current customers.

Eric Dresselhuys: This support for scale is important because we're going to need a lot of long-geration energy storage. As many of you know, electricity demand in the U.S, and around the world is beginning to increase dramatically as we work to electrify everything and support the massive demand from technologies such as Generative AI. After decades of essentially no low growth, the Federal Energy Regulatory Commission referred, now shows the U.S, electricity demand is expected to grow by 4.7 percent annually.

Erik Bylin: Unlock future projects with these customers and serve as a critical catalyst to building on over $1.5 billion in potential projects with our current customers. Earlier this year, we successfully commissioned our first system at Schiphol Airport in Amsterdam, which is installed on the tarmac to phase out diesel ground power units or GPUs, that supply electrical power to aircraft while they're parked at the gate. We are pleased to share that in Q2, we went into operation at the airport This is an extremely meaningful validation of the safety of our technology given the strict standards and commercial aviation while also proving the functionality and versatility of our battery.

Eric Dresselhuys: That translates to 38 gigawatts of growth by 2028, and large customers are expecting it to be clean, driving the demand for green energy TPAs and clean base load power. Legislators and regular leaders are hearing the call, resulting in new mandates for long-geration energy storage in California, Michigan, New York, and other states, and across the globe. Ensuring a reliable cost-effective, decarbonized electricity system is our mission here at EFS, and we were pleased to be included in a recent New York Times discussion on the need to ensure the reliability of the grid.

Eric Dresselhuys: Earlier this year, we successfully commissioned our first system at Skickle Airport in Amsterdam, which is installed on the tarmac to phase out diesel ground power units, or GPUs, to supply electrical power to aircraft while they're parked at the gate. I'm pleased to share that in Q2, we went into operation at the airport and are charging GPUs. This is an extremely meaningful validation of the safety of our technology, given the strict standards and commercial aviation, while also proving out the functionality and versatility of our batteries.

Speaker Change: Earlier this year, we successfully commissioned our first system at Schiphol Airport in Amsterdam, which is installed on the tarmac to phase out diesel ground power units or Gpus.

Speaker Change: Electrical power to aircraft, while they're parked at the gate.

Speaker Change: I'm pleased to share that in Q2, we went into operation at the airport and are charging Gpus.

Speaker Change: This is an extremely meaningful validation of the safety of our technology given the strict standards in commercial aviation, while also proving out the functionality and versatility of our batteries.

Eric Dresselhuys: And yet another sign of the imperative behind California's drive to decarbonize an increased resiliency of the electricity system. In July, the California Energy Commission, or CEC, awarded a $10 million grant to our long-awaited battery storage project in partnership with Sacramento Municipal Utility District, or SMUD. As a reminder, SMUD signed a two-gigawatt-hour framework agreement with the SS, and we have already delivered in commission the first phase of this agreement. The CEC funding, along with incremental investment from SMUD, will be used to fund phase two, a 3.6 megawatt eight-hour iron flow battery implementation. With SMUD transitioning to a carbon-free power portfolio by 2030, a goal which is now a near five and a half years away, they are clearly taking meaningful steps towards achieving the 13.6 gigawatts of energy storage the California Public Utility Commission believes California will need by 2032.

Erik Bylin: And yet another sign of the imperative behind California's drive to decarbonize and increase the resiliency of electricity, in July, the California Energy Commission, or CEC, awarded a $10 million grant to our long-duration battery storage project in partnership with Sacramento Municipal Utility District, or SMUD.

Speaker Change: And yet another sign of the imperative behind California's drought to Decarbonize and increase resiliency of the electricity system in July the California Energy Commission or CEC awarded a $10 million grant to our long duration battery storage project in partnership with Sacramento Municipal utility district.

Speaker Change: Our slug.

Erik Bylin: As a reminder, SMUG signed a two gigawatt hour framework agreement with ESS, and we have already delivered and commissioned the first phase of this agreement. The CEC funding, along with incremental investment from SMUD, will be used to fund Phase 2, a 3.6 megawatt, 8 hour iron slow battery implementation, with SMUD transitioning to a carbon free power portfolio by 2030. Gold, which is now a mere five and a half years away.

Speaker Change: As a reminder, smoked signed a two gigawatt hour framework agreement with Etfs, and we have already delivered and commissioned the first phase of this agreement.

Eric Dresselhuys: Our customers are leaving the industry to the future, and their work demonstrates the progress we're making in the market, helping position our iron flow technology as the most proven, long-awaited energy storage technology available. These proofpoints are critical as they demonstrate the value of our solutions across a variety of use cases, on-law future projects with these customers and serve as a critical collateralist to building on an over $1.5 billion in potential projects with our current customers.

Speaker Change: The CEC expanding along with incremental investments in smug will be used to fund phase two or three six megawatts eight our iron flow battery implementation.

Speaker Change: With <unk> transitioning to a carbon free power portfolio by 2030.

Speaker Change: <unk>, which is now a mere five and a half years away.

Erik Bylin: They are clearly taking meaningful steps towards achieving the 13.6 gigawatts of energy storage the California Public Utility Commission believes California will need by 2032. At the end of May, Burbank Water and Power held a ribbon cutting with local elected officials to commemorate the commissioning of their ESS energy warehouse. Their first long-duration energy storage system, BWP is another progressive California utility that recognizes the necessity of pairing elders with renewables to achieve their aggressive decarbonization goals.

Speaker Change: Clearly taking meaningful steps towards achieving the $13 six gigawatts of energy storage, the California Public utility Commission believes California will need by 2032.

Eric Dresselhuys: At the end of May, Burbank Water and Power held the ribbon-cutting with local elected officials to commemorate the commissioning of their EFS Energy Warehouse, their first long-awaited energy storage system. BWP is another progressive California utility that recognizes the necessity of appearing at Eldas with renewables to achieve their aggressive decarbonization goals. Our energy warehouse is now integrated into BWP's and connected to a 265 kilowatt solar array capable of powering about 300 homes. Their forward thinking approach to decarbonization will help them increase their use of renewable energy and propel them towards their goal of achieving 100% carbon-free power by 2040.

Eric Dresselhuys: Earlier this year, we successfully commissioned our first system at Skickle Airport in Amsterdam, which is installed on the tarmac to phase out diesel, ground power units, or GPUs, to supply electrical power to aircraft while they're parked at the gate. I'm pleased to share that in Q2, we went into operation at the airport and are charging GPUs. This is an extremely meaningful validation of the safety of our technology given the strict standards and commercial aviation while also proving out the functionality and versatility of our batteries.

Speaker Change: At the end of May.

Speaker Change: Bank water empower held a ribbon cutting with local elected officials to commemorate the conditioning of their Etfs energy warehouse.

Speaker Change: Their first long duration energy storage system.

Speaker Change: Pwc is another progressive, California utility that recognizes the necessity of peering elders with renewables to achieve their aggressive de carbonization goals.

Erik Bylin: Our energy warehouse is now integrated into BWP's eco campus and connected to a 265 kilowatt solar array capable of powering about 300 homes. Their forward-thinking approach to decarbonization will help them increase their use of renewable energy and propel them towards their goal of achieving 100% carbon-free power by 2040. I'm pleased that ESS will play such an integral part in this journey, and it is gratifying to see the Birkbeck team so eager to publicize their project, including their planned VIP tour in September.

Speaker Change: Our energy warehouses now integrated into Dwp's equal campus and connected to a 265 kilowatt solar array capable of powering about 300 homes.

Eric Dresselhuys: And yet another sign of the imperative behind California's drive to decarbonize an increased resiliency of the electricity system in July, the California Energy Commission, or CEC, awarded a $10 million grant to our long-awaited battery storage project in partnership with Sacramento Municipal Utility District, or SMUD. As a reminder, SMUD signed a two-gigawatt-hour framework agreement with the SS, and we have already delivered in commission the first phase of this agreement. The CEC funding, along with incremental investment from SMUD, will be used to fund phase two, a 3.6 megawatt eight-hour iron flow battery implementation.

Speaker Change: They're forward thinking approach to de Carbonization will help them increase their use of renewable energy and propelled them towards their goal of achieving 100% carbon free power by 2040.

Eric Dresselhuys: I'm pleased that the DSS will place such an integral part in this journey, and it is gratifying to see the Burbank team so eager to publicize their project, including their planned VIP tour in September.

Speaker Change: I'm pleased the DSS will play such an integral part in this journey and it is gratifying to see the <unk> teams, so eager to publicize their project, including their planned VIP tour in September.

Eric Dresselhuys: We were pleased to announce that in being an energy, a Native American-owned microgrid developer and integrator, the CEC and the Department of Defense together selected ESS's iron flow batteries to demonstrate the diverse capabilities of Eldas' technologies for utility-scale resilient microgrid. The program is a valuable step forward in proving that LDS can deliver energy security to remote communities like tribal nations and military bases. Over the coming months, our project partners expect to demonstrate a variety of use cases for the telephone energy market, including solar peak shifting and grid and solar resources, after which time it will be placed in the commercial operation.

Erik Bylin: We were pleased to announce that Indian Energy, a Native American-owned microgrid developer and integrator, the CEC, and the Department of Defense together selected ESS's IronFlow batteries to demonstrate the diverse capabilities of Eldos technologies for utility-scale, resilient microgrids.

Speaker Change: We were pleased to announce that <unk> energy, a native American owned micro grid developer and integrator.

Speaker Change: The CDC and the department of Defense together selected Uss's iron flow battery is to demonstrate the diverse capabilities of elders technologies for utility scale resilient micro grids.

Eric Dresselhuys: With SMUD transitioning to a carbon-free power portfolio by 2030, a goal which is now a near five and a half years away, they are clearly taking meaningful steps towards achieving the 13.6 gigawatts of energy storage, the California Public Utility Commission believes California will need by 2032. At the end of May, Burbank Water and Power held the ribbon-tutting with local elected officials to commemorate the commissioning of their EFS Energy Warehouse, their first long-awaited energy storage system.

Erik Bylin: The program is a valuable step forward in proving that LDES can deliver energy security to remote communities like tribal nations and military bases. Over the coming months, our project partners expect to demonstrate a variety of use cases for the telephone energy market, including solar peak shifting and grid and celery service, after which time it will be placed into commercial operation. And now I'll touch on our progress with the Energy Center project we're developing with Portland General Electric and the transition to production manufacturing.

Speaker Change: The program is a valuable step forward improving that elders can deliver energy security to remote communities like tribal nations and military bases over.

Speaker Change: Over the coming months, our project partners expect to demonstrate a variety of use cases for the California energy market, including solar peak shifting and grid ancillary services.

Speaker Change: After which time it will be placed into commercial operation.

Eric Dresselhuys: And now I'll touch on our progress with the Energy Center project. We're developing the Portland General Electric and the transition to production manufacturing. Importantly, as we shared in the past, we completed production and testing of the inaugural EC and had been cycling it to home the operations while subjecting it to varied operating demands to characterize and validate its operational performance. As part of this, we continue to conduct additional durability cycling against both the PNML and NG19 testing regimes. It's great to see the unit performing well, and we have transacted more than 140 MW of energy through this one unit over the last couple of months.

Speaker Change: And now I'll touch on our progress with the Energy Center project, we're developing with Portland General electric and the transition to production manufacturing.

Eric Dresselhuys: BWP is another progressive California utility that recognizes the necessity of appearing at Eldas with renewables to achieve their aggressive decarbonization goals. Our energy warehouse is now integrated into BWP's and connected to a 265 kilowatt solar array capable of powering about 300 homes. Their forward thinking approach to decarbonization will help them increase their use of renewable energy and propel them towards their goal of achieving 100% carbon-free power by 2040. I'm pleased that the DSS will place such an integral part in this journey, and it is gratifying to see the Burbank team so eager to publicize their project, including their planned VIP tour in September.

Erik Bylin: Importantly, as we've shared in the past, we completed production and testing of the inaugural EC and have been cycling it to home the operations while subjecting it to varied operating demand to characterize and validate its operational performance.

Speaker Change: Importantly, as we've shared in the past.

We completed production and testing of the inaugural EC and had been cycle limit to only operations, while subjecting it to various operating demands to characterize and validate its operational performance.

Erik Bylin: As part of this, we continue to conduct additional durability cycling against both the PNNL and ONG-19 testing regimes. It's great to see the unit performing well, and we have transacted more than 140 megawatt hours of energy through this one unit over the last couple of months. Importantly, we're thrilled to see our iron flow technology transition quickly to a scaled-up form factor through the great work of our engineering and production teams. Building the units is only one part of making a new battery ready for market. In our business, certifications are imperative to our customers.

Speaker Change: As part of this we continue to conduct additional durability cycling against both the P&L and honestly 19 testing regimes.

Speaker Change: To see that and are performing well and we have transacted more than 140 megawatt hours of energy through this one unit over the last couple of months.

Eric Dresselhuys: Importantly, we're thrilled to see our iron flow technology transition quickly to a scaled-up form factor through the great work of our engineering and production teams. Building the units is only one part of making a new battery ready for market.

Speaker Change: Importantly, we're thrilled to see our iron flow technology transitioned quickly to a scaled up form factor through the great work of our engineering and production teams.

Eric Dresselhuys: We were pleased to announce that in being an energy, a native American-owned microgrid developer and integrator, the CEC and the Department of Defense together selected ESS's iron flow batteries to demonstrate the diverse capabilities of Eldas' technologies for utility-scale resilient microgrid. The program is a valuable step forward in proving that LDS can deliver energy security to remote communities like tribal nations and military bases. Over the coming months, our project partners expect to demonstrate a variety of use cases for the telephone energy market, including solar peak shifting and grid and solar resources, after which time it will be placed in the commercial operation.

Speaker Change: Building the units is only one part of making a new battery ready for market and our business certifications are imperative to our customers.

Eric Dresselhuys: In our business, certifications are imperative to our customers. Ensuring our solutions are safe and can withstand the harsh environments in which they operate is critical to enabling adoption.

Erik Bylin: Ensuring our solutions are safe and can withstand the harsh environments in which they operate is critical to enabling adoption. We mentioned last quarter that we were the first non-lithium grid battery that, for both the EW and EC, achieved IEEE 693 certification, a seismic rating that qualifies these systems for deployment as critical infrastructure across the United States. This is an essential certification for LDOS deployment in California, and in the near term, we expect to achieve UL 9540 for the EC. Safety Standard for Energy Storage Systems and Equipment for Fire Prevention.

Speaker Change: Ensuring our solutions are safe and can withstand the harsh environments in which they operate is critical to enabling adoption.

Eric Dresselhuys: We mentioned last quarter that we were the first non-lithium grid battery that, for both the EW and EC, achieved IEEE 693 certification, a seismic rating that qualifies these systems for deployment as critical infrastructure across the United States. This is an essential certification for eldest deployment in California, and in the near term, we expect to achieve UL 9540 for the EC, a safety standard for energy storage systems and equipment for fire prevention. Achieving both IEEE 693 and the UL 9540 certification is critical for utilities given the ongoing lithium storage incident in California and elsewhere. An important step in demonstrating the viability of our EC for frictionless deployment across broad use cases and a variety of environments.

Speaker Change: We mentioned last quarter that we were the first non lithium grid battery that for both the EW MDC achieved I Tripoli fixed 93 certification a seismic rating that qualify new systems for deployment as critical infrastructure across the United States.

Speaker Change: This is in the central certification for Elvis deployment in California, and in the near term, we expect to achieve UL $95 40 for the EC safety standards for energy storage systems and equipment for fire prevention.

Eric Dresselhuys: And now I'll touch on our progress with the Energy Center project, we're developing the Portland General Electric and the transition to production manufacturing. Importantly, as we shared in the past, we completed production and testing of the inaugural EC and had been cycling it to home the operations while subjecting it to varied operating demands to characterize and validate its operational performance. As part of this, we continue to conduct additional durability cycling against both the PNML and NG19 testing regimes.

Erik Bylin: Achieving both IEEE 693 and the UL 9540 certifications is critical for utility, given the ongoing lithium storage incidents in California and elsewhere, and an important step in demonstrating the viability of REC for frictionless deployment across broad use cases and a variety of environments. Given our progress, we incorporated a number of design optimizations from our first EC to enhance manufacturability and begin production of our second unit for PGE in July. We expect this unit to be completed by our next earnings call, with grid interconnection and handover to PGE expected to take place soon after.

Speaker Change: Achieving both I Tripoli 693, <unk> $95 40 certification is critical for utilities, given the ongoing lithium storage incidents in California and elsewhere.

Speaker Change: And an important step in demonstrating the viability of our EC for frictionless deployment across broad use cases, and a variety of environments.

Eric Dresselhuys: Given our progress, we incorporated a number of design optimizations from our first EC to enhance manufacturability and begin production of our second unit for PGE in July. We expect this unit to be completed by our next earnings call, with grid interconnection and handover to PGE expected to take place soon after. In conjunction with that, we are nicely positioned to begin building the first ECs for commercial deliveries in August. In preparation for our plan shipments to Tampa Electric followed by SMUD, we have bolstered our operations and assembly lines to accommodate the EC manufacturing requirements and volume expectations.

Speaker Change: Given our progress we incorporated a number of design optimizations from our first do you see to enhance manufacturer ability and began production of our second unit for PGE in July.

Eric Dresselhuys: It's great to see the unit performing well and we have transacted more than 140 MW of energy through this one unit over the last couple of months. Importantly, we're thrilled to see our iron flow technology transition quickly to a scaled up form factor through the great work of our engineering and production teams. Building the units is only one part of making a new battery ready for market. In our business, certifications are imperative to our customers.

Speaker Change: We expect this unit to be completed by our next earnings call with grid interconnection and handover to PGE expect it to take place soon after.

Erik Bylin: In conjunction with that, we are nicely positioned to begin building the first ECs for commercial deliveries in August. In preparation for our planned shipments to Tampa Electric followed by SMUD, we have bolstered our operations and assembly lines to accommodate the EC manufacturing requirements and volume expectations. As we've discussed on previous calls, our plan for 2024 was to moderate our builds and shipments in the first half and scale them in the second half after we made progress on our cost reduction initiative.

In conjunction with that we are nicely positioned to begin building the first ECS for commercial deliveries in August.

Speaker Change: Preparation for our planned shipments to Tampa electric followed by Spud, we have bolstered our operations in the assembly lines to accommodate the EC manufacturing requirements and volume expectations.

Eric Dresselhuys: Ensuring our solutions are safe and can withstand the harsh environments in which they operate is critical to enabling adoption. We mentioned last quarter that we were the first non lithium grid battery that, for both the EW and EC, achieved IEEE 693 certification, a seismic rating that qualifies these systems for deployment as critical infrastructure across the United States. This is an essential certification for eldest deployment in California and in the near term, we expect to achieve UL 9540 for the EC, a safety standard for energy storage systems and equipment for fire prevention.

Eric Dresselhuys: As we've discussed on previous calls, our plan for 2024 was to moderate our builds and shipments in the first half and scale them in the second half after we make progress on our cost reduction initiative. That plan remains intact, and we expect to begin increasing our shipments in the coming quarters, driven by a combination of EWs and initial shipments of our EC.

Speaker Change: As we've discussed on previous calls our plan for 2024 was to moderate our builds and shipments in the first half and scale them in the second half after we make progress on our cost reduction initiatives.

Erik Bylin: That plan remains intact, and we expect to begin increasing our shipments in the coming quarters, driven by a combination of EWs and initial shipments of REC. As you have likely seen from many companies in the energy transition space, project timing can be difficult to predict, and we've certainly had our share of delays.

Speaker Change: That plan remains intact, and we expect to begin increasing our shipments in the coming quarters, driven by a combination of gws and initial shipments of our D. C.

Eric Dresselhuys: As you have likely seen from many companies in the energy transition space, project timing can be difficult to predict, and we've certainly had our share of delays. That said, we continue to see ramping in 2024 revenue to multiple of what it was in 2023, which sets us up nicely to achieve our broader expansion plans for 2025 and beyond. So we'll continue to work to keep these projects on track.

Speaker Change: As you've likely seen from many companies in the energy transition space.

Speaker Change: Timing can be difficult to predict and we.

Speaker Change: Certainly had our share of delays.

Erik Bylin: That said, we continue to see revenue ramping up in 2024 to multiples of what it was in 2023, which sets us up nicely to achieve our broader expansion plans for 2025 and beyond. So we'll continue to work to keep these projects on track. And with that, I'll turn it over to Tony.

Speaker Change: That said, we continue to see ramping in 2020 for revenue to multiples of what it was in 2023, which sets us up nicely to achieve our broader expansion plans for 2025 and beyond.

Eric Dresselhuys: Achieving both IEEE 693 and the UL 9540 certification is critical for utilities given the ongoing lithium storage incident in California and elsewhere. An important step in demonstrating the viability of our EC for frictionless deployment across broad use cases and a variety of environments. Given our progress, we incorporated a number of design optimizations from our first EC to enhance manufacturability and begin production of our second unit for PGE in July. We expect this unit to be completed by our next earnings call with grid interconnection and handover to PGE expected to take place soon after.

Speaker Change: So we'll continue to work to keep these projects on track.

Tony Robb: And with that, I'll turn it over to Tony. Thanks, Eric. Let's otherwise notice all numbers we discussed today will be on a non-gap basis. You'll find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release, which is posted on our Investor Relations website. We reported revenue of $348,000 in the second quarter, with the associated cost of revenue reported at $11.7 million. As previously shared, the transition from R&D accounting to inventory accounting results in an LC on our via-adjustment that dramatically impacts our current cost results. This will not be a material contributed to our financials as we read scale.

Speaker Change: And with that I'll turn it over to Tony.

Tony Rabb: Thanks, Eric. Well, the totalized note is that all the numbers we discussed today will be on a non-gap basis. We find the reconciliation of gap to the non-gap financial measures in our earnings release, which is posted on our Investor Relations website. We reported revenue of $348,000 in the second quarter with the associated cost of revenue reported at $11.7 million.

Tony: Thanks, Eric.

Tony: Unless otherwise noted all numbers, we discuss today will be on a non-GAAP basis, you'll find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release, which is posted on our Investor Relations website.

Tony: We reported revenue of $348000 in the second quarter with the associated cost of revenue reported at $11 7 million.

Tony Rabb: As previously shared, the transition from R&D accounting to inventory accounting results in an LC-NRV adjustment that dramatically impacts our current college results. This will not be a material contributor to our financials as we reach scale. We continue to make progress towards profitability, however, our COGS results will not fully reflect our Cost Reduction Initiative's benefits, thereby making it difficult to assess our progress through our current financial status. We're making great progress with incremental cost reduction initiatives through value engineering, supply chain optimizations, and process improvements for both the energy warehouse and energy center.

Speaker Change: <unk> shared the transition from R&D accounting inventory accounting results in Enel CNR via adjustment that dramatically impacts our current Cogs results. This one.

Eric Dresselhuys: In conjunction with that, we are nicely positioned to begin building the first ECs for commercial deliveries in August. In preparation for our plan shipments to Tampa Electric followed by SMUD, we have bolstered our operations and assembly lines to accommodate the EC manufacturing requirements and volume expectations. As we've discussed on previous calls, our plan for 2024 was to moderate our builds and shipments in the first half and scale them in the second half after we make progress on our cost reduction initiative.

Speaker Change: <unk> not be a material contributor to our financials as we reach scale.

Tony Robb: We continue to make progress towards profitability. However, our cost results will not fully reflect our cost reduction initiatives' benefits, thereby making it difficult to assess our progress through our current financial statements. Making great progress with incremental cost reduction initiatives through value engineering, supply chain optimizations, and process improvements for both the energy warehouse and energy center. As we previously mentioned, during 2023, we lowered the cost to build need of you by 60%, and we're targeting another 40% reduction this year. With the improvements for realizing on the cost reductions in 2024, we still expect to reach non-GAAP gross margin profitability on the energy warehouse by the end of this year.

Speaker Change: We continue to make progress towards profitability. However, our cards results will not fully reflect our cost reduction initiatives benefits, thereby making it difficult to assess our progress through our current financial statements.

Speaker Change: We're making great progress with incremental cost reduction initiatives through value engineering supply chain optimization and process improvements for both the energy warehouse and energy Center.

Eric Dresselhuys: That plan remains intact and we expect to begin increasing our shipments in the coming quarters driven by a combination of EWs and initial shipments of our EC. As you have likely seen from many companies in the energy transition space, project timing can be difficult to predict and we've certainly had our share of delays. That said, we continue to see ramping in 2024 revenue to multiple of what it was in 2023, which sets us up nicely to achieve our broader expansion plans for 2025 and beyond. So we'll continue to work to keep these projects on track.

Tony Rabb: As we've previously mentioned, during 2023, we lowered the cost to build VW by 60%, and we're targeting another 40% reduction this year. With the improvements for realizing the cost reductions in 2024, we still expect to reach nine-gap gross margin profitability on the energy warehouse by the end of this year. Our non-GAAP operating expenses for Q2 were in line with our expectations at $9.1 million.

Speaker Change: As we've previously mentioned during 2023, we lowered the cost to build an EW by 60%.

Speaker Change: Targeting another 40% reduction this year.

Speaker Change: With the improvements we're realizing on the cost reductions in 2024, we still expect to reach non-GAAP gross margin profitability on the energy warehouse by the end of this year.

Tony Robb: Our non-GAAP operating expenses for T2 were in line with our expectations at $9.1 million. Non-GAAP R&D came in at $1.9 million, which would believe reflects the company's run rate and continued investment in our cost-out initiatives and product roadmap improvements on reliability, durability, and the efficiency of the EW and the EC. With that, we reported to you to adjust the EBITDA of negative $18.8 million. Turning the cash flow into liquidity, we ended the second quarter with 74.4 million in cash and short-term investments. We remained focused on managing our cash burn rate, including driving ongoing efforts to optimize working capital.

Speaker Change: Our non-GAAP operating expenses for Q2 were in line with our expectations at $9 $1 million.

Tony Rabb: Nongap R&D came in at $1.9 million, which we believe reflects the company's run rate and continued investment in our cost out initiatives and product roadmap improvements for reliability, durability, and efficiency of the EWMEC. With that, we report a Q2 adjusted EBITDA of negative $18.8 billion. Turning to cash flow and liquidity, we ended the second quarter with $74.4 million in cash and short-term investments. We remain focused on managing our cash burn rate, including driving ongoing efforts to optimize working capital.

Speaker Change: non-GAAP R&D came in at $1 9 million.

Speaker Change: Which we believe reflects the company's run rate and continued investment in our cost out initiatives and product roadmap improvements on reliability durability and the efficiency of the EW and the EC.

Tony Robb: And with that, I'll turn it over to Tony. Thanks, Eric.

Tony Robb: Let's otherwise notice all numbers we discussed today will be on a non-gap basis. You'll find the reconciliation of gap to the non-gap financial measures in our earnings release, which is posted on our investor relations website. We reported revenue of $348,000 in the second quarter with the associated cost of revenue reported at $11.7 million. As previously shared, the transition from R&D accounting to inventory accounting results in an LC on our via-adjustment that dramatically impacts our current cost results.

Speaker Change: With that we reported Q2, adjusted EBITDA of negative $18 8 million.

Turning to cash flow and liquidity, we ended the second quarter with $74 4 million in cash and short term investments.

Speaker Change: We remain focused on managing our cash burn rate, including driving ongoing efforts to optimize working capital.

Tony Rabb: Eric mentions this quarter, we expect to close on the first launch of an up to $250 million financing facility from Exyn, and from this, we intend to add about $10 million of cash to our balance sheet this year with extended repayment terms and very competitive. We have invested in another automated line that is planned to come online early next year to produce power modules that should greatly enhance our ability to ramp up in 2025. That capacity expansion comes at a dramatic improvement in cost per megawatt, roughly half the cost we previously expected.

Tony Robb: Zart mentioned that this quarter, we expect to close on the first branch of an up to $50 million financing facility from XM, and from this, we intend to add about 10 million of cash to our balance sheet this year with extended repayment terms and very competitive interest rates. We have invested in another automated line that is planning to come online early next year to produce power modules that should greatly enhance our ability to ramp up in 2025. That capacity expansion comes out of dramatic improvement in cost per megawatt, roughly half the cost we previously expected, and with the XM agreement, we expect to fully fund this and future production capacity expansion.

Speaker Change: As Eric mentioned this quarter, we expect to close on the first tranche of an up to $50 million financing facility from eczema and from this we intend to add about $10 million of cash to our balance sheet. This year with extended repayment terms and very competitive interest rates.

Tony Robb: This will not be a material contributed to our financials as we read scale. We continue to make progress towards profitability. However, our cost results will not fully reflect our cost reduction initiatives benefits thereby making it difficult to assess our progress through our current financial statements. Making great progress with incremental cost reduction initiatives through value engineering supply chain optimizations and process improvements for both the energy warehouse and energy center. As we previously mentioned, during 2023, we lowered the cost to build need of you by 60% and we're targeting another 40% reduction this year.

Speaker Change: We have invested in another automated line that is planned to come online early next year to produce power modules that should greatly enhance our ability to ramp up in 2025.

Speaker Change: That capacity expansion comes at a dramatic improvement in cost per megawatt roughly half the cost we previously expected.

Tony Rabb: And with the exam agreement, we expect the fully fund this and future production capacity expansion. We're extremely well-positioned to continue to expand our production capacity through this Ex-Im Financing Facility, effectively funding all of our production capacity CapEx needs through 2025 and into 2026. This transformative agreement bolsters our liquidity levels and we expect should support our business cash needs well into 2025. We continue to opportunistically look to strengthen our balance sheet through dilutive and non-dilutive financing alternatives, to provide the necessary capital to give us operational flexibility to respond to market demand. Our Ex-Im Financing is a great example of a non-dilutive solution to bolstering our cash position.

Speaker Change: With the eczema granted we expect to fully fund this and future production capacity expansion.

Tony Robb: We're extremely well positioned to continue to expand our production capacity through this Ex-Infinancing Facility, effectively funding all of our production capacity cap ex-needs through 2025 and into 2026. This transformative agreement bolsters our liquidity levels, and we expect should support our business cash needs well into 2025. We continue to opportunistically look to strengthen our balance sheet through dilutive and non-dilutive financing alternatives to provide the necessary capital to give us operational flexibility to respond to market demand. Our Ex-Infinancing is a great example of a non-dilutive solution to bolstering our cash position. Additionally, with such strong market tailwinds, we continue to see considerable investor interest in investing in long duration energy storage, and we remain very confident in our ability to raise the necessary capital to fund us through to cash flow break even.

Speaker Change: We're extremely well positioned to continue to expand our production capacity through this exit financing facility effectively funding all of our production capacity capex needs through 2025 and into 2026.

Tony Robb: With the improvements for realizing on the cost reductions in 2024, we still expect to reach non-gap gross margin profitability on the energy warehouse by the end of this year. Our non-gap operating expenses for T2 were in line with our expectations at $9.1 million. Non-gap R&D came in at $1.9 million, which would believe reflects the company's run rate and continued investment in our cost-out initiatives and product roadmap improvements on reliability, durability, and the efficiency of the EW and the EC.

Speaker Change: This transformative agreement bolsters, our liquidity levels, and we expect should support our business cash needs well into 2025.

Speaker Change: We continue to Opportunistically look to strengthen our balance sheet through dilutive and non dilutive financing alternatives to provide the necessary capital to give us operational flexibility to respond to market demand.

Speaker Change: Our exit financing is a great example of a non dilutive solution to bolstering our cash position.

Tony Robb: With that, we reported to you to adjust the EBITDA of negative $18.8 million. Turning the cash flow into liquidity, we ended the second quarter with 74.4 million in cash and short-term investments. We remained focused on managing our cash burn rate, including driving ongoing efforts to optimize working capital. Zart mentioned that this quarter, we expect to close on the first branch of an up to $50 million financing facility from XM and from this, we intend to add about 10 million of cash to our balance sheet this year with extended repayment terms and very competitive interest rates.

Tony Rabb: Additionally, with such strong market tailwinds, we continue to see considerable investor interest in investing in long-duration energy storage, and we remain very confident in our ability to raise the necessary capital to fund us through to cash flow break-even. And finally, as you may have seen, we filed a proxy statement with the SEC to execute a reverse split of our stock to address a listing notice from NewYorkStockEx. Once executed, we expect to be in compliance with the listing requirements and continue our operations as a publicly listed company.

Speaker Change: Additionally, with such strong market tailwind, we continue to see considerable investor interest in investing in long duration energy storage and we remain very confident in our ability to raise the necessary capital to fund us through to cash flow breakeven.

Tony Robb: And finally, as you may have seen, we filed a proxy statement with the SEC to execute a reverse split of our stock to address a listing notice from the New York Stock Exchange. Once executed, we expect to be in compliance with the listing requirements and continual operations as a publicly listed company. The current ratio of shares has yet to be determined, but we expect to complete the split in late August.

Speaker Change: And finally as you may have seen we filed a proxy statement with the SEC to execute a reverse split of our stock to address the listing notice from the New York stock exchange.

Speaker Change: Once executed we expect to be in compliance with the listing requirements and continue our operations as a publicly listed company.

Tony Rabb: The current ratio of shares has yet to be determined, but we expect to complete the split in late August. And with that, I'll open it up to questions. At this time, I would like to remind everyone that in order to ask a question, press the star from number one on your telephone keypad. We'll pause for just a moment to compile our Q&A roster. Your first question comes from Colin Rusch. Your line is now open. Hi, this is Lydia on behalf of Colin.

Speaker Change: The current ratio of shares has yet to be determined but we expect to complete the split in late August.

Tony Robb: We have invested in another automated line that is planning to come online early next year to produce power modules that should greatly enhance our ability to ramp up in 2025. That capacity expansion comes out of dramatic improvement in cost per megawatt, roughly half the cost we previously expected, and with the XM agreement, we expect to fully fund this and future production capacity expansion. We're extremely well positioned to continue to expand our production capacity through this Ex-Infinancing Facility, effectively funding all of our production capacity cap ex-needs through 2025 and into 2026.

Operator: And with that, I'll open it up for questions.

Speaker Change: With that I'll open it up for questions.

Operator: At this time, I would like to remind everyone that, in order to ask a question, press star to the number one on your telephone keypad. We'll pause for just a moment to compile our Q&A roster.

Speaker Change: At this time I would like to remind everyone that in order to ask a question Press Star and then everyone on your telephone keypad.

Speaker Change: Pause for just a moment to compile the Q&A roster.

Colin Rush: Your first question comes from Colin Rush. Your line is now open.

Speaker Change: Your first question comes from Colin Rusch. Your line is now open.

Unknown Executive: Hi, this is Lydia on for Colin. Thanks for taking our questions. First, we notice on slide 20 of the investor presentation that the capital required to produce for ESS is around 20 million per gigawatt hour. Could you maybe tell us about what scale you would need to achieve that number? You mean the scale to that that's on a per gigawatt hour basis in terms of the capacity that we need to add. So each of our lines is substantially less than that amount. So we can build; we can build an increment smaller than a gigawatt. I think line two is about a half, a little bigger than a half gigawatt hour of capacity.

Speaker Change: Hi, This is Blake on for Colin Thanks for taking our question.

Lydia: Thanks for taking our questions. First, we noticed on slide 20 of the investor presentation that the capital required to produce ESS is around 20 million per gigawatt hour. Could you maybe tell us at what scale you would need to achieve that number? Bye!

Blake: First we noticed on slide 20 of the Investor presentation that the capital required to produce for you.

Tony Robb: This transformative agreement bolsters our liquidity levels and we expect should support our business cash needs well into 2025. We continue to opportunistically look to strengthen our balance sheet through dilutive and non-dilutive financing alternatives to provide the necessary capital to give us operational flexibility to respond to market demand. Our Ex-Infinancing is a great example of a non-dilutive solution to bolstering our cash position. Additionally, with such strong market tailwinds, we continue to see considerable investor interest in investing in long duration energy storage and we remain very confident our ability raised in necessary capital to fund us through to cash low break even.

Speaker Change: SLS is around $20 million per gigawatt hour could you maybe parse out.

Speaker Change: You would need to achieve that number.

Speaker Change: Okay.

Unknown Executive: you mean the scale to that that's on a per gigawatt basis in terms of the capacity that we need to add? So, each of our lines is substantially less than that amount. So we can build we can build in increments smaller than we can. We can build in increments smaller than a gigawatt. I think line two is about a half, a little bigger than a half gigawatt hour of capacity. That's correct.

Speaker Change: You mean.

Speaker Change: Scale too.

Speaker Change: That's on a per gigawatt.

Our basis in terms of the capacity that we need to add.

Speaker Change: So each of our lines is substantially less than that amount.

Speaker Change: So we can build we can build in increments smaller than we can we can build the increments smaller than a gigawatt I think line too.

Speaker Change: As part of the house.

Speaker Change: Well I think we're gonna have gigawatt hour of capacity that's correct got it got it Okay and then maybe for a follow up could you speak to the growth and potential customers are evaluating data and how quickly those customers.

Unknown Executive: That's correct. Got it.

Unknown Executive: Got it. Okay, and then maybe for a follow-up, could you speak to the growth and potential customers evaluating your field data and how quickly those customers are moving through your field funnel? Sure, Eric. I'll take that.

Eric Dresselhuys: Okay, and then maybe for a follow-up, could you speak to the growth and potential customers evaluating your field data and how quickly those customers are moving through your field funnel? Sure, Eric, I'll take that. It's a mixed bag, as you would expect. We're seeing two things. We're seeing some of the behind-the-meter applications where customers have kind of all-on applications. They tend to move through them more quickly. They'll often want to run for a year, but sometimes less. And for other customers, we have a multi-phase approach where we're going through it kind of in order. So we'd expect, as we said, if you look at SMUD to having deployed the first phase, complete the work on that and start moving on to the second phase, which will be an EC phase product.

Speaker Change: So panel.

Unknown Executive: It's, it's a mixed bag, as you would expect. We're seeing two things. We're seeing some of the behind the meter applications, where customers have kind of follow-on applications; they tend to move through more quickly; they will often want to run for a year, but sometimes less. And for other customers, we have a multi-phased approach where we're going through it kind of in order. So we'd expect, as we said, if you look at SMUD, to have deployed the first phase, completed the work on that, and start moving on to the second phase, which will be an EC phase product.

Speaker Change: Sure Eric I'll take that.

Speaker Change: Mixed bag as you would expect we're seeing two things we're seeing some of the behind the meter applications, where customers have kind of a follow on applications. They tend to move through more quickly they often want to run for a year, but sometimes lives and.

Operator: And with that, I'll open it up for questions. At this time, I would like to remind everyone that in order to ask a question, press star to the number one on your telephone keypad. We'll pause for just a moment to compile our Q&A roster.

Speaker Change: And for other customers.

Speaker Change: We have a multi phased approach where we're going through kind of an order. So we would expect as we said, but if you look at smart.

Lydia: Your first question comes from Colin Rush. Your line is now open. Hi, this is Lydia on for Colin. Thanks for taking our questions. First, we notice on slide 20 of the investor presentation that the capital required to produce for ESS is around 20 million per gigawatt hour. Could you maybe tell us about what scale you would need to achieve that number? You mean the scale to that that's on a per gigawatt hour basis in terms of the capacity that we need to add.

Speaker Change: Two having deployed the first phase.

Speaker Change: Complete the work on that.

Speaker Change: Moving on to the second phase, which will be an EC phase product.

Eric Dresselhuys: The third piece that we found is that a lot of the market activity these days from an RFP or a five perspective are all targeting larger projects that will be 26 and 27 projects. One of the things about our industry that people who follow other companies would certainly be aware of is that the lead times for planning are quite long and that can be influenced by interconnect cues and site preparations as well. So we have a lot of folks that are looking at current customers and visiting them, getting feedback on the product as they're making their plans for very large projects that happen in the out years.

Unknown Executive: But the third piece that we found is that a lot of the market activity these days, from an RFP and RFI perspective, are all targeting larger projects that will be 26 and 27 projects. One of the things about our industry that, you know, people who follow other companies would certainly be aware is that the lead times for planning are quite long, and that can be influenced by interconnect queues and site preparations as well.

Speaker Change: The third piece that we found is that a lot of the the.

Speaker Change: Market activity at various stages from an RFP RFID perspective are all targeting larger projects that will be 26, and 27 projects one of the things about our industry that.

Speaker Change: People, who follow other companies would certainly be aware is that the lead times for planning are quite long.

Speaker Change: And that can be influenced by interconnect queues and site preparation.

Lydia: So each of our lines is substantially less than that amount. So we can build, we can build an increment smaller than a gigawatt. I think line two is about a half, a little bigger than a half gigawatt hour of capacity. That's correct. Got it.

Speaker Change: <unk> is as well so we have a lot of folks that are looking at current customers.

Unknown Executive: So we have a lot of folks that are looking at current customers and visiting them, getting feedback on the product as they're making their plans for very large projects that happen in the out years. And that activity has increased quite a bit, in part, as I mentioned, due to things like the need for green PPAs from hyperscalers and folks like that. Your next question comes from Corinne Blanchard. Your line is now open. Thank you. This is actually Mike Delpe on for Corinne.

Speaker Change: Visiting them getting feedback on the product as they are.

Speaker Change: Their plans for very large projects that happen in the out years and that activity has increased quite a bit.

Eric Dresselhuys: And that activity has increased quite a bit. In part, as I mentioned, due to things like the need for green PPAs from hyperscalers and folks like that.

Speaker Change: In part as I mentioned due to things like the need for Green Ppas from hyper scaler and folks like that.

Eric Dresselhuys: Okay, and then maybe for a follow up, could you speak to the growth and potential customers evaluating your field data and how quickly those customers are moving through your field funnel? Sure, Eric, I'll take that. It's a mix bag as you would expect. We're seeing two things. We're seeing some of the behind the meter applications where customers have kind of all-on applications. They tend to move through them more quickly. They'll often want to run for a year, but sometimes less. And for other customers, we have multi-phase approach where we're going through it kind of in order.

Corinne Blanchard: Your next question comes from Corinne Blanchard. Your eyes are open.

Speaker Change: Your next question comes from Corinne Blanchard.

Speaker Change: That is now open.

Mike Delpe: Hey, okay, Tony. Um, my question has to do with your... Okay. My question has to do with your revenue target of three to four times in 2024. So this is implying $23 million in the second half of midpoint.

Speaker Change: Thank you this is actually Mike <unk> on for Karen Okay Tony.

Mike: My question has hurting your.

Unknown Executive: Thank you. This is actually 24. So this is implying $23 million in the second half on this point.

Speaker Change: Hi.

Speaker Change: Good thank you.

Speaker Change: My question has to do with your revenue target of three to four times in 2024. So this is implying $23 million and the SEC.

Eric Dresselhuys: So we'd expect, as we said, if you look at smud to having deployed the first phase, complete the work on that and start moving on to the second phase, which will be an EC phase product. The third piece that we found is that a lot of the market activity these days from an RFP or a five perspective are all targeting larger projects that will be 26 and 27 projects. One of the things about our industry that people who follow other companies would certainly be aware is that the lead times for planning are quite long and that can be influenced by interconnect cues and site preparations as well.

Unknown Executive: Could you maybe break that down between energy centers and energy warehouses? Yeah, I think that the ramp up on the energy centers we've talked about in the past will start in the not until the fourth quarter. So, you know, it's going to be, I'd say, I don't know, maybe a split of two thirds, EWs and a third ECs. You know, as we said in our in the prepared comments, with the not just what we've seen, but with other people have seen, we get very anxious about the timing of one project versus another. If there's any slippage or movement and timing, because our numbers are competitively small number of projects, that can make a pretty big difference.

Speaker Change: Could you maybe break that down between energy centers and energy warehouses.

Tony Rabb: Could you maybe break that down between energy centers and energy warehouses? Yeah, it's, you know, I think that the ramp up on the energy centers we've talked about in the past will start in the fourth quarter. So, you know, it's going to be, I'd say, I don't know, maybe a split of two thirds EWs and a third ECs.

Speaker Change: Yes.

Speaker Change: Yes, I think that the.

Speaker Change: The ramp up on the energy centers, we've talked about in the past we will start in the not until the fourth quarter. So.

Speaker Change: Hum.

Speaker Change: It's going to be I would say I don't know maybe a split of.

Speaker Change: Two thirds.

Speaker Change: <unk> 36.

Speaker Change: As we said in our prepared comments.

Tony Rabb: You know, as we said in our prepared comments, with not just what we've seen but with other people have seen, we get very anxious about the timing of one project versus another if there's any slippage or movement in timing because our numbers are a comparatively small number of projects, that can make a pretty big difference, so I wouldn't want to hang my hat too hard on exact mixes, but that would roughly be the layout. Okay, thank you. That's very helpful.

Speaker Change: With the not just what we've seen but with other people will see and we get very anxious about the timing of one project versus another if there's any slippage or movement in timing because our numbers are up.

Eric Dresselhuys: So we have a lot of folks that are looking at current customers and visiting them, getting feedback on the product as they're making their plans for very large projects that happen in the out years. And that activity has increased quite a bit. In part, as I mentioned, due to things like the need for green PPAs from hyperscalers and folks like that.

Speaker Change: Comparatively small number of projects that can make a pretty big difference. So I wouldn't want to hang my hat too hard on exact mixes, but that would roughly be the layout.

Unknown Executive: So I wouldn't want to hang my hat too hard on exact mixes, but that would roughly be the way out. Okay, thank you. That's very helpful.

Unknown Executive: And then my follow-up has to do with growth tied to AI and data. You mentioned it in your prepared remarks, and I was wondering if you could give a little bit more color around what you're hearing from potential customers in that space. Sure.

Speaker Change: Okay. Thank you that's very helpful. And then my follow up has to do with the growth tied to AI data centers you.

Eric Dresselhuys: And then my follow-up has to do with the growth tied to AI and data centers. You mentioned it in your prepared remarks. Us wanted to give a little bit more color around what you're hearing from some customers in that today. Sure, yeah, so the step back is really on the broader category of data centers. One of the increasingly loud screams we're hearing from the market, both from end users, but also from developers who serve that market. And the fifth is that the data center operators have very ambitious plans for building out in support of what they expect to be a massive growth in generative AI.

Speaker Change: You mentioned in your prepared remarks, I was wondering if you could give a little bit more color around what you're hearing from potential customers in that space.

Unknown Executive: Yeah, so the step back is really on the broader category of data centers. One of the increasingly loud screams we're hearing from the market, both from end users and also from developers who serve that market, is that data center operators have very ambitious plans for building out in support of what they expect to be a massive growth in generative AI. And that's got two problems. One, it's just regular use, but generative AI, depending on who you talk to, kind of consumes 10 times more energy than say a typical Google search.

Speaker Change: Sure Yeah. So.

Corinne Blanchard: Your next question comes from Corinne Blanchard. Your eyes are open. Thank you.

The step back is really on the broader.

Speaker Change: Category of data centers one of the.

Speaker Change: Increasingly allow loud screams, we're hearing from the market both from end users, but also from developers who serve that mark is that.

Tony Robb: This is actually 24. So this is implying $23 million in the second half on this point. Could you maybe break that down between energy centers and energy warehouses? Yeah, I think that the ramp up on the energy centers we've talked about in the past will start in the not until the fourth quarter. So, you know, it's going to be, I'd say, I don't know, maybe a split of two thirds, EWs and a third ECs.

Speaker Change: The data center operators have very ambitious plans for building out in support of what they expect to be massive growth in generative AI.

Eric Dresselhuys: And that's got two problems. One, it's just regular use, but generative AI is, depending on who you talk to, kind of 10 times more energy consuming than, say, a typical Google search. So people are anticipating that demand. And what's happening is they're going to utilities, not just hearing the US, but around the world saying, hey, I'd like to build a data center of this size and I need the power of a certain level. And it's, they're getting the answer about utilities and say, I'm sorry, I just can't support that. It's just too much energy. So this is becoming kind of an economic limiter for the people in the business of hosting data centers to say, where can I go put a data center that can supply the power I need in some markets like Ireland is an example.

Speaker Change: And Thats got two problems one it's just regular use generative AI is depending on who you talk to kind of eight to 10 times more energy consuming than say a typical.

Speaker Change: Typical Google search.

Unknown Executive: So people are anticipating that demand, and what's happening is they're going to utilities, not just here in the U.S., but around the world, saying, hey, I'd like to build a data center of this size, and I need the power of a certain level. And they're getting the answer back from the utilities that say, I'm sorry, I just can't support that. It's just too much energy.

Speaker Change: So people are anticipating that demand and what's happening is theyre going to utilities.

Speaker Change: Just here in the U S, but around the world, saying, Hey, I'd like to build the data center of this size and I need the power of a certain level.

Tony Robb: You know, as we said in our in the prepared comments, with the not just what we've seen, but with other people have seen, we get very anxious about the timing of one project versus another. If there's any slippage or movement and timing, because our numbers are competitively small number of projects, that can make a pretty big difference. So I wouldn't want to hang my hat too hard on exact mixes, but that would roughly be the way out. Okay, thank you. That's very helpful.

Speaker Change: Uh huh.

Speaker Change: It.

Speaker Change: They're getting the answer back from the utilities and say I'm, sorry, I just can't support that it's just too much energy. So this is becoming kind of an economic.

Unknown Executive: So this is becoming kind of an economic limiter for the people in the business of hosting data centers to say, where can I go to put a data center that can supply the power I need? In some markets, like Ireland, for example. Ireland, they've come out and just told data center people, we'd love to have you, but you're totally responsible for coming up with your own power. And the people are saying, hey, we're going to build a data center of this size, and we're going to put in a certain level of power.

Speaker Change: Limiter for the people in the business of hosting data centers to say, where can I go put a data center.

Speaker Change: Can supply the power I need in some markets like.

Speaker Change: Ireland as an example, Ireland.

Eric Dresselhuys: Ireland, they've come out and just told data center people would love to have you that you're totally responsible for coming up with your own power. So with that, is a little bit longer in the background. What we're finding is that people are looking at saying, can I do this as a microgrid? Can I buy my own renewables? Parent with storage and created 24 seven green energy system. And do that without having a heavy reliance, maybe not no reliance, but without a heavier reliance. on the grid operator that I normally would have thought about doing. It's early days of this, but it's a topic in every conference that happens in the energy industry these days.

Eric Dresselhuys: And then my follow up has to do with the growth tied to AI and data centers. You mentioned it in your prepared remarks us wanted to give a little bit more color around what you're hearing from some customers in that today. Sure, yeah, so the step back is really on the broader category of data centers, one of the increasingly loud loud screams we're hearing from the market, both from end users, but also from developers who serve that market.

Speaker Change: Come out and just total data center people would love to have you, but youre totally responsible for coming up with your own power.

Speaker Change: So with that as a little bit long winded background. What we're finding is that people are looking at it saying can I do this as a micro grid can I buy my own renewables.

Unknown Executive: And they're getting the answer back from the utilities that say, hey, I'd like to build a data center of this size, and we'd love to have you, but you're totally responsible for coming up with your own power. So that is a bit of a long winded background. What we're finding is that people are looking at saying, Can I do this as a micro grid? Can I buy my own renewables?

Unknown Executive: Pair it with storage and create a 24-7 green energy system, and do that without having a heavy reliance, maybe not no reliance, but without a heavier reliance, on the grid operator that I normally would have thought about doing. It's the early days of this, but it's a topic at every conference that happens in the energy industry these days. And there have been quite a few big public announcements from Google, Microsoft, and AWS on how they're trying to procure their own green PPAs to get out of the way, to not have the reliance on the utility operator. Thank you, that's very helpful.

Speaker Change: With storage and create a $24 seven green energy system.

Speaker Change: And do that without having the heavy reliance maybe not no reliance but without it is heavier reliance.

Speaker Change: On the grid operator.

Speaker Change: I normally would have thought about doing it.

Eric Dresselhuys: And the fifth is that the data center operators have very ambitious plans for building out in support of what they expect to be a massive growth in generative AI. And that's got two problems. One, it's just regular use, but generative AI is depending on who you talk to kind of eat to 10 times more energy consuming than say a typical Google search. So people are anticipating that demand. And what's happening is they're going to utilities, not just hearing the US, but around the world saying, hey, I'd like to build a data center of this size and I need the power of a certain level.

Speaker Change: It's early days of this but it's.

Speaker Change: It's a topic at every conference that happens in the energy industry. These days and Theres been quite a few big public announcements from Google.

Unknown Executive: And there've been quite a few big public announcements from Google, Microsoft, and AWS. They're trying to procure their own green PPAs to get out of the way, to not have the reliance on the utility operators. Thank you. That's very helpful.

Speaker Change:

Speaker Change: Microsoft and AWS and Theyre trying to procure their own green PPA is to get out of the way. It does not have the reliance on the utility operators.

Speaker Change: Thank you that's very helpful.

Eric Dresselhuys: And it's, they're getting the answer about utilities and say, I'm sorry, I just can't support that. It's just too much energy. So this is becoming kind of an economic limiter for the people in the business of hosting data centers to say, where can I go put a data center that can supply the power I need in some markets like Ireland is an example.

Justin Clare: Our next question today comes from Justin Clare. Your line is not open.

Justin Clare: Our next question today comes from Justin Clare. Your line is now open. Adi Grazeman Jordan.

Speaker Change: Our next question today comes from Justin Clare.

Justin Clare: Your line is now open.

Tony Robb: Hi, good afternoon. So I wanted to start with the manufacturing here. So the second automated line, I think that's expected to come online next year. I was wondering if you could talk about the ramp there. So you talked about getting to one gig a watt hour. When could you achieve that run rate, and what does the timeline look like in terms of the ramp up of that second line?

Justin Clare: Hi, good afternoon.

Unknown Executive: So I wanted to start with manufacturing. Good afternoon. I wanted to start with manufacturing here. So the second automated line, you know, I think that's expected to come online next year. I was wondering if you could talk about the ramp there.

Speaker Change: So I wanted to start with manufacturing.

Unknown Executive: So you talked about getting to one gigawatt hour, you know, when could you achieve that run rate? And, you know, what does the timeline look like in terms of the ramp-up of that second? Yeah, we've. This is Tony. So the second line, we anticipate, should be online in the first half or by the end of the first half of next year. And so the way to think about that is that we'll have, you know, one gigawatt hour of production capacity going forward from that point. So we'll get about a half year's worth of that capacity in 2021.

Justin Clare: Afternoon.

Speaker Change: Wanted to start with the manufacturing here.

Speaker Change: The second automated line.

Speaker Change: I think thats expected to come online next year I was wondering if you could talk about the ramp there. So you talked about getting to one gigawatt hour when could you achieve that run rate and.

Speaker Change: What does the timeline look in terms of the ramp up of that second line.

Eric Dresselhuys: Ireland, they've come out and just told data center people would love to have you that you're totally responsible for coming up with your own power. So with that is a little bit longer in the background. What we're finding is that people are looking at saying, can I do this as a microgrid? Can I buy my own renewables? Parent with storage and created 24 seven green energy system. And do that without having a heavy reliance, maybe not no reliance, but without a heavier reliance, on the grid operator that I normally would have thought about doing.

Tony Robb: Yeah, this is Tony. So the second line we anticipate should be online in the first half or by the end of the first half of next year. And so the way to think about that is that we'll have one gig a watt hour approximately of production capacity going forward from that point. So we'll get about a half year's worth of that capacity in 20. I got it. Okay, okay, got it.

Speaker Change: Yes.

Speaker Change: This is Tony so the the second line, we anticipate should be online.

Tony: In the first half or by the end of the first half of next year.

Tony: So the way to think about that is that we will have.

Tony: One gigawatt hour approximately of production capacity going forward from that point, So we'll get about a half year's worth of that capacity.

Eric Dresselhuys: It's early days of this, but it's a topic in every conference that happens in the energy industry these days. And there've been quite a few big public announcements from Google, Microsoft and AWS. They're trying to procure their own green PPAs to get out of the way, to not have the reliance on the utility operators. Thank you.

Tony: And <unk> got it.

Unknown Executive: Okay, I got it. Okay, okay, I got it. And then just on the manufacturing CapEx, I was wondering, you know, when we think about the financing from the Export-Import Bank, you know, 10 million this year, and then 10 to 15 million, I think you anticipate next year, is all of that capital expected to be devoted toward the CapEx spend for that second automated line? And then just wondering how you're thinking about the remaining capital that might be available to you, and whether that could be used Yeah, exactly.

Okay, Okay got it.

Tony Robb: And then just on the manufacturing cap ex, was wondering, you know, when we think about the financing from Export Import Bank, you know, 10 million this year and then 10 to 15 million, I think you anticipate next year, is all of that capital expected to be devoted toward the cap ex spend for that second automated line. And then you just wondering how you're thinking about the remaining capital that might be available to you and whether that could be used for a third automated line or what you're contemplating there. Yeah, exactly. So the large portion of the first 10 million that we're drawing down is associated with line one and the production capacity cap ex that we incurred to put that in place.

Unknown Executive: That's very helpful.

Speaker Change: And then just on the.

Speaker Change: The manufacturing Capex I was wondering when we think about the <unk>.

Speaker Change: Financing from export import bank $10 billion. This year, and then $10 million to $15 million. I think you anticipate next year is all of that capital expected to be.

Speaker Change: Devoted toward the Capex spend for that second automated line and then just wondering how youre thinking about the remaining capital that might be available to you and whether that could be used for a third automated line or what you're contemplating there.

Justin Clare: Our next question today comes from Justin Clare. Your line is not open. Hi, good afternoon.

Tony Robb: So I wanted to start with the manufacturing here. So the second automated line, I think that's expected to come online next year. I was wondering if you could talk about the ramp there. So you talked about getting to one gig a watt hour. When could you achieve that run rate and what does the timeline look in terms of the ramp up of that second line? Yeah, this is Tony. So the second line we anticipate should be online in the first half or by the end of the first half of next year.

Unknown Executive: So the large portion of the first 10 million that we're drawing down is associated with line one and the production capacity CAPEX that we incurred to put that in place. So that's that look back component that Eric mentioned. And then line two will be financed with the remaining parts of the credit facility. And as we mentioned, the CapEx that we need to implement these lines is substantially less than line one.

Speaker Change: Yes, exactly so the <unk>.

Speaker Change: Large portion of the first $10 million that were drawing down is associated with buying one.

Speaker Change: And the production capacity capex that we incurred to put that in place.

Tony Robb: And so the way to think about that is that we'll have one gig a watt hour approximately of production capacity going forward from that point. So we'll get about a half years worth of that capacity in 20. I got it. Okay, okay, got it.

Tony Robb: So that's that look back component that Eric had mentioned. And then line two will be financed with the remaining parts of the credit facility. And, as we mentioned, the cap ex that we need to implement these lines is substantially less than line one. So we should be able to add multiple lines with this credit facility well beyond line two and into the capacity that we need into 2026.

Speaker Change: So thats that look back.

Speaker Change: Is that.

Eric Jussaume: That Eric had mentioned.

Speaker Change: And then.

Speaker Change: Line, two will be financed with.

Speaker Change: The remaining.

Speaker Change: Parts of the credit facility.

Speaker Change: And as we mentioned.

Unknown Executive: So we should be able to add multiple lines with this credit facility well beyond Line 2 and into the capacity that we need into 2026. Okay, okay, that's helpful. And then one more on the margin profile.

Speaker Change: So we should be able to add.

Speaker Change: Multiple lines with this credit facility well beyond line too and.

Speaker Change: And into the capacity that we need into 2026.

Unknown Executive: So it sounds like you're on track to reach non-gap profitability for the EW toward the end of this year. I'm wondering what the impact could be on the profitability for that product as that second automated line ramps up? Like, would you produce EWs on that line? And would you expect a margin boost at that point in time?

Unknown Executive: Okay, that's helpful.

Speaker Change: Okay. Okay. That's helpful. And then one more just on the margin profile. So it sounds like Youre on track to reach non-GAAP profitability for the EW towards the end of this year.

Tony Robb: And then one more just on the margin profile. So it sounds like you're on track to reach non-GAAP profitability for the EW toward the end of this year, wondering what the impact could be on the profitability for that product as that second automated line ramps up. Like, would you produce EWs on that line, and would you expect a margin boost at that point in time? Well, what gets produced on those battery stacks lines, those go into both EWs and ECs, it's the exact same product. So it doesn't matter what the mix of product is that we are shipping.

Tony Robb: And then just on the the manufacturing cap ex was wondering, you know, when we think about the financing from export import bank, you know, 10 million this year and then 10 to 15 million, I think you anticipate next year, is all of that capital expected to be devoted toward the cap ex spend for that second automated line. And then you just wondering how you're thinking about the remaining capital that might be available to you and whether that could be used for a third automated line or what you're contemplating there.

Speaker Change: Wondering what the impact could be on.

Speaker Change: Profitability for that product as that second automate automated line ramps up like would you produce EW is on that line and would you expect a margin boost.

Speaker Change: At that point in time.

Unknown Executive: Well, what gets produced on those battery stack lines goes into both EWs and ECs. It's the exact same product. So it doesn't matter what the mix of product is that we are shipping. Those production lines, the core components, and the battery powertrain that goes into the EC are the exact same product. So as we scale up to produce and sell ECs, that's all going to be happening on line one. And then when we run out of capacity on line one, we'll start producing on line two. Okay, I got it. All right. I appreciate it.

Speaker Change: Well.

Speaker Change: What gets produced on those battery stacks lines those go into both EW as an ECS. It's the exact same.

Tony Robb: Yeah, exactly. So the large portion of the first 10 million that we're drawing down is associated with line one and the production capacity cap ex that we incurred to put that in place. So that's that look back component that Eric had mentioned. And then line two will be financed with the remaining parts of the credit facility. And as we mentioned, the cap ex that we need to implement these lines is substantially less than line one. So we should be able to add multiple lines with this credit facility well beyond line two and into the capacity that we need into 2026. Okay, that's helpful.

Speaker Change: <unk> so it doesn't matter what the mix of product is that that we are shipping.

Tony Robb: Those production lines, the core components, and the battery powertrain that goes into the EC is the exact same product. So, as we scale up to produce and sell ECs, that's all going to be happening online one. And then, as we run out of capacity online one, we'll start producing online too. Okay, got it. All right, appreciate it.

Speaker Change: Those production lines.

Speaker Change: The core components.

Speaker Change: Battery powertrain that goes into the EC has the exact same product so as we scale up too.

Speaker Change: To produce and sell ECS, that's all going to be happening online one and then as we.

Speaker Change: Run out of capacity online one.

Speaker Change: We will start producing.

Speaker Change: Mine too.

Speaker Change: Okay got it alright I appreciate it thank you.

Unknown Executive: Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Davis Sunderland: Your next question today comes from Davis, Sunderland. You allowed yourself.

Davis Sunderland: Thank you. Your next question today comes from Davis Sunderland. Your line is now open. Erik, Tony, good afternoon guys.

Speaker Change: Your next question today comes from David Sunderland. Your line is now open.

Eric Dresselhuys: There Tony, good afternoon guys. Thank you for the time. Next, take my questions. We'll talk a bit more about the Honeywell partnership. Maybe if there's any new traction, you can speak to as a distribution channel. Maybe if there's any possibility to execute more. I guess I'll call them individual asset sales, rather than your typical kind of framework partnerships you have with say Smod or the Egg or some of the other larger partners. Just anything that's opened up from the Honeywell, and then I have one follow up. Yeah, sure. So, well, things are starting to really get some great momentum with Honeywell.

Speaker Change: Okay.

Unknown Executive: Thank you for the time. Thank you for taking my questions. Uh, when the afternoon talk a bit more about, about the Honeywell partnership. Maybe if there's any new traction you can speak to as a distribution channel, maybe if there's any possibility to execute more, I guess I'll call them individual asset sales rather than your typical kind of framework partnerships you have with, say, Smudge or League or some of the other larger partners.

Eric Tony Good afternoon, guys. Thanks for the time, thanks for taking my questions.

Speaker Change: Yes.

Eric Tony: Wanted to ask maybe to talk a bit more about.

Eric Tony: But the Honeywell partnership maybe if there is any new traction you can speak to as a distribution channel, maybe if theres any possibility to execute more.

Tony Robb: And then one more just on the margin profile.

Tony Robb: So it sounds like you're on track to reach non-gap profitability for the EW toward the end of this year, wondering what the impact could be on the profitability for that product as that second automated line ramps up. Like, would you produce EWs on that line, and would you expect a margin boost at that point in time? Well, what gets produced on those battery stacks lines, those go into both EWs and ECs, it's the exact same product.

Speaker Change: I guess I'll call them individual asset sales rather than your typical kind of framework partnerships you have with face monitor the AG or some of the other larger partners.

Unknown Executive: Just anything that's opened up from Honeywell, and then I have one follow-up. Yeah, sure. So, well, things are starting to really get some great momentum with Honeywell. We were very fortunate to host Vimal Kumar, the CEO of Honeywell, all of Honeywell, came out just last week to visit us. And I'm sorry, two weeks ago, I want to be accurate, came out to visit us here in Wilsonville and spend a day with us, which he's a busy guy. So I think that's a great sign for the importance that he's putting on the relationship in the space.

Speaker Change: Just anything that's opened up from the Honeywell and then I have one one follow up.

Unknown Executive: And we had a great series of conversations across both go-to-market and on some of the joint development activities that we've taken on together to do some things to add new features, functions, and performance. But a lot of it has been driven by just getting to scale more and driving costs out of the system. Honeywell certainly has a great appreciation, as we do, for the market environment and the mandate to get down the cost curve as fast as possible.

Speaker Change: Yeah sure so.

Speaker Change: Things are starting to really get some great momentum with Honeywell.

Eric Dresselhuys: We were very fortunate to host the Mall Camarro, the CEO of Honeywell. Wall of Honeywell came out just last week to visit us. And two, sorry, two weeks ago, I want to be accurate, came out to visit us here in Wilsonville and spend a day with us, which he's a busy guy. So I think that's a great time for the importance that he's putting on the relationship in the space. And we had a great series of conversations across both go to market and on some of the joint development activities that we've taken on together to do some things to improve, to add new features, functions, and performance.

Speaker Change: We were very fortunate to host the mall tomorrow the C.

Speaker Change: Honeywell all pretty well came out just last week to visit us and two I'm sorry, two weeks ago I want to be accurate.

Speaker Change: Came out to visit us here in Wilsonville and spend a day with us.

Tony Robb: So it doesn't matter what the mix of product is that we are shipping. Those production lines, the core components and the battery powertrain that goes into the EC is the exact same product. So as we scale up to produce and sell ECs, that's all going to be happening online one. And then as we run out of capacity online one, we'll start producing online too. Okay, got it.

Speaker Change: Which he is a busy guy so I think that's a great time for the importance that he has.

Unknown Executive: All right, appreciate it.

Speaker Change: Putting on the relationship in this space and we had a great series of conversations across both go to market and.

Unknown Executive: Thank you.

Speaker Change: Some of the joint development activities.

Speaker Change: That we've taken on together too.

Speaker Change: Do some things to improve.

To add new features functions and performance, but a lot of it has been driven by just getting the scale more and driving costs out of the system as the Honeywell certainly has a great appreciation.

Eric Dresselhuys: But a lot of it has been driven by just getting to scale more and driving costs out of the system. The Honeywell certainly has a great appreciation, as we do, for the market environment and the mandate to get down the cost curve as fast as possible. So, you know, we're at the stage now where the good market teams have been organized. They've been off actively engaged in the marketplace. And I think, you know, the hope would be we'd have announcements to make. We're putting proposals out to people, and our hope would be that we'll be able to translate that into live announcements with people here over the coming months.

Speaker Change: As we do for.

Speaker Change: The market environment and the mandate to get.

Davis Sunderland: Your next question today comes from Davis,underland. You allowed yourself.

Speaker Change: Down the cost curve as fast as possible so.

Davis Sunderland: There Tony, good afternoon guys. Thank you for the time.

Unknown Executive: So we're at the stage now where the go-to-market teams have been organized. They've been actively engaged in the marketplace, and I think the hope would be that we'd have announcements to make. We're putting proposals out to people, and our hope would be that we'll be able to translate that into live announcements with people here over the coming months. That's super helpful.

Speaker Change: We're at the stage now where the go to market teams have been organized they've been off actively.

Davis Sunderland: Next take my questions.

Davis Sunderland: We'll talk a bit more about the Honeywell partnership. Maybe if there's any new traction, you can speak to as a distribution channel. Maybe if there's any possibility to execute more.

Speaker Change: Engaged in the marketplace and I think the hope would be we have announcements to make we're putting proposals out the people and our hope would be that we'll be able to translate that into live announcements with people here over the coming months.

Tony Robb: I guess I'll call them individual asset sales, rather than your typical kind of framework partnerships you have with say Smod or the egg or some of the other larger partners. Just anything that's opened up from the Honeywell and then I have one one follow up. Yeah, sure. So, well, things are starting to really get some great momentum with Honeywell. We were very fortunate to host the Mall Camarro, the CEO of Honeywell Wall of Honeywell, came out just last week to visit us.

Unknown Executive: That's super helpful. Thank you.

Tony Rabb: Thank you. And then my follow up is just on raw material costs. And I know there's some one offs this quarter and probably the rest of this year with LCNRV, the counting of the higher cost. But just wanted to ask if you guys are suffering from the so-called startup premium, or if suppliers have been able to renegotiate with you guys as you're getting more units out in the field now, or just anything you can speak to on that would be great. Thank you. Yeah, hey, this is Tony.

Speaker Change: That's super helpful. Thank you and then my follow up is just on raw material costs and I know there are some one offs this quarter and probably the rest of this year with <unk> <unk> co.

Tony Robb: And then my follow-up is just on raw material costs. And I know there's some one off this quarter and probably the rest of this year with LCNRB, the counting on the higher cost. But just wanted to ask if you guys are suffering from the so-called startup premium or if suppliers have been able to renegotiate with you guys as you're getting more units out in the field now, or just anything you can speak to on that would be great. Thank you. Yeah, hey, this is Tony. So we're not seeing any negative impacts from our suppliers in terms of raw materials cost.

Speaker Change: One of the higher cost.

Speaker Change: Just wanted to ask you guys are suffering from the so called startup premium or if suppliers have been able to renegotiate with you guys as youre getting more units out in the field now or just anything you can speak to on that would be great. Thank you.

Tony Robb: And two, sorry, two weeks ago, I want to be accurate, came out to visit us here in Wilsonville and spend a day with us, which he's a busy guy. So I think that's a great time for the importance that he's putting on the relationship in the space. And we had a great series of conversations across both go to market and on some of the joint development activities that we've taken on together to do some things to improve to add new features, functions and performance.

Tony Rabb: So we're not seeing any negative impacts from our suppliers in terms of raw materials costs. Most of the efforts that we are seeing are we're either negotiating with our vendors for reduced costs or negotiating and qualifying new vendors for the same materials at lower costs. So that tends to be the primary focus of what we tend to be experiencing with respect to raw materials. Great, thank you. Your next question today comes from Thomas Boyes. Your line is now open. Thanks for taking my questions. Just two quick ones.

Speaker Change: Yeah, Hey, this is Tony.

Tony: We're not seeing any negative impacts from our suppliers in terms of raw materials costs most of the efforts.

Tony Robb: Most of the efforts that we are seeing is we're either negotiating with our vendors for reduced cost or negotiating and qualifying new vendors for the same materials for lower cost. So that tends to be the primary focus of what we tend to be experiencing with respect for our materials. Right. Thank you.

Tony: That we are seeing is we're either negotiating with our vendors for reduced costs are negotiating and qualifying new vendors for the same materials for lower cost so that tends to be the <unk>.

Mary focus of what.

Tony: We tend to be experiencing with respect to raw materials.

Tony Robb: But a lot of it has been driven by just getting to scale more and driving costs out of the system of the Honeywell certainly has a great appreciation as we do for the market environment and the mandate to get down the cost curve as fast as possible. So, you know, we're at the stage now where the good market teams have been organized. They've been off actively engaged in the marketplace. And I think, you know, the hope would be we'd have announcements to make. We're putting proposals out to people and our hope would be that we'll be able to translate that into live announcements with people here over the coming months. That's super helpful. Thank you.

Tony: Yeah.

Speaker Change: Great. Thank you.

Thomas Boyes: Your next question today comes in Thomas' voice. He lies now open. Thank you for taking my questions. Just two quick ones. Do you sense on maybe with the financing issues were that caused the delay in EWs, but this quarter, the reason I ask is we saw something similar in solar complex where adjustments to the domestic content add or caused some companies to kind of pause for a second. I think we assess the ground under the news kind of schedule that was put out there what the ramifications are. Is that something that you're seeing, or can you give any commentary there?

Speaker Change: Your next question today comes from Thomas Boyes. Your line is now open.

Thomas Boyes: Do you have a sense on maybe what the financing issues were that caused the delay in EWs this quarter? The reason I ask is we saw something similar in the solar complex where adjustments to the domestic content adder caused some companies to kind of pause for a second, reassess, figure out under the new kind of schedule that was put out there what the ramifications are. Is that something that you're seeing or could you give any commentary?

Thanks for taking my questions just two quick ones.

Thomas Boyes: Did you sense on maybe what the financing issues were that caused the delay in uw's. This quarter beyond the reason I ask because we saw something similar.

Speaker Change: In the solar complex, where adjustments to the domestic content adder caused some companies to kind of pause for a second reassess figure out under the new kind of schedule that was put out there. What the ramifications are is that something that youre seeing or could you give any commentary there.

Tony Robb: And then my follow up is just on raw material costs. And I know there's some one off this quarter and probably the rest of this year with LCNRB, the counting on the higher cost.

Eric Dresselhuys: Yeah, we haven't seen we haven't seen that specific case. You know, though, we like you. We've been noting a lot of the announcements made by others on project delays, either from. You know, site delays or other third-party equipment delays. We've been fortunate. We've avoided those for this quarter. This specific case was the project is specifically dependent on a government grant. So government funding that was expected to happen before the end of the quarter that would have freed everything up, and the government just didn't move fast. This government entity just didn't move fast enough to get it done.

Unknown Executive: Yeah, we haven't seen, we haven't seen that specific case. Although we like you, we've been noting a lot of the announcements made by others on project delays, either from, you know, site delays or other third party equipment delays. We've been fortunate to avoid those for this quarter.

Speaker Change: Yes, we haven't we haven't seen that specific case, although we like.

Tony Robb: But just wanted to ask if you guys are suffering from the so-called startup premium or if suppliers have been able to renegotiate with you guys as you're getting more units out in the field now or just anything you can speak to on that would be great. Thank you. Yeah, hey, this is Tony. So we're not seeing any negative impacts from our suppliers in terms of raw materials cost. Most of the efforts that that we are seeing is we're either negotiating with our vendors for reduced cost or negotiating and qualifying new vendors for the same materials for lower cost. So that tends to be the primary focus of what what we tend to be experiencing with respect for our materials. Right. Thank you.

Speaker Change: Been noting a lot of the announcements made by others on project delays either from.

Speaker Change: St delays or other third party equipment delays, we've been fortunate we've avoided those for for this quarter. This this specific case was the project is specifically dependent on a government grant so government funding.

Unknown Executive: In this specific case, the project is specifically dependent on a government grant. So government funding that was expected to happen before the end of the quarter would have freed everything up. And the government just didn't move fast enough. This government entity just didn't move fast enough to get it done. So we've talked to the partner, both our partner and the folks at the utility and the government funders. Everybody assures us that they're moving forward and getting it done, but it's just taken longer than they had hoped.

Speaker Change: That was expected to happen before the end of the quarter that would've freed everything up and the government just didn't move fast. This government entity just didn't move fast enough to get it done.

Unknown Executive: But unfortunately, in this case, it was enough of a timing flip that it held us back from shipping the product. Understandable. Do you know if that was the PACE program or the new era of financing vehicles? No, this was just a directed investment. So it wasn't under any sort of a broader program or, you know, anything that we'd see be more methodical.

Eric Dresselhuys: So we've talked to the party on both our partner and the folks at the utility and the government funders. Everybody assures us that they're moving through and getting it done, and it's just taken longer than they had hoped. But unfortunately, in this case, it was enough of a timing split that it held us back from shipping the product.

So we've talked to them.

Speaker Change: With our partner and the folks at the utility the government thunders, everybody is assures us that they are moving through.

Speaker Change: And getting that done and it's just taken longer than they had hoped but unfortunately in this case.

Speaker Change: It was enough of a timing slips.

Speaker Change: It held us back from shipping the product.

Thomas Boyes: Your next question today comes in Thomas voice. He lies now open. Thank you for taking my questions.

Unknown Executive: Do you know if that was the Pace program or the new error financing vehicles? No, this was just this was just a directed investment. So it wasn't under any sort of a broader program or, you know, anything that we'd see be more methodical. Got it.

Speaker Change: I understood was just that was the piece of program or is it the new era of financing vehicles.

Eric Dresselhuys: Just two quick ones. Do you sense on maybe with the financing issues were that caused the delay in EWs, but this quarter, the reason I ask is we saw something similar in solar complex where adjustments to the domestic content add or caused some companies to kind of pause for a second. I think we assess the ground under the news kind of schedule that was put out there what the ramifications are. Is that something that you're seeing or can you give any commentary there.

Speaker Change: No. It was out there suggest that this was just a directed investment so it wasn't under any sort of a broader program.

Speaker Change: Yes.

Speaker Change: Or anything that we'd see be more methodical.

Unknown Executive: Got it. And then for my follow-up, just, you know, it's good to see the project with India Energy. And we've talked about some of the traction you've seen in, you know, for military applications. I'm trying to get a sense of maybe what the size of the resiliency market would be for, you know, tribal lands. Is that a large opportunity? How do you think about addressing that longer? Yeah, I think it's, I don't know that I can give you a number specifically for tribal lands, but certainly, resilience as a market, resilience microgrids, we see as a multi-billion dollar US market between now and 2030.

Speaker Change: Got it.

Eric Dresselhuys: And then for my fall of just, you know, it's good to see the project with India energy. And we've talked about some of the traction you've seen in, you know, for military applications. I'm trying to get a sense of maybe what the size of the resiliency market would be for, you know, tribal lands is that it's going to be a large opportunity. How do you think about addressing that longer? term. Yeah, I think it's, I don't know that I couldn't give you a number specifically for tribal lands, but certainly resiliency as a market, resiliency micro grids.

Speaker Change: And then for my follow up just it was good to see the project with India Energy and we've talked about some of the traction you're seeing.

Speaker Change: For military applications I'm trying to get a sense of maybe what the size.

Eric Dresselhuys: Yeah, we haven't seen we haven't seen that specific case. You know, though, we like you. We've we've been noting a lot of the announcements made by others on project delays, either from. You know, site delays or other third party equipment delays. We've been fortunate. We've avoided those for for this quarter. This specific case was the project is specifically dependent on a government grant. So government funding that was expected to happen before the end of the quarter that would have freed everything up and the government just didn't move fast.

Speaker Change: The resiliency market would be for tribal.

Speaker Change: Tribal lands is that a significantly large opportunity how do you think about addressing that longer term.

Speaker Change: Yes I.

Speaker Change: I think I don't know that I can give you a number specifically for tribal lands, but certainly resiliency as a market resiliency micro grids, we see as a multibillion dollar U S market in between now and 2030 and it ties back a little bit to the earlier question on data centers, although that is certainly data center.

Eric Dresselhuys: We see as a multi-billion dollar U.S. market in between now and 2030. And, you know, it ties back a little bit to the earlier question on data centers, although that is certainly data centers are a very unique use case with some very unique requirements. But it ties into this broader theme of people wanting to have not just green energy networks that they're supplying their own electricity, but they're really starting to shift to see this as a resiliency play where, you know, you're obviously going green and hopefully trying to derive costs out, but you're worried about your ability to access electricity.

Unknown Executive: And, you know, it ties back a little bit to the earlier question on data centers, although that is certainly true that data centers are a very unique use case, with some very unique requirements. But it ties into this broader theme of people wanting to have not just green energy networks that they supply their own electricity, but they're really starting to shift to see this as a resiliency play, where, you know, you're obviously going green and hopefully trying to drive costs out, but you're worried about your ability to access electricity on a regular basis.

Speaker Change: Our very unique use case.

Eric Dresselhuys: This government entity just didn't move fast enough to get it done. So we've talked to the party on both our partner and the folks at the utility and the government funders. Everybody assures us that they're moving through and getting it done and it's just taken longer than they had hoped. But unfortunately, in this case, it was enough of a timing split that it held us back from shipping the product. Do you know if that was the the pace program or the new error financing vehicles? No, this was just this was just a directed investment. So it wasn't under any sort of a broader program or, you know, anything that we'd see be more methodical.

Speaker Change: With some very unique requirements, but.

Speaker Change: Ties into this broader theme of people wanting to have.

Unknown Executive: Got it.

Speaker Change: Not just green.

Speaker Change: Green energy.

Speaker Change: Networks that theyre supplying their own electricity, but theyre really starting to ship to see this as a resiliency play where.

Speaker Change: You're obviously going green and hopefully trying to drive cost out.

Speaker Change: But you are worried about your ability to access electricity.

Eric Dresselhuys: On a regular basis. And so micro grids for military bases or indigenous communities are great examples of where they frankly have in the past either had an underserved community where the electricity distribution isn't good enough or where the cost of having a power outage is so severe; it could be on the cost of electricity where there's operational or application impacts to losing electricity. And we like those markets because those markets also tend to have put a big premium on both American-made products and on safe products, right? They want to do. There's a lot of concern about lithium and some of the problems that lithium batteries have had.

Speaker Change: On a regular basis, and so micro grids for military bases or.

Unknown Executive: And so microgrids for military bases or indigenous communities are great examples of where they, frankly, have in the past either had an underserved community where the electricity distribution isn't good enough, or where the cost of having a power outage is so severe, it's beyond the cost of electricity, right? There are operational or application impacts to losing electricity. And we like those markets because those markets also tend to put a big premium on both American-made products and safe products, right?

Indigenous communities are great examples of where they frankly have.

Speaker Change: In the past either had an underserved community, where the electricity distribution isn't good enough.

Speaker Change: Or where the cost of having a power outages. So severe it's beyond the cost of electricity right. There is operational our application impacts.

Eric Dresselhuys: And then for my fall of just you know, it's good to see the project with India energy. And we've talked about some of the traction you've seen in, you know, for military applications.

Speaker Change: Losing electricity and we like those markets because those markets also tend to have.

Eric Dresselhuys: I'm trying to get a sense of maybe what the size of the resiliency market would be for, you know, tribal lands is that it's going to be a large opportunity. How do you think about addressing that longer? term. Yeah, I think it's, I don't know that I couldn't give you a number specifically for tribal lands, but certainly resiliency as a market, resiliency micro grids. We see as a multi billion dollar U.S, market in between now and 2030.

Speaker Change: Put a big premium on both American made products and unsafe products right. They want other than there's a lot of.

Unknown Executive: They wanted their There's a lot of concern about lithium and some of the problems that lithium batteries have had. And so there's a kind of a predisposition, if you will, towards buying a US product or buying a product that is non-lithium in design.

Speaker Change: Concerned about lithium and some of the problems that lithium batteries have had.

Unknown Executive: And so there's a kind of a predisposition, if you will, towards buying a US product or buying a product that is not lithium in design. Got it. No, it's very helpful.

Speaker Change: And so there is a kind of a pre disposition if you will towards buying a U S product.

Speaker Change: We're buying.

Speaker Change: A product that is in line with him and design.

Eric Dresselhuys: And, you know, it ties back a little bit to the earlier question on data centers, although that is certainly data centers are a very unique use case with some very unique requirements. But it ties into this broader theme of people wanting to have not just green energy networks that they're supplying their own electricity, but they're really starting to shift to see this as a resiliency play where, you know, you're obviously going green and hopefully trying to derive costs out, but you're worried about your ability to access electricity.

Unknown Executive: Got it. No, it's very helpful. I'll hop back in the queue. Thanks again.

Speaker Change: Got it no that's very helpful. I'll hop back in the queue. Thanks again.

Unknown Executive: I'll hope I can make you think again.

Speaker Change: Sure.

Operator: Again, if you would like to ask a question, press star, then one on your telephone keypad.

Speaker Change: Sure.

Operator: Again, if you would like to ask a question, press star then 1 on your telephone keypad. Our next question comes from Brian Hayden. Your line is now open. Brian, your line is now open. Baby, we lost Brian.

Speaker Change: Again, if you would like to ask a question Press Star then one on your telephone keypad.

Brian Hayden: Right next question comes from Brian Hayden. Your line is not open. Brian, your line is not open.

Speaker Change: Our next question comes from Brian Hayden.

Speaker Change #100: It is now open.

Speaker Change #100: Okay.

Speaker Change #100: Brian Your line is now open.

Eric Dresselhuys: On a regular basis. And so micro grids for military bases or indigenous communities are great examples of where they frankly have in the past either had an underserved community where the electricity distribution isn't good enough or where the cost of having a power outage is so severe, it could be on the cost of electricity where there's operational or application impacts to losing electricity. And we like those markets because those markets also tend to have put a big premium on both American made products and on safe products, right?

Operator: Maybe we'll ask Brian.

Speaker Change #101: Maybe we lost Brian.

Operator: It would appear we are having technical disquease volcanic quartz lines.

Operator: It would appear we are having technical difficulties with the Canada Courts lines. I do apologize, but that was our final question for today. I see there aren't any further questions in the queue, so that will conclude today's conference call. I want to thank you all for your participation, and that will conclude today's call. You may now disconnect.

Speaker Change #102: It would at Pampa, we are having technical difficulties with Canaccord. Your line I do apologize, but that was our final question for today.

Operator: I do apologize, but that was our final question for today.

Operator: I see there aren't any further questions in the queue, so that will conclude today's conference call. I want to thank you all for your participation, and that will conclude today's call.

Speaker Change #102: There aren't any further questions in the queue. So that will conclude today's conference call.

Speaker Change #102: Thank you all for your participation and that will conclude today's call you may now disconnect.

Operator: You may now disconnect.

Speaker Change #102: Yeah.

Eric Dresselhuys: They want to do. There's a lot of concern about lithium and some of the problems that lithium batteries have had. And so there's a kind of a pre disposition, if you will, towards buying a US product or buying a product that is not lithium in design. Got it. No, it's very helpful. I'll hope I can make you think again. Again, if you would like to ask a question, press star, then one on your telephone keypad.

Brian Hayden: Right next question comes from Brian Hayden.

Operator: Your line is not open. Brian, your line is not open. Maybe we'll ask Brian. It would appear we are having technical disquease volcanic quartz lines.

Operator: I do apologize, but that was our final question for today. I see there aren't any further questions in the queue so that will conclude today's conference call. I want to thank you all for your participation and that will conclude today's call.

Operator: You may now disconnect.

Q2 2024 ESS Tech Inc Earnings Call

Request a DemoDemo

GWH

ESS Tech

Earnings