Q2 2024 FREYR Battery Inc Earnings Call
Speaker Change: [inaudible] one, [inaudible]
Jeffrey Spittel: Hello, and welcome to FREYR Battery's second quarter 2024 earnings conference call. With me today on the call are Daniel Barcelo, Chairman of FREYR's Board of Directors, our Co-Founder, Chief Executive Officer, and Board Director, Tom Einer Jensen, and Evan Calio, our Chief Financial Officer.
Speaker Change: Thank you for watching, see you next time!
Speaker Change: Hello, and welcome to FREYR Battery's second quarter 2024 earnings conference call.
Speaker Change: With me today on the call are Daniel Barcello, Chairman of FREYR's Board of Directors, our co-founder, Chief Executive Officer, and Board Director, Tom Einer Jensen, and Evan Calio, our Chief Financial Officer.
Jeffrey Spittel: During today's call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside FREYR's control and are difficult to predict. Additional information about risk factors that could materially affect our business is available in FREYR's S1, an annual report on Form 10-K filed with the Securities and Exchange Commission, which is available on the Investor Relations section of our website. With that, I'll turn the call over to Daniel.
Speaker Change: During today's call management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside FREYR's control and are difficult to predict.
Speaker Change: Additional information about risk factors that could materially affect our business are available in FREYR's S1, an annual report on Form 10-K filed with the Securities and Exchange Commission, which are available on the Investor Relations section of our website. With that, I'll turn the call over to Daniel.
Daniel Barcelo: Thank you, Jeff, and welcome everyone to our Q224 earnings call. Since this is my first opportunity to address you as FREYR's Chairman of the Board, I'd like to spend a few moments highlighting the strengths of our outstanding management team and emphasizing our commitment to generate value for our shareholders, customers, partners, and employees around the world. Our collective goal as FREYR's Board of Directors is to establish a profitable business as soon as possible. As Tom and Evan will detail shortly, the industry and the capital markets are evolving rapidly, and we must evolve with them.
Daniel: Thank you, Jeff, and welcome everyone to our Q2'24 earnings call.
Daniel: Since this is my first opportunity to address you as FREYR's Chairman of the Board, I'd like to spend a few moments highlighting the strengths of our outstanding management team and emphasizing our commitment to generate value for our shareholders, customers, partners, and employees around the world.
Speaker Change: Our collective goal as FREYR's Board of Directors is to establish a profitable business as soon as possible. As Tom and Evan will detail shortly, the industry and the capital markets are evolving rapidly, and we must evolve with them.
Daniel Barcelo: Our strategy has adapted to this changing landscape and the recent appointments to our board and leadership team best positioned FREYR to build on the progress we have made and to execute our strategy. FREYR's board of directors now includes our co-founder, Tor Ivar Sletiman, Todd Cantor, the managing partner of Encompass Capital, David Manners, who has extensive experience in the U.S. government, Peter Matrai, a co-founder and energy industry expert, Jessica Strine, a seasoned institutional investor, CEO and industry advisor, and Dan Steingart, professor of chemical metallurgy at Columbia University and the chair of FREYR's technical advisory board.
Speaker Change: Our strategy has adapted to this changing landscape, and the recent appointments to our board and leadership team best positioned FREYR to build on the progress we have made and to execute our strategy.
Speaker Change: FREYR's board of directors now includes our co-founder, Tor Ivar Sletiman, Todd Kantor, the managing partner of Encompass Capital.
Speaker Change: David Manners, who has extensive experience in the U.S. government.
Speaker Change: Peter Matrai, a co-founder and energy industry expert, Jessica Strein, a seasoned institutional investor, CEO and industry advisor, and Dan Steingart, professor of chemical metallurgy at Columbia University and the chair of FREYR's Technical Advisory Board.
Daniel Barcelo: We are fully aligned in support of Tom Jensen, our CEO, Evan Calley, our CFO, and the rest of our leadership team, and we have the utmost confidence in their abilities to lead this organization on an accelerated path to profitability. Our focus for the remainder of 2024 is to advance our attractive business development opportunities. During his time as our Executive Chair, Tom continued to spearhead our global business development endeavors, so his return to the CEO role dovetails with FREYR's top priority.
Speaker Change: We are fully aligned in support of Tom Jensen, our CEO , Evan Calley, our CFO , and the rest of our leadership team, and we have the utmost confidence in their abilities to lead this organization on an accelerated path to profitability.
Speaker Change: Our focus for the remainder of 2024 is to advance our attractive business development opportunities. During his time as our Executive Chair, Tom continued to spearhead our global business development endeavors, so his return to the CEO role dovetails with FREYR's top priorities.
Daniel Barcelo: We're also delighted to have Evan Callejo on our team as CFO. Evan brings deep global energy sector, capital formation, and deal-making expertise to FREYR, having previously run businesses at BTIG and Morgan Stanley, as well as having served as an attorney for the U.S. Securities and Exchange Commission. Evan will be instrumental in our journey to create lasting shareholder value. Before I turn the call over to Tom, I'd like to thank you, our shareholders, for your continued support, which is reflected in the passing of resolutions at our AGM in June. We're excited about the opportunities ahead for FREYR, particularly in the battery technology and energy storage space. And with that, I'll turn the call over to you, Tom.
Speaker Change: We're also delighted to have Evan Callejo on our team as CFO . Evan brings deep global energy sector, capital formation, and deal-making expertise to FREYR.
Speaker Change: having previously run businesses at BTIG and Morgan Stanley , as well as having served as an attorney for the U.S. Securities and Exchange Commission. Evan will be instrumental in our journey to create lasting shareholder value.
Speaker Change: Before I turn the call over to Tom, I'd like to thank you.
Speaker Change: our shareholders for the continued support, which was reflected by the passing of resolutions at our AGM in June . We're excited about the opportunities ahead for FREYR, particularly in the battery technology and energy storage space. And with that, I'll turn the call over to you, Tom.
Tom Einer Jensen: Thank you, Daniel. And welcome, everyone, to our Q2 2024 earnings call, FREYR's 13th earnings call since we went public, and my first earnings call since I came back into the CEO role. I'd like to start today's call on a personal note. As most of you know, I have been with FREYR from the start, and I care deeply about our people, our investors, our customers, our partners, and our successful business. And although the capital markets have been chaotic lately, it is nothing we haven't seen before.
Tom: Thank you, Daniel, and welcome, everyone, to our Q2 2024 earnings call, FREYR's 13th earnings call since we went public and my first earnings call since I came back into the CEO role.
Tom: I'd like to start today's call on a personal note. As most of you know, I have been with FREYR from the start, and I care deeply about our people, our investors, our customers, our partners, and our success.
Tom: And although the capital markets have been chaotic lately, it is nothing we haven't seen before. You may recall that we raised the initial equity to go public on the New York Stock Exchange in early 2021 via virtual roadshows in the throes of the pandemic.
Tom Einer Jensen: You may recall that we raised the initial equity to go public on the New York Stock Exchange in early 2021 via virtual roadshows in the throes of the pandemic. I'm delighted to be 65 days into my second tenure as CEO of FREYR. While I know we still have a lot of work to do and that confidence in us has been challenged, I want to firmly state that I would not have stepped back in if I did not see that we could deliver stellar results and groundbreaking developments similar in relative impact for us as a company to when we went public back in 2021.
AID: I am delighted to be 65 days into my second tenure as CEO of AID.
AID: While I know we have still a lot of work to do, and that confidence in us has been challenged,
AID: I want to firmly state that I would not have stepped back in if I did not see that we can deliver stellar results and groundbreaking developments similar in relative impact for us as a company as when we went public back in 2021.
Tom Einer Jensen: Back then, we had a conceptual ambition to become a battery company with a small team and a limited balance. Now, we are one of the few companies globally to have proven that we can produce functional batteries using next-generation equipment on the 24M semi-solid platform. We have a global partnership and customer network. We have a cash position of more than $200 million with no debt on our balance sheet.
AID: Back then, we had a conceptual ambition to become a battery company with a small team and a limited balance sheet.
AID: Now, we are one of the few companies globally to have proven that we can produce functional batteries using next-generation equipment on the 24-amp semi-solid platform.
AID: We have a global partnership and customer network. We have a cash position of more than $200 million with no debt on our balance sheet.
Tom Einer Jensen: We have strategic assets with which we can execute projects and unlock value, and we have an increasing number of highly promising opportunities to establish a deeply profitable business. We have globally leading partners across the entire battery value chain, including our Energy Transition Acceleration Coalition partners with added interest and participation from energy majors, hyperscalers, and ultra-large tech companies to see the critical role and vast potential that the battery industry represents, both in terms of decarbonization and also in terms of unlocking next-generation computational power in a sustainable manner.
AID: We have strategic assets with which we can execute projects and unlock value, and we have an increasing number of highly promising opportunities to establish a deeply profitable business.
AID: We have globally leading partners across the entire battery value chain, including our Energy Transition Acceleration Coalition partners, with added interest and participation from energy majors, hyperscalers, and ultra-large tech caps, to see the critical role and vast potential that the battery industry represents, both in terms of decarbonization, but also in terms of unlocking next generation computational power in a sustainable manner.
Tom Einer Jensen: We know, however, that our investors are eager for concrete news, and we recognize that your trust and support must be earned by delivering. So if you take one message from today's call, it's that our revamped board and management team, 65 days into working together, are acutely focused on execution. And this is what I'm doing together with our excellent team in a constantly changing and dynamic environment. Since my return to the CEO role, I have begun to sense a familiar feeling from our formative days.
AID: We know, however, that our investors are eager for concrete news, and we recognize that your trust and support must be earned by delivering.
Speaker Change: So, if you take one message from today's call, it's that our revamped board and management team, 65 days into working together, are acutely focused on execution. And this is what I'm doing, together with our excellent team, in a constantly changing and dynamic environment.
Speaker Change: Since my return to the CEO role, I have begun to sense a familiar feeling from our formative days. I'm hearing many of the same messages from existing and emerging partners, and I see real momentum behind the scenes.
Tom Einer Jensen: I'm hearing many of the same messages from existing and emerging partners, and I see real momentum behind the scenes. The key distinction is that FREYR is no longer merely a company with a vision to produce batteries. We have now proven to industry leaders that we possess the technical and operational acumen to justify a seat at the table. And we're capitalizing on that privilege.
Speaker Change: The key distinction is that FREYR is no longer merely a company with a vision to produce batteries. We have now proven to industry leaders that we possess the technical and operational acumen to justify a seat at the table, and we are capitalizing on that privilege.
Tom Einer Jensen: I am energized about the opportunity to serve as FREYR CEO once again, and I'm excited about the road ahead. Turning now to slide number four. We are leading with our conclusion by summarizing our value proposition to investors. As we saw in this morning's press release, our singular focus is to build a profitable business that generates first revenue and EBITDA as soon as next year. We intend to achieve this by unlocking value from our real assets, which include GigaArctic, GigaAmerica, the CQP, our land position in Finland, and our technology licenses. We've publicly traded battery startups are deeply out of favor. Our equity currently trades below cash.
Speaker Change: I am energized about the opportunity to serve as FREYR's CEO once again, and I'm excited about the road ahead.
Speaker Change: Turning now to slide number four, we are leading with our conclusion by summarizing our value proposition to investors.
Speaker Change: As we saw in this morning's press release, our singular focus is to build a profitable business that generates first revenue and EBITDA as soon as next year.
Speaker Change: We intend to achieve this by unlocking value from our real assets, which include GigaArctic, GigaAmerica, the CQP, our land position in Finland, and our technology licensees.
Speaker Change: With publicly traded battery startups deeply out of favor, our equity currently trades below cash, so there is meaningful hidden value to generate from our assets.
Tom Einer Jensen: So there is meaningful hidden value to generate from our assets. In the current financing and battery cell pricing environments, adaptability is key to success. As such, we have refocused our business development efforts on projects that are the quickest to market.
Speaker Change: In the current financing and battery cell pricing environments, adaptability is key to success.
Speaker Change: As such, we have refocused our business development efforts on projects that are the quickest to market. The downstream model impact opportunities we are advancing are financeable because of their relatively modest capital intensity, and they offer highly attractive economic returns.
Tom Einer Jensen: The downstream model impact opportunities we are advancing are financeable because of their relatively modest capital intensity, and they offer highly attractive economic returns. We are finalizing commercial agreements and technical solutions with top-tier partners, and we will be announcing specifics on economics and timelines as soon as we are ready with value-accretive deals. We are mindful of the challenges the battery industry is facing, and we prioritize solid value-accretive deals over speed. But we are now very close to the initial finishing line, so we'll ask for a bit more patience until we can announce specifics.
Speaker Change: We are finalizing commercial agreements and technical solutions with top-tier partners, and we will be announcing specifics on economics and timelines as soon as we are ready with value-accretive deals.
Speaker Change: We are mindful of the challenges the battery industry is facing, and we prioritized solid value-accretive deals over speed, but we are now very close to the initial finishing line. So we'll ask for a bit more patience until we can announce specifics, but our plans include commissioning and start-up production, revenue and EBITDA generation during 2025.
Tom Einer Jensen: But our plans include commissioning and start-up of production, revenue, and EBITDA generation during 2025. Our strong balance sheet is another source of strength for FREYR. Although external project-level equity and debt are available for bankable projects today, our significant cash balance and debt-free balance sheet give us the flexibility to be patient while we prioritize capital formation that is tied to specific projects. And to provide additional flexibility, we're implementing additional measures that will extend FREYR's runway to approximately 36 months without assuming the addition of any new sources of funding.
Speaker Change: Our strong balance sheet is another source of strength for FREYR.
Speaker Change: Although external project-level equity and debt are available for bankable projects today, our significant cash balance and debt-free balance sheet
Speaker Change: give us the flexibility to be patient while we prioritize capital formation that is tied to specific projects.
Speaker Change: And to provide additional flexibility, we're implementing additional measures that will extend FREYR's runway to approximately 36 months without assuming the addition of any new sources of funding.
Tom Einer Jensen: We're obviously also pursuing various sources of non-dilutive funding linked to our increasing product portfolio, but we take nothing for granted and seek to control what we can while pursuing additional opportunities to augment our ability to grow further. Turning to our third point, for all the capital equipment intensity of the battery industry, it's human capital in the form of technical and operational talent that is the primary source of value creation and competitive differentiation. With our recent success at the CQP on the 24M platform, we have demonstrated to our current and prospective partners that FREYR has world-class people who know how to find solutions to highly complex technical problems.
Speaker Change: We're obviously also pursuing various sources of non-dilutive funding linked to our increasing product portfolio, but we take nothing for granted and seek to control what we can while pursuing additional opportunities to augment our ability to grow further.
Speaker Change: Turning to our third point, for all the capital equipment intensity of the battery industry, it's human capital in the form of technical and operational talent that is the primary source of value creation and competitive differentiation.
Speaker Change: With our recent success at the CQP, on the 20 frame platform, we have demonstrated to our current and prospective partners that FREYR has world-class people who know how to find solutions to highly complex technical issues.
Tom Einer Jensen: Under the leadership of our newly appointed Chief Operating Officer, Mike Brose, our Chief Technology Officer, Andrea Spenson, and our EVP of Project Execution, Einar Kilde, we have developed deep subject matter expertise for a variety of battery value chain solutions, which continues to drive new opportunities. And finally, if we lift ourselves out of the tyranny of the moment in these volatile capital markets environments, FREYR's story is still tied to secular growth trends that should ultimately resonate with investors.
Speaker Change: Under the leadership of our newly appointed Chief Operating Officer, Mike Brose, our Chief Technology Officer, Andreas Benson, and our EVP of Project Execution, Einar Kilde, we have developed deep subject matter expertise for a variety of battery value chain solutions, which continues to drive new opportunities.
Speaker Change: And finally, if we lift ourselves out of the tyranny of the moment in these volatile capital markets environments, FREYR's story is still tied to secular growth trends that should ultimately resonate with investors.
Tom Einer Jensen: Battery solutions will increasingly be recognized as the key enabler of the energy transition, highlighted by the need to provide reliable, affordable, clean, dispatchable energy as the global power grids grow more reliant upon intermittent renewables amidst certain global electricity demand. FREYR is increasingly at the forefront of this energy revolution.
Speaker Change: Battery solutions will increasingly be recognized as the key enabler of the energy transition, highlighted by the need to provide reliable, affordable, clean, dispatchable energy, as the global power grids grow more reliant upon intermittent renewables amidst certain global electricity demand.
Speaker Change: FREYR is increasingly at the forefront of this energy revolution.
Tom Einer Jensen: Let me update you on the pillars of our FREYR 2.0 strategy that we have alluded to in previous calls. We are accelerating our conventional technology strategy, and we expect to lead with downstream projects focused on modular pack production. This approach is grounded in market fundamentals as follows.
Speaker Change: Turning now to slide 5.
Speaker Change: Let me update you on the pillars of our FREYR 2.0 strategy that we have alluded to in previous calls.
Speaker Change: We are accelerating our conventional technology strategy and we expect to lead with downstream projects focused on module and pack production.
Tom Einer Jensen: The economics of module impact projects benefit from the surplus of battery cell capacity while finalizing end user applications with local content requirements and battery management. Financing is available for these projects because they are far less capital intensive than battery cell gigafactories. FREYR has already been working on downstream technology configurations to support cell production, so we can channel that momentum to manufacture purpose-built storage solutions for our customers, and the construction lead times for module-impact facilities are much shorter, enabling us to accelerate our path to market, also given that we have building and infrastructure assets inside the company.
Speaker Change: This approach is grounded in market fundamentals as follows. The economics of module impact projects benefit from the surplus of battery cell capacity while finalizing end-user applications with local content requirements and battery management systems.
Speaker Change: Financing is available for these projects because they are far less capital intensive than battery cell gigafactories.
Speaker Change: FREYR has already been working on downstream technology configurations.
Speaker Change: to support cell production, so we can channel that momentum to manufacture purpose-built storage solutions for our customers, and the construction lead times for module impact facilities are much shorter, enabling us to accelerate our path to market, also given that we have building and infrastructure assets inside the company.
Tom Einer Jensen: The second pillar of our FREYR 2.0 strategy is our emphasis on financial discipline and our strong balance sheet. In today's challenging financing environment, cash is king. Accordingly, we have built in flexibility in our operating model to adjust our cash burn rate to extend our runway to at least 36 months without raising any additional capital.
Speaker Change: The second pillar of our FREYR 2.0 strategy is our emphasis on financial discipline and our strong balance sheet. In today's challenging financing environment, cash is king.
Speaker Change: Accordingly, we have built in flexibility in our operating model to adjust our cash burn rate to extend our runway to at least 36 months without raising any additional capital.
Tom Einer Jensen: In conjunction with this priority, we're also pursuing multiple options to generate value from our existing assets, including gigahertz. Our commercial efforts are also in high gear. We are simultaneously evaluating potential inorganic opportunities while we mature the FREYR 2.0 commercial pipeline of conventional technology projects. Our team is eager to share what we've been working on in the public domain.
Speaker Change: In conjunction with this priority, we're also pursuing multiple options to generate value from our existing assets, including Gigarctic.
Speaker Change: Our commercial efforts are also in high gear. We are simultaneously evaluating potential inorganic opportunities while we mature the FREYR 2.0 commercial pipeline of conventional technology projects.
Tom Einer Jensen: And as we move from confidential negotiations to formal commitments, we will communicate our progress accordingly to the market. Meanwhile, while we focus on accelerating FREYR's path to commercialization in the near term, we remain committed to establishing a long-term competitive moat around our unique position with 24M's semi-solid technology. The technical milestones we have announced this year at the CQPP have proven that we, as a team, can produce batteries on a novel technology platform, and those achievements are attracting attention from potential partners across the battery and adjacent industries.
Speaker Change: Our team is eager to share what we've been working on in the public domain and as we move from confidential negotiations to formal commitments we will communicate our progress accordingly to the market.
Speaker Change: While we focus on accelerating FREYR's path to commercialization in the near term, we remain committed to establishing a long-term competitive moat around our unique position with 24M's semi-solid technology.
Speaker Change: The technical milestones we have announced this year at the CQPP have proven that we as a team can produce batteries on a novel technology platform, and those achievements are attracting attention from potential partners across the battery and adjacent industries.
Tom Einer Jensen: The battery industry's future rests on improving battery safety, increasing energy density, driving down raw material and conversion costs, and improving both the electrochemical and electromechanical aspects of battery production. There are multiple additional opportunities around the 21 platform, which includes novel materials, LFP recycling options, improved cell designs, and much safer separator solutions, which we believe could be a material part of a differentiated next-generation tech stack at ultra-low costs with all safety aspects under control.
Speaker Change: The battery industry's future rests on improving battery safety, increasing energy density, driving down raw material and conversion costs, and improving both electrochemical and electromechanical aspects of battery production.
Speaker Change: There are multiple additional opportunities around the 21 platform, which includes novel materials, LFP recycling options, improved cell designs, and much safer separator solutions, which we believe ultimately could be a material part of a differentiated next-generation tech stack at ultra-low costs with all safety aspects under control.
Tom Einer Jensen: We will, in a resource-sensible way, continue the work with current and new partners to develop competitive battery solutions based on the 20RM platform, gradually test and include additional aspects of the 20RM portfolio, and explore complementary avenues to leverage the digital assets we have developed in-house at FREYR and at the CKB. Turning to slides.
Speaker Change: We will, in a resource-sensible way, continue the work with current and new partners to develop competitive battery solutions based on the 20-RAM platform, gradually test and include additional aspects of the 20-RAM portfolio, and explore complementary avenues to leverage the digital assets we have developed in-house.
Speaker Change: in FREYR and at the CQP.
Tom Einer Jensen: Let's spend a few minutes panning out to assess the big picture opportunity for FREYR. Data from numerous sources continue to support our view that we are in the early stages of a structural and exponential growth trend for batteries, which are the key facilitator of the energy transition. In FREYR's core and markets, batteries are the solution for a structural dilemma across both the supply and demand spectrums for power. Furthermore, I want to underline that these secular growth trends are underpinned by learning curves, which will continue to drive down costs and accelerate deployment further.
Speaker Change: Turning to slide six.
Speaker Change: Let's spend a few minutes panning out to assess the big picture opportunity for FREYR.
Speaker Change: The data from numerous sources continue to support our view that we are in the early stages of a structural and exponential growth trend for batteries.
Speaker Change: which are the key facilitator of the energy transition. In FREYR's core and markets, batteries are the solution for a structural dilemma across both the supply and demand spectrums for power.
Speaker Change: Furthermore, I want to underline that these secular growth trends are underpinned by learning curves, which will continue to drive down costs and accelerate deployment further.
Tom Einer Jensen: Traditional estimators and conventional energy analysts still struggle to take on board the momentum in the transition, as has been the case consistently for the last decade. In the end, however, these trends are driven by economics, and exponential growth will continue as we are in the early stages of the S-curves as depicted in these charts. While economics drives global growth, policy has a role to play for temporary localized deployment.
Speaker Change: Traditional estimators and conventional energy analysts still struggle to take on board the momentum in the transition, as has been the case consistently for the last decades.
Speaker Change: In the end, however, these trends are driven by economics, and exponential growth will continue as we are in the early stages of the S-curves as depicted in these charts.
Speaker Change: While economics drive global growth, policy has a role to play for temporary localised deployment.
Tom Einer Jensen: Allocation of capital will gravitate to the markets which benefit from temporary incentives, like the Inflation Reduction Act, which is one of the reasons why FREYR re-domiciled to the U.S. earlier this year and why we are accelerating our presence in the U.S. energy transition. Power grids worldwide are becoming more reliant on intermittent renewable electricity sources through accelerating wind and, in particular, solar power generation deployment. These require battery backup in the form of battery energy storage system solutions to ensure a dispatchable affordable supply.
Speaker Change: Allocation of capital will gravitate to the markets which benefit from temporary incentives, like the Inflation Reduction Act, which is one of the reasons why FREYR redomiciled to the U.S. earlier this year and why we are accelerating our presence in the U.S. energy transition.
Speaker Change: Power grids worldwide are becoming more reliant on intermittent renewable electricity sources through accelerating wind and in particular solar power generation deployment.
Speaker Change: These require battery backup in the form of battery energy storage system solutions to ensure dispatchable, affordable supply.
Tom Einer Jensen: Irrespective of the source of power generation, however, and the notion that increasing intermittent power supply drives demand for batteries, low-cost battery solutions are very useful in supporting grid reliability, irrespective of the source of the power supply. Demand for electricity already fluctuates daily and seasonally with weather and during each day with peaks and troughs in usage patterns. Batteries used in storage applications enhance reliability, reduce costs, and support the ongoing deployment of new applications such as microgrids, electrified home heating, and the uptake of electric vehicles.
Speaker Change: Irrespective of the source of power generation, however, and the notion that increasing intermittent power supply drives demand for batteries, low-cost battery solutions are very useful in supporting grid reliability irrespective of the source of the power supply.
Speaker Change: Demand for electricity already fluctuates daily and seasonally with weather, and during each day with peaks and troughs in usage patterns.
Speaker Change: Batteries used in storage applications enhance reliability, reduce costs, and support the ongoing deployment of new applications such as microgrids, electrified home heating, and the uptake of electric vehicles.
Tom Einer Jensen: As learning curves continue to improve the performance, safety, and costs of batteries, everything that can be electrified will be electrified. Decentralized and decarbonized renewable energy-based microgrids coupled with renewable energy-based utility-scale solutions will increasingly be deployed, incentivized, and supported.
Speaker Change: As learning curves continue to improve performance, safety, and costs of batteries, everything that can be electrified will be electrified.
Speaker Change: Decentralized and decarbonized renewable energy-based microgrids coupled with renewable energy-based utility-scale solutions will increasingly be deployed, incentivized, and supported.
Tom Einer Jensen: FREYR is one of the few companies with fundamental exposure to this secular trend on both sides of the Atlantic, and we have pedigree partnerships in existing and next-generation battery technology solutions, providing a unique exposure for investors to ride this continuing and accelerating energy transition wave. And now, it is my great privilege to welcome Evan Calio to our team as FREYR's Chief Financial Officer. Evan was instrumental in FREYR's formation as a public company during his time at BTIG, so he knows our story. He understands our industry, and he has hit the ground running on several important initiatives during his first 65 days in his new role. Evan, you are heartily welcome to the team. Over to you.
Speaker Change: FREYR is one of few companies with fundamental exposure to this secular trend on both sides of the Atlantic. And we have pedigree partnerships in existing and next-generation battery technology solutions.
Speaker Change: providing a unique exposure for investors to ride this continuing and accelerating energy transition wave.
Speaker Change: And now, it is my great privilege to welcome Evan Calio to our team as FREYR's Chief Financial Officer.
Speaker Change: Eben was instrumental in FREYR's formation as a public company during his time at BTIG, so he knows our story. He understands our industry and he has hit the ground running on several important initiatives during his first 65 days in his new role. Eben, you are heartily welcome to the team. Over to you.
Evan Calio: Thank you. Thank you, Tom. Look, before I speak to slide seven, I'd also like to share just some personal observations on why I joined FREYR in June and am on this side of the mic for the first time. As some of you may know, I spent most of my career covering global energy markets as an investment banker, and as an equity research analyst, and over that time, I've witnessed several cycles, worked with many companies across the value chain in both traditional and renewable energy.
Eben: Thank you. Thank you, Tom. Before I speak to slide seven, I'd also like to share just some personal observations on why I joined FREYR in June and be on this side of the mic for the first time.
Eben: As some of you may know, I've spent most of my career covering global energy markets as an investment banker, as an equity research analyst, and over that time I've witnessed several cycles, worked with many companies across the value chain in both traditional and renewable energy.
Evan Calio: As Tom referenced, we worked together. We were a lead advisor in the D-SPAC IPO and retained close contact as an advisor really throughout the FREYR organization since the IPO. And while I appreciate the challenges of establishing a business, a publicly traded company in volatile markets, I believe FREYR has the right senior people, leadership. It's the right people. I believe they're in the right sector, Battery and its adj
Eben: I joined FREYR with eyes wide open.
Speaker Change: As Tom referenced.
Speaker Change: We worked together. We were a lead advisor in the D-SPAC IPO and retained close contact as an advisor really throughout the FREYR organization since the IPO. And while I appreciate the challenges of establishing a business, a publicly traded company, in volatile markets,
Speaker Change: I believe FREYR has the right senior people leaderships, the right people, I believe they're in the right sector.
Evan Calio: I think it's the right position, relative balance sheet strength, compelling and advanced projects, and the right time now. Now is the right time. On people, I'm excited to rejoin Tom and Peter Mitra as co-founders of FREYR and the opportunity to work again with Dan Barcello, Todd Kanter, and Jessica Strein, all of whom I've known for over 20 years. And in my first 60 days, it only confirms my conviction in organizational depth and focus. We have an exceptional group of leaders, and they're dedicated to building something meaningful and long-lasting. And that's appealing to me. In the sector, Tom covered it more eloquently than I might have.
Speaker Change: and its adjacencies. I think it's the right position, relative balance sheet strength and compelling and advanced projects and the right time now. Now is the right time.
Speaker Change: On people, I'm excited to rejoin Tom and Peter Mitraj, co-founders of FREYR. The opportunity to work again with Dan Barcello, Todd Kanter, Jessica Strein, all whom I've known for over 20 years. And in my first 60 days,
Speaker Change: It only confirms my conviction on the organizational depth and focus. We have an exceptional group of leaders and they're dedicated to building something meaningful, long-lasting, and that's appealing to me. On the sector...
Evan Calio: Yet electrification is happening. The stationary storage market has long-term tailwinds, the market's young and dynamic, and it will involve consolidation. That excites me. On time.
Speaker Change: Tom covered it more eloquently than I might. Yet electrification is happening. Stationary storage market has long-term tailwinds. The market's young and dynamic and it will involve consolidation. That excites me. On time.
Evan Calio: There's a saying in the energy business that's proven to be true throughout my career that fortunes are made in a downturn. I'm betting the cyclical downturn for a secular growth industry will only add to that adage. And while the sector is out of favor, we are working diligently behind the scenes to find value-creating transactions, opportunities tied to our 3G capital, global network, and technology footprint to build a valuable business for our shareholders. Tom and I have a standing call every weekday. It's 5 a.m. to 6 a.m. We're in different time zones.
Speaker Change: There's a saying in the energy business that's proven to be true throughout my career that fortunes are made in a downturn.
Speaker Change: oh
Speaker Change: I'm betting the cyclical downturn for a secular growth industry will only add to that adage.
Speaker Change: And while the sector is out of favor, we are working diligently behind the scenes to find value creating transactions.
Speaker Change: opportunities tied to our 3G capital, global network, technology footprint to build a valuable business.
Speaker Change: for our shareholders. Tom and I have a standing call every weekday. It's 5am, 6am, we're in different time zones, and I wake up every day excited for that. So I appreciate your trust in us, and I can assure you that I'm all in.
Evan Calio: And I wake up every day excited about that. So I appreciate your trust in us, and I can assure you that I'm all in. So let me now just address you.
Evan Calio: I'll walk you through the financial overview, which is slide seven. And while I highlighted the value of cash in a cyclical trough, my job is to preserve and extend it, okay? And when capital is scarce and expensive, as it is today, cash is king.
Speaker Change: So let me now just address
Speaker Change: I'll walk you through the financial overview, which is slide 7.
Speaker Change: And while I highlighted the value of cash,
Speaker Change: in a cyclical trough.
Speaker Change: My job is to preserve and extend it, okay? And when capital is scarce and expensive, as it is today, cash is king.
Evan Calio: Our debt-free balance sheet, our cash position, and our relative competitive strengths, and we're determined to safeguard and fortify it. Accordingly, as referenced, we're implementing a cost control initiative to extend our cash liquidity runway to 36 months. And I expect to see those effects in the fourth quarter of this year. With our focus on conventional technology strategy, we don't need to spend meaningful capital to advance our opportunities.
Speaker Change: Our Debt Prebalance Sheet, our Cash Position, our Relative Competitive Strengths.
Speaker Change: and we're determined to safeguard and fortify it.
Speaker Change: Accordingly, as was referenced, we're implementing a cost control initiative to extend our cash liquidity runway to 36 months.
Speaker Change: And I expect to see those effects in the fourth quarter of this year.
Speaker Change: With our focus on conventional technology strategy, we don't need to spend meaningful capital to advance our opportunities, so capital spending will decline until we have definitive agreements that catalyze...
Evan Calio: So capital spending will decline until we have definitive agreements that catalyze both development and, hopefully, EBITDA cashflow visibility. In the interim, we'll continue to reduce operating expenses. Regarding capital formations, this might be my previous career on Wall Street. You shouldn't expect to see activity before we have concrete agreements in place tied to specific value creation opportunities for our equity. We now have two of our five largest equity investors on the board. 10 days, sort of a similar, very similar start date to me.
Speaker Change: Development, and hopefully EBITDA cash flow visibility. In the interim, we'll continue to reduce operating expense. Regarding capital formations, this is my
Speaker Change: previous career on Wall Street, you know you should expect you shouldn't expect to see activity before we have concrete agreements in place tied to specific value creating opportunities for our equity.
Speaker Change: We now have two of our five largest equity investors on the board, 10 days sort of similar, very similar start date to me. So our team will continue to be very thoughtful about value enhancing capital formations.
Evan Calio: So our team will continue to be very thoughtful about value-enhancing capital formation. On the slide, total cash use in the quarter was $31 million, ending 2Q24 at $222 million. This is higher, quarter over quarter, by $8 million over the first quarter, yet adjusting for non-recurring property deposits in FX, it was down $2 million. So largely in line, quarter to quarter, year to date, with $54 million of cash use. This reflects 2Q activity at the CQP related to our successful cell production trials, and we expect these costs will continue into the third quarter.
Speaker Change: on the slide.
Speaker Change: Total cash use in the quarter was $31 million, ending 2Q24 at $222 million.
Speaker Change: This is higher.
Speaker Change: a quarter over quarter by $8 million over the first quarter, yet adjusting for non-recurring property deposits and FX, it was down $2 million. So largely in line quarter to quarter, year to date, $54 million cash use.
Speaker Change: This reflects 2Q activity at the CQP related to our successful cell production trials.
Evan Calio: However, into the fourth quarter and 2025, we expect to see the effects of cost and activity reduction that support our 36-month cash liquidity runway outlook. And that's it with that. I'll turn it back, Tom, to you and
Speaker Change: and we expect these costs will continue into the third quarter. However, into the fourth quarter and 2025, we expect to see the effects of cost and activity reduction that support our 36-month cash liquidity runway outlook.
Speaker Change: [inaudible]
Speaker Change: And that's it. With that, I'll turn it back, Tom, to you.
Tom Einer Jensen: Thank you, Evan. I also look forward to our early afternoon calls; your morning calls; that virtual coffee is a highlight of my day. Moving now to slide eight, we'll conclude with our key messages. Our team is moving forward decisively with our conventional strategy, which presents multiple paths to stand up a profitable business. Our collective goal is again to achieve first revenue and EBITDA as soon as 2025. As we've said earlier, we are continuing to progress cell production opportunities, but in the current state of the global capital markets and ahead of the U.S. election, our downstream product opportunities clearly offer a faster path to market.
Speaker Change: Close this out.
Tom: Thank you, Evan. I also look forward to our early afternoon calls, your morning calls. That virtual coffee is a highlight of my day. Moving now to slide eight, we'll conclude with our key messages.
Operator: Hello and welcome to Fairbattery's second quarter of 2020 for Earnings Conference Call.
Operator: With me today on the call, Daniel Barcelo, chairman of FREYR's Board of Directors, our co-founder, chief executive officer and board director, Tom Einer-Yenson, and Evan Calio, our chief financial officer. During today's call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside FREYR's control and are difficult to predict.
Speaker Change: Our team is moving forward decisively with our conventional strategy, which presents multiple paths to stand up a profitable business. Our collective goal is again to achieve first revenue and EBITDA as soon as 2025.
Speaker Change: As we've said earlier, we are continuing to progress cell production opportunities, but in the current state of the global capital markets and ahead of the U.S. election, our downstream product opportunities clearly offer a faster path to market.
Tom Einer Jensen: And as importantly, the economic returns associated with module impact production on either side of the Atlantic are highly attractive. These projects require a much smaller quantum of capital relative to cell production, and the construction cycle times are considerably shorter.
Operator: Additional information about risk factors that could materially affect our business are available in FREYR's S1, an annual report on form 10K file with the Securities and Exchange Commission, which are available on the Investor Relations section of our website.
Speaker Change: And as importantly, the economic returns associated with modular impact production on either side of the Atlantic are highly attractive.
Speaker Change: These projects require much smaller quantum of capital relative to cell production, and the construction cycle times are considerably shorter. So we're excited about these opportunities.
Tom Einer Jensen: So we're excited about these opportunities. As we finalize the technology agreements we're working on, we look forward to sharing more details with the investment community in the near term. Evan and I discussed how valuable our cash position and balance sheet is, but I will underscore that point one more time. Tonight, we are in an early stage secular growth industry that is currently out of favor, so maintaining ample dry powder to take advantage of strategic opportunities is a critical element of our plan.
Daniel Barcelo: With that, I'll turn the call over to Daniel.
Daniel Barcelo: Thank you, Jeff, and welcome everyone to our Q224Earnings Call. Since this is my first opportunity to address you as FREYR's chairman of the board, I'd like to spend a few moments highlighting the strengths of our outstanding management team and emphasizing our commitment to generate value for our shareholders, customers, partners, and employees around the world. Our collective goal as FREYR's Board of Directors is to establish a profitable business as soon as possible.
Speaker Change: As we finalize the technology agreements we are working on, we look forward to sharing more details with the investment community in the near term.
Speaker Change: Evan and I discussed how valuable our cash position and balance sheet is, but I will underscore that point one more time.
Evan: Tonight is in an early stage secular growth industry that is currently out of favor, so maintaining ample dry powder to take advantage of strategic opportunities is a critical element of our plan.
Tom Einer Jensen: We have multiple opportunities to generate value from each of our real assets, but Giga Arctic provides some particularly interesting use cases, given the scale and flexibility of what we already have on site. As we mature and finalize decisions, we'll be sure to update you accordingly.
Daniel Barcelo: As Tom and Evan will detail shortly, the industry and the capital markets are evolving rapidly, and we must evolve with them. Our strategy has adapted to this changing landscape and the recent appointments to our board and leadership team best position FREYR to build on the progress we have made and to execute our strategy. First Board of Directors now includes our co-founder, Tori Varsletemann, Todd Cantor, the managing partner of encompass capital, David Manners, who is extensive experience in the U.S, government, Peter Matrai, a co-founder and energy industry expert, Jessica Strine, a seasoned institutional investor, CEO, and industry advisor, and Dan Steingrup, professor of chemical metallurgy at Columbia University, and the chair of FREYR's Technical Advisory Board.
Evan: We have multiple opportunities to generate value from each of our real assets, but Giga Arctic provides some particularly interesting use cases given the scale and flexibility of what we already have on site. As we mature and finalize decisions, we'll be sure to update you accordingly.
Tom Einer Jensen: Consolidation is beginning to happen in the renewable energy space, and given the essential role that batteries play across the value chain, our deal teams are very active. We understand that our investors want to hear more about what these opportunities are. And we are eager to share more about these potentially transformative deals as we get through our confidential discussions. And finally, the achievements that Mike, Andreas, Einar, and the entire team made at the CQP during the first half of 2024 by producing batteries on the 24M semi-solid platform at the industrial scale attracted significant attention from new and existing strategic partners. We cannot control or predict when risk appetite in the capital markets will return.
Evan: Consolidation is beginning to happen in the renewable energy space, and given the essential role that batteries play across the value chain, our deal teams are very active.
Evan: We understand that our investors want to hear more about what these opportunities are, and we are eager to share more about these potentially transformative deals as we get through confidential discussions.
Speaker Change: And finally, the achievements that Mike, Andreas, Einar, and the entire team made at the CQP during the first half of 2024 by producing batteries on the 24-amp semi-solid platform at the industrial scale have attracted significant attention from new and existing strategic partners.
Daniel Barcelo: We are fully aligned in support of Tom Jensen, our CEO, Evan Calli or CFO, and the rest of our leadership team, and we have the utmost confidence in their abilities to lead this organization on an accelerated path to profitability. Our focus for the remainder of 2024 is to advance our attractive business development opportunities. During his time as our executive chair, Tom continued to spearhead our global business development endeavors, so as return to the CEO rolled dovetails with FREYR's top priorities.
Speaker Change: We cannot control or predict when risk appetites in the capital markets will return. But by demonstrating our ability to produce functional battery cells with the semi-solar technology, we have established a unique position.
Tom Einer Jensen: But by demonstrating our ability to produce functional battery cells with the semi-solar technology, we have established a unique position, and we intend to build a long-term competitive moat around it. In the interim, FREYR's emerging digital platform, the CKP and GIGARTIC, is unveiling new potential commercial pathways and triggering discussions with forward-thinking partners. To the point Evan made earlier, the challenges facing the battery industry are yielding opportunities for companies that manage capital prudently, adapt quickly and decisively to market conditions, and execute against a definitive but flexible plan with embedded optionality. We're focused on delivering our strategy, and we are enormously grateful for your continued support. And with that, I'll hand it back over to Jeff so we can take your questions. Thank you for your attention.
Speaker Change: and we fully intend to build a long-term competitive moat around it.
Daniel Barcelo: We also delighted to have Evan Calli on our team as CFO. Evan brings deep global energy sector, capital formation, and deal-making expertise to FREYR, having previously run businesses at BTIG and Morgan Stanley, as well as having served as an attorney for the U.S. Securities and Exchange Commission. Evan will be instrumental in our journey to create lasting shareholder value.
Speaker Change: In the interim, FREYR's emerging digital platform, the CKP and GIGARTIC, is unveiling new potential commercial pathways and triggering discussions with forward-thinking partners.
Speaker Change: To the point Evan made earlier, the challenges facing the battery industry are yielding opportunity for the companies that manage capital prudently, adapt quickly and decisively to market conditions, and execute against the definitive but flexible plan with embedded optionality.
Daniel Barcelo: Before I turn the call over to Tom, I'd like to thank you, our shareholders, for the continued support, which was reflected by the passing of resolutions that are IGM in June. We are excited about the opportunities that had for fair, particularly in the battery technology and energy storage space.
Jeff: Our team is always steadfast. We're focused on delivering our strategy, and we are enormously grateful for your continued support. And with that, I'll hand it back over to Jeff so we can take your questions.
Daniel Barcelo: And with that, I'll turn the call over to you, Tom. Thank you, Daniel.
Operator: 8, 7, 6, 5, 4, 3, 2, 1 Certainly. If you would like to ask a question, please type your question in the text box at the bottom right-hand corner of your screen.
Jeff: Thank you for your attention.
Tom Einer-Yenson: And welcome everyone to our Q22024 earnings call, FREYR's 13th earnings call. Since we went public, and my first earnings call since I came back into the CEO role. I'd like to start today's call on a personal note. As most of you know, I have been with FREYR from the start, and I cared deeply about our people, our investors, our customers, our partners, and our success. And although the capital markets have been chaotic lately, it is nothing we haven't seen before.
Operator: Certainly. If you would like to ask a question, please type your question in the text box on the bottom right-hand side of your screen. Your first question comes from the line of Tyler DiMatteo with BTIG. Please go ahead.
Speaker Change: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21.
Jeff: Certainly. If you would like to ask a question, please type your question in the text box on the bottom right hand corner of your screen.
Speaker Change: Thank you so much for watching this video, and don't forget to like, share, and subscribe to our channel.
Tom Einer-Yenson: You may recall that we raised the initial equity to go public on the New York Stock Exchange in early 2021 by a virtual road chose in the throes of the pandemic. I'm delighted to be 65 days into my second tenure as CEO of FREYR. While I know we have still a lot of work to do, and that confidence in us has been challenged, I want to firmly state that I would not have stepped back in if I did not see that we can deliver stellar results and groundbreaking developments similar in relative impact for us as a company as when we went public back in 2021.
Speaker Change: Thank you very much for joining us today.
Speaker Change: Thank you very much for watching this video.
Speaker Change: Your first question comes from the line of Tyler DiMatteo with BTIG. Please go ahead.
Tyler DiMatteo: Hi guys, good morning. Thanks for taking the question. Tom, I wanted to kind of start with, you know, with you being back in the seat now, just what are some of these key takeaways that you have? And I guess really, what I'm wondering is, you know, how do you prioritize the various business opportunities that you're, you know, alluding to and kind of pursuing here? I'm just curious, you know, what you think about that.
Tyler DiMatteo: Hi guys, good morning. Thanks for taking the question. Tom, I wanted to kind of start with, you know, with you being back into the seat now, just what are some of these key takeaways that you have? And I guess really what I'm wondering is, you know, how do you prioritize the various business opportunities that you're, you know, alluding to and kind of pursuing here? I'm just curious, you know, how you think about that.
Tom Einer-Yenson: Back then, we had a conceptual ambition to become a battery company with a small team and a limited balance sheet. Now, we are one of the few companies globally to have proven that we can produce functional batteries using next generation equipment on the 24M semi solid platform. We have a global partnership and customer network. We have a cast position of more than 200 million dollars with no debt on our balance sheet.
Tom Einer Jensen: Yeah. Hi Tyler.
Tom: Yeah. Hi, Tyler, and thank you for that question. So as we articulated during the call,
Tom Einer Jensen: And thank you for that question. As we articulated during the call, our primary focus is to get into revenue and EBITDA generation as quickly as possible. And as you know, raising capital for cell manufacturing in the West is a challenging endeavor. We are, of course, pursuing multiple opportunities in this regard. But the surplus of battery production in Asia allows us to pursue less capital-intensive but still cash-accretive and value-accretive opportunities in the multiple impact space.
Speaker Change: Our primary focus is to get into revenue and EBITDA generation as quickly as possible.
Tom Einer-Yenson: We have strategic assets with which we can execute projects and unlock value, and we have an increasing number of highly promising opportunities to establish a deeply profitable business. We have globally leading partners across the entire battery value chain, including our energy transition acceleration coalition partners with added interest and participation from energy majors, hyper scalers, and ultra-large tech caps to see the critical role and vast potential that the battery industry represents both in terms of decarbonization, but also in terms of unlocking next generation computational power in a sustainable manner.
Speaker Change: and as you know, raising capital for cell manufacturing in the West.
Speaker Change: It's a challenging endeavor. We are, of course, pursuing multiple opportunities in this regard.
Speaker Change: But the surplus of battery production in Asia allows us to pursue less capital intensive but still cash accretive and value accretive opportunities in the multiple impact space.
Tom Einer Jensen: So that is what we are targeting initially, and then we are pursuing other opportunities also upstream, midstream, and downstream. But the only way that we're going to sort of pursue that in a value-creative way is when we can link it to relevant financing activity. So you should expect us to focus a lot on generating revenue in the not-so-distant future, coupled with EBITDA generation. And then we'll build upon that additional exposure into the value chain of batteries.
Speaker Change: So that is what we are targeting initially and then we are pursuing other opportunities also upstream, midstream and downstream but the only way that we're going to sort of pursue that
Tom Einer-Yenson: We know, however, that our investors are eager for concrete news, and we recognize that your trust and support must be earned by delivering. So, if you take one message from today's call is that our revamped board and management team 65 days into working together are acutely focused on execution, and this is what I'm doing together with our excellent team in a constantly changing and dynamic environment. Since my return to the CEO role, I have begun to sense the familiar feeling from our formative days.
Speaker Change: in a value-creative way is when we can link it to relevant financing activity.
Speaker Change: So you should expect us to focus a lot on generating revenue in the not-so-distant future, coupled with EBITDA generation, and then we'll build up on that additional exposure into the value chain of batteries. The final thing I'll say is, given the...
Tom Einer Jensen: The final thing I'll say is, given the challenging financing markets and challenging capital markets, I should say, over the last sort of 12 to 18 months, coupled with these tectonic shifts in the battery space that the IRA represents but also the dramatic reduction in cell manufacturing costs and prices from China, I do think you will see a lot of opportunity for consolidation in the space. So we are being approached by a broad variety of companies that are interested in discussing how combination opportunities create more value. We are quite selective in who we are discussing opportunities with in this regard, but we are, of course, open to dialogue, but principally the focus is to generate revenue and EBITDA as quickly as possible.
Tom Einer-Yenson: I'm hearing many of the same messages from existing and emerging partners, and I see real momentum behind the scenes. The key distinction is that failure is no longer merely a company with a vision to produce batteries. We have now proven to industry leaders that we possess the technical and operational acumen to justify seed at a table, and we're capitalizing on that privilege. I am energized about the opportunity to serve as very CEO once again, and I'm excited about the role ahead.
Speaker Change: challenging financing markets and challenging capital markets I should say over the last sort of 12 to 18 months coupled with these tectonic shifts.
Speaker Change: in the battery space that the IRA represents, but also the dramatic reduction in cell manufacturing costs and prices from China, I do think you will see a lot of opportunity for consolidation in the space.
Speaker Change: So we are being approached by a broad variety of companies that are interested in discussing how Combinations
Tom Einer-Yenson: Turning now to slide number 4. We are leading with our conclusion by summarizing our value for physician to investors. As we saw in this morning's press release, our singular focus is to build a profitable business that generates first-straper-new and EBITDA as soon as next year. We intend to achieve this by unlocking value from our real assets, which include giga-arctic, giga-america, the CQP, our land position in Finland, and our technology licenses. We publicly traded battery startups deeply out of favor our equity currently trades below cash, so there is meaningful hidden value to generate from our assets.
Speaker Change: opportunities create more value. We are quite selective in who we are discussing opportunities with in this regard, but we are, of course, open for dialogue. But principally, the focus is generate revenue and EBITDA as quickly as possible.
Tyler DiMatteo: Okay. Great. No, no.
Tyler DiMatteo: Very, very helpful. And then I wanted to just kind of come back to the CQP here. You know, on one of the slides, it was alluded to that we're going to continue to progress some self-production there as well. I guess, Tom, to date, what are some of the key learnings from having that facility up and running? And I guess the other thing I wanted to kind of get some color on was the new business cases for the CQP. Any color there?
Speaker Change: Okay, great. No, no, very, very helpful. And then I wanted to just kind of come back to the
Speaker Change: QP here, you know, on one of the slides, it was alluded to, you know, we're going to continue to progress some self-production there as well. I guess, Tom, you know, today, what are some of the key learnings?
Tom Einer-Yenson: In the current financing and battery cell pricing environments, adaptability is key to success. As such, we have refocused our business development efforts on projects that are the quickest to market. The downstream model impact opportunities we are advancing are financeable because of their relatively modest capital intensity, and they offer highly attractive economic returns. We are finalizing commercial agreements and technical solutions with top tier partners, and we will be announcing specific son economics and timelines as soon as we are ready with value-ocreative deals.
Speaker Change: From having that facility, you know up and running and I guess the other thing I wanted to kind of get some color on was the the new business cases for the CQP any color there?
Tom Einer Jensen: Yeah, thank you, Tyler. So. So.
Tom: Yeah, thank you, Tyler. So.
Tom Einer Jensen: Putting into operation a next-generation battery technology is not a trivial endeavor, I can say that. It's been quite a tall order, and the team at FREYR, an exceptional number of capable people, including a lot of stakeholders and people from our partners, have been working day and night over the last, well, essentially since we made that investment decision back in August 2021, to really stand up a next-generation battery manufacturing technology The fact that we have been able to both build it, erect it, commission it, and start operations on it speaks volumes, in my opinion, of the team that's been able to take that to the scale that it is.
Tom: So...
Speaker Change: Putting into operation a next-generation battery technology is not a trivial endeavor. I can say that.
Speaker Change: It's been quite a tall order, and the team at FREYR, an exceptional amount of capable people, including a lot of stakeholders and people from our partners.
Tom Einer-Yenson: We are mindful of the challenges the battery industry is facing, and we prioritize solid value-ocreative deals over speed, but we are now very close to the initial finishing line, so we will ask for a bit more patience until we can announce specifics, but our plans include commissioning and start-up production, revenue, and EBITDA generation during 2025. Our storm balance sheet is another source of strength for failure. Although external project level equity and debt are available for bankable projects today, our significant cash balance and debt-free balance sheet give us the flexibility to be patient while we prioritize capital formation that is tied to specific projects.
Speaker Change: have been working day and night over the last...
Speaker Change: Well, essentially, since we made that investment decision back in August 2021, to really stand up a next generation battery manufacturing technology.
Speaker Change: The fact that we have been able to both build it, erect it, commission it, and start operations of it speaks heaps and bounds, in my opinion, of the team that's been able to take that to the scale that it is.
Tom Einer Jensen: However, the tectonic shifts in the market and the requirement to both produce safer, higher energy density, longer cycle life, and also lower cost batteries do require us to think through what additional elements we need to prove in that system. We have excellent working relationships with not only the 24M experts but also the entire 24M ecosystem, as well as a number of additional companies around it. So we will be testing out a broad variety of solutions to ensure that we can generate a pathway and a road map to even better and even lower cost solutions for next generation technology.
Speaker Change: However...
Speaker Change: the tectonic shifts in the markets and the
Tom Einer-Yenson: And to provide additional flexibility, we are implementing additional measures that will extend Friars runway to approximately 36 months without assuming the addition of any new sources of funding. We are obviously also pursuing various sources of non-biotic funding linked to our increasing product portfolio, but we take nothing for granted and seek to control what we can while pursuing additional opportunities to augment our ability to grow further. Turning to our third point, for all the capital equipment intensity of the battery industry, it's human capital in the form of technical and operational talent that is the primary source of value creation and competitive differentiation.
Speaker Change: requirement to both produce safer, higher energy density, longer cycle life and also lower cost batteries.
Speaker Change: does require us to think through what additional elements we need to prove up in that system.
Speaker Change: We have excellent working relationships with not only the 24M,
Speaker Change: experts, but also the entire 20-prime ecosystem, as well as a number of additional companies around it. So we will be testing out a broad variety of solutions to ensure that we can generate a
Speaker Change: pathway and a roadmap to even better and even lower cost solutions.
Tom Einer Jensen: So the fact that we have an operating asset where we have proven that we can run and produce batteries will give us an opportunity to start implementing additional measures to become even more competitive as the market evolves moving forward.
Tom Einer-Yenson: With our region's successes at the CQP, on the 20-frame platform, we have demonstrated to our current and prospective partners that Friars has world-class people who know how to find solutions to highly complex technical issues. Under the leadership of our newly appointed Chief Operating Officer Mike Bros, our Chief Technology Officer Andrea Spenson and our EVP of Project Execution, I'm not killed, we have developed deep subject matter expertise for a variety of battery value chain solutions which continues to drive new opportunities.
Speaker Change: for next generation technology. So the fact that we have an operating asset where we have proven that we can run and produce batteries will give us an opportunity to start implementing additional measures to become even more competitive as the market evolves moving forward.
Tom Einer Jensen: Okay, great. Thank you, Tom. I really appreciate the caller there. I'll turn it back to the queue. If you would like to ask a question...
Speaker Change: okay great thank you Tom really appreciate the caller there I'll turn it back to the queue
Operator: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. We have no questions at this time. I will now turn the conference back over to the speakers for closing remarks.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Tom Einer-Yenson: And finally, if we lift ourselves out of the tyranny of the moment in these volatile capital markets environments, Friars' story is still tied to secular growth plans that should ultimately resonate with investors. Battery solutions will increasingly be recognized as the key enabler of the energy transition highlighted by the need to provide reliable, affordable, clean, dispatchable energy as the global power grids grow more reliant upon intermittent renewables amid certain global electricity demand. Friars increasingly at the forefront of this energy revolution.
Speaker Change: [inaudible]
Speaker Change: [inaudible]
Speaker Change: [inaudible]
Speaker Change: We have no questions at this time. I will now turn the conference back over to the speakers for closing remarks.
Tom Einer-Yenson: Foundation. Turning it out to slide five. Let me update you on the pillars of a FREYR 2.0 strategy that we have alluded to in previous calls. We are accelerating our conventional technology strategy and we expect to lead with downstream projects focused on multi-lampact production. This approach is grounded in market fundamentals as follows. The economics of multi-lampact projects benefit from the surplus of battery cell capacity while finalizing end user applications with local content requirements and battery management systems.
Tom Einer Jensen: Thank you, Krista. Well, thank you, everyone, for your attention and your interest in FREYR.
Speaker Change: Thank you, Krista. Well, thank you, everyone, for your attention and your interest in FREYR. We look forward to seeing you out on the road. We have a number of events planned for the coming quarter. So we will talk to you all soon. Please don't hesitate to follow up with questions. We'll be around to field them today and the remainder of next week. Thanks very much. This will conclude the call.
Tom Einer Jensen: We look forward to seeing you out on the road. We have a number of events planned for the coming quarter, so we will talk to you all soon. Please don't hesitate to follow up with questions. We'll be around to field them today and the remainder of next. Thanks very much. This will conclude the call.
Tom Einer-Yenson: Financing is available for these projects because they are far less capital intensive than battery cell gigafactories. FREYR has already been working on downstream technology configurations to support cell production so we can channel that momentum to manufacture purpose-built storage solutions for our customers and the construction lead times for multi-lampact facilities are much shorter enabling us to accelerate our price path to market. It's also given that we have building an infrastructure assets inside the company.
Operator: Thank you for your participation, and you may now disconnect.
Tom Einer-Yenson: The second pillar of our FREYR 2.0 strategy is our emphasis on financial discipline and our strong balance sheet. In today's challenging financing environment, cash is king. Accordingly, we have built in flexibility in our operating model to adjust our cash burn rates to extend our runway to at least 36 months without racing any additional capital. In conjunction with this priority, we're also pursuing multiple options to generate value from our existing assets, including gigarctic.
Tom Einer-Yenson: Our commercial efforts are also in high gear. We are simultaneously evaluating potential inorganic opportunities while we mature the FREYR 2.0 commercial pipeline of conventional technology projects. Our team is eager to share what we've been working on in the public domain and as we move from confidential negotiations to formal commitments, we will communicate our progress accordingly to the market. While we focus on accelerating FREYR's path to commercialization in the near term, we remain committed to establishing a long-term competitive mode around our unique position with 24M semi-solid technology.
Tom Einer-Yenson: The technical milestones we have announced this year at the CQP have proven that we as a team can produce batteries on a noble technology platform and those achievements are attracting attention from potential of partners across the battery and adjacent industries. The battery industry's future rests on improving battery safety, increasing energy density, driving down raw material and conversion costs, and improving both electrochemical and electromechanical aspects of battery production. There are multiple additional opportunities around the 24M platform, which includes novel materials, LFP recycling options, improved cell designs, and much safer separator solutions, which we believe ultimately could be a material part of a differentiated next-generation tech stack at ultra-low costs with all safety aspects under control.
Tom Einer-Yenson: We will, in a resource sensible way, continue the work with current and new partners to develop competitive battery solutions based on the 24M platform, gradually tests and include additional aspects of the 24M portfolio and explore complementary avenues to leverage the digital assets we have developed in-house, in FREYR and at the CQP.
Tom Einer-Yenson: B. Turning to slide six, let's spend a few minutes panning out to assess the big picture opportunity for failure. The data from numerous sources continue to support our view that we are in the early stages of a structural and exponential growth trend for batteries, which are the key facilitator of the energy transition. In today's core and market, batteries are the solution for a structural dilemma across both the supply and demand spectrums per power.
Tom Einer-Yenson: Furthermore, I want to underline that these secular growth trends are underpinned by learning curves, which will continue to drive down costs and accelerate deployment further. Traditional estimators and conventional energy analysts still struggle to take on board the momentum in the transition, as has been the case consistently for the last decades. In the end, however, these trends are driven by economics and exponential growth will continue as we are in early stages of the S curves as depicted in these trends.
Tom Einer-Yenson: While economics drive global growth, policy has a role to play for temporary localized deployment. Allocation of capital will gravitate to the markets which benefit from temporary incentives like the inflation reduction act, which is one of the reasons why Freyid read domiciles to the US earlier this year and why we are accelerating our presence in the US energy transition. Powergrids worldwide are becoming more reliant on intermittent renewable electricity sources through accelerating wind and in particular solar power generation deployment.
Tom Einer-Yenson: These require battery backup in the form of battery energy storage system solutions to ensure dispatchable affordable supply. Irrespective of the source of power generation, however, and the notion that increasing intermittent power supply drives demand for batteries, low cost battery solutions are very useful in supporting grid reliability irrespective of the source of the power supply. Demand for electricity already fluctuates daily and seasonally with weather and during each day with peaks and troughs in usage patterns.
Tom Einer-Yenson: Batteries used in storage applications enhance reliability, reduce cost and support the ongoing deployment of new applications such as micro grids, electrified home heating and the uptake of electric vehicles. As learning curves continue to improve performance, safety and costs of batteries, everything that can be electrified will be electrified. Decentralized and decarbonized renewable energy based micro grids coupled with renewable energy based utility scale solutions will increasingly be deployed incentivized and supported. Today is one of few companies with fundamental exposure to this secular trend on both sides of the Atlantic and we have pedigree partnerships in existing and next generation battery technology solutions providing a unique exposure for investors to ride this continuing and accelerating energy transition wave.
Evan Calio: And now it is my great privilege to welcome Evan Calio to our team as Friars Chief Financial Officer. Evan was instrumental in phrase formation as a public company during his time at BTIG so he knows our story. He understands our industry and he has hit the ground running on several important initiatives during his first 65 days in his new role.
Evan Calio: Evan, you are heartily welcome to the team, over to you. Thank you, Tom.
Evan Calio: Before I speak to slide 7, I'd also like to share some personal observations on why I joined Fair and June and be on this side of the mic for the first time. As some of you may know, I spent most of my career covering global energy markets as an investment banker, as an equity research analyst, and over that time I've witnessed several cycles with many companies across the value chain in both traditional and renewable energy.
Evan Calio: I joined Fair with Eyes Wide Open. As Tom referenced, we worked together, we were a lead advisor in the DeSPAC IPO and retained close contact as an advisor, really throughout the Fair Organization since the IPO. And while I appreciate the challenges of establishing a business, a publicly traded company, in volatile markets, I believe FREYR has the right senior people, leaderships, the right people. I believe in the right sector, battery and its adjacencies.
Evan Calio: I think it's the right position relative balance, these strengths and compelling advanced projects, and the right time now is the right time. On people, I'm excited to rejoin Tom and Peter McTry's co-founders of FREYR opportunity to work again with Dan Barcello, Todd Canner, Jessica Strine, all who I've known for over 20 years. And in my first 60 days, it only confirms my conviction on the organizational depth and focus. So we have an exceptional group of leaders, and they're dedicated to building something meaningful and long-lasting, and that's appealing to me. On the sector, Tom covered it more eloquently than I might yet electrification is happening. Stationary storage market has long-term tailwinds, the markets young and dynamic, and it will involve consolidation. That excites me.
Evan Calio: On time, there's a saying in the energy business that's proven to be true throughout my career, the fortunes are made in the downturn. I'm betting the cyclical downturn for a secular growth industry, while we add to that adage. And while the sector is out of favor, we are working diligently behind the scenes to find value-creating transactions, opportunities, tied to our 3G capital, global network, technology footprint, to build a valuable business for our shareholders.
Evan Calio: Tom and I have a stand-in call every weekday, the 5am, 6am, we're in different time zones, and I wake up every day excited for that. So I appreciate your trust in us, and I can assure you that I'm all in.
Evan Calio: So let me just address, I'll walk you through the financial overview, which is slide 7, and while I highlighted the value of cash in a cyclical trough, my job is to preserve and extend it. And when capital is scarce and expensive as it is today, cash is king. Our debt free balance sheet, our cash position, our relative competitive strengths, and we're determined to safeguard and fortify it. Accordingly, as was referenced, we're implementing a cross-control initiative to extend our cash liquidity runway to 36 months, and I expect to see those effects in the fourth quarter of this year.
Evan Calio: With our focus on conventional technology strategy, we don't need to spend meaningful capital to advance our opportunities. So capital spending will decline until we have definitive agreements that catalyze both development and hopefully EBITDA cash flow visibility in the interim will continue to reduce operating expense regarding capital formations. This might previous career on Wall Street, you know, you should expect. You shouldn't expect to see activities before we have concrete agreements in place tied to specific value creating opportunities for our equity.
Evan Calio: We now have two of our five largest equity investors on the board. 10 days sort of similar, very similar start to me, so our team will continue to be very thoughtful about value enhancing capital formations. On the slide, total cash use in the quarter was $31 million ending to Q24 at $222 million. This is higher quarter over quarter by $8 million over the first quarter. Yet adjusting for non-recurricular property deposits and effects, it was down $2 million.
Evan Calio: So largely in line quarter to quarter year to date, $54 million cash use. This reflects two Q activity at the CQP related to our successful sell production trials and the expect these costs will continue in a third quarter.
Evan Calio: However, into the fourth quarter and 2025, we expect to see the effects of cost and activity reduction that support our 36 month cash liquidity runway outlook. That's it.
Evan Calio: With that, I'll turn it back to you and close us out. Thank you, Evan. I also look forward to our early afternoon calls.
Tom Einer-Yenson: Your morning calls that virtual coffee is is a highlight of my day. Moving now to slide eight will conclude with our key messages. Our team is moving forward decisively with our conventional strategy, which presents multiple paths to stand up a profitable business. Our collective goal is again to achieve first revenue and EBITDA as soon as 2025. As we've said earlier, we are continuing to progress sell production opportunities, but in the current state of the global capital markets and ahead of the US election are downstream product opportunities clearly offer a faster path to market.
Tom Einer-Yenson: And as importantly, the economic returns associated with multi impact production on either side of the Atlantic are highly effective. These projects require much smaller quantum of capital relative to sell production and the construction cycle times are considerably shorter. So we're excited about these opportunities as we finalize the technology agreements we're working on will look forward to sharing more details with the investment community in the near term. Evan and I discussed how valuable our cash position and balance sheet is, but I will underscore at that point one more time.
Tom Einer-Yenson: Today is in an early stage secular growth industry. There's currently out of favor, so maintaining ample drive powder to take advantage of the treated opportunities is a critical element of our plan. We have multiple opportunities to generate value from each of our real assets, but giga Arctic provides some particularly interesting use cases given the scale and flexibility of what we already have on, as we mature and finalize decisions, we'll be sure to update you accordingly.
Tom Einer-Yenson: Consolidation is beginning to happen in the renewable energy space, and given the essential role that batteries play across the value chain, our deal teams are very active. We understand that our investors want to hear more about what these opportunities are, and we are eager to share more about these potentially transformative deals as we get through confidential discussions. And finally, the achievements that Mike, Andreas, Ina, and the entire team made at the CKP during the first half of 2024 by producing batteries on the 20 frames semisolid platform at the industrial scale have attracted significant attention from new and existing strategic partners.
Tom Einer-Yenson: We cannot control or predict when risk appetites in the capital markets will return, but by demonstrating our ability to produce functional battery cells with the semisolid technology, we have established a unique position and will tend to build a long term competitive mode around it. In the interim, Friday's emerging digital platform, the CKP and gigartic is unveiling new potential commercial pathways and triggering discussions with forward thinking partners. To the point Evan made earlier, the challenges facing the battery industry are using opportunity for the companies that manage capital. So, prudently, adapt quickly and decisively to market conditions and execute against the definitive, but flexible plan with embedded optionality.
Tom Einer-Yenson: Our team is set fast, we're focused on delivering our strategy, and we are enormously grateful for your continued support.
Operator: And with that, I'll hand it back over to Jeff so we can take your questions.
Operator: Thank you for your attention. 10, 9, 7, 6, 5, 4, 3, 2, 1.
Operator: Certainly, if you would like to ask a question, please type your question in the text box on the bottom right hand corner of your screen.
Tyler DiMario: Your first question comes from the line of Tyler DiMario with BTIG. Please go ahead. Hi guys, good morning. Thanks for taking the question. Tom, I wanted to start with you being back into the seat now. What are some of the key takeaways that you have? And I guess really what I'm wondering is, how do you prioritize the various business opportunities that you're alluding to and pursuing here? I'm just curious how you think about that.
Tyler DiMario: Yeah, hi Tyler and thank you for that question. So, so as we articulated during the call, our primary focus is to get into revenue and EBITL generation as quickly as possible. And as you know, raising capital for sell manufacturing in in the west is a challenging endeavor. We are of course pursuing multiple opportunities in this regard, but the surplus of battery production in Asia allows us to pursue less capital intensive but still cash accretive and value accretive opportunities in the multi impact space.
Tyler DiMario: So that is what we are targeting initially and then we are pursuing other opportunities, also upstream, midstream and downstream, but the only way that we're going to sort of pursue that in a value creative way is when we can link it to relevant financing activity. So you should expect us to focus a lot on generating revenue in the not so distant future, coupled with EBITDA generation, and then we'll build up on that additional exposure into the value chain of batteries.
Tyler DiMario: The final thing I'll say is given the challenging financing markets and challenging capital markets, I should say, over the last sort of 12 to 18 months, coupled with these tectonic shifts in the battery space that the IRA represents but also the dramatic reduction in cell manufacturing costs and prices from China, I do think you will see a lot of opportunity for consolidation in the space. So we are being approached by a broad variety of companies that are interested in discussing how combinations opportunities create more value. We are quite selective in who we are discussing opportunities within this regard, but we are of course open for dialogue.
Tom Einer-Yenson: But principally, the focus is generate revenue in EBITDA as quickly as possible. Okay, great, no, no, very helpful.
Tom Einer-Yenson: And then I wanted to just kind of come back to the CQP here. One of the slides, it was alluded to, we are going to continue to progress some self production there as well. I guess Tom, what are some of the key learnings from having that facility up and running? And I guess the other thing I wanted to kind of get some color on was the new business cases for the CQP.
Tom Einer-Yenson: Any color there? Yeah, thank you, Tyler. So, so putting into operation, the next generation battery technology is not a trivial endeavor, I can say that. It's been quite quite a tall order. And the team, I tried an exceptional amount of capable people, including a lot of stakeholders and people from our partners have been working day and night over the last. Well, essentially, since we made that investment decision back in in August 2021, to freely stand up the next generation and battery manufacturing technology.
Tom Einer-Yenson: The fact that we have been able to both build it, direct it, commission it, and start operations of it. Speak seats and balance in my opinion of the team that's been able to take that to the scale that that it is. However, the tectonic shifts in the markets and the requirement to both produce safer, higher energy density, longer cycle life, and also lower cost batteries. It does require us to to think through what additional elements we need to prove up in that system.
Tom Einer-Yenson: We have excellent working relationships with not only the 24M experts, but also the entire 24M ecosystem as well as a number of additional companies around it, so we will be testing out a broad variety of solutions to ensure that we can generate a. Pathway and a roadmap to even better and even lower cost solutions for next-generation technology. So the fact that we have an operating asset where we have proven that we can run and produce batteries will give us an opportunity to start implementing additional measures to become even more competitive as the market evolves moving forward. Okay, great. Thank you, Tom. Really appreciate the color there.
Operator: I'll turn it back to the queue. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. We have no questions at this time.
Operator: I will now turn the conference back over to the speakers for closing remarks. Thank you, Chris Hood. Well, thank you everyone for your attention and your interest in prayer. We look forward to seeing you out on the road. We have a number of events planned for the coming quarter. So we will talk to you all soon. Please don't hesitate to follow up with questions. We'll be around to field them today and the remainder of next week. Thanks very much.
Operator: This will conclude the call.
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