Q2 2024 Gauzy Ltd Earnings Call

August 8, 2024

At this time I would like to turn the conference over to Mr. Dan Scott Investor Relations. Thank you you may begin.

for Prepare remarks and Q&A.

for prepare remarks and Q&A.

Den Scott: At this time, I would like to join the conference over to Mr. Den Scott, Investor Relations. Thank you, you may begin. Thank you, operator, and thank you, everyone, for joining us today. Hosting the call today are Gauzy's CEO and co-founder, Eyal Peso, and CFO, Meir Peleg.

Den Scott: At this time, I would like to join the conference over to Mr. Den Scott, investor relations.

Operator: Thank you, you may begin. Thank you, operator, and thank you, everyone, for joining us today.

Dan Scott: Thank you operator, and thank you everyone for joining us today.

Speaker Change: During the call today are <unk>, CEO and co founder <unk> peso and CFO Mayor Pilling.

Operator: Hosting the call today are Gauzy's CEO and co-founder, Eyal Peso, and CFO, Meir Peleg.

Speaker Change: On this call management will be making forward looking statements non historical facts, which are based on management's current expectations beliefs projections and assumptions many of which by their nature are inherently uncertain.

Eyal Peso: On this call, management will be making four-looking statements, not historical facts, which are based on management's current expectations, beliefs, projections, and assumptions, many of which, by their nature, are inherently uncertain. These four-looking statements are subject to risks and uncertainties. Actual results could differ materially from our four-looking statements if any of our key expectations, beliefs, projections, or assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call, or in our latest reports and filings for the Securities and Exchange Commission, each of which can be found on our website, www.gauzy.com. We do not undertake any duty to update any four-looking statements.

These forward looking statements are subject to risks and uncertainties actual results could differ materially from our forward looking statements if any of our key expectations beliefs projections or assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call.

Or in our latest reports and filings with the Securities and Exchange Commission each of which can be found on our website www dot <unk> dot com, we do not undertake any duty to update any forward looking statements.

Eyal Peso: We do not undertake any duty to update any four-looking statements.

Speaker Change: This call contains time sensitive information that is accurate only as of today August eight 2024.

Eyal Peso: This call contains time-sensitive information that is accurate only as of today, August 8, 2024. Except as required by law, Gauzy disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

Eyal Peso: This call contains time-sensitive information that is accurate only as of today, August 8, 2024.

Except as required by law <unk> disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.

Eyal Peso: Except as required by law, Gauzy disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Today's presentation will also include references to non-GAAP financial measures. You should refer to the information contained in the company's second-quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures.

al: Today's presentation will also include references to non-GAAP financial measures you should refer to the information contained in the Companys second quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures with that let me turn the call over to al.

Eyal Peso: Today's presentation will also include references to non-gap financial measures. You should refer to the information contained in the company's second-quarter press release for definitional information and reconciliations of historical non-gap measures to the comparable financial measures.

Eyal Peso: With that, let me turn the call over to AL. Thank you very much, Dan, and good morning, everyone.

Eyal Peso: With that, let me turn the call over to Al.

al: Thank you very much Dan and good morning, everyone.

Eyal Peso: Thank you very much, Dan, and good morning, everyone. This is our first conference call since completing our initial public offering in June. I would like to start out by thanking our team for their outstanding execution, as well as our new shareholders for their tremendous support. The idea was an important milestone for our company, and we are all excited about the new opportunities that the public creates for us. Our results so far in 2024 reflect record growth attributed to new commercial opportunities and the expansion of existing programs with our strong and sticky customer base. I know that our team is just getting started on what they can achieve, and we look forward for continuing to deliver our objectives.

al: This is our first conference call since completing our initial public offering in June.

Eyal Peso: This is our first conference call since completing our initial public offering in June. I would like to start out by thanking our team for their outstanding execution as well as our new shareholders for their tremendous support. The idea was an important milestone for our company, and we are all excited about the new opportunities that the public creates for us. Our results so far in 2024 reflects record growth attributed to new commercial opportunities and the expansion of existing programs with our strong and sticky customer base. I know that our team is just getting started on what they can achieve, and we look forward for continuing to deliver our objectives.

al: And I would like to start out by thanking our team for their outstanding execution as well as our new shareholders for their tremendous support.

al: The IPO was an important milestone for our company and we are all excited about the new opportunities that being public creates fries.

Our results so far in 2024 reflects record growth attributed to new commercial opportunities and the expansion of existing programs with our strong and sticky customer base.

al: I know that our team is just getting started on what they can achieve and we look forward for continuing to deliver our objective.

al: I'm going to focus my opening remarks today on three topics.

Eyal Peso: I'm going to focus my opening remarks today on three topics. One, providing a brief overview of Gauzy for those of you who are new to the story. Two, a high-level summary of how we performed in the second quarter and first half. And three, and finally, our strong backlog and pipeline of innovation, driving our positive outlook for the business for the rest of the year.

al: One providing a brief overview of <unk> for those of you who are new to the story to a high level summary of how we performed in the second quarter and first half.

al: And three and finally, our strong backlog and pipeline of innovation driving our positive outlook for the business for the rest of the year.

May Impelling: Following that I will turn it over to <unk>, Chief Financial Officer May Impelling, who will provide financial highlights from the second quarter.

Meir Peleg: Following that, I will turn it over to Gauzy's chief financial officer, May of Belling, who will provide financial highlights from the second quarter.

Meir Peleg: Following that, I will turn it over to Gauzy's Chief Financial Officer, May of Belling, who will provide financial highlights from the second quarter.

May Impelling: So first a brief overview of <unk> and what we do.

Eyal Peso: So first, a brief overview of Gauzy and what we do. We are a global leader in light and vision control technologies, specializing in advanced materials and systems that enable the electronic control of light through to inspiring the paratures. We are headquartered in Tel Aviv with a significant global presence that includes over 650 employees across 14 locations worldwide. Gauzy serves more than 1,000 customers today in over 30 countries through both direct sales and a network of over 95 certified partners.

May Impelling: We're a global leader in light envision control technology specializing in advanced materials and system that enables the electronic control of light through transparent <unk>. We are headquartered in Tel Aviv with a significant global presence that includes over 650 employees across 14 locations worldwide.

May Impelling: <unk> serves more than 1000 customers today in over 30 countries.

Through both direct sales and a network of over 95 certified partners. Our innovation is backed by a 141 patents across multiple countries, including the U S, Germany, France, Israel, China, Japan and more.

Eyal Peso: Our innovation is backed by a 141 patents across multiple countries, including the US, Germany, France, Israel, China, Japan, and more. We are a deep science company that is fully integrated from developing our own IP, the research and development through to production, manufacturing, and delivering. Leveraging our expertise in material science and software and beta electronics, we create world leading products including smart glass and advanced driver assistance systems or ADAS, serving our rapidly growing key market, including air and out ex-automotive and architecture.

May Impelling: We are in deep science company that is fully integrated from developing our own IP to research and development through to production manufacturing and delivery.

Eyal Peso: We are a deep science company that is fully integrated from developing our own IP, the research and development through to production, manufacturing, and delivering. Leveraging our expertise in material science and software and beta electronics, we create world leading products including smart glass and advanced driver assistance systems or ADAS, serving our rapidly growing key market, including air and out ex-automotive and architecture. We are focused on the research, development, and manufacturing of smart materials and systems that enable control of light through transparent appareagers. We have the most comprehensive portfolio of technologies, including polymer dispersed liquid crystal or PDLC and suspended particle devices or SPD.

May Impelling: Leveraging our expertise in material science and software embedded electronics, we create world, leading products, including smart glass and advanced driver assistance systems or Adas.

May Impelling: Serving a rapidly growing key market, including Aeronautics automotive and architecture.

May Impelling: We are focused on the research development and manufacturing of materials and systems that enable control of light through transparent to parity with <unk>.

Eyal Peso: We are focused on the research, development, and manufacturing of smart materials and systems that enable control of light through transparent appareagers. We have the most comprehensive portfolio of technologies, including polymer dispersed liquid crystal or PDLC and suspended particle devices or SPD. Both PDLC and SPD technologies allow us to electronically control light through transparent materials such as glass to control privacy, reduce glare, control temperature for energy savings, and comfort. Our technology allows any window to transition from transparent to fully opaque.

May Impelling: We have the most comprehensive portfolio of technologies, including polymer dispersed liquid crystal or PD, Oc and suspended protocol devices or SPD.

May Impelling: Both <unk> and SPD technologies allows us.

Eyal Peso: Both PDLC and SPD technologies allow us to electronically control light through transparent materials such as glass to control privacy, reduce glare, control temperature for energy savings, and comfort. Our technology allows any window to transition from transparent to fully opaque. Our products are already widely adopted in both the interior and exterior glazing of buildings, cars, and aircraft. This technology can already be found on the fun roofs of McLaren's, Mercedes, GM, Cadillac, and Ferraris and is expected to be widely adopted in mass market cars in coming years. In vision control, we are focused on the development, manufacturing, and delivery of ADAS for commercial vehicles, including buses and trucks.

May Impelling: Electronically controlled light through transparent materials, such as glass to control privacy reduce glare control temperature for energy savings and comfort.

May Impelling: Our technology has allowed any window to transition from transparent to fully opaque our products are already widely adopted in both the interior and exterior glazing of buildings cars in aircrafts.

Eyal Peso: Our products are already widely adopted in both the interior and exterior glazing of buildings, cars, and aircraft. This technology can already be found on the fun roofs of McLaren's Mercedes GM Cadillac and Ferraris and is expected to be widely adopted in mass market cars in coming years. In vision control, we are focused on the development manufacturing and delivery of ADAS for commercial vehicles, including buses and trucks. Our core ADAS product offerings includes our AI-powered TMS or camera monitoring system called smart vision.

May Impelling: This technology can already be found on the sunroof Mclarens Mercedes GM, Cadillac and Ferrari and is expected to be widely adopted in mass market cars in coming years.

Speaker Change: Envision control, we are focused on the development manufacturing and delivery of Adas for commercial vehicles, including buses and trucks are core Adas product offerings include our AI powered Tms or camera monitoring system called Smart vision.

Eyal Peso: Our core ADAS product offerings includes our AI-powered TMS or camera monitoring system called Smart Vision. Smart vision eliminates the need for side and rearview mirrors and replaces them with high-definition exterior cameras and interior display. Expanding the driver's visible range to a limited blank spot and delivering audio-visual alerts for real-time hazards enables drivers to make faster, more informed decisions that dramatically reduce accidents. By developing our proprietary AI module, we have created a self-learning system that allows us to understand and resolve the most important challenges drivers and fleets experience. One example of how AI can be experienced in our system is with automatically generated adaptive lines that resolve depth perception, constraints, inherent to a long and changing body vehicle, such as semi.

Speaker Change: Our vision and eliminate the need for site in rearview mirrors, and replacing them with high definition exterior cameras and interior display.

Eyal Peso: Smart vision eliminates the need for side and rearview mirrors and replaces them with high-definition exterior cameras and interior display. Expanding the driver's visible range to a limited blank spot and delivering audio-visual alerts for real-time hazards enables drivers to make faster, more informed decisions that dramatically reduce accidents. By developing our proprietary AI module, we have created a self-learning system that allows us to understand and resolve the most important challenges drivers and fleets experience.

May Impelling: Expanding the drivers visible range to eliminate blind spots and delivering audio visual alert for real time hazard enables drivers to make faster more informed decision that dramatically reduce accidents by.

May Impelling: Developing our proprietary AI module, we have created a self learning system that allows us to understand and resolve the most important challenges drivers in fleets experienced.

May Impelling: One example of how AI can be experienced in our system is with automatically generated adaptive line that resolve depth perception constrains inherent to a long and changing body vehicles, such as semi <unk>.

Eyal Peso: One example of how AI can be experienced in our system is with automatically generated adaptive lines that resolve depth perception, constraints, inherent to a long and changing body vehicle, such as semi. Gauzie delivers our ADAS and CMS technologies both as a tier 1 to OEM and as a retrofit solution to existing fleets. Smart vision is chosen by four trucks and for buses by the world's largest manufacturers such as Yutong, Mons, Kanya, Irizal and more.

May Impelling: <unk> delivers our Adas and CMS technologies, both as a tier one to OEM and as a retrofit solution to the existing fleet smarter.

Eyal Peso: Gauzie delivers our ADAS and CMS technologies both as a Tier 1 to OEM and as a retrofit solution to existing fleets. Smart vision is chosen by four trucks and for buses by the world's largest manufacturers such as Yutong, Mons, Kanya, Irizal, and more.

Speaker Change: Smart revision is chosen by Ford trucks and buses by the world's largest manufacturers such as Utah mine Scania in resolve and more.

Speaker Change: <unk> is comprised of four distinct business division, serving four key end market.

Eyal Peso: Gauzie is comprised of four distinct business divisions serving four key In aeronautics, Gauzy operates as a Tier I supplier of cockpit and cabin shading systems for commercial and business aviation. We are involved in production programs with major aircraft manufacturers like Boeing, Air Embryer, and Bombardia. Our well-established OEM relationships resulted in newly awarded programs for various aircraft this year, which increased our share in cockpit shading to a staggering 95 percent market share.

Eyal Peso: Gauzie is comprised of four distinct business divisions serving four key In aeronautics, Gauzy operates as a Tier I supplier of cockpit and cabin shading systems for commercial and business aviation. We are involved in production programs with major aircraft manufacturers like Boeing, Embraer, and Bombardier. Our well-established OEM relationships resulted in newly awarded programs for various aircraft this year, which increased our share in cockpit shading to a staggering 95 percent market share. We have also leveraged this leadership position to move beyond cockpit shading and to cabin shading, where we have been selected by airlines to utilize both our light-controlled glass and electrical mechanical shapes.

Speaker Change: In Aeronautics Gal <unk> operates as a tier one supplier of cockpit and cabin shading systems for commercial and business aviation.

May Impelling: Involved in production programs with major aircraft manufacturers like Boeing Embraer and Bombardier.

May Impelling: Our well established OEM relationships.

May Impelling: <unk> and newly awarded programs for various aircrafts this year, which increased our share in cockpit shading to a staggering 95% market share.

May Impelling: We have also leveraged the leadership position to move beyond cockpit shading into cabin shading, where we have been selected by airlines to utilize both our light controls glass and electrical mechanical shape.

Eyal Peso: We have also leveraged this leadership position to move beyond cockpit shading and to cabin shading, where we have been selected by airlines to utilize both our light-controlled glass and electrical mechanical shapes. The addressable market for shading and lighting systems in commercial and business jets is estimated at $600 million annually, and we currently have very few competitors. This division is already profitable and generates cash. In May of this year, we showcased our innovative cabin shading systems and transparent displayed technologies with an emphasis on the commercial industry in Humboldt at AIX, the world's largest aircraft interior exhibition.

May Impelling: The addressable market for heating and lighting systems in commercial and business Jets is estimated at $600 million annually and we currently have very few competitors.

Eyal Peso: The addressable market for shading and lighting systems in commercial and business jets is estimated at $600 million annually, and we currently have very few competitors. This division is already profitable and generates cash. In May of this year, we showcased our innovative cabin shading systems and transparent displayed technologies with an emphasis on the commercial industry in Humboldt at AIX, the world's largest aircraft interior exhibition.

May Impelling: This division is already profitable and generates cash in.

May Impelling: In may of this year, we showcase our innovative cabin shading system and transparent display technologies with an emphasis on the onto commercial industry and humbled at AIA X the world's largest aircraft industry exhibition.

Speaker Change: In architecture, we operate as a tier two supplier serving various architectural applications, including anterior partitions exterior facades and skylight.

Eyal Peso: In architecture, we operate as a Tier I supplier serving various architectural applications, including interior partitions, exterior facades, and skylights. We have an extensive distribution network, which includes more than 95 certified and trained glass fabrication partners in more than 30 countries that deliver our products to their local markets. We have a strong and growing presence with the world's best architectural firms, designers and builders.

May Impelling: We have an extensive distribution network, which includes more than 95 certified and trained glass fabrication partners in more than 30 countries that deliver our products to their local market.

May Impelling: We have a strong and growing presence with the world's best architectural firms designers and builders <unk>.

Speaker Change: <unk> motive goudy operates as a tier two supplier working with both Oems and auto glass manufacturers.

Eyal Peso: In Automotive, Gaussi operates as a Tier II supplier, working with both OEMs and OTO glass manufacturers. We have initiated zero production programs with six different OEMs, such as Ziamler, and continue to add new OEMs and models at a rapid pace. Our topologies are highly relevant for electric vehicles, which typically have large glass roofs.

Eyal Peso: In automotive, Gaussi operates as a Tier II supplier, working with both OEMs and OTO glass manufacturers. We have initiated zero production programs with six different OEMs, such as Ziamler, and continue to add new OEMs and models at a rapid pace. Our topologies are highly relevant for electric vehicles, which typically have large glass roofs.

May Impelling: We have initiated zero production programs with six different Oems, such as Daimler and continue to add new Oems and models at a rapid pace.

May Impelling: Our technologies are highly relevant for electric vehicles, which typically have large glass routes.

May Impelling: Shifting now to our safety Tech business, where we are a tier one supplier of our Adas products to commercial vehicles, such as buses and trucks are smart vision product line is already replacing mirrors in more than 80 cities around the world.

Eyal Peso: Shifting now to our safety tech business, where we are a Tier I supplier of our ADA products to commercial vehicles, such as buses and trucks. Our smart vision product line is already replacing mirrors in more than 80 cities around the world. Last month, we announced our deployment in Paris ahead of the Olympics, adding to our successful deployment in London, where we are installed on over 3,000 buses and growing.

May Impelling: Last month, we announced our deployment in Paris ahead of the Olympics, adding to our successful deployment in London, where we are installed on over 3000 buses and growing.

May Impelling: Each of our four business divisions has its own unique growth drivers I'll make two important points.

Eyal Peso: Each of our four business divisions has its own unique growth drivers. I'll make two important points. First, we address both OEM and aftermarket retrofit, which dramatically expands our addressable market across segments. Second, sustainability tailwinds are driving regulations, such as the US Inflation Reduction Act or the IRA, that are promoting the adoption of our products. Our business model typically involves long-term supply agreements with minimum annual commitments from our customers, allowing for stronger visibility.

May Impelling: We address both OEM and aftermarket retrofit, which dramatically expands our addressable market across segments.

May Impelling: Second sustainability tailwind are driving regulations, such as the U S inflation reduction act or the IRR that are promoting the adoption of our product our business model typically involves long term supply agreements with minimum annual commitments from our customers, allowing for a stronger visibility.

May Impelling: Allow me to provide some high level thoughts on our strong performance in the quarter and the first half.

Eyal Peso: Next, allow me to provide some high-level thoughts on our strong performance in the quarter and the first half. We grew our total revenues 22.4% in the second quarter and 31.5% in the first half of 2020. Ford. Our second quarter's strength was highly impressive considering the significant pull forward of sales we saw in the first quarter due to accelerated demand from some of our customers. Our results for both the quarter and the first six months featured particular strengths and safety tech, aerospace, and automotive.

May Impelling: We grew our total revenues 22, 4% in the second quarter and 31, 5% in the first half of 2024 are.

May Impelling: Our second quarter strength was highly impressive considering the significant pull forward of sales we saw in the first quarter due to accelerated demand from some of our customers.

May Impelling: Our results for both the quarter and the first six months featured particular strength and safety Tech aerospace and automotive the.

May Impelling: The impressive increase in revenues was.

Eyal Peso: The impressive increase in revenues was the primary driver of significantly higher growth profit in both periods. When you look at our performance on a trailing 12-month basis, or TTM, our revenue is up an impressive 43%. Our backlog is strong and growing with a number of exciting projects wins year-to-date across multiple segments that support our favorable outlook. We have been busy since our IPO. Our end markets are growing fast. Our backlog is ramping. Our products are winning market share, and we're executing well on our plan. That by a strong balance sheet and liquidity position, we are confident we will deliver on our goals.

May Impelling: The primary driver of significantly higher gross profit in both periods.

May Impelling: When you look at our performance on a trailing 12 month basis or TTM, our revenue is up an impressive 43%.

Eyal Peso: When you look at our performance on a trailing 12-month basis, or TTM, our revenue is up an impressive 43%. Our backlog is strong and growing with a number of exciting project wins year-to-date across multiple segments that support our favorable outlook. We have been busy since our IPO. Our end markets are growing fast. Our backlog is ramping. Our products are winning market share, and we're executing well on our plan. That by a strong balance sheet and liquidity position, we are confident we will deliver on our goals.

May Impelling: Our backlog is strong and growing with a number of exciting project wins year to date across multiple segments that support our favorable outlook.

May Impelling: We have been busy since our IPO our end markets are growing fast our backlog is ramping our products are winning market share and we're executing well on our plan.

May Impelling: Backed by our strong balance sheet and liquidity position, we are confident we will deliver on our goals.

mail: With that I will turn it over to mail for an update on <unk> financial results.

Meir Peleg: With that, I will turn it over to Meir for an update on Gauzy's financial results. Thank you, Eyal. For the second quarter, we generated revenues of $24.4 million, which was up 22.4% from the prior year period and ahead of our expectations. Demand for our products across aeronautics, safety tech, and automotive were strong. It's more than an option that declined in architecture that reflected the timing of deliveries in full-year contracts. As Eyal mentioned, it's important to note that our typical contracts involve full-year orders, quantities, and there can be a variability in those shipments across the quarters based on our customer demand.

Meir Peleg: With that, I will turn it over to Meir for an update on Gauzy's financial results. Thank you, Eyal. For the second quarter, we generated revenues of $24.4 million, which was up 22.4% from the prior year period and ahead of our expectations. Demand for our products across aeronautics, safety tech, and automotive was strong. It's more than an option that declined in architecture that reflected the timing of deliveries in full-year contracts. As Eyal mentioned, it's important to note that our typical contracts involve full-year orders, quantities, and there can be a variability in those shipments across the quarters based on our customer demand.

mail: Thank you al for.

mail: For the second quarter, we generated revenues of $24 4 million.

mail: Which was up 22, 4% for the <unk>.

mail: <unk> period and ahead of our expectations.

Speaker Change: Demand for our products across Aero now safety Tech and automotive were strong.

mail: This more than offset a decline in architecture that reflected the timing of deliveries and the full year contract.

mail: As Al mentioned it is important to note that our typical contracts and will enroll full year orders quantities and there can be variability in those shipments across the quarters based on our customer demand.

al: This was evident as the first quarter of 2024, we saw several of our customers pull forward deliveries to meet faster than expected demand as such quarter to quarter results can vary, but when you look at us on a full year basis, the strength of our model the counts far more apparent.

Meir Peleg: This was evident in the first quarter of 2024. We saw several of our customers move forward deliveries to meet faster than expected demand. As such, quarter to quarter results can vary, but when you look at us on a full-year basis, the strength of our model becomes far more apparent. Cross-profit for the second quarter was $6.6 million and increased of 64% from the prior year period. This equated to gross margins in the second quarter of 27%, at 680 basis points improvement from the prior year period.

Meir Peleg: This was evident in the first quarter of 2024. We saw several of our customers move forward deliveries to meet faster-than-expected demand. As such, quarter-to-quarter results can vary, but when you look at us on a full-year basis, the strength of our model becomes far more apparent. Cross-profit for the second quarter was $6.6 million and increased of 64% from the prior year period. This equated to gross margins in the second quarter of 27%, at 680 basis points improvement from the prior year period. This was mainly due to the higher revenues and a favorable product mix. As GNA for the quarter was $9.4 million.

mail: Gross profit for the second quarter was $6 6 million, an increase of 64% from the prior year period.

mail: This equated to gross margins in the second quarter with 27%.

mail: 680 basis point improvement from the prior year period.

mail: This was mainly due to the higher revenues and a favorable product mix.

Meir Peleg: This was mainly due to the higher revenues and a favorable product mix. As GNA for the quarter was $9.4 million. Up to 24.7 percent mainly to support higher revenues as well as one-time expenses related to component initial public offerings. R&D expenses in the quarter were $4.1 million, up 7.7 percent and reflective of our strong commitment to innovation. Net loss for the quarter was $19 million compared to a net loss of $18.3 million in the prior year period.

mail: SG&A for the quarter was $9 4 million up to 24, 7% mainly to support higher revenues as well as one time expenses related to the company's initial public offering.

Meir Peleg: Up to 24.7 percent, mainly to support higher revenues as well as one-time expenses related to component initial public offerings. R&D expenses in the quarter were $4.1 million, up 7.7 percent and reflective of our strong commitment to innovation. Net loss for the quarter was $19 million compared to a net loss of $18.3 million in the prior year period. A justice net loss for the quarter was $7.8 million compared to a justice net loss of $8.9 million in the prior year period.

mail: R&D expenses in the quarter were $4 1 million up seven 7% and reflective of our strong commitment to innovation.

mail: Net loss for the quarter was $19 million compared to a net loss of $18 3 million in the prior year period.

May Impelling: Adjusted net loss for the quarter was $7 8 million compared to adjusted net loss of $8 9 million in the prior year period.

Meir Peleg: A justice net loss for the quarter was $7.8 million compared to a justice net loss of $8.9 million in the prior year period. A justice net income excludes amortization of intangibles, stock-based compensation, and other Eyal Peso, Daniel Scott, Dan Levy, Michael Nichols, Jeffrey Osborne, Daniel Scott Eyal Peso, Daniel Scott, Dan Levy, Michael Nichols, Jeffrey Osborne, Daniel Scott, Dan The decrease mainly reflected the timing of certain deliveries, which clients nominate on a full-view basis, but as we said, can vary from quarter to quarter.

May Impelling: Adjusted net income excludes amortization of intangibles stock based compensation and other non core items.

Meir Peleg: A justice net income excludes amortization of intangibles, stock-based compensation, and other Eyal Peso, Daniel Scott, Dan Levy, Michael Nichols, Jeffrey Osborne, Daniel Scott Eyal Peso, Daniel Scott, Dan Levy, Michael Nichols, Jeffrey Osborne, Daniel Scott, Dan. The decrease mainly reflected the timing of certain deliveries, which clients nominate on a full-view basis, but as we said, can vary from quarter to quarter.

May Impelling: This is the adjusted net income tables presented in our second quarter press release and earnings presentation.

Speaker Change: Now turning to our segment results starting with Aeronautics.

Speaker Change: Revenue in this segment was $10 million in the quarter up 28, 5% versus the prior year quarter and $7 8 million.

Speaker Change: <unk> was mainly driven by strong demand broadly across our suite of product offerings.

Speaker Change: Gross profit in a row now rigs were $3 9 million, an increase of 82, 9% year over year.

Speaker Change: This equated to a gross profit margin of 39% up from 27, 4% in the year ago quarter.

Speaker Change: Higher gross margin was a result of higher revenues across our fixed cost base.

Speaker Change: Now turning to our architectural segment results.

May Impelling: Revenue in the segment was $2 6 million in the quarter compared to $3 3 million in the prior year quarter.

May Impelling: Decrease mainly reflected the timing of certain deliveries, which clients nominate on a full year basis, but as we said can vary from quarter to quarter.

May Impelling: Gross profit in architecture was 0.9 million a decline of 11, 8% year over year.

Meir Peleg: Gross profit in architecture was 0.9 million, at decline of 11.8% year over year. It's equated to a gross profit margin of 36.3% up from 31.2% in the year ago quarter. The higher gross margin reflected a favorable product mix and operating efficiency.

Meir Peleg: Gross profit in architecture was 0.9 million, at a decline of 11.8% year over year. It's equated to a gross profit margin of 36.3%, up from 31.2% in the year-ago quarter. The higher gross margin reflected a favorable product mix and operating efficiency.

May Impelling: This equated to a gross profit margin of 36, 3% up from 31, 2% in the year ago quarter.

May Impelling: The higher gross margin reflected a favorable product mix and operating efficiency.

May Impelling: Now turning to our automotive segment.

Meir Peleg: Now turning to our automotive segment. Revenue in the automotive segment was 0.9 million in the quarter up 79.5%. The increase mainly reflects the start of serial production in the second quarter of 2023 to put it by our strong contracting activities and expansions of existing orders.

Meir Peleg: Now turning to our automotive segment. Revenue in the automotive segment was 0.9 million in the quarter, up 79.5%. The increase mainly reflects the start of serial production in the second quarter of 2023, to put it by our strong contracting activities and expansions of existing orders. Gross loss in automotive was approximately 0.9 million in both periods. In our safety tech segment, revenue was 10.8 million in the quarter, up 30.7% versus the prior year quarter's 8.3 million. The increase was largely driven by strong demand across our pseudo-product offering. Gross profit in safety tech was 2.2 million and an increase of 80% year over year.

May Impelling: Revenue in the automotive segment was <unk> 9 million in the quarter up 79, 5%.

May Impelling: The increase mainly reflects the start of serial production in the second quarter of 'twenty three supported by our strong contracting activity and expansion of existing orders.

May Impelling: Gross loss in automotive was approximately <unk> $9 million in both periods.

Meir Peleg: Gross loss in automotive was approximately 0.9 million in both periods. In our safety tech segment, revenue was 10.8 million in the quarter up 30.7% versus the prior year quarter's 8.3 million. The increase was largely driven by strong demand across our pseudo-product offering. Gross profit in safety tech was 2.2 million and increase of 80% year over year. The equated to gross profit margin of 20.6% up 560 basis points as a result of having more revenues to absorb fixed cost and federalable product mix.

May Impelling: And our safety Tech segment revenue was $10 8 million in the quarter up 37% versus the prior year quarter $8 3 million.

May Impelling: The increase was largely driven by strong demand across our suite of product offerings.

May Impelling: Gross profit in <unk> was $2 2 million, an increase of 80% year over year.

May Impelling: Equated to gross profit margin of 26% up 560 basis points as a result of adding more revenues to absorb fixed costs and favorable product mix.

Meir Peleg: The equated to gross profit margin of 20.6%, up 560 basis points, as a result of having more revenues to absorb fixed cost and federalable product mix.

May Impelling: Moving to our balance sheet.

May Impelling: We are well funded for the future in June we completed our IPO raising gross profit of $75 million.

Meir Peleg: Moving to our balance sheet, we are well funded for the future. In June, we completed our IPO raising gross process of 75 million. We closed our quarter with total liquidity of nearly 100 million. Since that time, we have completed a number of actions to simplify our balance sheet and capital resources for the long term. Third, the provider of our original 60 million grade line, of which 25 million was rigidly drawn, chose to participate in our IPO while reducing total availability of their grade line to the 35 million amounts.

Meir Peleg: Moving to our balance sheet, we are well funded for the future. In June, we completed our IPO, raising gross process of 75 million. We closed our quarter with total liquidity of nearly 100 million. Since that time, we have completed a number of actions to simplify our balance sheet and capital resources for the long term. Third, the provider of our original 60 million grade line, of which 25 million was rigidly drawn, chose to participate in our IPO while reducing total availability of their grade line to the 35 million amounts. As a result, we used the portion of our IPO process to repay what we had grown plus feet.

Meir Peleg: As a result, we used the portion of our IPO process to repay what we had grown plus feet. From a liquidity perspective, support from our lending group has been strong and we expect to replace a like amount of debt borrowing capacity under better terms in the near future.

May Impelling: We closed out the quarter with total liquidity of nearly $100 million.

May Impelling: Since that time, we have completed a number of actions to simplify our balance sheet and capital resources was the long term first the provider of our original $60 million grade line of which $25 million was previously drone chose to participate in our IPO, while reducing total availability of their credit lines and Undrawn 35.

May Impelling: $5 million an ounce as a result, we used the portion of our IPO proceeds to repay what we add zone plus feet from a liquidity perspective support from our lending group has been strong and we expect to replace a like amount of the borrowing capacity under better terms in the near future.

Meir Peleg: From a liquidity perspective, support from our lending group has been strong, and we expect to replace a like amount of debt borrowing capacity under better terms in the near future.

Speaker Change: Finally, let me give you some color on our expectations for the rest of the year.

Meir Peleg: Richard. Finally, let me give you some color on our expectation for the rest of the year. We're up to a strong start and our internal expectations for the full year are largely unchanged. I would point out that revenue is usually seasonally, consists from Q2 to Q3 due to the timing, vacation-infected shipments in Europe or in others. In 2024, we expect that trend to continue. Based on our anticipated geogratus mix, we expect Q3 revenues to be modestly hired sequentially followed by a bigger increase in Q4.

Meir Peleg: Richard. Finally, let me give you some color on our expectation for the rest of the year. We're up to a strong start, and our internal expectations for the full year are largely unchanged. I would point out that revenue is usually seasonally, consists from Q2 to Q3 due to the timing, vacation-infected shipments in Europe or in others. In 2024, we expect that trend to continue. Based on our anticipated geogratus mix, we expect Q3 revenues to be modestly hired sequentially, followed by a bigger increase in Q4. We expect gross margin in the second half to be higher as compared to the first half, based on the timing of revenues and associated operating leverage.

May Impelling: We're off to a strong start and our internal expectations for the full year are largely unchanged.

Speaker Change: I will point out that revenue is usually seasonally consists from Q2 to Q3 due to the timing occasionally impacted shipments in Europe in August.

May Impelling: In 2024, we expect that trend to continue.

May Impelling: Based on our anticipated geographic mix, we expect Q3 revenue to be modestly higher sequentially, followed by a bigger increase in Q4.

May Impelling: We expect gross margins in the second half to be higher as compared to the first half based on the timing of revenues and associated operating leverage finally, we expect adjusted net loss to narrow in 2024 as compared to 2023.

Meir Peleg: We expect gross margin in the second half to be higher as compared to the first half based on the timing of revenues and associated operating leverage. Finally, we expect adjusted net loss to narrow in 2024 as compared to 2023.

Meir Peleg: Finally, we expect adjusted net loss to narrow in 2024 as compared to 2023.

al: Now I will turn it back over to al for closing remarks.

Eyal Peso: Now, I will turn it back over to Eyal for closing remarks. Thanks, Meir.

Eyal Peso: Now, I will turn it back over to Eyal for closing remarks. Thanks, Meir. These are exciting times for Gauzy. We have demonstrated a very strong initial quarter as a public company, which is on track with our plan. We have grown revenues 43 percent over the past 12 months, while significantly expanding our gross margin. As we look to the back half of 2024, we are on pace to dramatically accelerate our revenue and profitability. The demand catalyst that we discuss today is poised to continue the wide adoption of our innovative products to an expanding customer base. In the upcoming quarters, we plan to introduce exciting new products that we expect will further accelerate our growth and expand our share in our key markets.

al: Thanks Mayo.

al: These are exciting times for galaxy.

Eyal Peso: These are exciting times for Gauzy. We have demonstrated a very strong initial quarter as a public company, which is on track with our plan. We have grown revenues 43 percent over the past 12 months, while significantly expanding our gross margin. As we look to the back half of 2024, we are on pace to dramatically accelerate our revenue and profitability. The demand catalyst that we discuss today are poised to continue the wide adoption of our innovative products to an expanding customer base.

al: We have demonstrated a very strong initial quarter as a public company, which is on track with our plan, we have grown revenues, 43% over the past 12 months, while significantly expanding our gross margin.

May Impelling: As we look to the back half of 2024, we are on pace to dramatically accelerate our revenue and profitability.

May Impelling: The demand catalysts that we discussed today are poised to continue the wide adoption of our innovative products to an expanding customer base.

May Impelling: In the upcoming quarters, we plan to introduce exciting new products that we expect will further accelerate our growth and expand our share in our key market.

Eyal Peso: In the upcoming quarters, we plan to introduce exciting new products that we expect will further accelerate our growth and expand our share in our key markets. We are well-funded following our successful IPO. We look forward to achieving our goals of growing the business, becoming adjusted EBITDA positive, followed by EPS and cash flow generation.

May Impelling: We are well funded following our successful IPO, we look forward to achieving our goals of growing the business, becoming adjusted EBITDA positive followed by EPS and cash flow generation.

Eyal Peso: We are well-funded following our successful IPO. We look forward to achieving our goals of growing the business, becoming adjusted EBITDA positive, followed by EPS and cash flow generation. I am confident in our strategy, our team, and our bright future.

al: I am confident in our strategy our team and our bright future. Thank you for your time today operator could you. Please open up the line for further questions.

Eyal Peso: I am confident in our strategy, our team, and our bright future. Thank you for your time today, operator.

Eyal Peso: Thank you for your time today, Operator.

Operator: Could you please open up the line for further questions? Ladies and gentlemen, we will begin the question and answer session. Should you have a question, please press the star followed by the one on your touch stone phone. You will hear a response that your hand has been raised. Should you wish to decline from the falling process, please press the star followed by the two. If you are using a speaker phone, please lift the handset before pressing any. One moment please for your first question.

Operator: Could you please open up the line for further questions? Ladies and gentlemen, we will begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a response that your hand has been raised. Should you wish to decline from the falling process, please press the star followed by the two. If you are using a speaker phone, please lift the handset before pressing any. One moment, please, for your first question.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer questions should you have a question. Please press the star.

Speaker Change: Followed by the Walmart Touchtone phone.

al: We'll hear response at your hand has been raised should you wish to decline from the former Baathists. Please press the star followed by the Q. If you are using a speaker phone lift your handset before pressing.

Speaker Change: One moment. Please for your first question.

Speaker Change: First question comes from the line of Mr. Dan Levy from Barclay.

Dan Ledi: Our first question comes from the line of Mr. Dan Ledi from Barclay. Please go ahead. Hi, good morning, and thank you for taking the question.

Speaker Change: Go ahead.

Dan Levy: Hi, Good morning, and thank you for taking the question wanted to start with a question on on the backlog and maybe you can understand help us understand how to interpret a read this figure of $36 million and maybe.

Eyal Peso: I wanted to start with a question on the backlog. Maybe you can help us understand how to interpret or read this figure of $36 million. Maybe how this gives us some confidence on the feasibility of forward revenue for you. Hi, Dan. Good morning, and thanks for the question. So our backlog is really what we have booked and we need to ship, it's booked in our system, and we need to ship. Usually, the nature of our four businesses is such that these POs that are committed hard commitments from customers in the lights of a PO, that we need to ship usually between a quarter to two quarters ahead.

Dan Ledi: I wanted to start with a question on the backlog. Maybe you can help us understand how to interpret or read this figure of $36 million. Maybe how this gives us some confidence on the feasibility of forward revenue for you.

Speaker Change: How this gives us some confidence on the visibility.

Speaker Change: <unk> revenue for you.

Speaker Change: Hi, Dan Good morning, and thanks for the question.

Eyal Peso: Hi, Dan. Good morning, and thanks for the question. So our backlog is really what we have booked and we need to ship. It's booked in our system, and we need to ship. Usually, the nature of our four businesses is such that these POs that are committed hard commitments from customers in the lights of a PO, that we need to ship usually between a quarter to two quarters ahead. So, this gives us very good visibility on top of our annual commitments, and most of our customers sign annual commitments. This backlog also provides us, you know, 100 percent on this number; it's 100 percent going to be shipped in a quarter or two ahead.

Speaker Change: So our backlog is.

Speaker Change: <unk> is really what we have booked and.

al: We need to ship, it's booked in our system and we need to ship usually this numbers.

al: The nature of our four businesses is such that these <unk> that are committed.

al: Hard commitments from customers and the and the likes of a Po.

al: That we need to ship usually between a quarter to two quarters ahead.

al: So this gives us very good visibility.

Eyal Peso: So, this gives us very good visibility on top of our annual commitments and most of our customers sign annual commitments. This backlog also provides us, you know, 100 percent on this number, it's 100 percent going to be shipped in a quarter or two ahead. So, that's where this number is coming from.

al: On top of our annual commitments and most of our customers find annual commitments. This backlog also provides us.

Dan Ledi: Okay, great, thank you.

al: 100% on this number.

al: 100%.

al: Going to be shipped in a quarter or.

Speaker Change: Or two ahead, so that's where that number is coming from.

Dan Ledi: So, that's where this number is coming from.

Speaker Change: Okay, great. Thank you.

Dan Ledi: Okay, great, thank you.

Speaker Change: And the second question wanted to ask about.

Dan Ledi: As a second question, one to ask about the free cash flow, maybe you can help us understand, appreciate the commentary provided on, you know, improved revenue in the back half, gross margins narrowing, gross margins improving as well, but maybe you could just talk about the free cash flow which was negative $20 million in the first half, there was some working capital and maybe you can just provide us some comments on sort of the cadence to expect on free cash flow. How much was the first half, maybe negatively impacted by some one-time items on working capital or just negative seasonality?

Dan Ledi: As a second question, one to ask about the free cash flow, maybe you can help us understand, appreciate the commentary provided on, you know, improved revenue in the back half, gross margins narrowing, gross margins improving as well, but maybe you could just talk about the free cash flow, which was negative $20 million in the first half. There was some working capital, and maybe you can just provide us some comments on sort of the cadence to expect on free cash flow. How much was the first half, maybe negatively impacted by some one-time items on working capital or just negative seasonality?

Speaker Change: The free cash flow, maybe you can help us understand I appreciate the commentary you provided on.

Speaker Change: Improved revenue in the back half gross margins narrowing.

Speaker Change: Margins improving as well.

Speaker Change: Maybe you could just talk about the free cash flow, which was.

Speaker Change: Negative $20 million in the first half there was some working capital and maybe you can just provide us some comments on sort of the cadence to expect on free cash flow. How much was the first half may be negatively impacted by some one time items on working capital or just negative seasonality.

Speaker Change: Okay.

Speaker Change: Thank you Dan.

Speaker Change: Per your question.

Dan Ledi: Thank you, Dan. So, very question, the net free cash, the free cash flow was affected in Q2 and for the whole half, the first half of 2024 by CapEx investment, okay, we invested 4.5 million for the first half and three out of it in Q2. And also, we had one-time payments in Q2, which are not going to be this kind of an expense of course, we might have some one-time, but one B in the coming quarter is for the rest of the year, related to the idea of course.

Meir Peleg: Thank you, Dan. So, very question, the net free cash, the free cash flow was affected in Q2 and for the whole half, the first half of 2024 by CapEx investment. Okay, we invested 4.5 million for the first half and three out of it in Q2.

Speaker Change: The net.

Speaker Change: Free cash flow free cash flow.

Speaker Change: Was the fact that in Q2 and for the whole half.

Speaker Change: The first half of 2024 by.

Speaker Change: Capex investments, Okay, we invested $4 5 million for the first half and three out of it in Q2 and also we had one time.

Meir Peleg: And also, we had one-time payments in Q2, which are not going to be this kind of an expense, of course. We might have some one-time, but one B in the coming quarter is for the rest of the year, related to the idea, of course. So, one-time expansion, I'd like to add just that. I mean, there were quite a lot of one-time expenses related to the IPO, of course, in Q2, so that's something that we're not going to see in the back half of the year.

Speaker Change: Payments.

Speaker Change: In Q2, which are not going to be.

al: This kind of the expense of course, we might have some one time, but.

al: <unk> in the coming quarters.

al: The rest of the year.

al: Related to the IPO of course.

al: So one time okay.

al: Address that.

Dan Ledi: So, one-time expansion, I'd like to add just that, I mean there were quite a lot of one-time expenses related to the IPO of course in Q2, so that's something that we're not going to see in the back half of the year. Okay, so how much, you know, of that negative $20 million of free cash in the first half, how much of that was maybe sort of not, you know, above normal CapEx or above, you know, the one-time expenses, just trying to get a sense of, you know, how much substantially the free cash flow should improve in the back half of the year. So, for the first half, including IPO and other one-time expenses, it's about 4 to 5 million in the first half.

al: Sure.

al: Uh huh.

al: Quite a lot of onetime expenses related to the IPO of course.

al: In Q2, so that's something that we're not going to see in the back half of the year.

Speaker Change: Okay. So how much of that negative $20 million free cash in the first half how much of that was maybe sort of.

Dan Ledi: Okay, so how much, you know, of that negative $20 million of free cash in the first half, how much of that was maybe sort of not, you know, above normal CapEx or above, you know, the one-time expenses, just trying to get a sense of, you know, how much substantially the free cash flow should improve in the back half of the year. So, for the first half, including IPO and other one-time expenses, it's about 4 to 5 million in the first half. Okay, so $4 to $5 million and sort of one-time expenses. Okay, thank you.

al: Not above normal capex for the.

Speaker Change: The onetime expenses, just trying to get a sense of.

Speaker Change: How much substantially the free cash flow should improve in the back half of the year.

Speaker Change: So for the first half, including IPO and other one time expenses, it's about $4 million to $5 million in the first half.

Dan Ledi: Okay, so $4 to $5 million and sort of one-time expenses, okay, thank you.

Speaker Change: Okay, so $4 million to $5 million of sort of one time expenses.

Speaker Change: Maybe if I could squeeze in one last one maybe you could just give us a sense on the relative.

Dan Ledi: Well, maybe, if I get squeezed in one last one, and maybe you could just give us a sense on the relative, you know, segment dynamics that are feeding into the backlog, appreciate, you know, there's a strong, I would say, demand on error right now that's what's being produced, but, you know, our understanding was that safety tech was the one where there was, you know, a very robust stream of programs coming on, retrofits, etc. So, how do you expect the backlog to shift from a segment perspective in the quarters to come?

Dan Ledi: Well, maybe, if I get squeezed in one last one, and maybe you could just give us a sense on the relative, you know, segment dynamics that are feeding into the backlog. Appreciate, you know, there's a strong, I would say, demand on error right now that's what's being produced, but, you know, our understanding was that safety tech was the one where there was, you know, a very robust stream of programs coming on, retrofits, etc.

Speaker Change: Segment dynamics that are feeding into the backlog.

Speaker Change: Appreciate.

Speaker Change: Strong I would say demand on air right now with being produced but.

Speaker Change: Our understanding was that safety Tech was the one where there was a <unk>.

Speaker Change: Very robust stream of programs coming on and retrofits et cetera. So how do you expect the backlog to ship from a segment perspective.

Dan Ledi: So, how do you expect the backlog to shift from a segment perspective in the quarters to come? And what did it take for automotive to go from?

Speaker Change: In the quarters to.

al: To come and what does it take for automotive to go from.

Dan Ledi: And what did it take for automotive to go from? and what's it relatively smaller portion of the backlogs is something more substantial. Thanks, Dan. So I'll start with the second half of the question. It's not sure that we're going to see the backlog of automotive substantially increasing on POs in the system that we still need to ship when we're looking at the end of a period because usually once we get the order from an OEM in the automotive segment, unlike other segments, we ship it rather quickly.

Speaker Change: What is a relatively smaller portion of the backlog or something more substantial.

Dan Ledi: and what's it relatively smaller portion of the backlogs is something more substantial.

al: Okay.

Speaker Change: Thanks, Dan So I'll start with the second half of the question.

Eyal Peso: Thanks, Dan.

Eyal Peso: So I'll start with the second half of the question. It's not sure that we're going to see the backlog of automotive substantially increasing on POs in the system that we still need to ship when we're looking at the end of a period because usually, once we get the order from an OEM in the automotive segment, we ship it rather quickly. So many, many times you see the backlog going up and then going down because we just shipped it. So it is going to be, you know, it's going to increase, but it's not going to go to the numbers of aeronautics where you get the purchase order and the backlog is purchase orders committed to ship in the short, very short term.

Speaker Change: It's you know, it's not I'm not sure that we're going to see the backlog of automotive.

Dan Ledi: So many, many times you see the backlog going up and then going down because we just shipped it. So it is going to be, you know, it's going to increase but it's not going to go to the numbers of aeronautics where you get the purchase order and the backlog is purchase orders committed to ship in the short, very short term. So you see bigger orders, you know, for a little bit more time so we can be even two quarters in arrow.

Speaker Change: Substantially increasing on on <unk> in the system that we still need to ship when we're looking at the end of period, because usually once we get the order from an OEM in the automotive segment. Unlike other segments, we ship it rather quickly. So so many many times you would see you would see.

al: The backlog going up and then going down because we just shifted so.

al: It is going to be.

al: It's going to increase but it's not going to go to the numbers of Aeronautics, where you get the purchase order and the backlog is purchase orders committed.

al: We are committed to ship into his short very short term. So you would see bigger orders.

Eyal Peso: So you see bigger orders, you know, for a little bit more time so we can be even two quarters in a row. So the number in arrow is kind of naturally bigger because it just, we get the POs are bigger when we have more time to ship it. And automotive, it tends to be shipped quite quickly after we receive the PO, so you won't see the purchase order on the book. But on an annual basis, this gives you a lot of information for the next quarter or two. But again, it doesn't take away from our annual minimum commitments in these segments.

al: For a little bit more.

al: Time, so we can be even two quarters, an arrow. So so the number in aero as kind of naturally bigger because it just we get we get the Pos are bigger when you have more time to ship it in automotive it tends to be shipped quite quickly. After we received the POC you won't see the purchase order on the book.

Dan Ledi: So the number in arrow is kind of naturally bigger because it just, we get the POs are bigger when we have more time to ship it. And automotive, it tends to be shipped quite quickly after we receive the PO so you won't see the purchase order on the book. But on an annual basis, this gives you a lot of information for the next quarter or two. But again, it doesn't take away from our annual minimum commitments in these segments.

al: But on an annual basis. This gives you a lot of information for the next quarter or two but again it doesn't it doesn't take away from our annual minimum commitments in these segments and in safety Tech, it's a little bit the same so I'm coming to back to the first first half of the question.

Dan Ledi: And in Safety Tech, it's a little bit the same. So I'm coming to back to the first half of the question. You see the big number in aeronautics a lot because there's record traveling in the last year where the cycles that the regulatory regulation mandate, the operators, the airlines who replace, for instance, a cockpit shade, shortens a lot. And once they foresee a lot of travel and more time in the air, they're picking up the orders to be ready for these replacements in the short term.

Eyal Peso: And in Safety Tech, it's a little bit the same. So I'm coming to back to the first half of the question. You see the big number in aeronautics a lot because there's record traveling in the last year where the cycles that the regulatory regulation mandate, the operators, the airlines who replace, for instance, a cockpit shade, shortens a lot. And once they foresee a lot of travel and more time in the air, they're picking up the orders to be ready for these replacements in the short term. So it's a lot because of that, and we expect that to kind of settle down a little bit.

al: We.

al: <unk>.

al: You would see you see the big number in Aeronautics a lot because there is.

al: Yeah.

al: There is record traveling in the last year, where or the cycles.

al: The regulatory Eregulation mandates.

al: Operators the airlines to replace for instance.

Speaker Change: Bit shade shortens a lot.

al: And once they for seats.

Speaker Change: A lot of travel and more time in the air there are picking up the orders to be ready for these replacements in the short term. So it's a lot because of that and we expect that to kind of settle down a little bit it's still going to grow very very nicely and even if we're going to expect accelerated.

Dan Ledi: So it's a lot because of that and we expect that to kind of settle down a little bit. It's still going to grow very nicely and even we're going to expect accelerated growth on this. But the backlog or the orders that we need to ship the time for shipping from the minute we get a PO is going to shorten. So you're going to see a balance on that. And I want to say it's kind of the same in Safety Tech.

Eyal Peso: It's still going to grow very nicely, and even we're going to expect accelerated growth on this. But the backlog or the orders that we need to ship, the time for shipping from the minute we get a PO is going to shorten. So you're going to see a balance on that. And I want to say it's kind of the same in Safety Tech. When we had to ship systems into the Paris Olympics, we got the order, and we had to ship it almost immediately. So it didn't live much in the backlog. So you know, so it's kind of the same like automotive.

al: On this but.

al: The backlog or the orders that we need to ship the time for shipment from.

al: We get a P. O is going to shorten so you see you're going to see a balance on that and I want to say, it's kind of the same in safety Tech when we had to ship systems into the Paris Olympics, we got the order and we had to ship it.

Dan Ledi: When we had to ship systems into the Paris Olympics, we got the order and we had to ship it almost immediately. So it didn't live much in the backlog. So you know, so it's kind of the same like automotive. You get the order and you ship it quite immediately. So it doesn't live a long time in this hard commitment, hard commitment pile, we call a backlog.

al: Most immediately so it didn't live much in the backlog. So it's kind of the same like automotive you get the order and you ship it quite quite immediately so it doesn't live a long time in this hard.

Dan Ledi: Great. We got there.

Eyal Peso: You get the order, and you ship it quite immediately. So it doesn't live a long time in this hard commitment, hard commitment pile we call a backlog.

al: Hard committed hard commitment.

al: Pile, we call a backlog.

al: Great. Thank you.

Dan Ledi: Great. We got there. Thank you. Thanks, Dan.

Dan: Thanks, Dan.

Speaker Change: Thank you Mr. Dan Levy from Barclays.

Dan Ledi: Thank you. Thanks, Dan. Thank you, Mr. Dan.

Dan Ledi: Thank you, Mr. Dan. Thank you very much.

Speaker Change: Next question comes from the line of Mr. Josh Nichols from B Riley. Please go ahead Sir.

Dan Ledi: [inaudible] Thank you.

Josh Nichols: Thanks for taking my questions.

Joshua Nichols: Thank you. And thanks for taking my questions.

Josh: And thanks for taking my questions. I wanted to ask a little bit on the gross margin. You saw a nice sequential improvement in margins up to 27%. You talked about expecting very good sales growth for this year. Can you elaborate a little bit about the gross margin expansion opportunities in the second half of the year, given the revenue trajectory that you expect to increase as well?

Josh Nichols: I wanted to ask a little bit on the gross margin you saw a nice sequential improvement in margins.

Joshua Nichols: I wanted to ask a little bit on the gross margin. You saw a nice sequential improvement in margins up to 27%. You talked about expecting very good sales growth for this year. Can you elaborate a little bit about the gross margin expansion opportunities in the second half of the year, given the revenue trajectory that you expect to increase as well?

al: 27%.

Speaker Change: You talked about expecting very good sales growth for this year can you elaborate a little bit about the gross margin expansion opportunities in the second half of the year.

Speaker Change: Given the revenue trajectory that you expect to increase as well.

Speaker Change: Thank you Josh.

Josh Nichols: So in general which.

Meir Peleg: Thank you, Josh. So in general, which we have a quite an infrastructure which can support much higher revenue. So the higher the revenue, the fixed costs will remain mostly the same and all the variable costs will increase. So as we expect that the H2 revenue top line will be higher than H1, this will considering that the fixed cost will remain mostly the same. It will enable us to increase the gross margins in H1 compared to H1 and for the whole year in general, compared to at 2023.

Meir Peleg: Thank you, Josh. So in general, which we have a quite an infrastructure which can support much higher revenue. So the higher the revenue, the fixed costs will remain mostly the same, and all the variable costs will increase. So, as we expect that the H2 revenue top line will be higher than H1, this will considering that the fixed cost will remain mostly the same. It will enable us to increase the gross margins in H1 compared to H1 and for the whole year in general, compared to at 2023.

Speaker Change: This.

Speaker Change: As we have.

Speaker Change: Quite a infrastructure, which can support much higher revenue so the higher the revenue the fixed costs will remain mostly the same and all the variable costs will increase as we expect that the H two revenue top line will be higher than H. One this.

Speaker Change: Considering that the fixed costs will remain mostly the same it will enable us to increase the gross margins in <unk> <unk> compared to <unk>, one and for the whole year in general compared to 2023.

Speaker Change: Maybe just I would like to add made with your permission. It's also that we see are.

Eyal Peso: Maybe just I'd like to add mail with your permission. It's also that we see a positive change in the mix of products with every division. You see less legacy and more of the new product lines being sold, for instance, in safety tech. Hence improving our gross profit by doing that measure, because we have different gross profits for different product lines. And of course, the same way we demonstrated this in H1 and we did well on our plans and our gross profit in H1, we're expecting the same and accelerated performance into H2, also due to, of course, the scale, but also due to better product mix.

Speaker Change: Positive change in the mix of products with every division you see less legacy and more of the new product lines being sold for instance in safety Tech.

Speaker Change: Hence improving our gross profit.

Speaker Change: By that measure because we have different gross profits for different product lines and of course, the same way we demonstrated this in H, one and we.

Eyal Peso: And of course, the same way we demonstrated this in H1, and we did well on our plans and our gross profit in H1, we're expecting the same and accelerated performance into H2, also due to, of course, the scale, but also due to better product mix. Thanks for the detail there.

Speaker Change: We did well on our plans and our gross profit in each one we are expecting the same and accelerated.

Speaker Change: Even accelerated performance into <unk>, who also do.

Speaker Change: Of course, the scale, but also due to a <unk>.

Speaker Change: Better product mix.

Speaker Change: And thanks for the detail there and then.

Josh: Thanks for the detail there. And then I know automotive, we've talked about that as a big long term opportunity working with I think six or so OEMs, including Daimler already. I'm kind of curious about the expectations for adding new customers to the company's platform potential announcements on that front in the second half of that. And how long it takes from the new customer addition to ramp up and actually start delivering some of these products.

Speaker Change: I know automotive we've talked about that as a big long term opportunity of working with six or so Oems, including Daimler already.

Joshua Nichols: And then I know automotive; we've talked about that as a big long-term opportunity working with, I think, six or so OEMs, including Daimler, already.

Speaker Change: I'm kind of curious about the expectations for adding new customers to the company's platform potential announcements on that front in the second half of the how long does it take.

Eyal Peso: I'm kind of curious about the expectations for adding new customers to the company's platform potential announcements on that front in the second half of that. And how long it takes from the new customer addition to ramp up and actually start delivering some of these products. So, thanks, Josh.

Speaker Change: New customer additions to ramp up but actually start delivering some of these products.

Josh Nichols: So thanks, Josh.

Speaker Change: I will say that.

Eyal Peso: So, thanks, Josh. I'll say that we have quite a few that are in line to initiate serial production. So the market and, of course, doesn't know. But, you know, we have some that we've been working on for a few years that are expected to announce the commences of serial production soon. So, you should expect, you should expect announcements in that respect with new OEMs, but also with new models. And that takes me to the second half of your question.

Eyal Peso: I'll say that we have quite a few that are in line to initiate serial production. So the market and, of course, doesn't know. But, you know, we have some that we've been working on for a few years that are expected to announce the commences of serial production soon. So, you should expect; you should expect announcements in that respect with new OEMs, but also with new models.

Speaker Change: We have quite a few.

Speaker Change: Our in line too.

Speaker Change: To initiate serial production so the market in <unk>.

Speaker Change: <unk> doesn't know but.

al: Yes.

al:

al: We have we have some that we've been working on for a few years that are expected to announce the commence of CRE production. Soon so you should expect you should expect announcements in that respect with new Oems, but also.

al: With new models and that takes me to the second half of your question, if an OEM needs to homologate, our SPD <unk> LLC on a rooftop it can take some time it depends it varies between Evs I have to say it depends it depends if it's more of a traditional OEM it can vary.

Eyal Peso: And that takes me to the second half of your question. If an OEM needs to homologate our SBDRLC on a rooftop, it can take some time. It depends; it varies between EVs. I have to say, it depends if it's more a traditional OEM. It can vary between months and even years. But once you homologated that product within an OEM, the next model and the next model and the next one. And usually, the next models are those who are more mass production. That is only a discussion about price. So you can see a very steep acceleration in volume after you had one OEM to one model that same OEM can do many more because it's already homologated.

Eyal Peso: If an OEM needs to homologate our SBDRLC on a rooftop, it can take some time. It depends, it varies between EVs, I have to say, it depends if it's more a traditional OEM. It can vary between months and even years. But once you homologated that product within an OEM, the next model and the next model and the next one. And usually, the next models are those who are more mass production. That is only a discussion about price.

al: Between months and even years, but once evo model gated that product within an OEM.

al: Our next model in the next model in the next one and usually the next models or those who are more mass production that is only discussion about price. So you can see.

al: A very steep acceleration in volume after you had one OEM to one model that same OEM can do many more.

Eyal Peso: So you can see a very steep acceleration in volume after you had one OEM to one model that same OEM can do many more because it's already homologated. So that's how you can need to view the automotive industry.

Speaker Change: Because it's Brady homologate it.

al: So that's how you kind of need to view the automotive business.

Josh: Thank you.

Eyal Peso: So that's how you can need to view the automotive industry.

Joshua Nichols: Thank you. Thanks for the last question. Just to pick it back about profitability and cash a little bit. I know you mentioned that you expected that it would come lost to Nero.

Speaker Change: Thanks, and then last question just to pivot back about profitability and cash flow but.

Meir Peleg: Thanks for the last question just to pick it back about profitability and cash a little bit. I know you mentioned that you expected that it would come lost to Nero. I'm curious on the EBITDA basis what the company's expectation is in terms of getting to kind of like break even profitable level and how long that may take. Sure. So we are very happy with our top-line revenue and gross margin for Q2 and H1 and we are on the way to be profitable and on track with our plan.

Speaker Change: I know you mentioned that you expect the income loss.

Speaker Change: Hello.

Speaker Change: I'm curious on the EBITDA basis, what the company's expectation is in terms of getting them to kind of like breakeven profitability level and how long that may take.

Meir Peleg: I'm curious on the EBITDA basis what the company's expectation is in terms of getting to kind of like break even profitable level and how long that may take. Sure. So we are very happy with our top-line revenue and gross margin for Q2 and H1, and we are on the way to be profitable and on track with our plan.

Speaker Change: Sure.

Speaker Change: We are very happy with our top line revenue and gross margin.

Speaker Change: For Q2, and H, one and we are underway to be profitable and on track with our plan.

Speaker Change: For the rest of the year.

Speaker Change: So an EBITA EBITA measure for Galaxy is a.

Meir Peleg: Yeah, for the rest of you. So the EBITDA measure for Gauzy as we say often is something that we like to see on an annual basis. There's sometimes pull forward on, I give you an example, R&D expenses that are not considering the specific top line of that quarter. But we're very accurate on an annual basis, same as we say on the revenue on which we base the budget that we provide for R&D example, which is an EBITDA expense. So I think that we're, while we're in line with the top line and gross profit, we're on track with the EBITDA measure as well for the full year.

Meir Peleg: Yeah, for the rest of you. So the EBITDA measure for Gauzy, as we say often, is something that we like to see on an annual basis. There's sometimes pull forward on, I give you an example, R&D expenses that are not considering the specific top line of that quarter. But we're very accurate on an annual basis, same as we say on the revenue on which we base the budget that we provide for R&D example, which is an EBITDA expense. So I think that we're, while we're in line with the top line and gross profit, we're on track with the EBITDA measure as well for the full year.

Josh: Thanks, guys.

Speaker Change: We say often is something that we we like to see on an annual basis.

Speaker Change: There is some sometimes pull forward on I'll give you. An example, R&D expenses that are not considering this specific top line of that quarter, but we're very accurate on a on an annual basis EMEA as we say on the revenue on which we base. The budget that we provide for R&D example, for example, which.

Josh: Thanks, Josh.

Speaker Change: And EBITA extend so I think that we're.

Speaker Change: While we are in line with the topline and gross profit were on.

Speaker Change: Are on track.

Speaker Change: What's the EBITA measure as well.

Speaker Change: For the full year.

Speaker Change: Thanks, guys.

Joseph: Thanks, Joseph Thanks, Josh.

Joshua Nichols: Thanks, guys. Thanks, Josh.

Speaker Change: Thank you Mr. Mr. Josh Nichols from B Riley <unk>.

Jeff Osborne: Thank you, Mr. Joshua Nichols from B. Riley.

Speaker Change: Your next question comes from the line of Mr. Jeff Osborne from Cowen. Please go ahead.

Jeff Osborne: Your next question comes from the line of Mr. Jeff Osborne from TD Cowan. Please go ahead. Yeah, great. Thank you.

Jeff Osborne: Your next question comes from the line of Mr. Jeff Osborne from TD Cowan. Please go ahead. Yeah, great.

Jeff Osborne: Okay, great. Thank you just maybe following up on that question, you mentioned that Dan $4 million to $5 million I think of the.

Jeff Osborne: Thank you. Maybe following up on that question, you mentioned again that 4 to 5 million, I think, of the cash consumption was sort of one time in nature.

Jeff Osborne: Maybe following up on that question, you mentioned again that 4 to 5 million, I think of the cash consumption was sort of one time in nature. Is there a way of thinking about for 2Q in particular, how much of the op-X was associated with the IPO or others that the figure did come in above our expectations. And I heard you just say you budget things on an annual basis. But if you could just articulate in further detail any one time items that might have been flowing through the op-X lines in 2Q, that would be helpful. Thank you, Jeff.

Jeff Osborne: Cash consumption was sort of onetime in nature or is there a way of thinking about for <unk> in particular, how much of the opex was associated with the IPO or or others that figure did come in above our expectations and I heard you just say.

Meir Peleg: Is there a way of thinking about for 2Q in particular, how much of the op-X was associated with the IPO or others that the figure did come in above our expectations. And I heard you just say you budget things on an annual basis. But if you could just articulate in further detail any one-time items that might have been flowing through the op-X lines in 2Q, that would be helpful.

Speaker Change: Budget things on an annual basis.

Speaker Change: If you could just articulate further detail any onetime items that might have been flowing through the opex lines in <unk> that would be helpful.

Speaker Change: Okay.

Jeff Osborne: Thank you Jeff.

Jeff Osborne: First.

Meir Peleg: Thank you, Jeff. So first, regarding the IPO, it's not just IPO expenses in H1; there were other one-time expenses which were included in H1. But we expect and project H2 to be much better because of the top line and gross margin will be increased, and that will back up our better free cash flow in that period. So maybe, I think that if there are any kind of one-time expenses which are not IPO related or more like op-X related in H1 that we're not going to see in H2, I say that's rather minor.

Speaker Change: Regarding the IPO Ed said, it's not just IPO expenses in <unk>.

Meir Peleg: So first, regarding the IPO, it's not just IPO expenses in H1, there were other one time expenses which were included in H1, but we expect and project H2 to be much better because of the top line and gross margin will be increased and that will back up our better free cash flow in that period. So maybe, I think that if there are any kind of one time expenses which are not IPO related or more like op-X related in H1 that we're not going to see in H2, I say that's rather minor.

Speaker Change: At one time expenses, which were included in H, one, but we expect and project <unk>.

Speaker Change: Two to be much better because of the topline and gross margin will be increased and thats.

Speaker Change: Backup backup our better free cash flow in that period.

Speaker Change: So.

Speaker Change: And maybe at cognizant.

Speaker Change: Jeff I think Thats you are looking at if there are any kind of onetime I think question the onetime expenses, which are not IPO related or more like an opex.

Speaker Change: Opex related in age one that we're not going to not going to see in <unk>.

Jeff Osborne: I'd say I'd say that.

Speaker Change: No.

Speaker Change: Yes.

Speaker Change: That's rather minor there are some but.

Meir Peleg: There are some, but the way to look at H2 with GAUSI is we're going to see, as we always do, years back, an accelerated growth into H2 providing us more cash to stabilize the EBITDA measure. Of course, removing all the one time expenses that we had in H1 unrelated to op-X like IPO, but you should view this mainly because of more cash we have left because of accelerated growth in H2. H2. Got it.

Speaker Change: The main main way the way to look at age two with <unk> is we're going to see.

Speaker Change: As we always do years back and accelerated growth into age to providing us more cash to stabilize the EBITDA measure.

Speaker Change: Of course, we're moving all the onetime expenses that we had in age one unrelated to opex.

Speaker Change: <unk> IPO, but.

Speaker Change: But you should view this mainly because of.

Speaker Change: More cash we have left because of accelerated growth in <unk>.

Speaker Change: Got it and then maybe switching gears, but can you just touch on the.

Meir Peleg: And then maybe switching gears, but can you just touch on the SB3 product cycle for safety tech? I think you're going to start introducing that in Q4 and then ramp that up in 2025. I just want to ensure that that's on track. Yep. Thanks, Jeff. It's 100% on track. I think we even mentioned this that we're going to announce the product out in Q3. We're going to do that in the IAA show in Germany, which is this year all about truck bus and coach.

Eyal Peso: And then maybe switching gears, but can you just touch on the SB3 product cycle for safety tech? I think you're going to start introducing that in Q4 and then ramp that up in 2025. I just want to ensure that that's on track.

Speaker Change: <unk> III product cycle for safety.

Speaker Change: Youre going to start introducing that in Q4, and then ramp it up in 2025, I just want to ensure that that contract.

Jeff Osborne: Thanks, Jeff.

Eyal Peso: Yep.

Speaker Change: 100% on track.

Eyal Peso: Thanks, Jeff. It's 100% on track. I think we even mentioned this, that we're going to announce the product out in Q3. We're going to do that in the IAA show in Germany, which is this year all about truck, bus, and coach. It's going to be a big, big event for us, and that's where we're going to announce it. Inviting anyone who wants to come and see us there is going to be a big, big event for us. So it's on track, very soon to be announced commercial and on track to, you know, to be launched commercially towards the end of this year, as you mentioned.

Speaker Change: I think we even mentioned this that we're going to announce the product out in Q3.

Speaker Change: We're going to do that.

Speaker Change: The IAA show in Germany, which is this year all about truck bus and coach is going to be a big big event for us and Thats, where.

Meir Peleg: It's going to be a big, big event for us and that's where we're going to announce it. Inviting anyone who wants to come and see us there is going to be a big, big event for us. So it's on track, very soon to be announced commercial and on track to, you know, to be launched commercially towards the end of this year, as you mentioned. Great to hear.

Speaker Change: We're going to announce it and writing anyone who wants to come and see US there is going to be a big big Big event for us So it's on track.

Speaker Change: Very soon to be announced commercial and.

Speaker Change: And on track to for them to be launched commercially.

Speaker Change: The end of this year as you mentioned.

Speaker Change: Great to hear.

Speaker Change: And then maybe just the last question on <unk> I think you mentioned in the prepared remarks, 80 cities and you mentioned, Paris, which you had put a press release out about I think during the IPO process. Most of the focus was on Melbourne, we own and.

Eyal Peso: Great to hear.

Meir Peleg: And then maybe just the last question on safety tech. I think you mentioned in the prepared remarks 80 cities and you mentioned Paris, which you had put a press release out about, I think during the IPO process, most of the focus was on Melbourne, the own and London, I believe, but is there any other notable cities that have, you know, hundreds of units that have been ordered that you cannot articulate or the bulk of the 80 just sort of in the testing phase?

Jeff Osborne: And then maybe just the last question on safety tech. I think you mentioned in the prepared remarks 80 cities, and you mentioned Paris, which you had put a press release out about, I think during the IPO process. Most of the focus was on Melbourne, the own, and London, I believe, but is there any other notable cities that have, you know, hundreds of units that have been ordered that you cannot articulate, or the bulk of the 80 just sort of in the testing phase? So I think the question, Jeff, it's Brisbane in Australia. It's also a major metropolis, but it's Brisbane, not Melbourne yet. But we're working, we're working on that as well.

Speaker Change: London I believe.

Speaker Change: Is there any other notable cities that have hundreds of units that have been ordered.

Speaker Change: That you can articulate or the bulk of the 80, just sort of in the testing phase.

Speaker Change: So I.

Speaker Change: It's a good question Jeff.

Meir Peleg: So I think the question, Jeff, it's Brisbane in Australia. It's also a major metropolis, but it's Brisbane not Melbourne yet, but we're working, we're working on that as well. I'd like to say that when we say it's already, you know, it's already running the streets on buses with no mirrors at all, you know, collecting great statistics, it's very important to be big and be first in these cases. Where are many cases?

Speaker Change: As Brisbane.

Speaker Change: Australia is also a major metropolis, but its Brisbane not Melbourne yet.

Speaker Change: But we're working we're working on that as well.

Speaker Change: I'd like to say that when we say it's already and.

Eyal Peso: I'd like to say that when we say it's already, you know, it's already running the streets on buses with no mirrors at all, you know, collecting great statistics. It's very important to be big and be first in these cases. Where are many cases?

Speaker Change: It's already running the streets on buses with no mirrors at all.

Speaker Change: Collecting great statistics, it's very important to be big and be first in these cases.

Speaker Change: Where in many cases, so there are cities that I am not able to mention right now and we have a pipeline of is this for the for the full for for a year.

Meir Peleg: So there are cities that I am not able to mention right now, and we have a pipeline of this for the full, for, you know, for a year or two from now. But I can give you color on this. When we say 80 cities, it's not only demos. We are embedded on, you can find us in Bilbao and Spain on Erisal, because Erisal has, it sells its bust with an option and the local city doesn't, doesn't have to sign a whole agreement with us for.

Eyal Peso: So there are cities that I am not able to mention right now, and we have a pipeline of this for the full, for, you know, for a year or two from now. But I can give you color on this. When we say 80 cities, it's not only demos. We are embedded on, you can find us in Bilbao and Spain on Erisal, because Erisal has, it sells its bust with an option and the local city doesn't, doesn't have to sign a whole agreement with us for. So, you know, it's a small operator in one part of the city using Erisal, and they already run it with our eight us because they're using that way.

Speaker Change: Or two from now.

Speaker Change: But I can give you color on this when we say 80 cities, it's not only demos.

Speaker Change: We are.

Speaker Change: Embedded on on you can find us in Bilbao in Spain on resolve because it is all has.

Speaker Change: It sells it starts with an option and local city doesn't doesn't have to sign a whole agreement with us for so.

Speaker Change: Small operator in one part of the city using ASR and they already run it with our Adas because they are using that so when im saying that were deployed commercially in 80 cities or more.

Meir Peleg: So, you know, it's a small operator in one part of the city using Erisal and they already run it with our eight us because they're using that way. So when I'm saying that we're deployed commercially in 80 cities or more, it's really not, it's not, it's not demos. It's really many times coming from the open and then being used by local municipalities or local fleets like VIP buses and things like that.

Eyal Peso: So when I'm saying that we're deployed commercially in 80 cities or more, it's really not; it's not; it's not demos. It's really many times coming from the open and then being used by local municipalities or local fleets like VIP buses and things like that.

Speaker Change: It's really not it's not.

Speaker Change: It's not demos, it's really many times coming from the <unk>.

Speaker Change: And then being used by local municipalities or local fleets like VIP buses and things like that.

Speaker Change: Great to hear that's all I had thanks so much.

Operator: Greta here, that's all I have. Thanks so much. Thank you, Mr. Jeff. I'll sprint from Tidi-Calvin. Ladies and gentlemen, we are still on our question and answer session. Should you have a question? Please press the star followed by the one at Merit Edge, please. Paul. Julia, a phone that your hands and this one has been raised. If you're using a speaker phone, this is the answer before presenting any key.

Matthew Sheerin: Greta here, that's all I have.

Speaker Change: Okay.

Matthew Sheerin: Thanks so much.

Mr. Jansen: Thank you Mr. Jansen will spring from TD count.

Matthew Sheerin: Thank you, Mr. Jeff. I'll sprint from Tidi-Calvin.

Speaker Change: Ladies and gentlemen, we are still in our question and answer session should you have a question. Please.

Operator: Ladies and gentlemen, we are still on our question-and-answer session. Should you have a question? Please press the star followed by the one at Merit Edge, please.

Speaker Change: Hello, everyone.

Speaker Change: So in Europe on the Janssen has been great.

Operator: Paul. Julia, a phone that your hands and this one has been raised. If you're using a speaker phone, this is the answer before presenting any key.

Speaker Change: Thank you speakers.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Mr. Matthew Sheerin from Stifel.

Matthew Sheerin: Our next question comes from the line of Mr. Matthew Sheerin from Tickle. Please go ahead. Yes, thank you.

Speaker Change: Go ahead.

Matthew Sheerin: Yes. Thank you good morning, everyone.

Speaker Change: Okay.

Meir Peleg: Good morning, everyone. Lots of good data points here and information. I did have a couple of modeling questions. Just regarding interest expense, I know you raised a lot of money on the IPO, and I know your debt has come down, so could you talk us through expectations for interest expense for the rest of the year? Thank you, Matt. So, as you said, and part of the financial expenses came from interest expenses, some came from value-eation, fair value valuation.

Matthew Sheerin: Good morning, everyone. Lots of good data points here and information.

Matthew Sheerin: Lots of good data points here on information I did have a couple of modeling questions.

Matthew Sheerin: I did have a couple of modeling questions.

Speaker Change: Regarding our interest expense I know you raised a lot of money on the IPO and I know you are.

Meir Peleg: We did repay a part of our debt in Q3, but we have enough opportunity to get to profitability, so we're still on track, and we were offered by the way with the new facility with better turns, and we are considering it right right now. So, maybe I think that you're going to expect Matt, the interest expenses into the second half to be reduced, because we have repaid, we have repaid some of the debt with the IPO proceeds.

Meir Peleg: Just regarding interest expense, I know you raised a lot of money on the IPO, and I know your debt has come down, so could you talk us through expectations for interest expense for the rest of the year?

Speaker Change: Your debt has come down so could you talk us through expectations for interest expense.

Speaker Change: For the rest of the year.

Speaker Change: Okay.

Matt: Thank you Matt.

Matt: So.

Meir Peleg: Thank you, Matt. So, as you said, and part of the financial expenses came from interest expenses; some came from value-eation, fair value valuation. We did repay a part of our debt in Q3, but we have enough opportunity to get to profitability, so we're still on track, and we were offered, by the way, with the new facility with better turns, and we are considering it right now. So, maybe I think that you're going to expect Matt, the interest expenses into the second half to be reduced, because we have repaid; we have repaid some of the debt with the IPO proceeds.

Speaker Change: As you said.

Speaker Change: Part of the financial expenses came from insurance expenses.

Speaker Change: Some came from valuation fair value valuation.

Speaker Change: We did repay part of our debts in Q3.

Speaker Change: But we havent naphtha liquidity to get it to profitability. So.

Speaker Change: We're still on track and we were offered by the way with the new facility was better churn and we are considering it.

Speaker Change: Right right now.

Speaker Change: So maybe.

Speaker Change: I think that you're going to again expect Matt.

Speaker Change: The <unk> expenses into the second half to be reduced because we have repaid.

Speaker Change: We have repaid some of the debt with the IPO proceeds were also as mentioned we have a few offers right now on the table too.

Meir Peleg: We're also, as May has mentioned, we have a few offers right now on a table to potentially replace existing debt with better terms, and we're exploring it right now. Does that answer you a question? Yeah, I mean, directionally, it does, but are we talking about getting that cut in half? You are 13 million last year, and you are 7 million or 7 points, whatever, million in the first half of this year, so do you expect that to be down dramatically, like the one or two million a quarter, or? It should be down dramatically in HD, yes.

Meir Peleg: We're also, as May has mentioned, we have a few offers right now on a table to potentially replace existing debt with better terms, and we're exploring it right now.

Speaker Change: Potentially.

Speaker Change: <unk>.

Speaker Change: Replace existing debt with better terms and we're exploring it right now.

Speaker Change: Is that does that answer your question.

Meir Peleg: Does that answer you a question? Yeah, I mean, directionally, it does, but are we talking about getting that cut in half? You are 13 million last year, and you are 7 million or 7 points, whatever, million in the first half of this year, so do you expect that to be down dramatically, like the one or two million a quarter, or? It should be down dramatically in HD, yes.

Speaker Change: I mean directionally it does.

Speaker Change: We're talking about like getting that cut in half.

Speaker Change: There are $13 million last year.

Speaker Change: In your $7 million seven.

Speaker Change: Whatever 1 million in the first half of this year. So do you expect that to be down dramatically like the one or $2 million a quarter.

Speaker Change: It should be down.

Speaker Change: Dramatically.

Speaker Change: In HD.

Speaker Change: Okay.

Speaker Change: Yeah. Thanks for all the commentary around the backlog in.

Eyal Peso: Okay, and then thanks for all the commentary around the backlog and opportunities with the end market, but one potential concern that we're getting from investors is in the slowdown of EV across the globe, and still growing, but still slower, we're seeing pushouts of model years, and I know a lot of your growth opportunity within auto is tied to EV, particularly on the sunroof. Are you seeing any concerns with customers? Are you sort of small enough and niche enough where you're focusing on a sort of high end, and that's not a concern near term? Thanks, Matt.

Eyal Peso: Okay, and then thanks for all the commentary around the backlog and opportunities with the end market, but one potential concern that we're getting from investors is in the slowdown of EV across the globe, and still growing, but still slower. We're seeing pushouts of model years, and I know a lot of your growth opportunity within auto is tied to EV, particularly on the sunroof. Are you seeing any concerns with customers? Are you sort of small enough and niche enough where you're focusing on a sort of high end, and that's not a concern near term? Thanks, Matt.

Speaker Change: Opportunities and markets.

Speaker Change: <unk>.

Speaker Change: One potential.

Speaker Change: And there we're getting from investors is.

Speaker Change: And the slowdown of EV across the globe.

Speaker Change: And still growing but slower we're seeing push outs of model years, and I know a lot of your growth opportunity.

Speaker Change: Within auto is tied to EV, particularly the sunroof.

Speaker Change: Are you seeing any concerns with customers or use some sort of small enough and niche enough, where youre focusing on sort of the high end and thats not a concern near term.

Speaker Change: Thanks, Matt I'll take that one it's a great question.

Eyal Peso: I'll take that. It's a great question. I'd like to say that we're not experiencing any slowdown ourselves, and I think that in many cases slowdown is interpreted, at least from what we see, it's still growing, but only the acceleration is not as expected, but it's still growing, and that change in acceleration of the adoption of EV is really so far from what we're doing right now with what we're experiencing. We're working with numerous OEMs on programs and not even one has either stopped or delayed plans.

Eyal Peso: I'll take that. It's a great question. I'd like to say that we're not experiencing any slowdown ourselves, and I think that in many cases, slowdown is interpreted, at least from what we see, it's still growing, but only the acceleration is not as expected. But it's still growing, and that change in acceleration of the adoption of EV is really so far from what we're doing right now with what we're experiencing. We're working with numerous OEMs on programs, and not even one has either stopped or delayed plans. So, on the big, big numbers, you're right, and it's a good point, but the matter of the fact is that it is still growing, and we are still in the very beginning.

Speaker Change: I'd like to say that we are and we're not we're not experiencing any slowdown ourselves and I think that in many cases.

Speaker Change: Slowdown is interpreted at least from what we see.

Speaker Change: It's still growing but only the acceleration is not as expected, but it's still growing and that change in acceleration of the adoption of EV.

Speaker Change: Is really so much so far from what we're doing right now.

Speaker Change: What we're what we're experiencing we are working with numerous Oems on programs and not not even one as as either stopped or delayed plans.

Speaker Change: On the big Big numbers, Youre right and it's a good it's a good point.

Eyal Peso: So on the big, big numbers, you're right, and it's a good point, but the matter of the fact is that it is still growing, and we are still in the very beginning. We're talking about 6 OEMs today. We have way more than 6 in the pipeline. A lot of them are also EV. No one has indicated anything like stopping anything or would not. And again, the need in our product, we think, and we have OEMs agreeing with us, is in every EV that has a glance roof, and that number is so big and so far from what we're doing right now.

Speaker Change: The matter of the fact is that it is still growing.

Speaker Change: And we are.

Speaker Change: We are we are still in the very very beginning we're talking about six Oems today, we have we have.

Eyal Peso: We're talking about 6 OEMs today. We have way more than 6 in the pipeline. A lot of them are also EV. No one has indicated anything like stopping anything or would not. And again, the need in our product, we think, and we have OEMs agreeing with us, is in every EV that has a glance roof, and that number is so big and so far from what we're doing right now. And I have to say, you should expect us to be not only on niche and high end. That's always how it starts in automotive. If you're going to go in Daimler, you're going to start with the S Class and go take your way down to the E Class and C Class.

Speaker Change: Way more than fixed in the pipeline.

Speaker Change: A lot of them are also even though no. One no. One has indicated any anything like stopping anything or whatnot and again, our the need in our product, we think and we have Oems agreeing with US is in in every EV that hasnt glass roof.

Speaker Change: And that number is so big and so far for what we're doing right now and I have to say youre going to you should expect us to be not only on niche and high end that's always how it starts in automotive if I'm, if youre going to go.

Eyal Peso: And I have to say, you should expect us to be not only on niche and high end. That's always how it starts in automotive. If you're going to go in Daimler, you're going to start with the S class and go take your way down to the E class and C class. That's how it goes. But these OEMs negotiate terms and annual contract with us taking into consideration the next models within every OEM. So you should expect us also on, say, you know, more regular passenger cars.

Speaker Change: In Daimler you're going to start with the S class and go.

Speaker Change: Take your way down to the <unk>, that's how it goes but these Oems negotiate terms and annual contract without taking into consideration. The next models within every OEM. So you should expect this also on say more more regular to passenger cars soon.

Eyal Peso: That's how it goes. But these OEMs negotiate terms and annual contracts with us, taking into consideration the next models within every OEM. So you should expect us also on, say, you know, more regular passenger cars.

Speaker Change: Okay. That's very helpful. Thank you very much.

Matthew Sheerin: Sue. Okay, that's very helpful. Thank you very much. Thank you, Matt. Thank you, Mr. Matthew Sheerin. There are no further questions at this time.

Eyal Peso: Sue.

Matthew Sheerin: Okay, that's very helpful. Thank you very much.

Speaker Change: Okay.

Matt: Thank you Matt.

Matthew Sheerin: Thank you, Matt. Thank you, Mr. Matthew Sheerin.

Matt: Thank you Mr. Marty sharing.

Speaker Change: There are no further questions at this time I would now like to turn the call back over to Mr. <unk>.

Operator: There are no further questions at this time.

Eyal Peso: I'd now like to turn the call back over to Mr. A.

Eyal Peso: I'd now like to turn the call back over to Mr. A. El Peso, Chief Executive Officer for Fight Now Coles in Commons. Thank you for joining us today. We look forward to future discussions and announcements to update you on our progress.

Speaker Change: <unk> Chief Executive Officer for final closing comments.

Eyal Peso: El Peso, Chief Executive Officer for Fight Now Coles in Commons. Thank you for joining us today. We look forward to future discussions and announcements to update you on our progress. Have a great rest of your day. Thanks.

<unk>: Thank you for joining us today, we look forward to future discussions and announcements to update you on our progress have a great rest of your day. Thanks.

Eyal Peso: Have a great rest of your day.

Operator: Thanks.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today.

Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating and asking if you please connect your life. I hope you all have a great day.

Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating and asking if you please connect your life.

Speaker Change: Thank you for participating in aesthetic disconnect your lines.

Speaker Change: Have a great day.

Operator: I hope you all have a great day.

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